This summer, the trustees of the PSC-CUNY Welfare Fund reluctantly concluded that the financial structure for adjunct health insurance coverage had become unsustainable. At the July 25 Board meeting, the Welfare Fund Trustees passed a resolution to discontinue the current adjunct basic health insurance program as of August 31, 2012, unless sufficient and permanent funding or an alternative benefit source is secured. The program would be replaced by substantially reduced benefits commensurate with available funding. The resolution cited the explosive growth over the past decade of both the cost per member and the number of members covered – all in the face of an unchanging, flat contribution from the City University of New York.
It was a wrenching decision because the trustees are aware of the dramatic impact on many people’s lives if the problem is unresolved at the end of this time period. On the other hand, it was the only responsible course of action.
The Welfare Fund is the product of a Trust Indenture and Tripartite Agreement among the Fund, the union (PSC) and the employer (CUNY). It operates as a trust established under New York State law and is subject to a plethora of federal, state and local regulations. Trustees are vested with a fiduciary responsibility to act only in the best interests of all Fund participants and make all reasonable efforts to maintain the solvency of the Fund. That responsibility is both a legal and a practical one: a Fund that ran out of money would do no one any good.
In recent years interim measures have allowed the Board to maintain the adjunct benefit in anticipation of the bargaining parties (PSC and CUNY) attaining a longer-lasting solution. Our recent decision is a recognition that the situation is unsustainable without immediate structural revision. To continue the benefit under present circumstances would be a breach of our fiduciary responsibility.
The adjunct basic health insurance provided by the Welfare Fund is unique among the 100+ supplemental New York City welfare funds. Most City welfare funds cover only things like optical, dental, and prescription drug benefits: no other City fund has to provide basic health insurance for a major part of the workforce. Since the late 1980s there has been a failure by both CUNY and the City of New York to recognize the full health insurance rights of these part-time workers. The PSC leadership at the time (1986) negotiated a contribution from CUNY for adjunct health care to be administered, not by the New York City Employee Benefits Program, but by the PSC-CUNY Welfare Fund. The arrangement has been honored by the trustees ever since, although with increasing concern.
In 2003, the current PSC leadership negotiated an increase to the University’s flat-sum contribution, but was unable to win CUNY’s agreement to an arrangement where contributions would rise with enrollment levels and insurance premiums. The increased contribution reduced the shortfall to $600,000 in 2003. However, the shortfall increased each subsequent year and is projected to be $11 million in 2011. The Fund cannot continue to cover the shortfall without jeopardizing the benefits of all participants.
Trustees have taken a number of financial measures to keep the Welfare Fund operational. In 2003, there were significant changes: moving to mail order for prescription drugs, switching to a low-cost NYSUT life insurance plan, and benefit reductions to extended medical coverage. The adjunct component also took cuts: co-pay increases in 2005, a negotiated shift of 180 doctoral student /adjuncts to the NYSHIP system in 2009 and some unilateral insurer reductions in 2011. All of these measures have only served to stave off the inevitable. It is projected that as of August 31, 2012, without adequate remedial action, the Fund will face insolvency within 12 months.
Those of us who have spent our careers at CUNY have observed the increased reliance of the University on adjunct faculty, who now provide half of all instruction. We have seen part-time faculty become a central part of the University’s teaching resources. What the Welfare Fund trustees have not seen is a commitment to provide the basic rights of health insurance to eligible members of this enormous component of CUNY’s workforce.
The management of the Fund and the advice of legal counsel, benefits consultants and auditors have been consistent through this period. The Board has been kept fully apprised of the deteriorating financial situation, and the Fund’s management has handled it in a conscientious and ethical manner. The PSC-CUNY New York Welfare Fund is one of the few Welfare Funds to have an independent audit committee, and the audit committee concurs with the Board’s decision. Beyond the measures already taken, there is little more the Fund can do other than urge the bargaining parties (CUNY and the PSC) to find answers.
As individuals and colleagues we regret having to take this measure. As trustees of the Fund, we had no other responsible alternative.
Professor Martell is chair of the Audit Committee of the PSC-CUNY Welfare Fund. He is the Saxe Distinguished Professor of Finance at Baruch College and Director of the Weissman Center for International Business.