Tom Henry

The following is the third of three articles prepared by Tom Henry of Sea Isle City for Cape Issues. They will be published in three weekly segments beginning with the March 3 print edition.

PART 3: Conclusions and Recommendations

This is the third part of a series that seeks to explain the collective bargaining process, the benefits public employees have gained through the process, and the problems that have been found in the system. This section will present some general conclusions about the collective bargaining process and list some recommendations for changing the system to better protect the interests of the taxpayers who, at the end of the day, must pay for the implementation of the collective bargaining contracts.

The two State Commission of Investigation reports pointed to a possible savings of $10 million for local taxpayers in just 71 school districts studied and more than $39 million worth of excessive cash benefit payouts to public employees in just 75 local government entities studied. Extrapolated statewide, action to curtail such extravagance would result in enormous savings—especially given that fact that nearly $ 40 billion is spent by local taxpayers every year to fund municipal governments, school districts, and local public authorities. The lack of sufficient information provided to the public regarding the compensation and severance agreements for senior administrative personnel results in a system that is ripe for abuse.

The major obstacle for the public in understanding the economic impact of the salary and compensation benefits provided by union and individual contracts is the secrecy of the process. The evolution of the collective bargaining process has reduced it to a two-party process which then hands the bill to an unknowing public.

The absence of public involvement in the collective bargaining process has been the focus of significant discussion in recent years. At Brown University’s Conference entitled, Collective Bargaining in Public Education: A New Dialogue, the participants underscored the importance of expanding the role of the community and other stakeholders in the collective bargaining process. In a similar vein, Munk (1998) at the Mackinac Center for Public Policy argued that collective bargaining inhibits open communications. She points out that the lack of openness means:

• taxpayers and members of the community are frequently unaware of, or misinformed about, what is negotiated.
• Collective bargaining has resulted in too much of the public interest being given away.

Perhaps the situation can best be summarized by the statement of one participant in a seminar entitled “Why Public Sector Collective Bargaining Should Be Made Public:”

I’m a taxpayer, and that money my elected officials are bargaining away is very
much indeed MY money. I earned it, turned it over to the government in the form
of taxes with the expectation that it would be used for legitimate public purposes
only, and its distribution open for public inspection and subject to public
comment. There is only one reason why elected officials and union bosses would
want to conduct negotiations in private, and that is to keep taxpaying citizens such
as myself from knowing what kinds of deals they’re making and why they are
making them. It’s rotten business, and it ought to be against the law. ( J. Stegall,
2009).

A different solution to public sector collective bargaining is advanced by S. Christensen in a paper entitled; “Pay Boards versus Collective Bargaining in the Public Sector.” She calls for a retrenchment in public sector labor relations policy in that bargaining over pay in the public sector should be eliminated in favor of pay scales that are set by an independent agency on the basis of comparability to the private sector.

Recommendations

It is obvious that the salaries and benefits provided to public employees in the form of union and individual contracts are placing an unsustainable burden on taxpayers. In an effort to bring openness and public scrutiny to the public bargaining process, it is recommended that:

1. New Jersey modify the Public Employment Relations Act to require public participation in the first two collective bargaining sessions where each party exchanges proposals and the employer presents counterproposals to the initial union proposals.
2. Prior to the formal ratification of any negotiated contract, the government will provide the public with a detailed explanation of the benefits provided, along with the initial cost of each benefit and the cumulated effect on the tax rate.
3. The public be afforded the opportunity to provide comment on the proposed agreement(s) before they are ratified.
4. Sick Leave benefits should be limited to no more than 15 days per year. At retirement, payment for accumulated unused sick leave be limited to a lump sum representing no more than 50 percent of an employee’s unused sick leave, up to a maximum of $15,000. No public employee should be permitted to cash in accumulated unused sick leave at any time prior to retirement, including in the event of termination or resignation.
5. Sick Leave payouts should be based on the individual’s pay rate at the time the days are earned and not on the individual’s par rate at the time of retirement.

6. Public employees at all levels should adhere to the state limit of a maximum of 25 paid vacation days per year after 20 years of continuous service. No more than one annual allotment of vacation time should be carried forward by any employee from one year to the next. At retirement, employees should be authorized to redeem only that portion of their final year’s vacation allotment which has actually been earned; no such lump-sum payment should be greater than the value of one year’s worth of accumulated vacation.
7. Public employees at all levels should be required to adhere to the established schedule of holidays and administrative time off authorized for state employees.
8. Terminal leave, in whatever form it may take, should be eliminated.
9. The payment of bonuses, stipends, separation payouts and other forms of special compensation should be eliminated.
10. Compensatory time be allocated strictly based upon hours actually worked beyond the normally scheduled hours of employment as confirmed by daily attendance records. Such time should be used with one year of its allocation. Under no circumstances should compensatory leave be exchanged for cash payments.
11. County and local employees contribute to their health insurance at the same rate as their counterparts in state government.
12. In the interest of fostering greater transparency, oversight and accountability, local and county government must maintain easily accessible and readily understandable summary sheets delineating all benefits provided to every employed individual. In addition, the employer must disclose the terms and conditions of all special compensation and benefit arrangements negotiated with and awarded to select individuals upon resignation, retirement and/or termination.
13. Post-retirement employment agreements should be prohibited.
14. When binding arbitration is used to settle impasses, the arbitrator must be guided by the impact of any aspect of the settlement on the local tax rate, especially in consideration of the state imposed budget caps, and a comparison of the proposed salary and benefits to those in the private sector.

(ED. NOTE: Tom Henry has more than 40 years experience in public sector collective bargaining. He has written several articles on the financial impact of collective bargaining on organizations. He has been the President of the New Jersey Association of County College Negotiators.)

REFERENCES

Begin,J.P.; T. Settle; P. Alexander. Academic Bargaining: Origins and Growth. Institute of Management and Labor Relations, Rutgers University. 1977

Christensen, S. Pay Boards versus Collective Bargaining in the Public Sector. Canadian Public Policy. Vol, 6, No. 4, 1980.

Fecteau, M. Legal Boundaries of Collective Bargaining. Labor Studies Center.
Wayne State University, Detroit, MI.

Froonjian, J. “State heads toward ‘pension train wreck’”. The Press of Atlantic City. Dec. 6, 2009

Milakovich, M. & G. Gordan. Public Administration in America. 10th Ed.
ISBN: 0495569402.

Munk, L.R.G. Collective Bargaining Inhibits Open Communication. Mackinac Center for Public Policy. 1998.

Sherk, James. The heritage Foundation. 2008. www.heritage.org/Research/ Labor/wm2773.cfm#_ftn13.

State of New Jersey Commission of Investigation. TAXPAYERS BEWARE: What You Don’t Know Can Cost You. March 2006.

State of New Jersey Commission of Investigation. THE BEAT GOES ON: Waste and Abuse in Local Government Employee Compensation and Benefits. December 2009.

State of New Jersey Public Employment Relations Commission. What Is PERC?.

_________. “ Collective Bargaining in Public Education: A New Dialogue. Annenberg Institute for School Reform at Brown University. Dec. 2006.

Click here to read Part 1 of the series.

Click here to read Part 2 of the series.