Rocky Mountain Public Employer Labor Relations Association

Public Sector Collective Bargainingby

Hal Stratton

July 16, 2010

Tamaya Resort and Spa

Santa Ana Pueblo, New Mexico

Public Sector Collective BargainingHistory in the U.S.

Throughout American history -- and as recently as the 1950s -- there were no unions for government workers. Public-sector employees were expected to earn a bit less than their private-sector equivalents. The reasons they did so included an interest in public service, job security and reasonable benefits.

New York City

This changed in the late fifties with New York City Mayor Robert Wagner's appeal to the votes of city workers. He signed an executive order authorizing them to unionize, and soon other local and state legislators around the country followed his lead.

JFKExecutive Order 10988

In 1962, President John F. Kennedy granted federal employees the right to collectively bargain. Since then, public sector union membership has increased significantly while, in the private sector, union membership has fallen.

Union MembershipPublic v. Private Sector

In 2009, private sector union members were outnumbered for the first time by their public sector counterparts.

Basis for Unions and Collective Bargaining

The historical basis of unions revolved around workers receiving a reasonable share of a company's profits. But governments don't make profits.

Public Sector Collective Bargaining in New Mexico

• Prior to 1971, no public sector collective bargaining in New Mexico

• 1963-1987 NM Legislature considered at least 17 public sector collective bargaining bills and failed to pass any of them

• NM Legislature did authorize collective bargaining for municipal transit workers in 1965– Pursuant to the Urban Mass Transit Act– Mandated in order to receive federal funds

Pre-1971 New Mexico AG OpinionsPublic Sector Collective Bargaining

• Prior to 1971 all NM attorneys general opinions determined public sector collective bargaining was not authorized in NM– AG Op. No. 55-140 (1955) (Robinson)

• Whether Employees at NM Insane Asylum could organize and bargain

• Public employees couldn’t belong to a union– AG Op. No. 55-241 (1955) (Robinson)

• Previous opinion applies to all state and local government employees

– AG Op. No. 59-90 (1959) (Dickson)• Employees could organize but need not be recognized• No collective bargaining, striking or picketing• Allegiance to union and to municipality are inconsistent

– AG Op. No. 63-52 (1963) (Hartley)• Reaffirming the previous opinions

Public Sector Collective Bargainingby Attorney General “Executive Order”

• 1971 AG reversed the opinion of the Deputy AG contained in a letter sent two days previously to Ft. Bayard Medical Center– AG letter found public sector collective bargaining

was not illegal• AG Op. 73-19 stated:

– “this office likewise authorized permissive collective bargaining by public employees in New Mexico on April 14, 1971” (emphasis in the original) (Comparing the NM AG’s action in authorizing public sector collective bargaining to Presidents Nixon’s and Kennedy’s executive orders sanctioning federal collective bargaining)

New Mexico 1987

• AG Op. 87-41 (1987) Reverted to the previous interpretation– Adopted the majority of states’ view– Must have specific public sector collective bargaining

statute– New Mexico Legislature had not passed one

• AFSCME v. Stratton (1988) NM Court decided follow the “minority view.”– Allowed State Personnel Board to make the decision– Permissive Public Sector Collective Bargaining

New Mexico Statutory Era

• 1992 collective bargaining bill passes legislature for first time (23rd state)

• Law contained sunset provision which took effect in 1999 during Johnson administration

• 1999 bills passed and vetoed by Gov. Johnson• Richardson elected and promises to push

collective bargaining legislation• 2003 current collective bargaining bill by the

legislature passed

Public Employees Bargaining Act 2003

• Purposes—– Promote harmonious

and cooperative relationships between public employers and public employees

– Protect the public interest by ensuring at all times the orderly operation and functioning of state government

– Guarantee rights of public employees to bargain collectively

Public Employees Bargaining Act2003

• Provides for state and local public sector collective bargaining

• Leaves union and agency shop provisions to negotiation

• Provides for exclusive representation• Prohibits strikes and lockouts• Prohibits picketing of homes or private businesses

of elected officials or public employees• Provides impasse resolution pursuant to the

Uniform Arbitration Act

NM Public Sector Collective Bargaining Limitations

• Scope of bargaining cannot violate state statutes, and specifically—– Bateman Act– Personnel Act– The Group Benefits Act– Per Diem and Mileage Act– Retiree Health Care Act– Public Retirement laws– Tort Claims Act

NM Public Sector Collective BargainingOther Provisions

• Bargaining agreements must have a grievance procedure– Uniform Arbitration Act– Judicial Review

• Payroll deduction for dues is mandatory subject of bargaining– Payroll deductions must be honored until

employee revokes in writing pursuant to terms of agreement

New Mexico Collective BargainingImpasse Procedure

• Either side may request mediation• Arbitration

– Arbitrator must choose from one of the parties complete, last and best offer

– Can’t require an additional appropriation of funds– Subject to judicial review under the Uniform

Arbitration Act– Binding arbitration

• Local government may enter into agreement with an alternate impasse procedure

California Experience

• 1968 California Legislature passes the Meyers-Milias-Brown Act extending bargaining rights to local government workers

• Teachers and other state employees gain bargaining rights in the 1970s

• Occurred during burgeoning California economy

CaliforniaPublic Sector Job Explosion

• 1960—874,000 government jobs

• 1980—1.6 million government jobs

• 1990—2.1 million government jobs

• Late 1970s—170,000 in teachers union

• Early 1990s—225,000 in teachers union

• Today—340,000 in teachers union

Reaction to Prop 13

• 1978 Proposition 13 Initiative– Property Tax Cap

• 1980 Local government workers went on strike 40 times even though it was illegal

• 1985 California Supreme Court sanctioned local workers right to strike

• Unions then implemented a period of “rolling strikes” and the “blue flu” strategy

California Teachers Association(CTA)

• After Prop. 13 launched, CTA coordinated statewide effort to support friendly politicians

• Union candidates began to be elected to school boards and gaining the majority

• 1987 83% of local board seats in Orange County went to union candidates

• 1988 Prop. 98—40% of state budget goes to local education– Local schools got an extra $450 million in funding– Much of it went to increased teacher salaries

CTA Strikes

• CTA began to call teacher strikes• 1989 strikes cost California students 7.2 million

classroom days– And, they urged students to support them by skipping

school.

• 1994 CTA began involvement in other non-school, political issues– Opposed measure that prohibited illegal immigrants

from using state government programs– Opposed ban on state recognizing gay marriages

performed elsewhere

California Correctional Peace Officers Association (CCPOA)

• 1980 Won right to represent 1,600 members• 22 new correctional institutions built in 25 years• Union Membership expanded—

– 1988 17,000 members– 1997 25,000 members– Today 31,000 members

• Budget is now $25,000,000 with 70 employees including 20 lawyers

CCPOA Political Clout

• 2004 spent $200,000 in an assembly race to unseat a member who supported prison privatization

• 1998 gave Gov. Gray Davis $1.5 million in contributions and $1 million in independent ads

• After 2002 re-election Davis gave members a 34% pay hike– Average base salary went form $50-65,000– Cost budget $2 billion over life of the contract– Eight weeks after the offer, CCPOA donated $1

million to Davis campaign

California Organization of Police and Sheriffs (COPS)

• Retire at age 50 with 90% of their final working salary after 30 years service

• Controversial Campaign

Solicitations– Called neighbors and threatened to cut off 911 service if they

didn’t contribute– Reportedly offered to shave points off of driving records in return

for contributions– 1998 Published voter guide for which candidates paid to be

included

California Service Employees International Union

(SEIU)• 1984 Cal. St. Employees Assoc. affiliated with

SEIU• SEIU represents 700,000 workers• 1980s began effort to have independent

contractor home-health care workers declared government employees

• They won in court and began organizing them• Won representation of 74,000 in LA County

alone• Reached state-wide total of 130,000

SEIU Political Activity

• 2005 Spent $20,000,000 against initiative to cap government growth and rein in union power

• Spends millions on initiatives to increase taxes– Failed at times– 2004 succeeded in millionaire’s tax to support mental-

health spending– Supported living wage laws-LA and San Fran

• 2003 pressured the board of CalPERS to stop investing in companies that outsourced government jobs to private contractors

Governor Gray Davis EraCalPERS

• CalPERS board lobbied for pension bill– Issued opinion that new benefits could be paid for out of surplus and

stock-market gains– California municipalities followed suit

• Stock market slide in 2000– State’s obligation went from a few hindered million in 1999 to $ 3

billion by 2010– Orange County went from $140 million to $410 in 2009

• 1999 Legislation increasing pension benefits– Retroactive cost-of-living adjustment for retired

public employees– Cheaper 1991 Wilson pension plan phased out– Public safety workers retire at 50 with 90% of

salary

Davis Recalled

• 2000 Negotiations to have a portion of the state budget surplus devoted to education

• Davis began the bidding at $1.2 billion but eventually agreed on $1.84 billion

• After reelection in 2002 Davis announced the massive deficit

• Recall election– SEIU spent $ 2 million to defeat recall– Then, jumped to Cruz Bustamante when it was apparent Davis

would be recalled

Arnold Schwarzenegger

• Backed 2005 Initiatives to:– Curb the unions and restrain government growth– Included provision to make it more difficult for

unions to use member dues for political purposes

• Most expensive statewide election in US history– More that $300 million spent– CTA mortgaged its Sacramento headquarters and

spent $57 million

• All initiatives went down to defeat

Intervening Events

• Housing boom in mid-2000s drove up tax collections

• State spent surpluses increasing spending 32% or $34 billion in four years

• Housing market crashed in 2007• Mid-2009, $21 billion deficit

– State issued IOUs when it temporarily ran out of cash

So what?

• 12.3% unemployment in California• 20 billion in the red (Jan. 2010)• $12 billion tax increase last February• 2500% increase in state pension cost over the last

decade• 15,000 government retirees who receive pensions of

over $100,000 per year• 2008 California had unfunded pension liability of $63

billion• State had to issue IOUs when it ran out of money• Governor orders state employees to be paid minimum

wage

What CA state officials are saying: State Treasurer Bill Lockyer

• State Treasurer Bill Lockyer says pensions will bankrupt the state and--– “It's absolutely critical that the governor and

legislature quickly adopt a budget that's free of hope-and-a-prayer math and legal clouds. Every day without a credible plan brings us closer to deterioration of the State's credit rating and the humiliation of IOUs”

– Every day without a budget increases fiscal problems by more than $50 million

What CA state officials are saying:Governor Schwarzenegger

• Governor Schwarzenegger:– "We are about to get run over

by a locomotive. We can see

the light coming at us.“

• Has imposed the federal

minimum wage on all state

workers– Approved by Calif. Court of Appeals

What CA state officials are saying: Willie Brown’s

“Out of Control” Civil Service • "I don't come to this issue, frankly, with clean hands. I did a lot of stuff when I served as a member of the Legislature.” • “The deal used to be that civil servants

were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians – pushed by our friends in labor -- gradually expanded pay and benefits . . . while keepingthe job protections and layering on incredibly generous retirement packages.“

• "When I was Speaker I was in charge of passing spending. When I became mayor I was in charge of paying for that spending. It was a wake-up call."

California Municipalities

• Vallejo bankruptcy• City of Orange

– $88 million budget in 2009– Spent $13 million on pensions– Expects this to rise to $23 million in three years

• Contra Costa– Pensions rose from $70

million in 2000 to $200 million currently

• Los Angeles– ½ of the city’s $7 billion budget goes to salaries– Hundreds of millions in shortfall currently– Expected to go to $1 billion within a few years– City handed out a 23% pay increase in 2007– Schools $600 deficit

What is going on Nationally?

• 20 million of 23 million civil government workers are state and local

• 2008 cost for employees was $1.1 trillion – One half of total state and local spending

• Government union membership– 2008—39%– 2009—37.2%– New Mexico—12.5%

CompensationU.S. Bureau of Economic Statistics

• U.S. Bureau of Economic Statistics--

• 1950-1980 Private and government compensation moved in lock step

• Average Compensation 2008– Private Sector $59,909 ($9,881 benefits)– Public Sector $67,812 (15,761benefits)

• NM $64,432

CompensationBureau of Labor Statistics

• 2009 Average Wage– Public Sector $39.66 per hour– Private Sector $27.42 per hour

• Public Sector comp. is 45% greater than private sector– 34% in wages; 70% in benefits

• Average hours worked 2008– Private Sector 2,050 hours per year– Public Sector 1,825 years per year

Public Sector Benefit Advantage2009

• Health Care– 71% Private Sector– 88% Public Sector

• Retirement plans – Private Sector 67% total; 76% full time– Public Sector 90% total; 99% full time

• Life insurance– Private Sector 59%– Public Sector 80%

• Paid Sick Leave– Private Sector 61%– Public Sector 89%

Government Retirement Plans

• Most government plans are “defined benefit” as opposed to “defined contribution”

• Most benefits based on last one to three years of work

• Retirement age is usually 55 (or less)• “Layoffs and discharges” in public sector are 1/3

of that in the private sector• Quit rate in the public sector is also 1/3 of private

sector

Government Pension Issues• Early Retirement

– Usually age 55 with thirty years of service– Usually defined benefit plans

• Double Dipping– Retiring early and taking another public sector job– Collect pension, salary and 401(k) benefits

• Pension Spiking– Raises in final year of work, over-time, vacation pay or sick leave

• Disability Claims– Collecting disability payments and working in another job

• Excessive Pension Benefits- CalPERS 6,144 retired public employees and 3,090 retired

teachers receiving in excess of $100,000

• Overpromising Benefits• Pay-to-Play Corruption

– Defined benefit plans—governments have huge portfolios

State Fiscal Challenges

• Rising state and local government debt– 2000 $1.2 trillion– 2009 $2.3 trillion– Up 92%

• Unfunded state pension plans– $1 trillion officially– Cato study using realistic assumptions-- $3.2 trillion– Illinois teaches—only 35% of funding

• Underfunding vs. overpromising

State Fiscal ChallengesRetiree Health Care

• Retired Employee Health Plans– Underfunded by $1.4 trillion nationwide– California annual retiree health case costs

• $3.4 billion in 2005• $31.4 billion by 2020

Overall Union Statistics

• Total Numbers—2009– Private Sector 7.4 million– Public Sector 7.9 million

• Percentages– 7.2% of private sector workers– 37.4% of government workers

• Median weekly earnings– Full time union member $908– Workers not represented by unions $710

• Government employment grew last year—– 22,516,000 up 16,000 from previous year

Public Sector Collective Bargaining--In the Public Interest?

What is the public interest?

• Peaceful, stable employee-employer relationship

• Protection of rights of all public employees• Providing governmental services in the most

efficient manner possible• Protection of the rights of the people through

elected representatives– To control government policy– To control cost of government

Stability and Harmony

• Public sector collective bargaining results in increased strike activity– Prior to 1958, 15 strikes against government– By 1980, thirty-seven states had enacted compulsive

public sector collective bargaining activity, there were 536 strikes

• Michigan-passed collective bargaining law 1965– 1958-64 one strike against government– 1965-1980 759 strikes against government

• Pennsylvania-passed collective bargaining law 1970– 12 years prior to passage—72 strikes– 11 years after passage—767 strikes

• 1981 Reagan’s action re PATCO strike reduced strikes by about 50%

Employee Rights v. Union Privileges

• Employees’ Right to join a union– 1st Amendment

• Union rights—– Sole and exclusive representative of all

employees in the unit– Union or Agency shop– Defense of employees in adverse action

• Including absenteeism, insubordination, poor evaluations, etc.

Efficient Delivery of Public Services

• Strikes, picketing where allowed deter efficient delivery

• Binding arbitration removes elected officials from the process

• Union contracts tie hands of elected officials to respond to economic emergencies– To wit: City of Albuquerque

• More government– At least one more board and bureaucracy

• Government employees paid to do union work– See City of Albuquerque again

Public Control of GovernmentPolicies and Costs of Government

• Should voters or unions control public policy and cost of government?

• If collective bargaining is compulsory, public officials must bargain “in good faith”– How is good faith defined or interpreted?

• Deprives public of its right in policy making• Decisions made in mediation or arbitration• Unions can withhold labor—public cannot• Binding Arbitration

Differences between Private and Public Sectors

• Public Sector is a Monopoly and thePrivate Sector is Competitive

• Public Sector Decisions are Political and Private Sector Decisions are Economic

• Public Sector (Government) is Sovereign and Private Sector is governed by freedom to contract

Federal Legislation Pending

• Public Safety Employer-Employee Cooperation Act– Mandates state and local governments engage in

collective bargaining with public safety officers

• President asking for an additional $50 billion for state an local government

• Card Check or Employee Free Choice Act– Dispenses with secret or

private ballot election for union certification

RMPELRA

Hal StrattonBrownstein | Hyatt | Farber | Schreck

Albuquerque-DenverWashington, DC505-724-9596

hstratton@bhfs.comwww.bhfs.com