Philadelphia Orchestra players OK tentative contract with deep cuts

Posted: October 13, 2011

The Philadelphia Orchestra Association Thursday secured the main prize in its Chapter 11 bankruptcy case: a deeply concessionary labor deal from musicians.

On the cusp of the opening of the orchestra's 2011-12 season, members of the ensemble Thursday approved a contract calling for a 15-percent pay cut, reducing the size of the ensemble, and replacing the defined-benefit pension with a defined-contribution plan.

The deal was mediated under the supervision of Stephen Raslavich, chief judge of U.S. Bankruptcy Court for the Eastern District of Pennsylvania, and is subject to the approval of bankruptcy court.

The American Federation of Musicians and Employers' Pension Fund, the $1.7 billion national plan that would be jilted by the new labor deal, has pledged to fight for up to $35 million it says it will be owed if the Philadelphia Orchestra Association carries out its stated intention to withdraw from the fund.

Musicians accepted the deal only "reluctantly," they said in a prepared statement, because the alternative - a potential strike - could have meant "additional uncertainty and harm to the members of this great orchestra." John Koen, cellist and chairman of the players' negotiating team, said in unusually pointed language:

"It is the self-admitted failures of management and the board that have led us to this point, and we challenge them to make the changes needed to raise the funds necessary to operate and promote the orchestra with the same passion with which we create music.

"The members of the board of directors, in particular, must equal our total commitment to putting the orchestra on more solid financial footing. We hope our sacrifices for the good of the orchestra will inspire the community to demonstrate their support so that today's approval will mark the beginning of a process of renewal and that in four years the Philadelphia Orchestra will be stronger and more financially secure than ever."

In a prepared statement attributed to president Allison B. Vulgamore and board chairman Richard B. Worley, management called the new contract "a critical step toward reaching an important goal within the reorganization process - achieving long-term financial stability for the Philadelphia Orchestra while also maintaining its artistic excellence."

Koen said he was aware of several musicians mulling positions - either in other orchestras, or at universities - who will now have to make their decisions about whether to stay or go.

Salary cuts in the new contract are so severe that in 2015, at the end of four years of incremental raises, musicians will still not be earning the base minimum amount promised - but reneged on by management - this season.

It is not clear what will happen to the pension benefits of those who already have retired from the orchestra, Koen said.

The deal, the terms of which were obtained by The Inquirer, comes into effect as of Nov. 1:

A minimum annual salary of $106,000, rising to $111,800 in 2012-13; $117,000 in 2013-14; and with 2014-15 stepped up from $119,600 to $124,800. That last amount is the current base minimum.

A hiring freeze will cut the official size of the ensemble from the current 105 instrumentalists and two librarians to 95 instrumentalists and two librarians, with the reduction achieved through voluntary retirements and attrition. Players have until Nov. 1 to apply for retirement.

Replacement of the current defined-benefit pension plans with a 403b plan in which the association contributes 8 percent of the minimum weekly salary for orchestra members under the age of 40; 9.5 percent for those between 40 and 50; and 10.5 percent for those 50 and older.

Substitute players, including returning retirees, will be paid at 85 percent of the minimum weekly scale, with a vague exploration of an expanded relationship with the Curtis Institute of Music to create "greater work and learning synergies."

The association has the right to split the orchestra into two parts, each potentially performing in a different venue at the same time up to eight weeks per year, increased from the previous two.

The salary minimums are earned by slightly more than half the orchestra. Others, such as principal and other titled players, earn more - in some cases much more. Compensation to those over-scale players is being reduced by an "applicable percentage." The new deal calls for work-rule changes regarding vacation: what days of the week musicians can be required to work: allowing some longer concerts without overtime, and rehearsal rules. It also contains incentives for certain musicians to retire, and others to stay. About $3.3 million is to be divided over the life of the contract among active musicians, as well as to retiring musicians to become "goodwill ambassadors" performing some non-musical duties.

A two-percent salary bonus will be paid to musicians who have been given tenure and who have been on the job fewer than five years - in other words, those who are most likely to audition for other orchestras.

Changes in the pension plan are contingent on approval by the Pension Benefit Guarantee Corp., the federal agency that makes up pension obligations employers are unable meet.

"In the event the PBGC does not agree to a distress termination, then this agreement may become null and void upon the election of either party and the parties may promptly meet to negotiate a new collective bargaining agreement," says the memorandum of agreement between the musicians' union and the association.

The memorandum of understanding (MOU) also contains language that underscores the contentious nature of this round of labor negotiations, which came in the guise of the association's April 16 Chapter 11 filing.

"On Oct. 5, 2011, the POA represented to the musicians and to the bankruptcy court that its financial condition is such that it cannot afford a more costly contract than that represented by this MOU. The POA understands that the musicians have relied on this representation in agreeing to and ratifying this MOU. In the event that this representation was false, the musicians shall have all rights and remedies provided for at law, including without limitation the right to reopen this MOU."

Contact Peter Dobrin at pdobrin@phillynews.com or 215-854-5611. Read his blog at www.philly.com/artswatch.

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