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By General Secretary & Treasurer Kim Thompson

Just as you balance your personal checkbook and compare income to expenses in making decisions where to spend and where to save, we at UTU International make similar decisions with your dues.

Accepting responsibility to protect the interests of our members also includes accepting responsibility to use the funds entrusted to the International so as to obtain the most value from every dues dollar received.

There is no silver bullet for managing finances. Resource utilization is regularly assessed and needed adjustments are made. Demanded action is met with a cost-effective response. This same standard is applied to funds managed for the Discipline Income Protection Program and the United Transportation Union Insurance Association (UTUIA).

During the current administration, the UTU’s General Fund, accounting for most day-to-day operations of the International, has increased from $2.1 million to nearly $2.6 million.

The balances of all other funds have improved by an even greater extent, with the total of all International funds increasing from $7.5 million to nearly $16 million — an increase of 111 percent.

The Convention Fund balance assures that necessary funds are available to finance the 11th Quadrennial Convention convening in August.

This is all in spite of reduced membership owing to the deep recession and employee layoffs, and extraordinary administrative and legal expenses.

In 2007, our Discipline Income Protection Program reserve fund suffered a $2 million loss and was left with a balance of just over $5 million. Today, our reserves are at more than $9 million, assuring sufficient funds to satisfy all outstanding liabilities and provide the protection our members expect and deserve.

The UTUIA, meanwhile, earned more than $400,000 from operations during 2010, and remains financially strong with nearly $26 million in surplus.

Union assets are invested primarily in cash accounts and short term bonds, and are largely unaffected by the stock market problems.

The UTUIA, as all insurance providers — and even the Railroad Retirement Trust Fund — has assets invested in the stock market, as well as in bonds and cash accounts. But UTUIA investments are generally conservative in nature. UTUIA investment advice is obtained through independent advisers who have no financial benefit from actual transactions, but are paid on a fee-for-service basis.

Prior to this administration assuming office, it was said that the UTU was broke and could not survive on its own. In addition to precariously low reserves, our nation fell into the worse economic recession since the Great Depression of the 1930s. During the depths of this recession, more than 15 percent of our members were furloughed.

Disciplined finance management by this administration enabled continued growth.

Now, as the railroads recall employees and hire new workers, the resulting increased receipts will add to these reserves, assuring availability of funds for continued quality representation.

The Railroad Retirement Board (RRB) is required by law to submit annual reports to Congress on the financial condition of the railroad retirement system and the railroad unemployment insurance system. These reports must also include recommendations for any financing changes which may be advisable in order to ensure the solvency of the systems. In June, the RRB submitted its 2010 reports on the railroad retirement and railroad unemployment insurance systems.

The following questions and answers summarize the findings of these reports.

1. What were the assets of the railroad retirement and railroad unemployment insurance systems last year?

As of September 30, 2009, total railroad retirement system assets, comprising assets managed by the National Railroad Retirement Investment Trust and the railroad retirement system accounts at the Treasury, equaled $24.6 billion. The Trust was established by the Railroad Retirement and Survivors’ Improvement Act of 2001 to manage and invest railroad retirement assets. The cash balance of the railroad unemployment insurance system was $47.6 million at the end of fiscal year 2009.

2. What was the conclusion of the 2010 report on the financial condition of the railroad retirement system?

The conclusion was that, barring a sudden, unanticipated, large drop in railroad employment or substantial investment losses, the railroad retirement system will experience no cash-flow problems during the next 23 years. The long-term stability of the system, however, is not assured. Under the current financing structure, actual levels of railroad employment and investment return over the coming years will determine whether additional corrective action is necessary.

3. What methods were used in forecasting the financial condition of the railroad retirement system?

The valuation projected the various components of income and outgo of the railroad retirement system under three employment assumptions, intended to provide an optimistic, intermediate and pessimistic outlook, respectively, for the 25 calendar years 2010-2034. The projections of these components were combined and the investment income calculated to produce the projected balances in the railroad retirement accounts at the end of each projection year.

Projecting income and outgo under optimistic, intermediate and pessimistic employment assumptions, the valuation indicated no cash-flow problems occur throughout the 25-year projection period under the optimistic and intermediate assumptions. Cash-flow problems do occur under the pessimistic assumption but not until 2033, 23 years from now.

4. How do the results of the 2010 report compare with those of the 2009 report?

The projected combined account balances are higher through calendar year 2025 under each employment assumption than in last year’s report. Under the optimistic and intermediate employment assumptions, the account balances are lower at the end of the current projection period due to lower taxes in some earlier years.

The favorable comparison with last year was largely due to actual investment return of approximately 24.3 percent exceeding the expected investment return of 7.5 percent in calendar year 2009, and to a lesser extent due to a lower estimated cost-of-living adjustment for 2011 in this year’s report. This was offset by lower projected employment and a lower estimated wage increase for 2009 in this year’s report.

5. Did the 2010 report on the railroad retirement system recommend any railroad retirement payroll tax rate changes?

The report did not recommend any change in the rate of tax imposed by current law on employers and employees. The absence of projected cash-flow problems for at least 23 years under each employment assumption indicated that an immediate increase in the tax rate schedule is not required.

6. What were the findings of the 2010 report on the financial condition of the railroad unemployment insurance system?

The RRB’s 2010 railroad unemployment insurance financial report was also generally favorable. Even as maximum benefit rates increase 39 percent (from $64 to $89) from 2009 to 2020, experience-based contribution rates are expected to keep the unemployment insurance system solvent, except for short-term cash-flow problems in 2010 and 2011 under all assumptions. However, projections show a quick repayment of any loans even under the most pessimistic assumption.

Unemployment levels are the single most significant factor affecting the financial status of the railroad unemployment insurance system. However, the system’s experience-rating provisions, which adjust contribution rates for changing benefit levels, and its surcharge trigger for maintaining a minimum balance help to ensure financial stability in the advent of adverse economic conditions.

Under experience-rating provisions, each employer’s contribution rate is determined by the RRB on the basis of benefit payments made to the railroad’s employees. The report predicted that, even under the most pessimistic assumption, the average employer contribution rate remains well below the maximum throughout the projection period.

The report also predicted that the 1.5 percent surcharge in effect in calendar year 2010 will be followed by either a 2.5 percent surcharge under an optimistic assumption or a 3.5 percent surcharge under the intermediate or pessimistic assumptions for calendar year 2011. Under all assumptions, a 2.5 percent surcharge is predicted for calendar year 2012. A surcharge of 1.5 percent for calendar year 2013 is likely only under the pessimistic assumption.

7. What methods were used to evaluate the financial condition of the railroad unemployment insurance system?

The economic and employment assumptions used in the unemployment insurance report corresponded to those used in the report on the retirement system. Projections were made for various components of income and outgo under each of three employment assumptions, but for the 11 fiscal years 2010-2020, rather than a 25-year period.

8. Did the 2010 report on the railroad unemployment insurance system recommend any financing changes to the system?

No financing changes were recommended at this time by the report.

(The preceding release was issued by the Railroad Retirement Board on August 17, 2010.)

Almost a year has passed since Mike Futhey, Arty Martin and Kim Thompson took office.

They ran on a platform of specific promises, including full disclosure. Following are Futhey administration promises and results, so far:

Promise #1: Restructure the International by reducing the number of International officers in Cleveland,and providing the most possible assistance to general committees, state boards and local officers.

Results: The vice president-administration duties were consolidated with those of the general secretary and treasurer (GS&T), and that vice president position was reassigned to the field. All full-time officers are assigned on a full-time basis and are required to make detailed and timely reports of their activities.

Communication with local officers was expanded, especially through visits to locals and general committees by the International president, assistant president, GS&T and International vice presidents.

Also, the UTU Alumni Association was restructured to provide greater interaction between the UTU International and retirees.

Promise #2: Automate more functions.

Results: The Information Technology Department has accelerated the conversion of critical data from an antiquated mainframe computer to modern operating systems.

Direct deposit of dues, DIPP and UTUIA insurance premiums was implemented on CSX and portions of UP, with other national- agreement carriers to be added in 2009.

Automation of billing and auditing is underway.

Also, the iLink platform was expanded for use by general committees and state boards, allowing improved and more rapid access. iLink will be directly accessible from the UTU Web site by Dec. 1.

Promise #3: Expand education opportunities.

Results: The computer-based UTU University was created, providing structured, self-teaching programs through iLink. Group instruction, to assist officers in getting started, is underway.

The awards database search engine is being improved.

Regional meeting workshops are being fine tuned to better meet member needs, especially for officers administering the National Labor Relations Act.

Promise #4: Grow and protect the International’s finances.

Results: UTU International funds have increased by $3.4 million — some 45 percent — to $11 million since Jan. 1. They are managed for the most effective return consistent with a conservative investment approach.

Also, organizing of unorganized airline, bus and rail properties has been accelerated.

Promise #5: Expand the Bus Department.

Results: More aggressive organizing is underway of bus properties in the Northeast and on the West Coast.

Also, regional meeting workshops were beefed up to provide greater understanding of labor laws affecting bus members.

Promise #6: Yardmaster commitment.

Results: While there no longer is a vice president of the Yardmaster Department, a yardmaster vice president position remains within the International headquarters to provide assistance as requested.

Promise #7: Airline commitment.

Results: In spite of the demise of Big Sky Airlines, the assistant president is assigned to search out the unorganized in the aviation industry. Discussions are underway on two airline properties, where employee interest in the UTU, based on the quality of representation at Big Sky, is strong.

Promise #8: Improve the ability and ease of researching controlling awards.

Results: iLink now provides better access to controlling awards, plus secure chat rooms for various levels of elected officers to exchange information and ideas.

Promise #9: Grow the UTU through the right merger with the right organization, and provide full transparency in the process.

Results: The UTU International is aggressively defending attempts by the SMWIA to force a merger in the face of a federal court decision that members were not provided information on conflicts between the two constitutions prior to casting ballots in 2007.

Promise #10: Improve member services.

Results: Leadership reports are posted to the UTU Web site for member inspection.

Meetings have been held regularly by senior International officers with general chairpersons and state legislative directors in an open-forum format.

A monthly UTU News feature introduces members to UTU employees, and explains what they do.

Promise #11: Engage in successful contract negotiations.

Results: A new national rail agreement bettered the pattern was negotiated in January, and was overwhelmingly ratified by the membership.

Arbitration on training and service-scale is scheduled to commence in early December.

Also, UTU International officers are available to assist general chairpersons, as requested, including providing assistance in negotiating individualized agreements to satisfy the new rail-safety bill’s changes to hours of service and limbo time.

Advice on complying with the FRA’s emergency ban on use of electronic devices in the cab has been posted on the UTU Web site.

Advice on how hours-of-service changes in the safety bill will affect members will be posted by Dec. 1. Those changes are not effective until July 2009.

Promise #12: Expand the legislative agenda and deliver on those promises.

Results: The UTU provided leadership in passage of the Rail Safety Improvement Act — the most sweeping safety reform in 30 years. Included is a provision permitting general chairpersons to sit down with carrier labor relations officers and negotiate a better balance between time off and earnings, while preserving guaranteed time off.

UTU efforts to elect Barack Obama and labor friendly lawmakers exceeded any effort ever mounted by a labor union.

The UTU will continue efforts to fix the commercial driver’s license problem, and will work with the AFL-CIO to identify qualified nominees for regulatory agency positions in the Obama administration.

“We have achieved solid gains in pursuing platform objectives,” said UTU International President Mike Futhey. “We are committed to building on the accomplishments of the first year, and identifying new objectives to serve the membership.”

Brothers and Sisters:

As we approach the six-month point of our administration, we are pleased to report that UTU finances have been improving steadily.

When we took office Jan. 1, there were forebodings of financial disaster just around the corner. For sure, there were financial difficulties, but nothing of the nature that, as we had been told, required us to surrender our independence to another organization to bail us out.

In fact, the combination of internal cost reductions — including an end to wasteful spending — plus additional dues dollars have increased our total International funds by more than $2 million. While that certainly seems like a lot of money, our cash on hand is still shy of a minimum safety level sufficient to weather strikes and other unexpected costs.

So long as we are not hit with a sudden financial shock, we will continue to add to our fund balances, each day growing financially stronger. We are pledged to continue strict cost controls — especially with regard to travel — in the face of sharply higher airline fares and health-care costs for our International staff.

The surplus of the United Transportation Union Insurance Association also continues to increase, and the surplus is on track to grow in excess of half-a-million dollars in calendar year 2008.

This is result of additional policy sales and a favorable trend in claims presented.

The UTUIA is one of the nation’s few remaining union-friendly insurance companies. Where competing insurance companies frequently are engaged in anti-union activities, such as lobbying for corporate-favored public policy, the UTUIA is an insurance company owned by union members, and it operates solely for the benefit of union families.

As for our Discipline Income Protection Plan (DIPP), it continues to face financial pressures flowing from the continued excessive discipline being issued by some carriers.

We recognize also that UTU members have been stepping up to the plate and supporting DIPP with their participation.

And we remain proud that the UTU DIPP remains steadfast in looking for ways to pay claims of participants. By contrast, other job benefit plans continue to look for ways to avoid paying claims.

As we have said previously, if the DIPP is to remain a viable service to UTU members, then UTU members must participate in large numbers. We again ask all participants to continue their membership in the DIPP fund, and to encourage your brothers and sisters also to participate.

In solidarity,

Mike Futhey, International President

President@utu.org

Arty Martin, Assistant President

AsstPres@utu.org

Kim Thompson, General Secretary & Treasurer

GST@utu.org

Brothers and Sisters:

This is another in a series of what will be many leadership messages to our membership.

Our first week in office involved:

  • Familiarizing ourselves with the day-to-day operation of the International;
  • Assessing the financial condition of the UTU and the UTUIA;
  • Reviewing activities of the past few months that affect our union going forward;
  • Assessing the needs of general committees;
  • Assigning projects to International officers based on priorities and specific skills; and,
  • Working feverishly to assure that our cherished craft autonomy is not sacrificed through what has been revealed as a too-hastily concluded merger agreement.

We are also preparing to meet with the National Carriers’ Conference Committee Jan. 22 for the first national contract negotiations held in more than a year.

As you are aware, we have five new International vice presidents. Also, there have been abolished four U.S. International vice president positions, and two in Canada, which constitutes a significant cost savings for our union.

This major transition required a thorough review of assignments, which we are in the process of completing. Within the next few days, all current International officers will have been given their new assignments.

We are also working with the National Mediation Board to jump-start grievance handling at that level following a lengthy delay owing to a congressional budget deadlock that required the NMB to halt all travel for neutrals.

Another area of concern is passenger railroads, including Amtrak and commuter carriers. As you are aware, a Presidential Emergency Board made non-binding recommendations this month in an effort to settle a collective bargaining impasse between Amtrak and eight of its unions. The UTU is not one of those unions.

The UTU has been in difficult negotiations with Amtrak since August 2000, on behalf of some 2,600 Amtrak conductors, assistant conductors and yardmasters.

A significant sticking point in our negotiations is Amtrak’s demand that management have an unrestricted right to determine the staffing level of passenger trains, which could mean the elimination of many assistant conductor positions.

We have been resolute in our insistence that the assistant conductor is absolutely essential for passenger safety and security — especially in this post-9/11 environment. To this end, the U.S. Department of Transportation, at the direction of Congress, has commenced a study on that issue and we are confident our position will be validated by the federal government.

In the meantime, we continue our effort to gain for our Amtrak-employed members an equitable agreement on wages, benefits and working conditions, which includes the back pay already recommended by the PEB for the other organizations. On Amtrak, we are also mindful of actions by management to eliminate many yardmaster positions.

The federal study into the safety and security-related roles of Amtrak conductors and assistant conductors could also provide protection for UTU-represented assistant conductors employed in commuter operations.

We are reminding our negotiators of a conclusion by a special Presidential Railroad Commission — created by President Kennedy in 1962 — that, “In this [railroad] industry, whatever may be said of others, the employees have a legitimate collective bargaining interest in the matter of crew consist, and it is our view that the collective bargaining process should remain the basic method for resolving disputes concerning this matter.”

As gasoline prices skyrocket, air travel becomes more problematic and the population ages, Americans are voting increasingly with the feet and wallets to ride Amtrak and the various commuter rail systems nationwide. The growing demand for high-speed regional rail and expanded commuter rail also provides new opportunity for organizing the unorganized.

The UTU also will work with Amtrak and commuter railroads to ensure freight railroads do not discriminate against passenger operations by denying them the priority dispatch access to which they are entitled. We will also lobby at the state and congressional level for sufficient public funding for new and expanded commuter and transit services.

Another subject we are investigating is the appointment last July of a sitting UTU president to the advisory board of the American Income Life Insurance Co., which competes with our own UTUIA. That appointment may have constituted a conflict of interest with his position as a director and chief executive officer of the UTUIA, and we will report to you on the results of that investigation. We stress that this is not a matter of “going after” a former officer, but a matter of protecting UTUIA.

We also are following the unfortunate demise and pending liquidation of Big Sky Airlines. Protection of our members employed by Big Sky is our number one priority, and the UTU law department is researching all options to ensure the letter of the law and collective bargaining agreements are followed.

Bus operators and mechanics represented by the UTU also are important to us, and we will devote what ever resources are required to assist our bus locals in negotiating equitable contracts, and to organize unorganized properties.

We also pledge to continue efforts before Congress to right the wrong of prior federal legislation that puts each commercial driver’s license at risk for even minor traffic violations when operating a private automobile. We also are working with Congress to gain additional federal funding for training of bus operators, and means of increasing the physical protection of drivers from assaults by passengers.

Additionally, we are seeing an increase in demand for bus travel — local and intercity — throughout the nation as the price of gasoline soars. This is especially so in rural and low population areas without air service. The UTU will be encouraging communities and states to devote additional tax revenue to enhancing local and intercity bus service, which also will create new organizing opportunities for the UTU.

Clearly, we have a lot on our plates. Our union is especially fortunate to have highly skilled, loyal and determined officers and staff at the International, general committee and local levels, as well as in state legislative and provincial board offices, whose advice and assistance is crucial to providing second-to-none service to all our members.

In solidarity,

Mike Futhey, International President

President@utu.org

Arty Martin, Assistant President

AsstPres@utu.org

Kim Thompson, General Secretary & Treasurer

GST@utu.org