Collective Bargaining. Fiscal Aspects of Negotiations Workshop. Fiscal Aspects of Negotiations Workshop September Ron Bennett President & CEO

Transcription

1 Fiscal Aspects of Negotiations Workshop Presented by Ron Bennett President & CEO Maureen Evans Associate Vice President John Gray Vice President Collective Bargaining

2 Negotiation Process What is the role of the Mediator?

3 How can districts make it easier to get an agreement? Things That Make a Difference

4 Things That Make a Difference Attitude your and theirs Approach Foundation building Preparation Respect Principled discussions and conclusions Can you give us examples of good and bad processes?

5 Characteristics that Influence Fiscal Negotiations Reminders and Hints for District Negotiators You are the public. You are not a neutral. The bargaining table is unequal. The district has all the marbles. Management can also demand. It is not a one-way street. Recognize that anything you say can and will be used against you. Language is forever. Public pressure is often a deciding factor. Honesty and openness need not compromise your position.

6 Reminders and Hints for District Negotiators School finance is finite if this, then not that. Unions represent employees and not education. If you are ever going to say yes, know it early. Don t be afraid of impasse. Prepare for negotiations as if you are going to factfinding. Remember, it is not unfair to just say No. Who represents the interests of the public?

7 What advantages do each of the parties have during the negotiations process? Build Your Budget on Dollars Not Percentages

8 Build Your Budget and Negotiations on Dollars, Not Percentages Districts spend dollars, not percentages Don t show income growth as a percent Build unrealistic expectations Impossible to fund for everyone Weakens realistic budget evaluations Show income growth as dollars Creates realistic competition among stakeholders Can better reflect net after declining enrollment loss Is clearer parallels how we all do a personal budget Show Your Method for Calculating Your Income Growth Many alternative methods use the one that works for your district Dollar difference in unrestricted expense: last year vs. this year; or, Reflect the total income by line from: Cost-of-living adjustment (COLA) Less declining enrollment loss Other unrestricted income growth Net total unrestricted income

9 How do you break down the barriers to understanding? Consider Fair Share Negotiations

10 Fair Share: Calculate the New Income Step One: Calculate the new dollars actually received from the state Step Two: Compute the percentage of the budget devoted to this bargaining unit in prior years Step Three: Compute the net cost of step and column increases Step Four: Calculate the increased cost of benefits provided to bargaining unit members Step Five: Divide the remaining new dollars by the cost of 1% salary schedule increase Step Six: Prepare a summary showing the result of these calculations Should you place compensation formulas in the contract?

11 Do fair share negotiations work for all employee groups? Build Your Offer on Comparisons

12 Build Your Offer on Comparisons Comparable salary and benefits is the single most important statistic for how a contract should settle What is the best comparable group? Use a common type unified, high school, or elementary, and Use districts in the same geographical market basket; or Use districts within a common size band; or Use a financial characteristic that is like your district, such as: Other basic aid districts, or Districts with high deficit spending, or Districts with fast declining enrollment Methods for Measuring Compensation Certificated comparison categories total compensation BA average district contribution to health plan BA average health BA average health Maximum + average health Classified comparison categories Pick beginning and ending salaries for one position in each major class: Clerical Transportation Aides Maintenance Grounds

13 If you don t compare to other districts in salary, do you need to give a bigger raise? What should you do if the unions thinks you should compare to different districts?

14 Live the Ending Balance Live the Ending Balance Live, sleep, and breathe the district s ending balance and know why it changed The most clearly identified solvency indicator Never too high; never too low Can make or break the reputation of the district negotiator, the CBO, and the superintendent Union will watch the ending balance like a hawk How accurate is your district s projection of the ending balance? Example: Compare last year s Unrestricted Ending Balance Projection at the Second Interim with the same in the Unaudited Actual

15 The state requires schools maintain minimum reserves, are there any rules that deal with maximum reserves? What factors play a role in determining reserves?

16 Make Sure Management is on the Same Page Make Sure Management is on the Same Page Build your negotiations on the Governing Board guidelines The Board signs the contract Teach management in the same manner as you teach the unions Management needs to understand the why and not just the position Teach so they understand Your team The management team the cabinet must be together Make sure the principals know the why of your position Expand your negotiating team to include principals And include them in the executive sessions But in time of adversity, the principal is the site leader and not a salesman for management

17 What tactics are used to divide the district negotiations team? Don t Be Afraid to Communicate

18 Don t Be Afraid to Communicate But Do It Wisely Unless you have agreed to a blackout, you have not given up your right to send information to the unit membership An explanation of your position and the evidence is a valuable management tool Keep it short, keep it accurate, do not exaggerate, do not propose what you have not proposed at the table Provide back-up data to support your position And yes, you can respond to the demonstration at the Board meeting a measure response is not unfair Is joint communication from district and union appropriate?

19 What should be the tone of the joint communication? Understand the Power of Certification

20 Understand the Power of Certification Use It Wisely District superintendents and CBOs must certify that the costs of the agreement can be met during the term of the agreement Provides dramatic power to the superintendent and CBO Can correct runaway agreements Forces a Governing Board to fund budget reductions Can lead to career changes and revisions for superintendent/cbos who are wrong Provide up-front information to the union negotiating team if you re not going to be able to certify Source: Government Code Section What happens when the superintendent signs off on a tentative agreement but the CBO does not?

21 What happens when the county office does not agree with the district on a tentative agreement? Consider the Power of Timing

22 Consider the Power of Timing Scenario Percentage Salary Increase for Each of Three Years 1 3%, 3%, 3% 2 6%, 3%, 0% 3 0%, 3%, 6% The Power of Timing Your Settlement Scenario #1: 9% Over Three Years Even Distribution Each Year Economic Increase Year 1: Economic Increase Year 2: Economic Increase Year 3: District Annual Cost Year 1 3% 3% Year 2 3% 3% 6% Year 3 3% 3% 3% 9% Cumulative Cost = 18% Carry Forward Cost = 9% Scenario #2: Provide 9% But Frontload the Contract Economic Increase Year 1: Economic Increase Year 2: Economic Increase Year 3: District Annual Cost Year 1 6% 6% Year 2 6% 3% 9% Year 3 6% 3% 0% 9% Cumulative Cost = 24% Carry Forward Cost = 9% Scenario #3: Provide 9% But Backload the Contract Economic Increase Year 1: Economic Increase Year 2: Economic Increase Year 3: District Annual Cost Year 1 0% 0% Year 2 0% 3% 3% Year 3 0% 3% 6% 9% Cumulative Cost = 12% Carry Forward Cost = 9% The same principle applies to contracts starting mid or late year

23 If you are wrapping up a future year, how do you know what percentage to settle on? Duration of contracts

24 Be a Listener, Know Their Interests Be a Listener, Be a Teacher, Know Their Interests Listening is an urgent attribute at the table Let them talk... and talk... and talk Don t interrupt Teaching without preaching is the second most important attribute The why of your position The evidence supporting your position The match of your position and their interests Know your interests and your bottom line Move consistently toward those goals; or Change your bottom line

25 Provide an instance of where the most important item really is not the most critical? How do you use an insight to your advantage?

26 Use Multiyear Projections Use Multiyear Fiscal Projections Long-range planning does not deal with future decisions, but with the future of present decisions. Peter Drucker Present an understandable multiyear projection to the negotiating teams Show that, as options or assumptions change, district balances change Update and print the multiyear projection with each new proposal If revenue assumptions are in dispute, shift to a projection of expenditures And then ask, will revenues match that percentage increase?

27 Are multiyear projections a crystal ball? What is the response to a union claiming the district is too conservative in multiyear projections?

28 Bargaining Roles Bargaining Roles Governing Board Superintendent Chief Business Official (CBO) Human Resources Chief Negotiator

29 What happens when a management team member steps outside of their role? Negotiating Health and Welfare Benefits

30 Health Benefits Health benefits cost controls have to be the number one priority District revenues are finite; if this, then not that There s only so much money for total compensation If a district does not have health benefit cost controls, salaries and instructional needs are being denied to make up the added cost Uncapped plans use up dollars automatically and may leave little or nothing for anything else Example: Assume an $8,000 benefit cost and a $50,000 average teacher salary A 15% increase in benefits cost is $1,200 equivalent to a 2.4 salary increase Statewide Unified Average Health and Welfare Benefits Year Average Active Employee District Contribution per FTE $9, $8, $8, $7, $7, $6, $6, $5, $5, Percentage Increase 3.9% 5.5% 7.5% 5.0% 10.7% 9.6% 9.8% 8.0% 6.3% Source: State-Certified Reports J90, CBEDS, SACS for applicable years

31 Health Benefit Concern Scale Level of Concern Employee Concern About Cost of Care 100% Employee-paid 125 Election Hard caps Trade off for salary Soft caps 100% Employer-paid Deductible Copays Amount Employee Pays How does the district get credit for making an employee health and welfare contribution?

32 Is there a downside to a hard cap on employee health benefits? Retiree Health Benefits

33 Retiree Health Benefits Retiree Health Benefits Be careful what you give to those who leave Lifetime benefit liability can reach disastrous proportions Social Security and Medicare benefits now require 65+ for eligibility Remember, health benefits at retirement were originally offered as an incentive Language that grants medical benefits until age 65 or Medicare-eligible will automatically extend benefits Be cautious in what you give away GASB 43 and 45 Impact on Negotiations GASB 43 requires planning for funding of other postretirement benefits (OPEB) GASB 45 requires that OPEB be recognized as an expense on the LEA s financial statements OPEB includes any health benefits or other benefits provided to employees after retirement GASB 43 and 45 bring retiree benefits to center stage at the negotiations table This is the time to think: Retiree benefits take today s dollars off the table for active employees We expect this to be an issue within the union as well

34 How does the district get credit for providing postemployment health benefits? What is the impact on a district with heavy postretirement costs?

35 Step and Column XYZ Unified Comparative Analysis of Certificated Salaries % of Personnel (FTE) District Composite State Less $35,000 $35-42,000 $42-49,000 $49-56,000 $56-63,000 $63-70,000 $70-77,000 > $77,000 Salary Level District = XYZ Unified Composite = Average of Comparative Districts State = Statewide Unified Average Salary Distribution

36 XYZ Elementary Comparative Analysis of Certificated Salaries % of Personnel (FTE) District Composite State 0 Less $35,000 $35-42,000 $42-49,000 $49-56,000 $56-63,000 $63-70,000 $70-77,000 > $77,000 Salary Level District = XYZ Elementary Composite = Average of Comparative Districts State = Statewide Elementary Average Salary Distribution How does the district get credit for step and column movement?

37 Salary Details Can Have a Major Impact on Competitiveness Salary Details Can Have a Major Impact on Salary Construction Salary cell competitiveness can be hurt if: The district has a high staffing ratio The district s personnel have high seniority Personnel can move quickly through the schedule The district gives major off-schedule bonuses

38 If district salaries are not competitive, is the union stuck with lower salaries forever? Preparing for Factfinding

39 Preparing for Factfinding Factfinders shall consider (Educational Employment Relations Act ): 1.State and federal laws applicable to the employer 2.Stipulations of the parties 3.Interest and welfare of the public and the financial ability of the public school employer 4.Comparison of the wages, hours, and conditions of employment with other employees generally in public school employment in comparable communities 5.The CPI (Consumer Price Index) for goods and services, commonly known as the cost of living 6.Overall compensation, including wages, vacations, holidays, insurance, pension, medical, and hospitalization benefits received 7.Any other facts not included in 1 to 6 above, which normally are taken into consideration in making findings and recommendations What are some examples of criteria that helped to reach a settlement?