Bruce D. Campbell James A. DuganCampbell, Durrant, Beatty PASBO RCLPalombo & Miller, P.C. Arbitrator/Labor Consultant555 Grant Street, Suite 310 1274 Edward StreetPittsburgh, PA 15219 State College, PA 16801412-395-1260 814-235-1948 phone/fax412-395-1291 FAX jdugan1@aol.combcampbell@cdblaw.com

IT’S NOT BUSINESS AS USUAL

PENNSYLVANIA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS (PASBO)

CURRENT TRENDS IN COLLECTIVE BARGAINING2011 AND BEYOND

March 17, 2011

Pennsylvania school districts have not experienced the negative effects of the poor economy, beginning in 2008.  

* State aid and stimulus funds provided a protective cushion

 * Collective bargaining continued as usual

 * Governor Rendell was education friendly

      1

MAJOR ISSUES IN COLLECTIVE BARGAINING 

 1. WAGES 2. RETIREMENT INCENTIVES 3. HEALTH INSURANCE

(Including by out of spousal coverage)    

2

Teacher contract raises (including steps) from 1/10/09 - 8/4/10 POST RECESSION SETTLEMENTS: 2009 - 2010 average raise 3.9% or $2,137 2010 - 2011 average raise 3.8% or $2,195 2011 - 2012 average raise 3.9% or $2,308 2012 - 2013 average raise 3.8% or $2,329  Sources: Pennsylvania State Education Association, settlements from 1/10/09 - 8/4/10   3

CONSUMER PRICE INDEX - URBAN CONSUMERS 

FOR DECEMBER, 2010   U.S. PHILADELPHIA PITTSBURGH  12 months 1.5 1.4 1.9   CAUTION: FOOD & ENERGY EXCLUDED FROM CORE

INDEX

Sources: U.S. Department of Labor, Bureau of Labor StatisticsPSBA website - January, 2011  4

PENNSYLVANIA BUDGET FORECAST FOR 2011 - 2012 PROJECTS A DEFICIT OF $4 BILLION TO $5 BILLION.

* FEDERAL EDUCATION JOB FUNDSESTIMATED $337,816 MILLION WERE PROJECTED TO CUSHION REDUCTION IN SUBSIDY FOR 2011 - 2012 (a)

 * GOVERNOR CORBETT HAS DIRECTED THAT THESE FUNDS

OFFSET REDUCTIONS IN BASIC SUBSIDY FOR 2010 - 2011 (a) * NO SCHOOL DISTRICT WILL RECEIVE LESS THAN ORIGINALLY INCLUDED IN THE BUDGET FOR 2010 - 2011,

BUT NO STIMULUS FUNDS FOR 2011 - 2012 (a) * PROPOSED $550 MILLION REDUCTION IN BASIC SUBSIDY FOR

2011-2012 (b)

* PROPOSED $484 MILLION REDUCTION IN ACCOUNTABILITY GRANTS AND REIMBURSEMENT FOR LOSS OF STUDENTS WHO TRANSFER TO CHARTER SCHOOLS (b)

Source:(a) 1/28/11 letter from Secretary Zogby to Appropriations Committees(b) Governor Corbett’s budget proposal 5

 

TAX LIMITS   ACT 1 INDEX Average of the percentage increases in Statewide Average Weekly Wage (SAWW) and the Employment Cost Index (ECI)  2008 - 2009 4.4% 2009 - 2010 4.1% 2010 - 2011 2.9% 2011 - 2012 1.4%

6 

PSBA ESTIMATES THAT MORE THAN HALF OF THE 500 SCHOOL DISTRICTS MAY FILE TO SEEK EXCEPTIONS TO

ACT 1 LIMITS. 

ESTIMATES MAY CHANGE AS DISTRICTS ADOPT PRELIMINARY BUDGETS

       Source: The Daily ItemSunbury, PA2/17/11  7

THE COST OF HEALTHCARE  IN 2010, THE AVERAGE FAMILY PREMIUM FOR PRIVATE SECTOR EMPLOYES WAS $13,770.   2020 PROJECTED COSTS: $23,342 - $29,000 INCREASE OF 79% +  Sources:  Business Round Table - Firedog Lake.com 12/30/10The Commonwealth Fund - Firedog Lake.com 12/29/10The Kaiser Family Foundation website 9/2/10  8

HEALTHCARE

IN 2009/10, 77% OF REPORTING DISTRICTS HAVE COST SHARING OF HEALTH BENEFITS (EMPLOYEE CONTRIBUTIONS) - PSBA website (No $ amounts specified) AVERAGE WORKER CONTRIBUTION - NATIONWIDE FOR FAMILY COVERAGE: $333/MONTH ($3997/ANNUAL)  Sources: The Kaiser Family Foundation - website  FEDERAL EMPLOYEES CONTRIBUTE 25% (FAIR SHARE) TOWARD HEALTHCARE COVERAGE AND ARE SUBJECT TO A TWO YEAR WAGE FREEZE.  9

RETIREMENT ISSUE HOUSE BILL 2497 RE-AMORTIZED PSERS ACTUARIAL ACCRUED LIABILITIES, BUT DID NOT SOLVE THE RETIREMENT CRISIS. 

PSERS CONTRIBUTION RATES 2010 - 11 5.64% 2015 - 16 23.66% 2011 - 12 8.65% 2016 - 17 24.50% 2012 - 13 12.19% 2017 - 18 25.27% 2013 - 14 16.69% 2018 - 19 26.24% 2014 - 15 21.18% 2019 - 20 26.96%    10

AVERAGE STARTING/MAXIMUM SALARIES IN 2009 - 10 

STARTING MAXIMUM  BACHELORS $39,439 $66,352 MASTERS $42,490 $72,693

Source: PSBA website 1/24/11  WHAT IS THE EDUCATIONAL VALUE OF A TEACHER MASTERS DEGREE TO STUDENT PERFORMANCE?  ANSWER: “NOT MUCH, IF ANY”! 11

U.S. SECRETARY OF EDUCATION, ARNE DUNCAN: “MASTERS DEGREE BONUSES ARE AN EXAMPLE OF SPENDING MONEY ON SOMETHING THAT DOESN’T WORK”. BILLIONAIRE BILL GATES: “…IN WASHINGTON STATE, MORE THAN HALF OF OUR TEACHERS GET IT (MASTERS). THAT’S MORE THAN $300 MILLION EVERY YEAR THAT DOESN’T HELP KIDS…”

UNIVERSITY PROFESSOR, DAN GOLDHABER STATES THAT HIS RESEARCH DATING BACK TO 1997 HAS SHOWN THAT STUDENTS OF TEACHERS WITH MASTERS DEGREES SHOW NO BETTER PROGRESS IN STUDENT ACHIEVEMENT THAN THEIR PEERS TAUGHT BY TEACHERS WITHOUT ADVANCED DEGREES. HE CONTINUED THAT SINCE THAT TIME, REPEATED STUDIES HAVE CONFIRMED THESE RESULTS.Source:Centre Daily TimesState College, PA11/24/10

12

1. SCHOOL DISTRICTS PAY FOR CREDITS FOR TEACHERS TO EARN MASTERS DEGREES.

 2. EACH YEAR THE TEACHER MOVES UP ONE STEP ON THE

SALARY SCHEDULE (until he/she reaches maximum step) 3. THEN WHEN THE TEACHER EARNS HIS/HER MASTERS, HE/SHE

IS MOVED ACROSS THE SALARY SCHEDULE FOR HIGHER PAY ECONOMICALLY, THIS PRACTICE IS “THREE STRIKES AND YOU’RE OUT”!

ADD INSULT TO INJURY, THE DISTRICT THEN SPENDS HUGE SUMS OF MONEY ON PROFESSIONAL DEVELOPMENT ACTIVITIES TO IMPROVE TEACHER PERFORMANCE (including those teachers with advanced degrees). WHAT DID THE MASTERS GET US? HOLD THE LINE ON INCREASES FOR ADVANCED DEGREES! 13

THINGS TO CONSIDER RE: TEACHER WAGES:  1. WAGE FREEZE - INCLUDING STEP MOVEMENT  2. HALF-STEP INCREASE EACH YEAR (a)  3. DROP A STEP/ADD A STEP  4. ANY INCREASE IN WAGES MUST BE OFFSET WITH SAVINGS

IN BENEFITS OR STAFFING LEVELS. 

TAKE ADVANTAGE OF SAVINGS THROUGH ATTRITION - RETIREMENTS, RESIGNATIONS, ETC. 

5. CREDIT FOR YEARS OF SERVICE IN ANOTHER DISTRICT (and step placement) SHOULD BE THE SOLE DISCRETION OF THE BOARD.

(a) Recently, some Fact Finders have recommended half-steps.  14

RANGE OF FUND BALANCES FOR 501 SCHOOL DISTRICTS IN 2008 - 2009  (RECOMMENDED RANGE BETWEEN 5% - 10%)  

# DISTRICTS % DISTRICTS  BELOW 0.00% (No Fund Balance) 14 2.79% 0.00 - 4.99% 42 8.38% 5.00 - 9.99% 100 19.96% 10.00 - 14.99% 122 24.35% 15.00% - over 223 44.5%

Source:PSBA website 2/16/11 15

 

RANGE OF OPERATING POSITION 501 SCHOOL DISTRICTS IN

2008 - 2009THE OPERATING POSITION IS THE DIFFERENCE BETWEEN ACTUAL REVENUE AND ACTUAL EXPENDITURES IN THE SAME YEAR

# DISTRICTS # DISTRICTS BELOW 0.00% 156 31.14% 0.00 - 4.99% 276 55.68% 5.00 - 9.99% 59 11.78% 10.00 - 14.99% 7 4.40% 15.00% - over 0 0.00%

MANY DISTRICTS ARE SPENDING DOWN AVAILABLE FUND BALANCES. IN 156 DISTRICTS, EXPENDITURES EXCEEDED REVENUES. SUCH A PRACTICE IS NOT FINANCIALLY SUSTAINABLE.Source:PSBA website 2/16/11

16

70% - 80% of District Budgets are comprised of personnel and benefit costs:* ARE YOUR STAFFING LEVELS REALISTIC?

 * HAVE YOU OBSERVED TEACHER SCHEDULES,

CLASS SIZES, ETC? 

* VISIT THE SAME CLASSROOM SEVERAL TIMES DURING THE SAME DAY TO GET THE REAL PICTURE.

 * CONDUCT SIMILAR ANALYSES FOR SUPPORT STAFF

POSITIONS 

* SPECIAL EDUCATION TEACHERS MUST DEAL WITH CLASS SIZE AND CASE LOAD, BUT ARE THE LISTS AND NUMBER OF STUDENTS ACCURATE?

 * ONLY REPEATED OBSERVATIONS WILL CONFIRM

THE ACCURACY OF THE LISTS PROVIDED.  * WHO PREPARES THE INFORMATION AND WHO

REVIEWS IT?17

SPECIAL EDUCATION IEPs. 

* WHO PREPARES THE IEPs AND WHO REVIEWS THEM?

 * ARE IEPs PREPARED TO MEET THE NEEDS

OF THE STUDENTS OR THE COMFORT WISHES OF STAFF MEMBERS?

 * HAVE THE DUTIES OF SPECIAL EDUCATION

AIDES BEEN REVIEWED AND THEIR JOB PERFORMANCES OBSERVED?

 * HAVE THE REGULATIONS ASSOCIATED

WITH ALTERNATIVE FUNDING SOURCES SUCH AS ACCESS AND IDEA BEEN REVIEWED FOR ACCURACY?

 * IF THERE ARE MORE ADULTS IN THE

CLASSROOM THAN STUDENTS, PERHAPS A REVIEW IS IN ORDER!

 18

DUE TO ECONOMIC CLIMATE:  

* DISTRICTS MAY BE NEGOTIATING CONTINUOUSLY

 * UNIONS MAY PUSH FOR LONGER TERM

CONTRACTS 

* CONTINUE UNDER CURRENT COLLECTIVE BARGAINING AGREEMENT AND

MAINTAIN “STATUS QUO”     

19

STATUS OF NEGOTIATIONS IN PENNSYLVANIA  

2008 2009 2010 2011 2012 School districts Negotiating 109 127 152 130 124  School districtsStill negotiating 1 4 53 124 124  Source: PSBA website 2/16/11  20

IN A RECENT DECISION, ARBITRATOR JOHN SKONIER HAS RULED THAT STEP MOVEMENT IS NECESSARY TO MAINTAIN “STATUS QUO” IF TEACHERS HAVE STARTED WORK FOR THE NEXT SCHOOL TERM BEFORE THE CONTRACT HAS EXPIRED.  DISTRICTS MAY WISH TO CONSIDER CHANGING THE EXPIRATION DATES OF SUBSEQUENT CONTRACTS TO JULY 1.       

21

RISKS OF MAINTAINING “STATUS QUO” “… THE LAST ACTUAL PEACEABLE AND LAWFUL NON-CONTESTED STATUS WHICH PRECEDED THE CONTROVERSY…” PENNSYLVANIA SUPREME COURTFAIRVIEW SCHOOL DISTRICT V UNEMPLOYMENT COMPENSATION BOARD OF REVIEW 454 A. 2d 517 (1982) “… ALTERING CLASS SCHEDULES FOR ONE SCHOOL BUILDING OUT OF 10, WHICH DID NOT RESULT IN A CHANGE IN THE LENGTH OF THE WORKDAY, CONTRACT TIME WITH STUDENTS AND THE LIKE STILL RESULTED IN A “STATUS QUO” VIOLATION…” COMMONWEALTH COURTNEW CASTLE AREA SCHOOL DISTRICT V UNEMPLOYMENT COMPENSATION BOARD OF REVIEW 24 PPER 24182 (1993) 22

GENERAL RULE OF THUMB REGARDING “STATUS QUO”

   

DO NOT TAMPER WITH ANYTHING!!!!!   

MEET WITH AND ADVISE ADMINISTRATORS  

     

23

CONTROLLING HEALTHCARE COSTS 

* BE REALISTIC IN PLAN DESIGN - $5.00 AND $10.00 OFFICE VISIT CO-PAYS AND $25.00 - $50.00 EMERGENCY ROOM VISIT CO-PAYS ARE OUT!

 * REVIEW YOUR CLAIMS EXPERIENCE - WHAT

SERVICES ARE DRIVING COSTS AND ARE THERE ALTERNATIVES?

 * REVIEW YOUR MEDICAL AND PHARMACY BENEFIT

PLANS - PERFORMANCE ENHANCING DRUGS (VIAGRA, CIALIS, ETC) AND STERILITY TREATMENT/DRUGS SHOULD NOT BE COVERED.

 * ESTABLISH THREE PART FORMULARIES: GENERIC,

PREFERRED BRAND AND NON-PREFERRED BRAND WITH APPROPRIATE CO-PAYS.

 * EMPLOYEE CONTRIBUTIONS THROUGH A SECTION

125 PLAN REDUCES THE PAIN 24

* REGULAR REVIEW OF CLAIMS EXPERIENCE AND IDENTIFICATION OF COST DRIVERS WILL ENHANCE DEVELOPMENT OF WELLNESS PROGRAMS

 * KEEP THE UNION INFORMED - IF EMPLOYEES ARE

GOING TO CONTRIBUTE, THEY SHOULD KNOW THE FACTS

 * THE GOAL IS TO ENCOURAGE EMPLOYEES TO BETTER

MANAGE THEIR HEALTH CARE DOLLARS. HIGHER CO-PAYS FOR INDIVIDUALS WHO USE THE SERVICES MAY BE MORE PALATABLE THAN ACROSS THE BOARD NETWORK DEDUCTIBLES. OR PERHAPS A BLENDING OF THE TWO STRATEGIES WILL BE APPROPRIATE.

 * EXPLORE AND SHOP AROUND. CHECK OUT PA RX

FINDER FOR DRUG COSTS AT DIFFERENT PHARMACIES. CONSIDER SERVICES OF A PHARMACY BENEFIT RISK MANAGER TO ENSURE THAT YOUR PROGRAM OPERATES AS INTENDED.

 THIS PROGRAM WILL NOT RUN IN NEUTRAL. 25

CONSIDER THIRD PARTY OPTIONS TO SETTLE AGREEMENTS * FACT FINDING 

UNILATERAL REQUESTS BY APRIL 10 

BILATERAL REQUEST OR MEDIATOR SUPPORT REQUEST AFTER APRIL 10 * NON-BINDING ARBITRATION 

SOUDERTON (MONTGOMERY COUNTY) AND SPRINGFIELD (DELAWARE COUNTY) ARE EXAMPLES OF NEGOTIATED NON- BINDING ARBITRATIONS ISSUES WITH THESE OPTIONS: * TIME CONSUMING WITH RESPECT TO PREPARATION* TIMELINES INVOLVED IN PROCEDURES* DEAL WITH STATUS QUO CRISIS BUT, PROCESS MAY PROVIDE A FOUNDATION FOR NEGOTIATED SETTLEMENT.

26

SUBCONTRACTING SUPPORT STAFF WORK 

(TRANSPORTATION, FOOD SERVICE, CUSTODIAL, ETC)

 THE GOAL SHOULD BE TO REDUCE COSTS - NOT BREAKTHE UNION.

 BEFORE CONTRACT NEGOTIATIONS BEGIN - SOLICIT REQUESTS FOR PROPOSALS (RFPs)

 ADVISE THE UNION OF DISTRICT’S INTENTIONS AND THAT RFPs WILL BE SHARED WITH THE UNION.

 THE DISTRICT IS OBLIGATED TO NEGOTIATE IN GOOD FAITH!

   27  

CASES CITED FOR REVIEW: 

* UPPER MOORELAND TOWNSHIP SCHOOL DISTRICTSUBCONTRACT MAINTENANCE, GROUNDS, CUSTODIAL AND TRANSPORTATION

 * REYNOLDS SCHOOL DISTRICT

SUBCONTRACT CAFETERIA MONITORS 

* LAKE LEHMAN SCHOOL DISTRICTNON UNION INDIVIDUALS OPERATING RECEPTION (FOOD SERVICES) THAT HAD PREVIOUSLY BEEN OPERATED BY BARGAINING UNIT MEMBERS

 * NESHAMINY SCHOOL DISTRICT

TIMING OF SUBCONTRACTING AND RESULT OF FACT FINDING (Review article in PASBO Report (August, 2010) by Paul Minotti, Director of Facilities at Neshaminy School District)

Source:Jeff Sultanik, EsquireFox Rothchild, LLPPASBO webcast 1/28/1128

WILL POLITICIANS ACT? 

* GOVERNOR CORBETT AND REPUBLICAN LEGISLATURE MAY CONSIDER REQUESTS TO REVIEW TEACHER TENURE, ELIMINATE SICK DAYS/SABBATICAL LEAVE FROM THE SCHOOL CODE (items for collective bargaining) AND PERMIT FURLOUGH OF PROFESSIONAL STAFF FOR ECONOMIC REASONS.

 * GOVERNORS CHRISTIE (New Jersey) AND CUOMO

(New York) ARE LOOKING AT SIMILAR CHANGES. 

IN ADDITION, THEY ARE LOOKING TO RESTRICT THE LONG STANDING UNION POSITION OF “LAST IN, FIRST OUT” REGARDING TEACHER FURLOUGHS.

 * OHIO LEGISLATURE CONSIDERING BILL TO LIMIT

ITEMS (SUCH AS HEALTHCARE AND RETIREMENT) FROM COLLECTIVE BARGAINING.

 29

GIVEN THE FACT THAT THESE THREE STATES BORDER PENNSYLVANIA, ANY CHANGES IN TEACHER STATUS COULD HAVE REPERCUSSIONS IN PENNSYLVANIA.

 * WISCONSIN LEGISLATURE CONSIDERING VOTE TO

REMOVE TEACHER CONTRIBUTIONS TO RETIREMENT AND HEALTHCARE FROM COLLECTIVE BARGAINING PROCESS. STATE WOULD UNILATERALLY SET THE RATES.

      

30

COLLECTIVE BARGAINING - HOW TO PROCEED?  

WHAT ARE DISTRICT OBJECTIVES? 

SELECT YOUR TOP FIVE GOALS. IF YOU ACHIEVE TWO OR THREE - CONSIDER NEGOTIATIONS A SUCCESS 

WHO WILL MAKE UP DISTRICT TEAM AND DO THEY HAVE BOARD SUPPORT?

 MOST DIFFICULT PART OF BARGAINING MAY BE

DEALING WITH YOUR OWN SIDE!   31

THINK LONG TERM! IN MOST CASES, THESE ISSUES DID NOT DEVELOP AS THE RESULT OF ONE CONTRACT AND IT IS UNLIKELY THAT THEY WILL BE RESOLVED IN ONE CONTRACT.   REVIEW OF COLLECTIVE BARGAINING ISSUES SHOULD BE AN ON-GOING PROCESS. CIRCUMSTANCES AND PRIORITIES CHANGE. A CRISIS MAY DEVELOP IN THE MIDDLE OF A CBA. THAT IS WHY MOUs WERE CREATED. FILE MEDIATION NOTICE EVERY YEAR! DISTRICT SHOULD ADOPT RESOLUTION DESIGNATING LOCAL HOLIDAYS WITH EACH YEAR SCHOOL CALENDAR  32