September/October 2015

Barney R. Mundorf is an attorney with Guin Mundorf LLC. He counsels Illinois school districts on labor, employment, and personnel issues.

Coll ective bargaining remains challenging for Illinois school districts due to the state’s continuing financial crisis, declining or static local funding revenue, uncertainty with pension reform and implementation of the Affordable Care Act, and various educational reform initiatives such as PERA evaluations and reduction in force procedures. By understanding the current trends and strategies, school leaders will be better equipped next time you sit at the negotiation table.

Trending Now: PERA Evaluation Plan Implementation

Illinois school districts ranked in the lowest 10 percent of performing schools must have commenced using teacher evaluation plans that comply with the Performance Evaluation Reform Act (PERA) no later than September 1, 2015. For the other 90 percent of school districts, the deadline to implement PERA is September 1, 2016. Unions often propose language to include PERA evaluation plans and procedures in collective bargaining agreements, which a school board can and should reject. PERA evaluations are developed through a joint committee with membership that includes an equal number of administrators and teachers. A final PERA evaluation plan will include three main parts: Evaluation Procedures, Professional Practice, and Student Growth.

Recommended strategies:

School boards are not required to include PERA committee language in the collective bargaining agreement (CBA) and should not agree to do so.

School boards are also not required to include PERA evaluation plans or procedures in the collective bargaining agreement and should not agree to do so. If evaluation procedures are included in the CBA, the union can file a grievance and challenge a teacher’s poor evaluation for even minor procedural irregularities.

While teacher evaluation procedures are a mandatory subject of bargaining with the union, the final PERA evaluation procedures must comply with the Illinois State Board of Education rules (Title 23 Illinois Administrative Code Part 50). Reject any union proposal that modifies the evaluation procedures in Part 50. Rather, simply agree to follow the state regulations, nothing more and nothing less. The school board has the right to make the final decision on evaluation procedures if the Joint PERA committee cannot reach agreement on procedural issues.

The school board is not required to negotiate or reach agreement through the Joint PERA committee on the Professional Practice component of the evaluation plan. Districts must consult the union (through the Joint PERA committee) and get input and comments on the Professional Practice rubric. However, they have the right to make the final decision on the substantive criteria, weight, and areas evaluated under Professional Practice.

Unions will often propose that the Professional Practice criteria be weighted equally. Reject such proposals and decide the weight that will be assigned to each of the evaluative criteria. If the Joint PERA committee cannot reach agreement on the Professional Practice criteria or weight assigned to each criterion, the school board has the right to make the final decision.

The only component of the PERA evaluation plan that requires the Joint PERA committee to reach agreement on is “student growth.” If the Joint PERA committee fails to reach agreement within 180 calendar days from the date of its first formal meeting, the district and union will default to the Illinois State Board of Education procedures for the use of student growth as a significant factor in measuring a teacher’s performance.

Trending Now: Soft Salary Freeze or Equivalent

Not surprisingly, salaries continue to remain the most difficult issue to negotiate. The vast majority of districts are negotiating something less than a soft freeze (step only) or up to a maximum of a soft freeze. There are very few districts negotiating salaries that exceed the cost of a soft freeze. Another trend, in order to avoid committing funds in future years, is to negotiate a one-time off the salary schedule bonus payment, which range from $400 to $800. Some districts, due to serious budget shortfalls and a significant decline in fund balances based on previous deficit spending, are negotiating hard freezes (no step or lane movement).

Recommended strategies:

The board of education must plan early and decide how much money, if any, is available to negotiate the labor contract. The board must know its end point in order to establish its starting point.

Well before negotiations start, share financial information with the union and public early and often. Prepare charts to graph the ending fund balances in the major operating funds (education, transportation, operation and maintenance, and working cash) to demonstrate declining revenue, declining fund balances, and overall downward financial trend. The board of education should never adjust the salaries of administrators or other nonunion employees until it has finalized negotiations with the labor unions.

Salary should never be negotiated in isolation and must be negotiated as a “package” proposal that includes other financial issues, such as health insurance. A package proposal means the union must accept all proposals or reject all proposals in the package; it cannot cherry pick one proposal and reject another.

While the district is obligated to bargain in good faith, it is not legally obligated to make concessions at the bargaining table. Bargaining in good faith means the district can say “no” to any union proposal, including union proposals for wage increases.

Trending Now: Affordable Care Act Confusion

The Affordable Care Act (ACA), commonly known as Obamacare, continues to create great confusion among employers and employees. Contrary to union assertions, the ACA does not legally obligate school districts to pay health insurance premiums on behalf of employees. However, school districts who qualify as large employers (50 or more full-time equivalent employees) may be subject to penalties if they do not offer affordable health insurance to full-time employees (those who work 30 or more hours per week).

Recommended strategies:

If the district does not currently pay for the health insurance premiums for union members, they should calculate whether it will be cheaper to pay the health insurance premium or the ACA penalty. For example, if single insurance premiums cost $4,800 per year, one is better off paying the $3,000 ACA penalty instead of providing board paid insurance to employees.

For educational support personnel, consider negotiating language to give the district the authority to modify and reduce employees’ work hours. Under the ACA, only full-time employees, defined as those who work 30 or more hours per week, will create a potential penalty. Avoid the ACA penalties in their entirety if employees’ work hours are set at less than 30 per week.

The ACA does not obligate a district to pay family insurance premiums for its employees and there are no ACA penalties for failure to do so. Reject any union proposal for board paid family insurance premiums under the ACA.

Trending Now: Reduction in Force Procedures

Not surprisingly, unions continue to propose language to modify and alter the statutory Reduction in Force (RIF) procedures.

Recommended strategies:

Reject any union proposal that deviates from the statutory RIF procedures.

Unions will attempt to negotiate language to give recall rights to teachers RIFed from Group 1 or expand recall rights for teachers RIFed from Group 2. Reject these proposals.

By statute, a teacher that receives a “Needs Improvement” rating on either of his/her last two performance evaluations must be placed in RIF Group 2. Unions will propose language to move a teacher from RIF Group 2 to Group 3 if the teacher’s most recent evaluation is “proficient.” Reject this proposal.

Teachers RIFed from Groups 3 and 4 have recall rights for one year and unions will often propose language to expand the recall rights to two years. Reject this proposal.

Maintain a firm position and only agree to RIF procedures that comply with the statute.

Trending Now: Potential Pension Contribution Increases

On May 8, 2015, the Illinois Supreme Court struck down the state’s pension reform law as unconstitutional. As a result, school districts must prepare for potential increases in pension contributions from employers and employees, as that is one of the only sure ways the state legislature can generate more funds to address its $100 billion or more unfunded pension liability.

Recommended strategies:

Negotiate a “cap” on board paid contributions to the Illinois Teachers Retirement System (TRS) on behalf of teachers. Currently, teachers are required to contribute 9.4 percent of their wages to TRS, but many districts have negotiated contract language that obligates the board to make the teachers’ TRS contributions. Therefore, avoid any language that obligates the board to pay the teachers’ “full” TRS contributions. Instead, negotiate language that states the board will pay up to a maximum of 9.4 percent of the teachers required TRS contributions. If the TRS rate increases above 9.4 percent, the teacher is obligated to pay the increase.

In addition to the teachers’ required TRS contributions, districts are currently required to contribute .58 percent of teachers’ salaries to TRS. It is possible that the state may shift its TRS contribution obligations to local school districts, resulting in a significant increase in TRS contributions. Consider negotiating language that decreases the board’s TRS contribution on behalf of teachers in an amount equal to any TRS rate increase imposed on the school district. For example, “The board’s TRS contributions paid on behalf of teachers shall be up to but not exceed 9.4 percent. However, if the board’s required TRS contribution rate increases, then the board’s TRS contributions paid on behalf of teachers shall decrease in the same amount. For example, if the board’s TRS rate increases 1 percent, then the board’s TRS contribution for teachers shall be reduced from 9.4 percent to 8.4 percent.”

Trending Now: Short-Term Labor Contracts

It is not uncommon for school districts to negotiate one-year labor contracts due to funding uncertainty. Understandably, boards are not willing to commit funds to salary two and three years out because the current year’s General State Aid funds are not even certain. Unions, likewise, are not willing to accept a wage freeze or low salary increase two and three years out and would rather wait and see if funding improves and then negotiate salary.

Recommended strategies:

To avoid returning to the table every year, consider negotiating a “re-opener” clause. For example, the board and union enter into a three-year contract and negotiate salary in the first year and include a re-open provision to negotiate salary only in year two and three.

However, be aware that unions often oppose re-opener provisions because the union cannot strike during the term of the three-year contract. If the parties cannot reach agreement when negotiating salary under a re-opener provision, the board can impose its last, best final offer on the union after bargaining in good faith and declaring/giving notice of impasse.

This article originally appeared in the Spring 2015 issue of Update, the quarterly publication of the Illinois Association of School Business Officials. It was updated and is reprinted with the permission of the author and Illinois ASBO.