THE POSSIBILITIES AND
THE DIFFICULTIES
OF SHARING SERVICES,
SUBCONTRACTING OR CONSOLIDATING
TO REDUCE EXPENDITURES
Presented by:
Jeffrey F. Swiatek, Esq.
Dina L. Allen, Esq.
Hodgson Russ LLP
The Guaranty Building
Suite 100
140 Pearl Street
Buffalo, New York 14202-4040
Telephone No. 716-856-4000
July 15, 2013
I. Introduction.
- An on-going need to reduce or at least to limit increases in future expenditures is likely going to be a fact of life for school districts for quite some time.
- At some point there will be no more programs or personnel that a district will be able to cut if it intends to continue educating the children in its community. Our school leaders will have to become even more creative in how they seek to keep expenses in check, as they will need to look to be even more efficient than they have been up until now.
- We realize that many of these cost-saving measures have already been used by many districts. However, we expect that they likely will have to be revisited in the coming years.
II. sharing services.
A. Shared Personnel.
1. Shared administrators and supervisors.
2. Specifically authorized by Education Law Article 40-A (Sections 1980 and 1981).
3. May share services of Superintendent, Associate Superintendent, Assistant Superintendent, Director of Physical Education or any other employee with District-wide administrative or supervisory responsibilities.
4. May be shared between two or more school districts.
5. Sharing administrators who may be granted tenure:
a) Districts must designate principal employing district.
b) Shared personnel is considered to be employed by the principal employing district.
c) Decisions regarding the probationary appointment and compensation package are to be made with consent of the majority of the Board of Education of each participating District.
d) Principal employing District makes decisions regarding termination, discipline or tenure in consultation with other participating Districts.
e) Services rendered under such agreement in any other participating District is deemed to have been rendered in the principal employing District for purposes of tenure credit, seniority and discipline.
f) If another participating District is substituted as the principal employing District, the shared employee is considered an employee of the new principal employing District with the same tenure status s/he maintained in the prior principal employing District. Length of service credit in the prior principal employing District (for purposes of salary, sick leave, etc.) is credited as employment time with the new principal employing District.
g) If District abolishes position, tenured administrator has recall rights only in principal employing District, and similarity is determined by 40% of duties.
6. Sharing administrators who are not in a tenure-track position:
a) Such administrator is jointly employed by all of the participating school districts.
b) Decisions on employment terms are made with consent of the majority of the School Boards of all participating Districts.
7. Agreements to share personnel must be approved by the District Superintendent (or by the Commissioner of Education or his designee if there is no District Superintendent).
8. Carefully consider terms of any employment agreements and/or agreements between participating districts.
a) Employer/joint employer status
b) Term of agreement
c) Allocation and payment of compensation
d) Benefits (e.g., health insurance, etc.)
e) Time off benefits (e.g., vacation, sick time, bereavement, holiday, etc.)
f) Work schedule
g) Evaluations
h) Discipline
i) Insurance requirements
j) Liability/indemnification
B. Inter-Municipal Arrangements.
1. Legislative Authority.
a) New York General Municipal Law, Article 5-G (§§119m,n,o,oo) (enacted in 1960).
b) Legislative purpose is to effectuate N.Y. Constitution Art. 9, §1 authorization to provide for cooperative efforts by local governments:
...two or more [municipal] units may join together pursuant to law in providing any municipal facility, service, activity or undertaking which each of such units has the power to provide separately...
c) Intended to allow local governments to provide services more effectively and cost efficiently.
d) Authority under Article 5-G is in addition to the authority provided by any other statutes to engage in cooperative efforts (e.g., cooperative purchasing under Gen. Mun. Law §§103-104).
2. Applicability.
a) A municipal cooperative agreement under Article 5-G may be entered into by and between any “municipal corporation”, which includes any county (outside of New York City) city, town, village, fire district, BOCES or school district (GML §119-n[a]).
b) Article 5-G authority does not extend to contracts with private entities (Opinion of Office of State Comptroller [“OSC”] 81215).
3. Permissible Subjects.
a) Municipal corporations may enter into agreements “for the performance among themselves or one for the other of their respective functions, powers and duties on a cooperative or contract basis or for the provision of a joint service...” (GML§119-o[1]).
b) “Joint service” is defined as “joint provision of any municipal facility, service, activity, project or undertaking or the joint performance or exercise of any function or power which each of the municipal corporations or districts has the power by any other general or special law to provide, perform or exercise, separately and, to effectuate the purposes of this article, shall include extension of appropriate territorial jurisdiction necessary therefor” (GML §119-n[c]).
c) Can include either a (1) service agreement or a (2) joint agreement.
4. Approval Requirements.
a) Any cooperative agreement “shall” be approved by each participant by a majority vote of the “voting strength” of each participant (all independent approval requirements, such as public hearing, referendum or relevant state and federal approvals, also apply) (GML §119-o[1]).
5. Specified Possible Terms of an Inter-Municipal Agreement.
a) Allocation of revenues and costs on “equitable basis” (GML§119o[2.a]).
b) Employment, compensation and assignment of personnel and related issues (subject to Civil Service Law) (id. at 2.b).
c) Supervision, operation and maintenance issues (id. at 2.c).
(1) May be governed jointly or by “joint board”.
d) Purchasing and contracting issues (id. at 2.d).
(1) Competitive bidding still applicable.
e) Property acquisition, custody, maintenance, repair and disposition (id. at 2.e).
f) Acceptance of gifts, grants or bequests (id. at 2.f).
g) Procedures for procurement of federal or state aid (id. at 2.g).
h) Responsibility for custody of monies (id. at 2.g).
i) Process for responding to liabilities (id. at 2.i).
j) Procedure for “periodic review” of agreement (maximum term may be five years, subject to renewal, unless otherwise provided by law) (id. at 2.j).
k) Dispute resolution procedures (id. at 2.k).
l) Other matters “reasonably necessary and proper” to effectuate and progress the cooperative effort (id. at 2.l).
(1) Nature and intent of agreement.
(2) Scope and standard of service.
6. Other Possible Limitations.
a) Subcontracting limitations - Under many circumstances the transfer of bargaining unit work to non-unit members through a municipal cooperation agreement will constitute subcontracting (e.g., Town of Brookhaven, 28 PERB. §3010).
b) Contractual limitations – As with the case of the exercise of management rights discussed above, the collective negotiations agreement may serve to prohibit or modify what otherwise could have been a matter of management discretion.
III. Subcontracting of Services.
A. Municipalities are, as a general matter, free to contract with private parties for the provision of services which otherwise may be performed by public employees. Westchester County CSEA v. Cimino, 58 A.D.2d 869 (2nd Dept., 1977).
B. However, the reality in the heavily unionized public sector is that the right to subcontract may be significantly qualified, including under PERB’s standards or based upon provisions of a collective bargaining agreement.
C. PERB Standards.
1. There are two essential questions that must be determined when deciding whether the transfer of unit work violates § 209-a.1(d) of the Act:
a) Was the work at-issue exclusively performed by unit employees for a sufficient period of time to have become binding; and
b) Was the work assigned to non-unit personnel substantially similar to that exclusive unit work. Niagara Frontier Transportation Authority, 18 PERB §3083 at 3182 (1985).
If both of these questions are answered in the affirmative, PERB will find a violation unless there is a significant change in job qualifications. When there is a significant change in job qualifications, PERB will balance the respective interests of the public employer and the unit employees to determine if there is a violation. Town of Riverhead, 42 PERB 3032 (2009). Failure to negotiate with respect to a decision to subcontract can constitute an improper practice (e.g., City of Niagara Falls, 31 PERB. §3085 [1998]).
2. PERB may apply a past practice analysis as the means for analyzing the related issues of unit work, discernible boundary and exclusivity.
3. When determining the scope of unit work and whether that work has been performed exclusively by the unit, PERB may examine whether an enforceable past practice exists by determining whether the “practice was unequivocal and was continued uninterrupted for a period of time under the circumstances to create a reasonable expectation among the affected unit employees that the [practice] would continue.” Chenango Forks CSD, 40 PERB 3012 (2007); see also, Manhasset UFSD, 41 PERB 3005 (2008) affirmed, Manhasset UFSD v. PERB, 61 AD3d 123, 42 PERB 7004 (3d Dept. 2009).
This prima facie showing may be subject to a defense raised by the employer demonstrating its lack of actual or constructive knowledge and, therefore, a lack of a bilateral acceptance of or acquiesce to the practice. Id. Constructive knowledge will likely be found to exist when the past practice is reasonably subject to the employer’s managerial and/or supervisory responsibilities and obligations.
4. PERB may also apply the “reasonable relationship requirement” wherein the Board will examine the relationship between the proposed discernible boundary and the duties of the unit employees. According to PERB, this test allows it to further ascertain whether unit employees had a reasonable expectation that the past practice would continue.
a) A discernible boundary may be drawn around work where there exists a clearly circumscribed practice within which unit members perform defined tasks. Manhasset UFSD, 41 PERB 3005 (2008). In determining the discernible boundary, if any, of a past practice in transfer of unit work one must look at the:
“nature and frequency of the work performed, the geographic location where work is performed, the employer’s explicit or implicit rationale for the practice, and other facts establishing that the at-issue work has been treated as distinct from work performed by non-unit personnel.” Manhasset UFSD, 41 PERB at 3025.
D. Contractual Standards.
1. The provisions of an applicable collective negotiations agreement may also restrict in some fashion the ability of the town to subcontract, in which case any challenge to a subcontract would proceed through the contractual grievance/arbitration procedure.
2. Many bargaining contracts include specific prohibitions against subcontracting, such as:
“The District shall be prohibited from subcontracting any District work performed by members of this bargaining unit.”
3. Also look out for indirect contractual limitations, such as:
“During the term of this Agreement, the District shall not diminish any of the rights currently enjoyed by unit members.
“The District shall continue all practices currently in effect.”
4. PERB has found that a union and an employer may satisfy by agreement their mutual duty to bargain a given subject, and thereby waive any further bargaining rights regarding the exercise of that contract right, without expressly stating in their contract that it was reached pursuant to the Act and was intended to fulfill the entirety of their statutory bargaining duty on that particular subject. Cnty. of Livingston, 26 PERB 3074 (1993). The language must provide specific evidence that the employer has satisfied its duty to negotiation about the assignment of unit work to non-unit employees.
5. The contractual language may look as follows:
“…to determine whether and to what extent the work required in operating its business and supplying its services shall be performed by employees covered by [the] Agreement…” Cnty. of Livingston, 26 PERB 3074 (1993).
“The Employer retains the sole right to manage its business affairs and services and to direct the working force, including the right to…determine when and to what extent the work required in operating its business and supplying its services [is] to be performed by employees governed by this Agreement…” Cnty. Of Allegany, 33 PERB § 3019 (2000); Cnty. Of Allegany, 45 PERB § 4580 (2012).
6. PERB also reversed an ALJ’s determination, and permitted a District to subcontract its cafeteria operation as a result of the District’s duty satisfaction/waiver defense. The management rights clause in this case granted the District the right to “contract for performance of any of its services.” PERB held that the all-inclusive meaning of “any” made it unnecessary to enumerate each of the services for which the District could subcontract.
E. Statutory Standards.
1. General standard: In order for another state law to overcome New York’s strong and sweeping public policy under the Act mandating negotiations between employers and employee organizations over terms and conditions of employment in the public sector, the statute must plainly and clearly manifest a legislative intent for the at-issue subject to be nonmandatory. The Legislature’s intent may be explicit or it may be implied from the particular wording utilized in the statute. Springs UFSD, 45 PERB. §3040 (2012).
2. BOCES Programs: Use of BOCES personnel to provide services previously performed by district personnel does not need to be negotiated in any circumstance. The New York Court of Appeals has established that the statute authorizing school districts to make use of BOCES (Education Law § 1950) evidenced an intention by the legislature that a decision to use BOCES services need not be negotiated. Webster Central School District v. Public Employment Relations Board, 75 N.Y. 2d 619 (1990); Vestal Employees Association v. Public Employment Relations Board, 94 N.Y. 2d 409 (2000).
3. Universal Prekindergarten Programs: SED issues grants to school districts for the operation of prekindergarten programs as long as all four-year old children have an equal chance of being admitted to the program consistent with Education Law § 3602-e. PERB determined that the structure, wording and purpose of Education Law § 3602-e demonstrate a clear and plain legislative intent districts, without mandatory negotiations, to subcontract with a collaborating eligible agency for teaching assistant duties. Springs UFSD, 45 PERB. §3040 (2012). In its decision, however, PERB emphasized the narrowness of the decision and its limited precedential value for future cases.