Monday, March 16, 2009

Chaos in Collective Bargaining (Updated)

Facing a half-billion dollar deficit, the Montgomery County government has no choice other than to seek savings through renegotiating its contracts with its public employee unions. But a chaotic endgame with the Fire Fighters union has exacerbated a painful process and led to a potential violation of county law.

Montgomery County has six public employee unions with collective bargaining agreements. The Montgomery County Education Association (MCEA), Service Employees Local 500 and the Montgomery County Association of Administrative and Supervisory Personnel (MCAASP) negotiate with MCPS Superintendent Jerry Weast. Their contracts are approved by the Board of Education and the County Council determines the overall funding level for the school system. The Fire Fighters, Police and the Municipal & County Government Employees Organization (UFCW Local 1994, MCGEO) negotiate their agreements with the County Executive. Those agreements must be approved and funded by the County Council.

The county’s FY 2010 budget problems were apparent last summer. By November, deficit estimates approached $500 million. In December, Dr. Weast renegotiated agreements with the three school unions eliminating their cost-of-living increases and providing for savings of $89 million. But the new deals also contained a “me-too” clause stating:

If the County Government negotiates higher compensation improvements for any of its employee organizations during FY10, FY11, or FY12; those higher increases will be matched for school system employees.
County Executive Ike Leggett’s task was crystal clear from that time on. He had to obtain cost savings from the three non-school unions without activating the me-too clause. If the me-too clause was invoked, an arbitrator had to evaluate the claim and if it was upheld, millions of dollars would be put back into the budget.

In January, the Fire Fighters announced a tentative deal with Leggett’s team providing for $7 million in savings. The total savings amount was proportionately in line with the concessions made by the school unions. But since some of the savings came from deferring, and not foregoing, pay increases (as the school unions had done), some in the Executive branch became concerned about risking activation of the me-too clause. Leggett spokesman Patrick Lacefield promptly disavowed the deal because of “outstanding legal issues.” This points to internal disagreements on the management side of the table.

Normally, when one side rejects a proposal during a collective bargaining process, it responds with a counter offer. But management made no such counter to the Fire Fighters and no further formal bargaining sessions were held. Instead, management complained to the Post, and the Editorial Board obliged by penning a stinging critique of the Fire Fighters. That provoked this response from Fire Fighters President John Sparks and further increased tensions around the issue.

Last week, as the County Executive’s budget approached its release deadline, there were still no negotiations with the Fire Fighters. Top managers said that Leggett remained undecided on the Fire Fighters’ contract as the clock ticked to zero. By that time, MCGEO and the Police had given up their cost-of-living increases in line with the school employees. They also bargained me-too clauses. Finally, the Post reported that Leggett’s budget would not fund any increases for any of the three county unions even though management had not reached a deal with the Fire Fighters.

The problem? That’s illegal.

Section 33, 153(l) of the County Code states:

In each proposed annual operating budget, the County Executive must describe any collective bargaining agreement or amendment to an agreement that is scheduled to take effect in the next fiscal year and estimate the cost of implementing that agreement. The annual operating budget must include sufficient funds to pay for the items in the parties' final agreement. The employer must expressly identify to the Council by April 1, unless extenuating circumstances require a later date, all terms and conditions in the agreement that:

(1) require an appropriation of funds, or

(2) are inconsistent with any County law or regulation, or

(3) require the enactment or adoption of any County law or regulation, or

(4) which have or may have a present or future fiscal impact.

If a later submission is necessary, the employer must specify the submission date and the reasons for delay to the Council President by April 1. The employer must make a good faith effort to have the Council take action to implement all terms and conditions in the parties' final agreement.
And Section 33, 154(a)(8) states:

(a) The employer and its agents or representatives must not:

(8) directly or indirectly oppose the appropriation of funds or the enactment of legislation by the County Council to implement an agreement reached under this Article...
Former County Executive Neal Potter tried a similar maneuver in the early 1990s and was turned back. Ike Leggett was a member of the County Council at the time.

So now there is no renegotiated agreement with the Fire Fighters, a potential violation of county law by the Executive Branch and a giant mess for the County Council to clean up. How did we get to this point?

Some point to stubbornness by the Fire Fighters. It’s true that Fire Fighters President John Sparks has a reputation for being a bit difficult at times. But he did offer concessions approaching a similar economic value to what was offered by the other unions. And at least some parts of the management team found them to be acceptable; otherwise there would have been no tentative deal.

But this is really a story of confusion, delay and indecision. The county’s budget problems have been obvious for many months. And the management team had enormous leverage over the Fire Fighters. Public opinion has been leaning against substantial public employee raises for at least a year. The voters sent a strong message against further tax increases by their approval of the Ficker Amendment. The gargantuan size of the budget deficit guaranteed work hour reductions of some kind, especially if pay increases were maintained. Sensing these factors, the other five unions gave up their cost-of-living increases. But despite all of the above, management convened no negotiations and did not press its advantage against the Fire Fighters. Our advice to any party in a collective bargaining process is: if you have leverage, use it.

Now the County Council will have to do the dirty work of eliminating funds for the Fire Fighters’ raises. They already have their hands full dealing with the worst budget in decades. And they have another labor issue to deal with: the disability bill proposed by Council Members Phil Andrews and Duchy Trachtenberg. Here is another issue that has dragged on since last summer. Disability benefits are normally decided by collective bargaining, but because this process has taken so long, Council Members Andrews and Trachtenberg can reinforce their argument that the matter should be taken away from the Executive and the unions. Former County Executive Doug Duncan probably would have vetoed this bill because it infringes on the Executive Branch’s authority, but Ike Leggett did not send a representative to testify at the bill hearing.

Concessionary bargaining is never easy. It always tests the relationship between management and labor. The best way to deal with it is to muster your leverage, exert maximum pressure on the other side and strike an agreement quickly, as MCPS Superintendent Jerry Weast demonstrated. But for unknown reasons, Leggett’s team was unable to follow suit with the Fire Fighters. And that has generated both chaos in collective bargaining and increasing questions about the County Executive’s leadership.

Update: The Fire Fighters have now filed a complaint against the Leggett administration.