What the “Stabilization Fund” Stabilizes (and why Mulgrew needs to stop raiding it)

The UFT leadership (Mulgrew and crew, aka “Unity”) are locked in a desperate fight with the UFT members and the UFT retirees – Mulgrew and co are struggling to reduce how much health care we receive, in order to pay a debt they incurred years ago – we are battling to prevent them, to preserve our health care.
Because the politicians and the insurance companies and big business are on Mulgrew’s side, you might think he is a heavy favorite to defeat the members and the retirees.
But so far we have successfully held him off.

A key element in this debate is the “Stabilization Fund” – most members have not heard of the Stabilization Fund, and those who have generally do not know much about it. There’s a reason – read on:

There is a battle in New York City. A David vs Goliath battle. A battle with a retiree group allied with labor activists on one side, and Mayor Adams, the Municipal Labor Committee, and the United Federation of Teachers leadership under president Michael Mulgrew on the other.

The Stabilization Fund is at the heart of the battle. And the stakes: how much health care Mulgrew allows members and retirees to have. (I’m writing “Mulgrew” but really municipal union leaders Nespoli and Garrido along with Mayor Eric Adams are all part of one team).

Administrative Code 12-126 is involved. There’s been plenty written about that.

City agreed to fund healthcare at a specific level

But today we look at the code from a new angle. Section 12-126 of the Administrative Code provides that the City will fund health care at the level of HIP (which is a relatively high bar). If you sign up for a plan that costs more than HIP, you pay the difference. That’s what you look at each fall during the health care transfer period – not the cost of each of the other plans, but the cost above HIP.

But what about the other option? HIP is an HMO. We have a choice of two premium-free plans. The other is not an HMO. It used to be GHI (that’s what I still usually call it, even though I know that’s wrong). Today it is in fact, Emblem.

When HIP costs more than GHI did, there’s no problem. GHI was cheaper, the agreement says the city funds up to the HIP level. We were covered.

But sometimes GHI (now Emblem) costs more than HIP, as is the case today. The Stabilization Fund was designed to smooth over that difference (when GHI cost more).

Stabilize the difference between the cost of HIP and the cost of GHI

The Stabilization Fund “stabilizes” the difference in cost between HIP and GHI (now Emblem) so that we get both premium-free.

It’s a big chunk of money (I’m not sure how big – that seems to be an item of contention, but the UFT says “almost broke” and this guy says $900,000,000 – so in that range), and while it is “sitting there” it is tempting for some to try to dip into it.

What else? (Mulgrew version)

The UFT website says

“the city and its unions have also used the fund in a variety of ways, such as offsetting members’ costs for PICA drugs (such as chemotherapy and injectables), subsidizing the cost of retiree prescription drug riders, shoring up various union welfare funds facing fiscal uncertainties and paying survivors’ benefits to the widows of uniformed officers.”

What else? (What you wanted to know)

This fund sits there. It is a temptation. I do believe that it currently holds $900,000,000 (nine hundred million, if that helps. Almost a billion).

In our 2014 contract, the UFT desperately wanted big raises. They learned the wrong lesson from their one failed contract (1995): they always want to make the “number” look big. So when the City claimed not to have enough money, the UFT offered up our future health care. They took bigger raises, but promised to pay back into the Stabilization Fund. They might have gotten some by reducing administrative costs or getting hospitals not to overcharge. But they also took money from my pocket and yours. Every new copay we paid, that was us repaying Mulgrew’s debt. Every new restriction, that was us limiting how much healthcare we took (leaving more for the Fund).

However, the UFT did make its obligation on the 2014 loan. (in part with our money, but they made it).

In 2018, however, they’d gotten used to the bad habit. Big pool of money. They got permission to borrow from it once before.

Fund or Piggy Bank?

Is it a stabilization fund? Or a piggy bank? Depends on who you ask. Mulgrew thinks it’s a bank, and borrowed from it again. I will talk more about this more extensively in a later post.

Today Mulgrew (and the MLC) are scrambling to pay what they owe. And once again, they want to pay with my money and your money, or by paying out less for our healthcare.

Does Michael Mulgrew care more about the health of his Stabilization Fund or about the health of his members and retirees?

These loans that the MLC (and UFT) took from the Stabilization Fund, they have to be paid back.

The first (2014) was paid back with a variety of sources, but some of the payback came from members’ pockets.

The second (2018) has been partially paid back with a mix, but more this time came from members’ pockets

The second (2018) for really horrible reasons is not close to being paid back. And with a mountain of debt, Mulgrew is looking to pick a new group of pockets (retirees) to replenish the piggy bank.

Question? Answer!

What is the Stabilization Fund? It is money the city and the unions used to use to balance the cost between HIP and GHI. Now it sits there like a slush fund. The MLC unions (including the UFT) borrowed from it, promising to return the money in the form of healthcare cuts. And the current debate was generated by the MLC and UFT and NYC trying to find a quick stream of cash to put into it, and deciding to try to squeeze that cash out of the retirees.