Public Education Legal Update
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The Next Phase in the COVID-19 Battle for School Districts: Budget Cuts, Furloughs, Layoffs and Collective Bargaining
On March 1 st , school districts across the Commonwealth were at various stages in the process of adopting their FY21 budgets with the usual push and pull for limited resources. “Limited resources” has now taken on a whole new meaning as school districts struggle to prepare a budget with significantly less revenue that now has to address the added challenges of closing gaps created by months of remote learning, maintaining a safe and healthy learning environment and supporting students struggling with the emotional aspects of the COVID-19 pandemic. As discussions now turn to revised budgets for the 2021 Fiscal Year, school districts are examining all options including furloughs, layoffs and wage concessions. Each of these actions may implicate collective bargaining obligations depending on the language in the applicable collective bargaining agreement and whether the school district is currently in negotiations for a successor agreement.

As is the case with any negotiation, it is always best to start with a negotiation strategy based on the school district’s objective. If the goal is, for example, to cut $1,000,000, it can be accomplished in a number of ways, and understanding the educational, economic and operational value of certain items is important to a successful negotiation.

Once a goal is set and different ways to accomplish the goal have been identified, school districts should consider what rights they have under existing collective bargaining agreements to implement alternative strategies. Most agreements give school districts the right to conduct layoffs and specify a layoff process. Generally, absent such provisions, school districts must negotiate not only for the right to conduct layoffs but also the manner in which layoffs will be made. By contrast, furloughs are rarely addressed in collective bargaining agreements and, therefore, cannot be implemented without providing unions with notice of the proposed furlough and an opportunity to bargain to resolution or impasse prior to implementation. Fortunately, because a furlough is most often a more desirable alternative to a layoff and most, if not all, collective bargaining agreements allow for layoffs, unions will likely be agreeable to a furlough when the alternative is a layoff.

When considering layoffs and furloughs, school districts also need to be aware of any contractual layoff notice requirements. Some collective bargaining agreements require layoff notices be issued by a certain date. As most such provisions were undoubtedly negotiated with an eye toward layoffs occurring in the following school year after the school district’s budget has been set, an argument could be made that these notice provisions were not intended to apply to decisions made as a result of changes to the budget or operational needs occurring after the negotiated notice date. However, that argument needs to be carefully evaluated on a case-by-case basis as the risks associated with making an error in layoffs can include an order for reinstatement with full back pay and benefits. Regional school districts also have to account for the direct cost of unemployment compensation claims resulting from a layoff or furlough and municipal districts should confer with municipal leadership as to these costs.

Some school districts may look to avoid layoffs and/or furloughs by seeking wage concessions. For agreements that are open for renegotiation, school districts can take a hard line and negotiate for no base wage increases. Generally, step increases are automatic however. Whether a district can unilaterally implement step freezes after a collective bargaining agreement expires depends upon the language in the agreement and the past practice relative to awarding step increases after the expiration of an agreement. In virtually all circumstances, the practice will reflect that step increases have been awarded after an agreement has expired. As such, step freezes will most likely need to be negotiated. For agreements that are not expiring this year, any wage (including step) increases must be implemented unless the union agrees to waive them. Although wage concessions are often a proposed alternative to layoffs or furloughs, school districts should avoid negotiating any agreement that precludes them from making further cuts.

Regardless of your school district’s approach to budget cuts, it is critical that you consider the relevant provisions of any applicable collective bargaining agreements. Further, you may be required to provide the affected bargaining unit(s) with notice and an opportunity to bargain prior to implementing a chosen approach to address a budget shortfall. We strongly recommend that school districts confer with their counsel regarding potential budget cutting strategies.

Mirick O’Connell’s Public Education Group and Labor, Employee and Employee Benefits Group will continue to monitor the latest developments regarding the impacts of the COVID-19 pandemic, and will update you accordingly. Please contact any member of our team if you have any questions. 
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