Pacific Maritime Association

Funding of Benefits Methods designed to assess funds to pay for collectively bargained fringe benefits and other programs have increased in complexity over the years because of the increasing amounts of money required and the changing structure of the industry. Benefits and other Industry obligations historically have been funded by assessments levied on hours paid or on tons handled or on a combination of the two. As assessment systems have changed, responsibility for paying for benefits programs have shifted between stevedores and vessel operators. FUNDING BENEFITS WITH HOURS AND TONNAGE CONTRIBUTIONS The genesis of the current benefits funding assessment system was an agreement among the PMA membership dated December 14, 1983. Although the agreement has been amended a number of times in the years since, the basic structure remains. The 1983 assessment agreement was based on the premise that all benefits will be funded by an assessment on hours paid unless the total hours paid falls below a defined number, which is referred to as the divisor. When paid hours fall below the divisor, a portion of the benefits funding obligation shifts to the tonnage sector. The hours portion of the benefits obligation is derived by first dividing the total benefits costs by the divisor. The result is the hourly benefits assessment rate. This rate is then multiplied by the number of hours expected to be paid to determine the total amount that will be raised by the hours sector. If total benefits costs exceed the amount raised by the hours sector then the difference will be raised by the tonnage sector. The process of achieving an agreement on the divisor that was used in the assessment formula was a formidable undertaking. During the fall of 1983, Pres Lancaster and a group of industry executives worked intensely for many weeks to develop the divisor and the assessment system in which it would be deployed. Industry Assessments Assessments are levied on payroll hours and tonnage to fund the costs of collectively bargained fringe benefits and other industry obligations. Payroll hour assessments are paid by the companies simultaneously with weekly payrolls. Tonnage is reported and assessments paid on a monthly basis. The tonnage reporting is also a source of statistical data that chronicle waterborne cargo movements through West Coast ports. After reaching consensus on a solution, the group presented their assessment proposal to the PMA Board of Directors. The Board, however, demanded a further refinement of the divisor, and after further deliberations, a compromise was reached and the number 24,800,546 was agreed upon. The divisor that was first proposed in September 1983 was 26,021,071. This number was the total number of payroll hours reported for calendar year 1962. The number was "brokered" down because some PMA members felt that the higher number shifted too much of the benefits costs to the tonnage sector. On November 9, 1983, the Board adopted a resolution recommending approval of the proposed assessment system by the PMA membership. The membership adopted the proposal on December 14, 1983. The agreement was filed with the Federal Maritime Commission on December 22, 1983 and was designated LM-84. Three tugboats alongside a Yang Ming vessel at berth in the Port of Tacoma. PACIFIC MARITIME ASSOCIATION 49 I N D U S T RY A S S E S S M E N T S

• Cover