IMPORTANT UPDATE RE THE STATE BUDGET AND THE WAGE FREEZE/FURLOUGH ISSUE

6-16-09

Since our last Council Exec. meeting and the Open Letter to Delegates was sent out there have been some important developments that you and your members need to be aware of.

Last Friday, representatives of the Council & Rutgers AFT had a meeting with Lou Greenwald, Chair of the Assembly Budget Committee, at which we asked a number of questions about the budget. He indicated that the Governor and Legislators intended to craft budget language which would require our senior public higher educational institutions to implement wage freezes and furloughs in order to receive their full share of State aid.

Since that meeting, that language has been drafted and incorporated into the budget bill, as has been reported by the press. Not only did Greenwald indicate that the budget is now finalized, but Legislators attending the NJ AFL CIO Conference also indicated that this finalized budget would be adopted on Thursday this week.
Here is the language added to the FY 2010 budget which conditions higher education funding on the implementation of wage freezes and/or furloughs, among other things:

“Of the amounts hereinabove appropriated for senior public institutions of higher education, an amount up to 5.25% of the appropriation for each senior public institution of higher education shall be withheld until the institution certifies to the Director of the Division of Budget and Accounting in the Department of the Treasury that the institution has: 1) achieved or will achieve personnel related cost savings through wage freezes, furloughs, or other actions that provide savings equivalent to Fiscal Year 2010 savings that the negotiated self-directed furlough program for civilian State employees will achieve;…… In the event that any institution cannot certify its compliance with this condition to the Director of the Division of Budget and Accounting in the Department of the Treasury by December 1, 2009, the appropriation withheld from that institution shall be reallocated to other public institutions of higher education by the State Treasurer based upon the recommendations of the Commission on Higher Education and the Director of the Division of Budget and Accounting in the Department of the Treasury.”

Furthermore, the legislative budget does not contain any appropriations for salary increases or increments (steps).

WHAT THIS MEANS

If an institution wants to avoid a 5.25% cut in their legislative budget appropriation, that institution would need to realize personnel-related  savings equivalent to those obtained by the State through its negotiated agreement with State employees. In order to obtain these savings each institution could implement one or more of the following measures without negotiations:

1.      Unpaid furlough of employees for an unspecified number of days; currently 10 at William Paterson and 12 at Kean were formally announced.  Under current labor laws, the employer could take this action without negotiating over the substantive decision if the furlough is effectuated by way of a complete closure of the facilities, applicable to all employees. In that event, the union could only negotiate over impact issues, such as when the furlough days would be scheduled.

2.     Not implement the salary increases and increments which would mean the loss of our 2009 cost of living increase (3.5%) and our increments (step movement) for this fiscal year. As a result, at the end of our agreement salaries and increments would be at the 2009 salary and step rates because the 2010 increase of 3.5% would be the only increase for the remainder of the agreement. In this regard, you should be aware that Article XXI of our contract makes our cost of living increase “subject to an appropriation by the Legislature” for that specific purpose. By refusing to appropriate funds for the specific purpose of our wage increase, the legislature has made a lawsuit extremely difficult if not impossible to pursue effectively. Furthermore, given our history with such issues, a decision might not be rendered for months if not a year or more in the future.  If we win the members could eventually be made whole; if we lose, members could lose the salary increases entirely, rather than just having them deferred.

3.      Under Article XLI, Section A(6) of our existing contract the colleges can also withhold 3% of current pay for up to two years. In theory, this could be done unilaterally in addition to the failure and/or refusal to pay an anticipated salary increase or increment.

4.      As a public employer, each College and University covered by our Agreement has the right to lay off employees, provided the applicable notice periods have been honored. Wide discretion would be permitted these employers in terms of deciding where to effectuate staff cuts, and how many employees would be let go.
We also received a call today from the Office of Employee Relations letting us know that we would be receiving a letter tomorrow or the next day that essentially would be outlining the steps mentioned in the legislative language that our institutions would have to comply with since we do not have an agreement with the State.

Currently, we do not have a majority of locals agreeing to negotiate with the State over a uniform application of wage freeze/furlough language. Without any agreement between the State and the Council this means that institutions can use some or all of the options mentioned above to effectuate those cost savings to avoid a cut in their appropriation.  As a result, there would be no consistent application of the cost savings mechanisms described above, since each institution would retain the discretion to implement such measures as it saw fit.

Our Rutgers AFT colleagues have indicated to us that they are even more adversely affected by this due to the fact that their contract was back loaded on the wage increases and Rutgers administration is proposing cost savings that would cause them to lose most of the back loaded increases as well as having layoffs and other financial implications not yet decided.

It appears that if the Council Locals desire to negotiate with the State regarding this, we must notify the State of our intent to negotiate before July 1 when institutions would freeze the 12 month employee salary increases that would take place.

 

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