Viewpoint: The Battle Continues to Save the Puerto Rican Teachers' Pension

This piece, from American Federation of Teachers Executive Vice President Evelyn DeJesus, is a response to a Viewpoint we published earlier this week, “The AFT Shouldn’t Be Negotiating Away Puerto Rican Teachers’ Pensions,” by the MORE Caucus of New York City’s United Federation of Teachers.—Editors

In all due respect, the Labor Notes-published Viewpoint on Puerto Rico‘s teacher pension fight is void of essential facts. If we are going to be victorious over the relentless attack on workers’ pensions, the labor movement must mobilize and strategize together. This is what the private sector unions accomplished this year in advance of the relief President Biden provided to multiemployer plans in the American Rescue Plan. Unfortunately, we have virtually no real allies in the bankruptcy process.

The Asociación de Maestros de Puerto Rico (AMPR, the Puerto Rican Teachers Association), its local Sindical, and the American Federation of Teachers continue to oppose any cuts to teacher pensions. (AMPR is an AFT affiliate—Eds.) That is clear and central in the proposal we negotiated. It is also clear that our unions are steadfast against the pension freeze as proposed in the bankruptcy case. This will continue to be an incredible fight.

PUBLIC PENSIONS DECIMATED

You can’t fight pension cuts unless you deal with the facts. For many years basically every public employee defined-benefit pension plan has been decimated in Puerto Rico. There are only two large public employee pension plans that still remain active and standing—the teachers’ plan (TRS) and the judges’ plan (JRS).

Freezing these two pension plans is part of the junta’s bankruptcy plan pending in the United States District Court. The Puerto Rico government is bankrupt, owing billions of dollars, and has not demonstrated a way to pay its debt. The political mismanagement of the public’s finances is indictable—including the pension plans. It is estimated that the teachers’ plan is funded only at about four cents on the dollar. They recklessly misspent our retirement dollars.

The new federal law, PROMESA, allowed the Commonwealth of Puerto Rico to declare bankruptcy. The law also established that an oversight board, which is referred to as the junta, is the only party that can submit a proposed bankruptcy exit plan. Every creditor who wants to fight in the bankruptcy case knows that the junta has that exclusive power.

The leaders of AMPR and the Sindical asked AFT to assist (not lead) them in navigating through this oppressive and complex anti-worker bankruptcy process. AFT assisted our affiliates by offering legal, organizing, and financial teams to be involved in the local’s fight to keep the teacher pension plan. AFT’s assistance strengthened our members’ voice on the streets and in the court.

The latest bankruptcy negotiations came about after 11,000 rank-and-file teachers signed a petition asking their union to try to renegotiate a bankruptcy plan to save the pension and include a backup plan in the event the court decides to freeze the plan. These teachers who signed the petition understood that doing nothing could lead to a court-imposed pension freeze. So along with our political and grassroots opposition, the complex bankruptcy proceedings still had to be navigated.

Based on member sentiment, the AMPR engaged in a tough renegotiation. Those negotiations resulted in the current deal which is being voted on.

PLAN B

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The first priority of that deal stipulates that the teachers’ pension plan be saved. This is legally referred to as a “Most Favored Nation” clause, which means if any legislation is enacted to save public pensions—like Act 7 (the “Dignified Retirement” Law, which protects public pensions—Eds.)—the teachers get the same treatment! In fact, any better pension treatment will automatically cover the teachers and save their defined benefit plan. Further, if the JRS judicial pension plan is saved, the teachers’ plan will also be saved. In essence, if our political or public effort succeeds in saving the plan, our teachers are protected.

But what if those efforts fail? Every other major Puerto Rico public employee defined benefit plan has been frozen for years. Most bankruptcy proceedings involving pension plans have resulted in court-imposed or negotiated pension erosion. This is a reality that cannot be fought rhetorically. A real alternative was needed.

If and only if the political and public fights do not save the teachers’ pension plan, then will the second part of the voted upon deal go into effect. This “Plan B” or “seguro” (“insurance”) aspect of the arrangement only kicks in if all other attempts fail. Otherwise, we are only left with the court’s ruling.

The terms of the backup strategy plan came directly from union meetings, interviews, and the voices of our members. If regrettably the pension is frozen, the frozen plan will have many more enhanced retirement benefits than any other previously frozen plan. These include better early-outs, bridges to retirement, and multipliers.

Moreover, almost all of our teachers have never been enrolled in Social Security. This Plan B creates a rank-and-file teacher oversight group to oversee a mandated transition to Social Security. Further, teacher healthcare benefits have been increased. Additionally, there is a new five-year collective bargaining agreement. And payments to the teachers are included. These negotiated Plan B benefits—which only go into effect if there is a court-imposed pension freeze—total over $1.2 billion.

Hopefully Plan B doesn’t kick in because we would have succeeded in saving the teachers’ pension plan. Without a backup plan, the teachers would end up with the junta’s plan. That is a lose-lose outcome. It is also wrong to not let our members vote on this potential deal—either way. (The digital vote is being conducted by an independent and leading balloting organization that many unions utilize.)

So let us unite together on behalf of working families and not attack each other without knowing the full facts and without ever talking to one another. Let us fight for pensions on multiple fronts and have strategic plans, including alternatives. Let us give rank-and-file members the right to vote—yes or no. Regardless of the outcome, thousands of our members will cast their ballots and direct their future.

Evelyn DeJesus is the Executive Vice President of the American Federation of Teachers.