Neshaminy ESPA and Neshaminy School District Fact Finding Report of April 29, 2010

8/9/2019 Neshaminy ESPA and Neshaminy School District Fact Finding Report of April 29, 2010

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IN THE MATTER OF FACT FINDING BETWEEN:

Neshaminy Educational Support ProfessionalAssociation PSEA-NEA

and

Neshaminy School District

REPORT OF THE NEUTRAL FACT FINDER

Background

The most recent collective bargaining agreement between the

Neshaminy School District and the Neshaminy ESPA is for the term 2003-2009.Negotiations have taken place between the parties for a successor agreement,beginning December 3, 2008. The parties met and exchanged proposals. Boththe District and the Association prepared and presented separate comprehensiveproposals for settlement. None of these efforts so far have resulted in agreement.

On March 12, 2009, the District advised the Association that it would beexploring the idea of subcontracting out some of the functions performed by unitemployees, specifically work performed in the transportation, custodial,maintenance and food service operations. Later in negotiations, the Districtadvised the Association that grounds work was also being considered foroutsourcing. Requests for Proposal (RFPs) were received from bidders outliningthe potential savings which could be realized through subcontracting.

In an effort to reach agreement, the parties voluntarily chose to enlist theassistance of a neutral fact finder. The parties agreed that the fact finder wouldengage in both mediation, as well as formal hearing, prior to the issuance of areport containing recommendations. The parties jointly appointed theundersigned, Margaret Brogan, to act in that capacity.1 Meetings and hearingswere held between the parties and the fact finder on March 15, March 25 andApril 6, 2010. At that time, the parties presented evidence and argument tosupport their respective positions in this matter. The findings of fact andrecommendations below are based upon the information provided to the factfinder during this process.

1 While Act 88 allows for fact finding if either party requests, the parties chose to utilize private fact finding

because the parties found the 40 day period for the issuance of a fact finding report to be too constraining

given the complexities of this matter.

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The Districts Fiscal Position

During this proceeding, the District has presented persuasive evidence tothis fact finder that it is in a precarious fiscal position. The District hasexperienced a sharp drop in local taxes and other revenues. State subsidies

represent just a small percentage of total general fund budget revenues. Healthcare and retirement system payments have deeply escalated. Act 1 limits theDistricts ability to respond to declining revenues and increased expendituresbecause of the statutes cap on any tax increases. The Act 1 cap presently isonly 2.9%, and may be less for the 2010-11 school year.

The Issue of Subcontracting

The results of the RFPs indicate that the District could realize very largesavings, perhaps as much as 15 million dollars for the next three years, if

transportation, maintenance, custodial, grounds work and food serviceemployees were laid off and outsourced. At first blush, subcontracting presentsa savings option for a District that has little to no money to spare, and a limitedability to find more.

At the same time, subcontracting can have the obvious impact of the lossof unit employees. A good number of these workers are citizens and taxpayersin the District. Therefore, their layoff due to outsourcing would have a negativeripple effect upon the local economy. Moreover, these employees, many withlong tenure, have served the District well, providing invaluable and essentialservice to the Districts children.

Putting aside the direct impact on unit employees and their families,subcontracting, quite simply, does not always work. If the District were tooutsource key operations, it may lose control over the quality of those essentialfunctions. A subcontractor may hire employees who are unqualified. It may givethose employees low pay and benefits, and limited job protections, resulting infrequent turnover and poor work product. If this School Board takes the knee

jerk response, in an attempt to appease taxpayers today, of jettisoning itsexperienced employees and replacing them with the unknown workers of asubcontractor, it may find itself in a far worse predicament down the road, andmuch explaining to do to its taxpayers, when basic services, needed to supportthe education of its children, have been compromised.

Moreover, the decision to subcontract will most assuredly result inlitigation, as the Association will question whether the decision to subcontract hasbeen made in conformance with applicable law. Whatever the merits of eachsides respective positions, this litigation will take time and money, and will leavethe entire District -- its employees, its students and its taxpayers -- in a legallimbo until the issues are resolved by tribunals outside this District. It is obviously

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far better if the parties can reach agreement, allowing the important work of theDistrict -- the education of its students to be its focus.

Conclusions of the Fact Finder

Two critical facts have been revealed. The District is entitled to realizesignificant savings in this contract in light of the above. At the same time, it isunrealistic to expect this unit to bear the total cost of the savings potentiallyrealized by subcontracting given the wages and benefits of this unit. Savingsshould be expected in this collective bargaining agreement, but the District alsoneeds to also find savings elsewhere.

I have evaluated the competing concerns and arguments of the parties inthe light of the above. I considered two avenues to address these problems. Ibelieve it is educational for the District and the employees represented by the

Association to see both scenarios I have considered and my rationale for why Iam recommending Scenario #2 below.

Rejected scenario #1

Given the problems with subcontracting, and the impact upon the workers,I first considered a scenario where no subcontracting would be recommended.However, in order to achieve substantial savings in this contract, cuts would haveto be made across the unit, impacting those employees who are in no danger ofbeing outsourced.

There are only limited areas where savings can be found: through areduction of the labor costs of wages, current employee benefits and retireebenefits. To achieve significant savings, in exchange for a no-subcontractingpromise, the following would be reasonable: 1) a 5% pay cut across-the-boardeach year of the proposed collective bargaining agreement; 2) the Health planproposed by the District (Blue Cross Personal Choice C3-F3-01 or comparableplan along with the proposed dental, vision, and prescription plans); 3) Healthcare premium co-shares of 10%, 11%, and 12% starting with the 2010-11 schoolyear; and 4) retirees going forward would have to pay the same health care co-shares as the unit, with no retiree benefits for employees hired after July 1, 2010.It is obvious that this proposed contract would be painful for all unit employees,and retirees, and it seems inequitable that those employees who are notthreatened with subcontracting should bear such a heavy burden.

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Recommended scenario #2

However, a solution to this apparent dilemma of finding significantsavings, while at the same time providing equity and job protection to unitemployees, may be possible. A review of the RFPs for subcontracting of

transportation reveals the components of what might be a palatable answer. Thelowest bid promises that it will provide preferential hiring of current staff at thecurrent wage rate, along with a $3000 summer unemployment eligibility perdriver, and medical benefits with employer contributions. At the same time, theDistrict will realize not only the reduction of the labor costs, but also the sale orrent of the bus inventory of the District, bringing about significant revenues. Thiswould provide job protections to the transportation employees, so long as theDistrict makes these stipulations part of any deal it makes with a subcontractor.

Along with job protections in the short term, unit employees should begranted the right to protect their jobs and benefits in the long term, through

representation of the employees by the Association. In very persuasive courtprecedent, which reflects a similar situation to the one before us, a federal courtupheld the decision of the National Labor Relations Board, which found that asubcontractor was required to recognize the union that had previouslyrepresented the school districts bus drivers when the sub took over the provisionof school bus transportation.2 Rulings by the NLRB are dependent upon thefacts of each case, but given the circumstances presented here, this precedentappears to be applicable and provides a very appealing option. In order for theDistrict to be fair and equitable to its transportation employees, any outsourcingcontract the District pens with a subcontractor should include job and unionprotection guarantees.

While subcontracting of the transportation employees is far from a perfectsolution, the outsourcing of those individuals, so long as jobs and union rights areprotected, would provide the significant savings of approximately $8,500,000over the term of the proposed four-year collective bargaining agreement. Withthese savings realized, the rest of the unit would not be as negatively impacted,and, indeed, could be the beneficiaries of a wage increase and better healthbenefits. In addition, current retiree benefits would remain in effect. Finally, theDistrict should promise not to subcontract any other services during the life of theagreement, granting job security to those still employed.

2Dean Transportation, Inc. and NLRB, 551 F.3d 1055 (D.C. Cir., 2009).

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FORMAL RECOMMENDATION OF THE FACT FINDER

Accordingly, based upon all of the above, I recommend that thefollowing be the basis for a new collective bargaining agreement between

the parties:

A four year contract (2009-10 through 2012-13) in order to provide neededlabor stability.

Article 1, paragraph 1.6: amended to include provision that District maynot subcontract out any unit work, other than transportation services,during the life of the collective bargaining agreement.

Article 7, paragraph 7-1: amended to include across the board increasesof 0% for the current year, 3% for 2010-11, 3% for 2011-12, and 3% for

2012-13.

Article 8: amended to indicate that the District will provide PC 20/30/70Health plan with 10% premium co-share each year, beginning 2010-2011.Clause will include me-too provision that if the teacher unit, which iscurrently in bargaining, gets a better health plan or lesser premium co-shares, then this unit will be accorded the same deal.

Article 8: All current retiree benefits remain intact, with the exception, if itnot already the status quo, that retirees be placed on the same health plan

as current employees. Amended to state that no retiree benefits will beprovided to those employees hired after July 1, 2010.

Appendix B is deleted.

Appendix C, Memorandum of Understanding, is to be amended so as todelete the following paragraphs: 3, 4, 6 and 10.

New provision: District is entitled to subcontract out transportationservices to a subcontractor so long as the following provisions arecontained in the contract between the District and the subcontractor:

1. All transportation employees currently employed by the Districtwill be offered employment by the subcontractor; and if theyaccept, will be hired.

2. All hired employees will be maintained at their current wagerate, and benefits will be granted with a significant amount of thepremium paid by the subcontractor.

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3. All hired employees will be entitled to $3,000 of summerunemployment benefits.

4. The subcontractor will purchase the bus inventory of the District.

5. In accordance with applicable law, and upon the hiring of amajority of the Districts employees performing transportationservices, and upon a proper demand for recognition andbargaining by the PSEA, the subcontractor will promise that itwill recognize and bargain with the PSEA as the collectivebargaining agent of the employees previously employed by theDistrict and hired by the subcontractor.

New provision: Transportation employees laid off as a result ofsubcontracting will be granted a severance benefit of $74 per sick day.

All other contract provisions, not referenced above, will remain thesame as reflected in the 2003-09 agreement.

____________________________Margaret R. Brogan, Fact Finder

Date: April 29, 2010

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Documents

Neshaminy ESPA and Neshaminy School District Fact Finding Report of April 29, 2010