March/April 2019

Trends in collective bargaining in 2019

By Melissa D. Sobota and Shelli L. Anderson
Melissa D. Sobota and Shelli L. Anderson are attorneys with Franczek P.C. in Chicago.

A number of changes that will impact and influence the collective bargaining process for years to come took place in 2018. In Illinois, these changes include the election of a new governor, an amendment to the Illinois Pension Code, an impactful U.S. Supreme Court decision, and a national rise in activism among teachers. Each of these influences is detailed below, as are recommendations and predictions of how they will impact collective bargaining in our schools for the next few years.

Impact of a new administration

During his campaign, Governor J.B. Pritzker emphasized his hope to improve the education system and make Illinois a national model for education. Only a month into his term, Pritzker formed and appointed members to his Educational Success Committee, which we predict will focus on the following issues:

  • Promoting early childhood education;
  • Rolling back the emphasis on school vouchers and charter schools;
  • Supporting a $40,000 minimum salary for public school teachers;
  • A commitment to an equitable funding formula;
  • Increased funding for K-12 schools.

Throughout his campaign, Pritzker emphasized the need to promote and develop early childhood education. He has pledged to expand the birth-to-3 programs, pave a path for universal pre-K statewide, and lower the compulsory school age from 6 to 5 in an effort to ensure every child is able to benefit from the cognitive, social, and emotional benefits of early childhood education. Accordingly, we predict this year will bring about an increase in funding and/or legislation related to these initiatives.

Unions may capitalize on this opportunity to discuss early childhood education at the bargaining table or request impact bargaining, provided new legislation is enacted that will affect the wages, hours, or working conditions of members’ employment.

Where Governor Bruce Rauner was a vocal proponent of school choice and supportive of efforts to expand charter school options in the state, Pritzker has expressed his belief that adequate public school funding should come first. In 2017, Illinois introduced Invest in Kids, a new private school scholarship for low- and middle-income students, which was funded by independent tax credits. The program launched in 2018 and gave tax breaks to residents who donated to private schools and offered scholarships to low-income families to send their children to private schools. Pritzker, however, campaigned on rolling back the Invest in Kids scholarship program and supporting a moratorium on charter schools.

Accordingly, we predict that Pritzker will focus his efforts on increasing funding for the existing public school system rather than seeking to expand the school voucher and charter school programs.

In May 2018, the General Assembly passed Senate Bill 2892, which would have increased the minimum salary for full-time teachers in Illinois public schools to $40,000 over the next five years. Despite the support in the General Assembly, Rauner vetoed the bill. With the change of leadership, both legislative chambers and the governor’s office will be led by Democrats. Accordingly, we predict that a similar bill to Senate Bill 2892 will be introduced early in the legislative session and will be passed with the support of Pritzker.

In 2017, the state adopted a new evidence-based funding (EBF) formula, which funnels more state money to school districts with greater financial needs and fewer means to raise revenue locally. Rauner signed the final changes to the formula in the spring of 2018. The goal of the funding formula is to have every district meet a 90 percent adequacy level. In order to be fully funded, the EBF formula requires an additional estimated $7.2 billion. In a recent speech, Pritzker emphasized that “[e]very child in this state deserves a quality education – regardless of the color of their skin, the zip code they come from, or the income of their parents,” signaling his desire to prioritize funding for the EBF formula. Moreover, Pritzker’s appointment of Senator Andy Manar, a driving force behind the successful movement to reform Illinois’ school funding formula, as co-chair of the Educational Success Committee further suggests his commitment to this issue.

Although it appears that Pritzker intends to make education a priority during his term, his biggest challenge will be to get the state’s fiscal issues in order and find alternative ways to increase funding for teachers, students, and schools. The state’s $8 billion K-12 public school system currently serves approximately two million students and employs approximately 130,000 teachers. State funding will be a key component to the success of Pritzker’s initiatives, including fixing the underfunded pension system, funding the EBF formula, and determining the financial forecast when negotiating bargaining agreements.

Impact of 2018 legislation

Policies aside, the General Assembly amended the Illinois Pension Code in June 2018, which will significantly impact labor negotiations in 2019. For the last decade, the Illinois Pension Code, 40 ILCS 5/16-158, has required employer contributions for teacher salary increases in excess of 6 percent of the previous year’s salary. When a teacher retired, the employer was required to pay TRS contributions equal to the actuarial value of the pension benefit that resulted from any salary increase over 6 percent that was used in the retiring teacher’s final average salary calculation. That changed on June 4, 2018, when House Bill 3342 was signed into law and became Public Act 100-0587.

Under the current law, for contracts entered into, amended, or renewed after June 4, 2018, the employer is required to pay the TRS contribution equal to the actual value of a pension benefit that results from any teacher salary increase over 3 percent in the years used to determine the teacher’s pension. Notably, the law provides a grandfathering clause, which exempts contracts and collective bargaining agreements that were entered into, amended, or renewed prior to the effective date.

There are multiple implications of this provision for employers to consider. The penalty applies if the amount of a TRS member’s salary for any school year used to determine the final average salary exceeds the prior year’s salary by more than 3 percent. If the salary increase exceeds the 3 percent limit, the employer must pay a penalty to TRS equal to the present value of the increase in benefits resulting from the portion of the salary increase in excess of 3 percent. Employers should also keep in mind that creditable earnings include more than salaries. They also include extracurricular pay, stipends, and contributions to tax-deferred retirement plans, among other payments. Finally, the average salary for Tier I members is calculated using the four highest, consecutive annual salary rates within the last 10 years of creditable service. For Tier II members, the average salary is the average of the eight highest, consecutive annual salary rates within the last 10 years of creditable service.

Although these contributions cannot be bargained away or negotiated as member contributions, this new law will influence and impact the parties’ priorities, strategies, and limitations at the bargaining table. In light of the modified pension law, we predict an increase in the already growing trend of school districts moving away from traditional salary schedules. Along with annual automatic raises to members’ salaries, a salary schedule contains automatic salary bumps called “step and lane” increases that add to a teachers’ total compensation. “Steps” refer to tenure, and “lanes” refer to the level of education the teacher has attained. Under a typical salary schedule, all teachers in the same step and lane are paid the same salaries, regardless of that teacher’s skill, effectiveness, or achieved outcomes for students.

 As an alternative to traditional salary schedules, we predict school districts will attempt to tie compensation increases to more tangible components such as funding, CPI, or meeting specific school district goals. We also predict that bargaining topics such as health insurance contributions, class size, plan time, professional development requirements, and responsibilities outside the school day will be hot topics during 2019 negotiations as school districts find ways to conserve funds and balance potential cost increases.

Impact of Janus

As widely anticipated, the U.S. Supreme Court held by a 5-4 vote that fair share agreements are unconstitutional. (Janus v. AFSCME, 585  US ___ (2018)). The central issue in Janus addressed whether government employees who are represented by a union to which they do not belong can be required to pay a fee to cover the costs of collective bargaining. The United States Supreme Court held that the public-sector unions’ procedure of exacting fair share fees from nonconsenting employees violated the First Amendment. The Court reasoned that forcing free and independent individuals to endorse ideas that they find objectionable raises serious First Amendment concerns, which could not be validated by justifications such as labor peace and avoiding the risk of free riders.

This decision has and will continue to impact labor negotiations. Based on the decision, employers were immediately required to cease deducting any fair share fees from the paychecks of any employee who had not voluntarily signed a dues authorization card. School districts have also received a number of demands for impact bargaining over the removal of fair share provisions in collective bargaining agreements. Among the demands districts have seen in impact bargaining include demands to receive personal contact information for all bargaining unit employees, an opportunity to meet with employees and new employees on paid time, limitation in the opt-out period, limitations on district communications with employees about membership, and prohibiting employers from sharing membership information with outside entities.

Districts should tread lightly when communicating with employees about Janus and union membership so as to avoid committing an unfair labor practice. The Illinois Educational Labor Relations Act still permits employees the right to select a representative of their choosing so districts must be cautious about unduly influencing an employee’s decision. Communications from the school district should contain only factual information and should not express any opinions about the decision, unions, union dues, or employee decisions to be members or not. Rather, employees inquiring about terminating membership or becoming full members should be directed to the union or the Illinois Educational Labor Relations Board.

Despite being an anticipated decision, we expect and have begun to see unions engaging in more aggressive bargaining to prove their worth to their members. We further predict an uptick in information requests and grievances, implementation of narrower dues revocation periods, and an assertion of members-only benefits. Beyond the bargaining table, we also expect there to be an increase in legislation and litigation over the effects of this decision. For example, shortly after the Court issued the Janus decision, the International Union of Operating Engineers, Local 150 filed a lawsuit in the United States District Court for the Northern District of Illinois against the Illinois Attorney General and Illinois Labor Relations Board, arguing that its duty of fair representation was unconstitutional in light of the Janus decision. Local 150 argued that the duty of fair representation violated its First Amendment rights by unconstitutionally compelling it to speak on behalf of non-members. In early February 2019, Judge Sharon Johnson ruled that the lawsuit could proceed. It is unclear how this lawsuit will ultimately turn out, but we will continue to monitor and report on its progress and implications of the ultimate ruling.

While the fallout continues to be legislated and litigated, it is important for all school districts to understand that they must treat all employees covered by a collective bargaining agreement equally, regardless of their membership status. Special benefits or compensation cannot be offered or given to employees based on their membership or non-membership status with a union and, until ruled otherwise, unions are required to continue to fairly represent all bargaining unit employees, regardless of their membership status.

Impact of increased activism

2018 also brought a remarkable display of teacher activism. Thousands of teachers in West Virginia, Oklahoma, Arizona, Colorado, Kentucky, and North Carolina successfully went on strike for higher wages and more school funding. Unlike strikes Illinois public school districts have experienced, the teachers in these states struck against their state legislatures, rather than their individual school districts, in order to obtain wage increases and increased school funding.

Illinois also saw a historic teacher strike in 2018 with the first strike against a charter school network. In December, the teachers at Acero Charter Network in Chicago went on strike for smaller class sizes, a shortened school year and school day, as well as a step and lane salary schedule similar to what teachers in the Chicago Public Schools receive. Acero Charter Network employs over 500 teachers and has 15 schools serving approximately 7,500 students. In early December the teachers struck for four days before the parties reached an agreement that reduced the school year, school day, and class size within the Network. This was the first strike against any charter school anywhere in the country.

At the same time the teachers in the Acero Charter Network were striking in Chicago, teachers in suburban Geneva School District 304 went on strike over compensation, specifically whether to move away from the traditional step and lane salary schedule model. The teachers demanded to keep it, consistent with comparable districts within Kane County. The parties reached an agreement after a six-day strike.

This strike was subsequently followed by another teacher strike in early February against the Chicago International Charter Schools (CICS) charter network in Chicago. CICS employs approximately 175 teachers at four schools, serving approximately 2,000 students. Like the teachers at Acero, the teachers at CICS are represented by the Chicago Teachers Union (CTU). The teachers at CICS went on strike for smaller class sizes, a shorter school day, shorter school year, and most importantly, higher pay. CICS claims that CTU’s wage proposal would “lead to financial insolvency.” The strike against CICS was ongoing at the time this article was written.

Also recently, teachers in Los Angeles, the nation’s second-largest district, went on strike over better pay, smaller class size, and increased support staff such as school nurses and librarians. This showing of activism illustrates that teachers across the country are not afraid to speak out and strike for higher wages and better working conditions.

In an effort to improve relationships, many school districts have shifted away from traditional bargaining toward Interest-Based Bargaining (IBB). Traditional bargaining consists of both sides exchanging written proposals and counterproposals “across the table” and is not typically a collaborative process. Once the parties reach a stalemate on the proposals, the parties will exchange final offers and if no agreement is reached, the union may call for a strike. In Illinois, before a union representing educational employees can go on strike, the parties must first go through the public posting process run by the Illinois Educational Labor Relations Board where both parties’ final offers are made available to the public and give 10 days’ notice of their intent to strike.

Generally speaking, IBB is a more collaborative approach that dispenses with the systematic exchanging of formal, written proposals in favor of participation by many individuals and reliance on interest-based problem-solving techniques. IBB is often run by using the services of the Federal Mediation and Conciliation Services (FMCS). Parties discuss the issues and interests and then process the options. If a consensus is reached, the issue is sent to the writing team. Although slightly idealistic, the obvious advantage of IBB is open exploration and discussion of issues and shared interests, which may help to promote better understanding of the concerns among parties and build greater trust.

Modified versions of IBB are also growing in popularity, and we expect this bargaining method to be a trend in 2019. This process begins very similarly to IBB with the parties working through the issues, interests, and options. However, unlike in IBB where consensus must be reached on each item, if no consensus is reached in Modified IBB, the issue is moved to the “parking lot.” Once all the issues have been processed, the parties return to the issues in the parking lot and engage in traditional or other modified bargaining. Finding a balance between traditional principles and more creative albeit idealistic methods may be a key component to minimizing strikes and rebuilding trust among the parties.

The items discussed herein are just a brief survey of what we think will influence and impact bargaining negotiations in 2019. Governor Pritzker’s focus on education may result in positive and meaningful changes to our state’s education system, but only if the funding is there to support his initiatives. The shift to a more collaborative negotiation approach will likely foster better bargaining relationships and build greater awareness and trust among the parties, particularly when working through the new 3 percent TRS cap, equitable funding formula, and financial forecast. Finally, the Janus decision will likely have a significant impact on both the vitality of public sector unions in this state and the methods by which they advocate for their members.

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