SEAC/ACSA Bargaining Advisory: #1
Implications of Governor’s Proposed Budget to K-12 Negotiations
Ruben Ingram, SEAC Executive Director and Brett McFadden, ACSA Management Services Executive, January 24, 2008.
The governor’s proposed mid-year and 2008-09 budget proposals pose significant implications to current and future K-12 negotiations. The intent of this advisory is to provide K-12 management teams initial perspectives and recommendations as to these implications. It is the first in a series of monthly advisories intended to provide information, analysis, and recommendations to K-12 management during this fiscal crisis.
Overview
The manner in which the governor has chosen to balance the budget presents a number of unique challenges that K-12 leadership has not, to date, experienced. In addition, budget deliberations will be subject to politics, state and national economics, and other dynamics which make it difficult to predict all elements. It is probable that such elements will significantly alter the final outcome of mid-year reduction and final budget year plans.
For planning purposes, management teams should see the governor’s plan as a worst case scenario. The final outcome will likely not be that bad, but we recommend that LEAs use the governor’s plan as a benchmark for contingency planning. But we also recommend that management teams do not overreact. Management’s response to this crisis and the perception of employee units and stakeholders will have lasting effects on employee morale, management and union relations, agency operations, and academic achievement. During this period, it is critical that K-12 management teams work closely with each other and their county offices when weighing financial, operational, and legal aspects pertaining to current and out-year bargaining contracts. LEA negotiating teams should plan accordingly, stay tuned for further updates, but not hit the “panic button.”
Current year reductions (2007-08)
The scope and severity of mid-year reductions has fostered considerable concern among K-12 management. Discussions with the governor and administration staff lead us to believe that mid-year reductions will take place in a manner that does not directly impact current year K-12 obligations for people and/or local programs. If the Legislature recommends mid-year reductions higher than what the administration has proposed, they would still avoid reductions to actual LEA 2007-08 revenues. Policy makers have informed us that they will seek mid-year reductions via a combination of unexpended fund sweep ups, deferrals, or other accounting mechanisms at the state level to achieve their final target number. The Legislature will likely ratify a set of K-14 mid-year reductions sometime mid-February.
What to do about existing offers
Districts and county offices are legitimately asking whether or not they can take an offer off the table as a result of the governor’s budget proposal. LEAs are once again cautioned to proceed carefully when considering possible actions. Although we believe the final 2008-09 state budget will be different than what has been proposed, the governor’s budget proposal is the only blueprint we have to work from right now. In light of that, we recommend management teams consider the following:
Explaining the fiscal impact of the existing proposal: If you have an offer on the table (but no tentative agreement), be prepared to describe its immediate and long term fiscal implications to programs and instruction in light of the governor’s budget proposal. Work with your county office to show that you can no longer afford the proposal for the life of the contract. Management teams have two options to consider in this regard. The first is to explain that the district’s superintendent and CBO would be unwilling to certify to the board of trustees that the district can afford the proposal in light of the governor’s budget proposal. The second is that communications with your county office lead management to believe that ratification of this proposal will result in a finding of qualified or negative certification based on “lack of going concern” and that the management team concurs with that finding.
The ability to pay argument: We caution management teams from using “ability to pay” arguments. Ability to pay cases do not typically hold up well in factfinding. Unions can say that districts could pay if they would make additional budget choices. Most often, these decisions involve reducing vital programs or other personnel outside that particular bargaining unit.
Try to get agreement with the unions: If possible, get an agreement with your union(s) that both sides will agree to suspend 07-08 negotiations at this time and hold current offers in abeyance until further information and clarity is available. If you cannot reach such an agreement with your union(s), work closely with your legal counsel to develop options that protect your district’s fiscal solvency, but also provide protection, to the extent possible, against unfair labor practice charges.
If you have a tentative agreement pending: While no single indicator of bad faith bargaining can sustain an unfair labor practice charge; taking back any offer that was made in your original proposal could lead to an unfair labor practice charge. Taking back a tentative agreement that both parties have signed off on will be even more problematic. When considering possible actions in this regard, we advise you seek legal review before any action is taken. But note that the long term fiscal solvency of your LEA is paramount to other considerations. School leaders will need to weigh their options and decide if rescinding a TA or other existing offers will put them at risk on an unfair labor practice. The manner in which this is done will influence subsequent actions by employee units. Communicating to your employee units in this regard may help your unions understand the unique circumstance all of public education has been thrust into as a result of the governor’s draconian proposal.
March 15 layoff notices
At this time, LEAs should begin planning for the issuance of March 15 layoff notices. We recommend reviewing and monitoring existing staffing and cleaning up seniority lists. This too should be viewed as contingency planning. Management teams will need to keep their options open. Districts and county offices are advised to use the governor’s current and budget year proposals as a baseline. Once again, we caution that management teams handle this issue responsibly and openly, but the clock is ticking and the process for layoff notices can require considerable time and effort to develop. We recommend that management teams communicate to all employee units and their leadership regarding this situation and management’s need to plan for the worst case scenario. CTA and CFT know that layoff notices will need to go out. But how management communicates and listens to its employee units (including site and district office management) will have either positive or negative ramifications in the future.
Budget year (2008-09) planning
The severity of the governor’s 2008-09 K-12 proposal may not come to fruition, but the budget year will still be very difficult for districts and county offices. At this time, we recommend LEAs adopt the following assumptions for 2nd interim certifications and initial budget planning:
A 6.99% deficit on their 2008-09 revenue limits, applied as a 0.9301 deficit factor.
- In addition, budget development assumptions should apply a 6.5% across-the-board reduction to state General Fund categorical program income for the 2008-09 fiscal year.
These assumptions are for contingency purposes. They are likely to change between now and 2008-09 state budget adoption. However, county offices will be using these assumptions when considering districts’ multi-year projections and 2nd interim certifications. We therefore recommend that districts utilize these same assumptions.
Management teams are also advised to project possible cost increases for step and column, operations, instruction (math and reading adoptions for example), health and welfare, etc. If these costs are going up by an equivalent 1 – 2% on your revenue limit, you are advised to factor such costs against projected reductions to revenue limits and state categorical aid.
Responding to requests for formulas in out years
It has become increasingly common for unions, and sometimes for management, to use formulas for out years as we never know what revenues will be available. We have always issued cautions regarding the use of formulas for obvious reasons. Unless you account for every single cost factor that will need to be funded by new monies, you could come up short. In addition, unions often argue that step and column are ongoing parts of the contracts and should not be part of the current negotiations. Management, of course, should always demonstrate what the actual year-to-year dollar costs are for maintaining step and column. Other daunting features of our funding system are the uneven funding of COLAs for categorical and other special programs. On the expenditure side, management needs to calculate increased operating costs of fuel, utilities, etc. These all have an influence on the actual dollars available for improvements to salaries and benefits. For 2008-09, it is our recommendation not to agree to out-year funding formulas. When expressing that position you can state the obvious; that is, we could receive not only a 0% COLA, but could actually be deficited another 2%. It is too dangerous to put any formula language into a contract for 08-09 and beyond.
Trading language in lieu of money
Some districts may be tempted to trade contract language in lieu of salary and/or benefit increases. We caution against giving away additional contract language or perceived non-cost items in lieu of salary increases. We renegotiate the fiscal aspects of our employee contracts every year, but contract language is usually here to stay. It may be tempting to agree to something that appears like it doesn’t cost anything in order to get an agreement. For instance, it might seem easy to agree to additional leave or limitations on the use of the duty day. However, this could have ramifications to productivity and/or student instruction. Education agencies will remain accountable to local, state and federal compliance regulations and statutes. Management teams should carefully weigh the out-year cost and policy ramifications of additional language or non-fiscal items.
Conclusion
This document is the first in a series of advisories on the implications posed to K-12 collective bargaining by this latest state budget crisis. It was developed via the ACSA/SEAC K-12 Collective Bargaining Alliance. The purpose of the alliance is to provide research, consulting, and professional development to management teams in the area of K-12 negotiations. The alliance provides a range of services focused on ways school leaders can better prepare and negotiate on behalf of their agencies, staffs, students, and communities. For additional information and/or assistance on these services or issues presented in this advisory, please contact either:
ACSA SEAC
Contact: Brett McFadden Contact: Dr. Ruben Ingram
916.444.3216 ext. 3810 949.387.1869
bmcfadden@acsa.org ringram@seacal.org
Editor’s note: This document was developed and reviewed with the assistance of members of ACSA’s Human Resources Council and other experienced county office, district leaders, and K-12 consultants.
