Walsh, Paterno Downplay Coaching Matchup 
12-7-92

Boy's Needs Are Loud And Clear 
A Mom's In A Financial Jam 
After Quitting Work To Care For 
Her Hearing-impaired Son 
*************************************** 
Photo 
Times Leader/don Carey

Sunday, December 06, 1992 &nbsp;&nbsp;&nbsp;&nbsp;Page: 1F/10F QUICK WORDS: COMMONWEALTH
TELEPHONE 





Core of the Conflict &nbsp;&nbsp;&nbsp; 
 ********************** &nbsp;&nbsp;&nbsp; TIMES LEADER PHOTOS/CLARK VAN ORDEN &nbsp;&nbsp;&nbsp; 
 * Commonwealth retirees Jo Besecker and Joe Balavage man the phones in the
union's campaign against the company* Audrey Van Orden retired with a pension
and a health insurance after 27 years with Commonwealth Telephone. Now, the
company wants the Dallas woman to pay part of her health care costs. &nbsp;&nbsp;&nbsp; 
 TIMES LEADER FILE PHOTO &nbsp;&nbsp;&nbsp; 
 * Retired Commonwealth Telephone workers picket at the company's
Wilkes-Barre headquarters in November 1991. They're protesting cuts in health
insurance coverage. &nbsp;&nbsp;&nbsp; 
 *********************** &nbsp;&nbsp;&nbsp; 
 Citing higher health care costs, Commonwealth cut employees' benefits. The
union countered with efforts to convince customers to switch phone companies. &nbsp;&nbsp;&nbsp; 
 By CLAIRE SCHECHTER &nbsp;&nbsp;&nbsp; 
 Times Leader Business Editor udrey Van Orden worked in Commonwealth
Telephone Co.'s business office for 27 years. She retired in 1987 with a $372
monthly pension and a company-paid insurance policy to cover medical expenses
not provided by Medicare. &nbsp;&nbsp;&nbsp; 
 Van Orden needed the help badly. &nbsp;&nbsp;&nbsp; 
 The 65-year-old Dallas woman suffers from diabetes, cancer, emphysema and
heart problems. Van Orden lives alone in a mobile home and says she "just gets
by" on her Commonwealth pension and $525 monthly from Social Security. &nbsp;&nbsp;&nbsp; 
 Recently though, Van Orden began receiving bills from her former employer
-- $20.42 monthly -- after Commonwealth decided to reduce health insurance
payments for retired workers. &nbsp;&nbsp;&nbsp; 
 Escalating health care costs and a burdensome new accounting rule forced
the changes, company executives say. &nbsp;&nbsp;&nbsp; 
 "It makes me absolutely sick," Van Orden says of her new insurance bills.
"When you give 27 years to a company, you don't expect this. It hurts." &nbsp;&nbsp;&nbsp; 
 Union representatives say Van Orden's financial pain will be widespread
among past and current Commonwealth employees if the company gets its way in a
year-long labor dispute over wages and health benefits. &nbsp;&nbsp;&nbsp; 
 The Dallas-based telephone company, a subsidiary of the Wilkes-Barre
telecommunications firm C-TEC Corp., made a "final contract offer" to 341
unionized workers in December 1991. The offer raised average salaries 6.5
percent over three years -- 2.5 percent in the first year, 2 percent in the
second and 2 percent in the third contract year. It also increased employee
contributions to health insurance coverage from current 8 percent levels to 17
percent in the first year, 20 percent in the second and 25 percent by the
third contract year. &nbsp;&nbsp;&nbsp; 
 Union representatives rejected the proposed pact and workers voted to
strike if necessary. &nbsp;&nbsp;&nbsp; 
 But before they take to the streets, union members say they'll try to rally
public support and take aim at their employers where it hurts most -- the
bottom line. &nbsp;&nbsp;&nbsp; 
 "We're committed to do everything we can to affect their revenues," says
Jim Short, an organizer for the workers' union, Communications Workers of
America (CWA). &nbsp;&nbsp;&nbsp; 
 So far, that's meant widespread newspaper advertising, informational
picketing and word-of-mouth and telephone attempts to convince businesses and
individuals to switch telephone business away from Commonwealth and its
affiliate company Commonwealth Long Distance Co. &nbsp;&nbsp;&nbsp; 
 Says Carol Hons, a Commonwealth service representative and a 25-year
company veteran, "We're not in a position to strike now. We can't afford it.
We could be replaced." &nbsp;&nbsp;&nbsp; 
 And while the labor battle centers on a new wage and benefit package, it
has also been laced with charges of management greed and influenced by broad
economic questions affecting U.S. companies large and small -- Who will pay
rising employee health care expenses? Should companies continue health
benefits for retired workers? &nbsp;&nbsp;&nbsp; 
 Commonwealth's labor problems have roots in management and workers' sharply
differing views of the Dallas-based telephone company and its parent, C-TEC
Corp. &nbsp;&nbsp;&nbsp; 
 Executives forecast a bright future. With holdings now including telephone,
cable television and cellular communication service companies across the
country, executives say C-TEC will eventually become very valuable to
shareholders. &nbsp;&nbsp;&nbsp; 
 John Reddan, of the Greenwich, Conn. securities firm Moran &amp; Associates,
agrees. "I absolutely buy their philosophy. They're in the three best
businesses in America today, local exchange telephone, cable television and
cellular phones. Their best growth is still to come." Moran &amp; Associates owns
about 110,000 shares of C-TEC. &nbsp;&nbsp;&nbsp; 
 It doesn't matter, executives say, that C-TEC's losses totaled $29 million
in the past two years; its long-term debt jumped $164 million; its dividend
was discontinued and its stock price dropped 50 percent. They are all
acceptable parts of the company's long-range goal to "build shareholder
value," C-TEC officials say. &nbsp;&nbsp;&nbsp; 
 Although publicly traded, C-TEC is controlled by top managers Andrew J.
Sordoni III, chairman; William Sordoni, vice chairman; and Charles Parente,
president. Together, they own more than 60 percent of the company's voting
stock. &nbsp;&nbsp;&nbsp; 
 The Sordoni brothers are third-generation members of the family that
founded the telephone company in 1928. Parente, of Dallas, was co-founder and
formerly a partner in a large Wilkes-Barre-based accounting firm. He joined
C-TEC as president in 1988. &nbsp;&nbsp;&nbsp; 
 Commonwealth's unionized employees see few benefits for themselves in
C-TEC's corporate vision. &nbsp;&nbsp;&nbsp; 
 "If all those plans materialize, will we share in that wealth? Will they
share their empire with employees. No way. It will never come back to us,"
says Rich Evanoski, a Commonwealth Telephone business systems technician and
president of CWA's local 1351. &nbsp;&nbsp;&nbsp; 
 The short term looks even worse, workers say. &nbsp;&nbsp;&nbsp; 
 Commonwealth Telephone, the lone money-maker among C-TEC's six divisions
last year, earned $32.9 million before interest expenses, taxes and $39
million reinvested for capital and technological improvements. The PUC also
ranked the firm highest in customer service among the state's major telephone
companies. &nbsp;&nbsp;&nbsp; 
 But workers say they gained nothing from those successes. &nbsp;&nbsp;&nbsp; 
 Instead, union members have worked without pay hikes for more than a year
under terms of their last three-year contract that expired Nov. 30, 1991. &nbsp;&nbsp;&nbsp; 
 At the same time, union representatives point out, 12 top C-TEC executives
took home salaries and bonuses totaling $7.4 million. Parente's compensation
for 1991 -- salary plus a bonus paid during 1992 -- was highest at $1.9
million. &nbsp;&nbsp;&nbsp; 
 "This (Commonwealth Telephone) is the profitable segment of C-TEC. We do
the work, we meet their goals every day," Evanoski says. "If we have to
tighten our belts, why don't they tighten them at the top, too?" &nbsp;&nbsp;&nbsp; 
 In newspaper advertisements placed earlier this year, the CWA called
Parente the "highest paid phone company executive in America" and said "the
Commonwealth/C-TEC Board is plundering the company for personal gain." &nbsp;&nbsp;&nbsp; 
 Hons says Commonwealth's proposed contract will "take us backwards. We've
worked for what we've gotten. It's hardly enough to pay our ordinary household
bills and educate our kids. They'll be taking us back to square one, to the
'40s and the '50s." &nbsp;&nbsp;&nbsp; 
 Commonwealth officials, however, are proud of the wages they pay workers
and believe their contract offer is "modest but fair." Company executives say
Commonwealth workers receive a wage and benefit package that is "superior in
all respects." As Commonwealth and C-TEC grow, officials say, workers share in
the success with new job opportunities. &nbsp;&nbsp;&nbsp; 
 The average hourly wage rate for Commonwealth's union workers is $13.92 per
hour, or $28,953 annually before overtime and before a $13,728 average benefit
package is added, according to the company. &nbsp;&nbsp;&nbsp; 
 In all, 46 percent of full-time union workers make $16 per hour and 231 of
Commonwealth's unionized workers make more than $30,000 each year, company
officials say. &nbsp;&nbsp;&nbsp; 
 Commonwealth executives stress their wage rates compare favorably to the
$10.25 per hour average wage paid to manufacturing workers in Northeastern
Pennsylvania as determined by a state Labor and Industry Department 1991
survey. &nbsp;&nbsp;&nbsp; 
 Comparisons to manufacturing workers, however, infuriate union workers.
They say their highly-skilled and technical jobs should more appropriately be
compared to workers at other telephone companies throughout the state. &nbsp;&nbsp;&nbsp; 
 CWA representatives say top-paid telephone system technicians at the
state's largest phone company, Bell of Pennsylvania, will make up to $759 per
week under a newly-signed contract. Similar workers at North Pittsburgh
Telephone Co. in Gibsonia make $694 weekly; at United Telephone Co. in
Carlisle, they earn $680 weekly; at Altel Pennsylvania in Kittanning, they
make $653. Commonwealth's highest-paid telephone systems technicians earn $640
per week under terms of their expired pact. &nbsp;&nbsp;&nbsp; 
 Commonwealth service representatives make up to $418 per week compared to
maximum wages of $438 at Altel, $538 at United Telephone and $617 weekly at
Bell, according to CWA officials. &nbsp;&nbsp;&nbsp; 
 Bell of Pennsylvania's new contract with its union members provides wage
increases totaling 11.74 percent over three years. &nbsp;&nbsp;&nbsp; 
 As for comparisons between Commonwealth workers' wages and C-TEC
executives' compensation, company officials say the two are "unrelated." &nbsp;&nbsp;&nbsp; 
 A C-TEC spokeswoman said Parente and the Sordonis refused to be interviewed
for this story. But in written responses to Times Leader questions and in a
three-hour interview, Paul Mazza, Commonwealth's executive vice president and
John Menapace, C-TEC's vice president and chief administrative officer,
outlined C-TEC's side of the labor dispute and defended Parente and other
executives' compensation. &nbsp;&nbsp;&nbsp; 
 "Is he (Parente) worth $1.9 million? I'd say an unqualified yes," said
Mazza. "He's taken our company in directions we'd never gone before. We're now
a player in cable television and in cellular. If it hadn't been for Chuck, we
wouldn't have made the quantum leap. He's had the foresight and willingness to
take risks in the interest of a growing company." &nbsp;&nbsp;&nbsp; 
 Bonuses, which account for more than half of Parente and other managers'
pay, were awarded because executives "significantly exceeded financial and
non-financial goals," Menapace said. Menapace refused to discuss those goals
because, he said, they would reveal C-TEC's business plan to competitors. &nbsp;&nbsp;&nbsp; 
 Menapace said, "They (union workers) don't want to talk about `is $16 an
hour fair?' They just want to talk about Chuck's (Parente's) $2 million. It's
unrelated." &nbsp;&nbsp;&nbsp; 
 Under C-TEC's contract proposal, union workers, who now pay 8 percent of
health insurance premiums, would pay 17 percent in the contract's first year,
20 percent in the second and 25 percent in the third year. &nbsp;&nbsp;&nbsp; 
 C-TEC officials say the company's health insurance expenses for employee
family medical and dental coverage are increasing 20 percent annually. They
will total $4 million in 1992. "Companies cannot afford to continue to
unilaterally incur these exorbitant costs," says Mazza. &nbsp;&nbsp;&nbsp; 
 Indeed, a study by consulting firm Foster &amp; Higgins showed employer
spending on private health insurance in the U.S. rose from $64 billion in 1964
to $174 billion in 1990. &nbsp;&nbsp;&nbsp; 
 A separate Bureau of Labor Statistics study showed that 66 percent of
full-time workers paid part of their family's health insurance coverage in
1989 compared to 46 percent in 1980. &nbsp;&nbsp;&nbsp; 
 Commonwealth's union representatives say added health insurance expenses
together with the small wage hikes offered by C-TEC will mean lower take-home
pay or "give-backs" -- about $3 to $5 less per week -- for some Commonwealth
workers by the end of the proposed three-year pact. &nbsp;&nbsp;&nbsp; 
 Company officials concede those givebacks may affect "a handful, maybe 15"
of the most recently-hired union workers. But most Commonwealth employees,
officials say, will make more money under the company's plan despite increased
medical insurance payments. &nbsp;&nbsp;&nbsp; 
 "We didn't set out to put anyone in a negative position," Menapace said.
"In a bargaining situation," he explained, "to give the bottom (workers) a
bigger raise would be awkward." &nbsp;&nbsp;&nbsp; 
 Union workers were unable to say how many workers will lose money under the
company's plan. &nbsp;&nbsp;&nbsp; 
 Retiree benefit cuts &nbsp;&nbsp;&nbsp; 
 The most bitterly-disputed contract proposal is C-TEC's plan to reduce
company health insurance payments for 101 retired Commonwealth employees and
to eliminate similar payments for future retirees. &nbsp;&nbsp;&nbsp; 
 Union representatives say the changes will force some retirees, who receive
only $99 monthly pensions from Commonwealth, to spend more than half their
pensions for health insurance. &nbsp;&nbsp;&nbsp; 
 According to the company, however, the average pension for Commonwealth
retirees is $406 per month. Only three retirees receive $99 or less and many
receive pensions from other former employees in addition to Social Security,
the company says. &nbsp;&nbsp;&nbsp; 
 "Our retirees won't be left out in the cold," Mazza says. &nbsp;&nbsp;&nbsp; 
 C-TEC officials say they're cutting back because of "overall rising costs
of health care and the increasing age of the population." &nbsp;&nbsp;&nbsp; 
 Of equal importance, is a new rule adopted in 1990 by the Financial
Accounting Standards Board. The rule requires most U.S. companies, by the
first quarter of 1993, to include on their balance sheets the total projected
expense of current and future retiree health care benefits. &nbsp;&nbsp;&nbsp; 
 If companies haven't previously recognized those expenses, they will have
to reduce earnings. That, in turn, could affect profits and borrowing
capabilities. Previously, companies were not required to account for all
future costs on their balance sheets and were allowed to subtract expenses as
they were paid. &nbsp;&nbsp;&nbsp; 
 C-TEC's projected liability under the new accounting rule totals $37
million, an "astronomically" high number, according to Menapace. "It's a
number that wouldn't put us out of business," he said, "but it would
negatively impact our ability to do business." &nbsp;&nbsp;&nbsp; 
 By reducing health insurance payments for current retirees and eliminating
all payments to future retirees, C-TEC will pare its $37 million expense to
$3.5 million, Menapace said. Then, the company will be able to show an
acceptable $422,000 annual expense on its balance sheet, according to
Menapace. &nbsp;&nbsp;&nbsp; 
 Last year a Foster &amp; Higgins survey showed that many companies have taken
similar actions in response to rising health care costs and in anticipation of
the accounting rule change. Employer-paid medical benefits for retirees
declined, according to Foster &amp; Higgins, from 64 percent of companies surveyed
in 1987 to 56 percent in 1991, the survey showed. &nbsp;&nbsp;&nbsp; 
 Only 41 percent of companies with fewer than 1,000 workers offered health
insurance coverage to retirees, the study showed, but 90 percent of utilities
surveyed offered medical benefits to all retirees. &nbsp;&nbsp;&nbsp; 
 In a more recent study in November of cutbacks at Fortune 500-size
companies, consultants Hewitt Associates found over half the 94 companies
surveyed had already reduced retiree health benefits, and almost all said they
were considering such a move. &nbsp;&nbsp;&nbsp; 
 At a standstill &nbsp;&nbsp;&nbsp; 
 Both labor and union representatives say they want to resume contract
negotiations, but neither side has called for new talks. &nbsp;&nbsp;&nbsp; 
 Commonwealth workers say they've rung bells and cheered for themselves at
work, walked "informational picket" lines in their spare time and worn
necklaces fashioned from plastic spoons to mock, what they call, C-TEC
executives' "silver spoon vs. plastic spoon" attitude. &nbsp;&nbsp;&nbsp; 
 Now, union workers say, at least one of their tactics seems to be
disturbing the company. Managers have threatened "progressive discipline"
should union members continue to distribute forms that urge customers to
switch business away from Commonwealth Telephone or its long distance
affiliate. &nbsp;&nbsp;&nbsp; 
 About 1,200 Commonwealth Long Distance customers have agreed to allow the
workers to change their long distance companies if the union decides to go
ahead with that plan, according to CWA spokeswoman Mary O'Hara. &nbsp;&nbsp;&nbsp; 
 Workers are planning next to ask Commonwealth Telephone customers for
permission to cancel "custom calling" features like call waiting, call
forwarding and voice mail. &nbsp;&nbsp;&nbsp; 
 Menapace says the union tactics won't work because customers are unlikely
to give up 10 percent discounts they receive using Commonwealth Long Distance
services. &nbsp;&nbsp;&nbsp; 
 "If they (union workers) hurt the company," Menapace say, "they'll hurt
themselves."

Core Of The Conflict 
********************** 
Times Leader Photos/clark Van Orden 
* Commonwealth Retirees Jo Besecker And Joe Balavage Man The Phones In The 
Union's Campaign Against The Company.

Core Of The Conflict ********************** Times Leader Photos/clark Van Orden * Commonwealth Retirees Jo Besecker And Joe Balavage Man The Phones In The Union's Campaign Against The Company.