S-1701 AND
NEGOTIATIONS
Click Here for a detailed summary of the laws provisions and its impact on
other aspects of school operations. |
The new law governing school districts budget caps and use of surplus funds is expected to have a profound effect on all aspects of school operations, including local negotiations. The extent of the laws impact on New Jerseys public schools is not yet fully understood, as the many details involved in the implementation and administration of these new state requirements are still in the process of development. Further, additional guidelines from the Department of Education, as well as changes in the law itself, are possible. Yet, in this period of uncertainty, it is clear that, while the law may have a unique and different effect on individual districts, all districts are now faced with reduced local flexibility and diminished financial resources. It is also clear that while boards are awaiting further clarification, they are still expected to comply with the framework established by the law and to carry on with their many other legal obligations.
How, then, should you proceed with your ongoing or upcoming negotiations? While it may be too early to address issues that are still in need of clarification (such as the criteria that will be used to determine appropriate line transfers of budgeted allocations), there are some clear negotiations guidelines, which include fundamental attitudes as well as reliance on proven bargaining techniques, that have and will continue to, provide boards with protective and productive approaches to bargaining.
FUNDAMENTAL APPROACHES
Be well-prepared and well- informed Know the provisions of the law and how it affects your district. Click Here for information to understand the provisions of the new law.
Talk to your Business Administrator to understand the impact of the law on your district. Consider the importance of having your business official at the bargaining table to assist you in presenting this information in a credible, accurate, and consistent manner to both your union and your neutral.
As part of your preparation, anticipate the issues that may arise in your districts negotiations. Be prepared to consider the pros and cons, and the short and long term impact, of various proposals or suggested approaches to resolving the dispute.
Anticipate your unions reaction Be realistically prepared to expect that your union will not embrace, or easily accept, your argument that you have unprecedented limits on resources to fund a settlement. Unions typical responses to boards fiscal constraints are Thats your problem. They expect business as usual: annual increases in salaries that exceed the last negotiated settlement, maintenance (or improvement) of their contractual benefit package, and no increases in their professional responsibilities.
Do not be intimidated by your unions repeated rejection of reality Unions continued rejections of boards positions and refusals to consider boards needs is a distinct bargaining strategy. It is designed to wear boards down and to persuade them to accept the unions rhetoric that they will never agree to particular issues. Be prepared to be committed and resolved to advocate your districts needs and to repeatedly convey the realities created by the new law.
Do not be afraid of mediation Mediation, as well as the other impasse procedures of factfinding and superconciliation, are procedures established and authorized by N.J.s bargaining law to help the parties resolve their deadlocked negotiations. (Click Here to access An Overview of Impasse Procedures, an article from the NJSBA subscription service, The Negotiations Advisor Online that explains the different impasse procedures required by law.)
Invoking those procedures is not a sign of a boards failure at the bargaining table. Rather, impasse procedures are recognized and respected as valuable effective tools that can help the parties reach a mutually acceptable agreement. In fact, neutrals can be of great assistance in stressing the importance of current realities and, thus, at this particular point in time can be most helpful in focusing unions on their need to recognize the present immediate environment surrounding this round of negotiations.
However, boards must be specifically prepared to deal effectively with the neutral assigned to their negotiations dispute. It will be most important for boards to educate their neutral(s) as to the provisions of the new law and the specific impact of the new requirements on their districts. Boards will need to demonstrate to their neutrals that this law presents unprecedented intrusions in their ability to allocate their limited resources and thus results in previously unknown, real and inescapable limitations on their ability to fund a negotiated settlement. (Click Here for specific talking points that can help boards to educate all neutrals.)
PROVEN BARGAINING
TECHNIQUES
The new conditions created by S-1701
emphasize the importance, and continued validity, of the good old bargaining
techniques that have, over time, proven to be essential to boards successful
bargaining efforts. More than ever,
boards need to approach their bargaining tables with a high level of expertise
to deal effectively with the increasingly complex task of reaching a negotiated
settlement in an environment marked by unions continued demands and districts
severe economic limitations.
Negotiate
over the Total Economic Package For many years, it has been
well understood that linking all economic items in a total package is the best
way for boards to contain and control the total costs of an agreement. Unions typically prefer to use a piecemeal
approach which separates the economic issues and leads to agreements over each
individual issue without consideration of the total cost of the agreement. This
approach loses sight of the fact that boards have a limited amount of funds and
that a dollar spent on health insurance reduces the amount left for salary
increases and any other contractual expenditures. Not surprisingly, boards that
have fallen into the unions trap ultimately find that their actual cost of
funding the agreement far exceeds their earlier expectations.
With the
anticipation of tighter caps, strong limitation on the amount of surplus that
can be maintained, and the significant restrictions on the transferring of
funds among line items, boards cannot afford to loose track of their total
contractual financial commitments.
Therefore, grouping all economic items together (or packaging all
economic issues) becomes a critical bargaining technique for all boards of
education. Keep in mind that the
packaging technique also holds an
additional benefit: a boards
consistent reiteration of the financial environment imposed by S-1701 may
ultimately lead to the unions understanding and reluctant acceptance of the
reality of boards limited resources.
Use
comparative data wisely Like it or not, comparative
data has always been an important external reference point that affects the
outcome of all local negotiations.
Boards skillful use of bargaining data is therefore an important
bargaining technique at all stages of negotiations, but becomes particularly necessary during impasse
procedures.
Under
the new law, boards will need to be prepared to clearly explain to their
unions, and to neutrals assigned to their dispute, why settlement
rates reached before the enactment of S-1701, and those reached
shortly thereafter, are irrelevant to negotiations occurring
in the context of new budgetary
restrictions. Negotiated in a totally different economic environment,
when boards had far greater flexibility to transfer funds, earlier settlements
no longer provide a basis for valid comparisons.
Similarly,
agreements reached during the summer of 2004 are the result of negotiations
that began long before the states new requirements. These negotiations occurred in an environment where boards could
not anticipate the enactment of new budgetary restrictions. Permitting these agreements to influence the
terms of later negotiations is illogical and completely disadvantageous to
boards of education. Therefore, in
anticipating unions and neutrals reliance on comparative data, be sure
to focus on the date at which the settlements occurred
and reject settlements that were reached under different circumstances.
The burden of demonstrating the importance of the date of a settlement will fall exclusively on boards of education. Boards must be fully prepared to consistently define and explain the basis of acceptable, logical comparisons and vigorously reject those that are not based on the current fiscal realities facing boards at this time. Further, although the significance of comparative data cannot be ignored, your districts own budgetary situation must be your foremost consideration in negotiations. You must be sure that your settlement is locally affordable, as well as acceptable, and will not damage your educational program or your districts operations.
Anticipate
Bargaining Issues and Consider Appropriate Board Responses
The new laws provisions suggest that some new twists on
old bargaining approaches may arise in ongoing or upcoming negotiations. Boards will be well-served by anticipating,
and preparing to respond to the following possible situations.
Settlement Rates and the CPI The new law establishes a budget cap of
2.5% or the CPI, whichever is greater.
Therefore, your union may, in one way or another, seek to link the settlement
rate to a rising cost of living index (but, would never consider
adjusting a settlement rate to a declining CPI). Be careful! Linking settlement rates to an
external reference point always holds a number of potential problems that are
all related to the boards lost control over the allocation of its resources
and thus can wreak havoc in the development of future budgets.
In spite of the potential for negative long-term impact,
some boards may still be tempted to accept the unions proposed linkage. These boards must insist on capping
the amount of the possible increase. Negotiating some limits on the amount of the settlement, or its
adjustment, can give boards some degree of control over the costs of an
affordable, and acceptable, increase in teachers salaries.
Union
Claims to Excess Surplus Unions have always looked to a
districts surplus as a source of funds
to support their demands for salary increases.
Now, under the new laws provisions, boards will be required to return
surplus funds that exceed the states guidelines (for the 2005-2006 school
year: 2% or $100,000 whichever is greater) to reduce the local property
tax. These provisions may spur unions
efforts to seek the allocation of these excess moneys to fund higher
settlement rates and improved teachers salaries. Boards must be prepared to face predictable, prolonged and
insistent union arguments that if you dont use it, youll lose it
anyway. Why not use it to improve our
salaries and bring us to par. Its a
win-win situation for all of us and can bring a quick and friendly settlement.
Boards must recognize the potentially negative implications
of this strategy. First, they must
assess their own willingness to use excess surplus funds, when it is
uncertain that the still undeveloped specific regulations and guidelines from
the Department of Education will authorize these type of transfers. When
surplus transfers are clarified, boards will need to assess if, how and when
they will be willing to allocate excess surplus funds to their operating
budgets and particularly to their salary line item. They must assess their salary levels and the structure of their
salary guides to determine whether their compensation policies need attention
to meet the districts staffing needs. They must consider their communities
expectations and the publics reaction to transfers of surplus funds that
result in the reduction or elimination of anticipated property tax relief. In short, boards must consider the full
short and long term impact of agreement to this possible union proposal.
Length
of the contract In
uncertain economic times, the prospect of entering into a three year contract
(which has been the norm in teachers settlements for many years) is likely to
be reconsidered by both parties. Given
the uncertainties of future resources, a one or two year contract may appear to
be a more prudent option. Keep in mind,
however, that under current law, these teacher contracts are not protected by
the New Jersey Supreme Courts decision in Neptune
Twp.Bd of Ed., which prohibits the payment of increment upon the expiration
of teachers three-year contracts.
Boards can avoid the potentially damaging and expensive implication of
an obligation to pay increment upon the termination of a one or two year
teachers contract by negotiating specific language which
provides Neptune-type protection. For
example, the following provisions are only a few examples that can be proposed
by boards of education:
|
Upon expiration of the agreement, there shall be no advancement on the salary guide. Guide placement will be pursuant to the successor agreement. |
or
|
Should this contract expire
without a successor agreement ratified by both parties, no incremental
advancement on the salary guide will be granted prior to the implementation
of the successor agreement. |
Wage
Reopeners Boards may, for a variety of reasons, still find that a three-year
contract provides the most attractive and appropriate approach for their districts. Boards considering this option need to be
aware that, in addition to front loading, there is another negotiations
practice that is commonly considered when future funding resources are
uncertain and neither party is eager to commit to what may ultimately result in
a disadvantageous agreement to either side.
This practice involves delaying agreement to salary increases for the second and/or third year of the contract
until a mutually defined future date.
At first blush, this approach known as a salary reopener,
may appear to present an attractive option for boards as it seems to be a
prudent, effective means of reducing the risks of committing to a fixed
expenditure when future resources are questionable. However, boards are advised to watch out: unless
the conditions for the reopener are carefully and thoughtfully defined, this
arrangement could be most disadvantageous for boards of education.
For example, a reopener that is limited to the single issue
of salary increases, leaves the board with little, or no bargaining
leverage. Under these
circumstances, negotiations are limited
to a single, union issue. Yet, the
board is denied the opportunity to raise its own concerns and its only
remaining option at the bargaining table is how much,, or how little, it will
give without getting anything in return.
On the other hand, a reopener that clearly and expressly authorize
midcontract negotiations over the total compensation package, including health
benefits and work time, provides the board with the necessary leverage to
engage in meaningful negotiations.
Boards considering reopeners must therefore avoid single issue
reopeners and give careful attention to defining the number of issues
that will be subject to midcontract negotiations.
Boards
considering the possibility of a reopener should also be aware that it is
unclear how the Neptune protection, discussed earlier, will
or will not apply to contracts that include salary reopeners. It is, therefore, most advisable for boards
to include specific Neptune-like protection through specific contract language which, in addition
to the examples provided above, also states that
No teacher will receive guide advancement during the
life of the contract, or upon expiration of the contract, until a new guide has
been agreed upon.
Front
Loading The
term front loading is used to describe a multi-year contract where the
settlement rate in the first year is higher than those provided in the second
and/or third year of the agreement. When
boards are aware of their immediate resources, but are concerned about their
ability to predict their future resources to fund a settlement, this may appear
to offer a reasonable and attractive resolution.
However, be sure that you fully understand these agreements. Front loading holds hidden costs for boards
of education as these types of settlements can be more expensive over the life of the agreement. Commonly, the
negotiated percentage increase negotiated for a second year of a contract is
calculated as a percentage of the first years salary base and the negotiated
increase for the third year is calculated on the second years salary
base. Thus, a large increase in the
first year results in an inflated salary base which is perpetuated in every
year of the contract and results in a higher dollar cost for a board of
education. (For more information and
examples of the hidden costs of front loading, please see the NJSBA
publication, Costing Out the Labor
Agreement.)
Boards must be very aware of the actual costs and financial
implications of front loading and assess the pros and cons of that approach in
light of each districts particular circumstances. In addition to the costs of the multi-year contract, boards may also
want to consider the longer range implication of a front loaded contract that
holds significantly lower settlements in its later years. These agreements can contribute to a
consistent decline in the teachers average settlement rate, a trend that will
be much appreciated by future boards in your district and throughout the
region.
ADDITIONAL CONSIDERATIONS
The new restrictions on school districts budgets is expected to have a
significant effect on districts conduct of negotiations. While the full extent of its impact on the
bargaining process and on settlement rates remain unknown, it is quite clear
that boards must be well-prepared to understand the new realities and to
respond appropriately to safeguard the short and long-term interests of their districts. It is also clear that the restrictions, and
the still undefined details, create a complex environment which widens the gap between boards
available resources and unions traditional aspirations to provide more for
their membership. This creates a
setting where the parties ability to reach a settlement is inescapably
complicated. Boards must therefore be
prepared for difficult negotiations and the greater possibility of intensified
conflict that may, in some districts, lead to intensified confrontational
bargaining.
To best manage this potentially highly charged bargaining environment,
boards must be exceedingly well-prepared to understand the process, the short
and long term implications of their agreements, and to approach the bargaining
table with well-developed and strong bargaining skills. More than ever, boards will need to consider
the benefits of obtaining the expertise of a professional negotiator to assist
them to best represent their interests at these difficult times.
Boards will also need to be prepared for the possibilities that prolonged
negotiations may lead to unions visible expressions of their dissatisfaction
with the boards alleged unwillingness to reach agreement. In preparing for these potential union
tactics, boards should seek guidance from their attorney, professional
negotiator, or the NJSBA Labor Relations Department.
And, finally, boards will need to remain alert to this new area which is
still a work in progress. The Labor Relations Department will keep you posted
of new developments that affect negotiations through on-going postings on the
Labor Relations Page of the NJSBA home page at www.njsba.org and the
Whats New page of The Negotiations Advisor Online, an NJSBA subscription
service. In addition, the impact of the
new law on negotiations will be discussed at the Labor Relations MiniWorkshop
held on October 20 at the NJSBAs Annual Workshop.