Friday, March 4, 2011

Senate Passes Collective Bargaining Reform

This is a continuation of a conversation started here.

As anyone remotely involved in public education in Ohio knows, the Ohio Senate rapidly moved Senate Bill 5 - the legislation meant to radically reform the laws under which public employee unions operate - from Committee to the floor, where it was passed with little debate.

The text of SB5 as amended and passed is available here, along with a summary generated by the Senate. The next step is for the Ohio House of Representatives to consider the Bill. If they choose to pass it without modification, the Bill could be on the Governor's desk in a matter of days. I'd be surprised if this happens - there will almost surely be amendments made by the House, forcing a conference between the Senate and House to resolve differences. So there's still a lot of politics to happen before any law is created.

But I may be wrong. A good friend and much better observer of politics than I feels SB5 will be passed by the House without modification and signed by the Governor, leaving the real battle for the budget process, which starts soon.

So here is where I stand at this point:

Right to Strike: SB5 takes away the ability for public sector workers to strike (Sec 4117.15 line 8393), and imposes significant penalties on those who do so illegally.

The threat of a teacher strike is the nuclear specter that hangs over every negotiation between a School Board and the employee unions. Some claim that the proof that the current collective bargaining laws have been working is that there have been few teacher strikes since it was implemented.

I think another explanation is that for most of the 30 years since those laws were passed, our economy was in one of the longest periods of growth and prosperity in American history. Therefore, school boards during that period felt confident that they could win sufficient support for additional tax levies to underwrite the deals the unions negotiated. No sense daring the teachers to strike if that's the case.

Those days are gone, and we're now in much tougher times. Does that mean it's impossible to negotiate a new collective bargaining agreement that fits the times?

That's the fear. Clearly our employees have shown a willingness to work a year without a base pay increase, and to postpone the application of step increases by half a year, and that is appreciated. But that's not a new contract, and we don't have a clear sense yet of what the teachers and staff are looking for in their next contract, which has to be negotiated this year. 

We all know that the State of Ohio has a huge revenue-vs-spending gap to fill, reportedly on the order of $8 billion, and we've already been told to expect a multi-million dollar cut to our annual funding from the State. I'm concerned that our current estimate of a 10% funding reduction is overly optimistic, and that as a district viewed to be affluent by the lawmakers, we might be hit with cuts that are double that.

So some painful choices are going to have to be made. How will the impact of our down economy be apportioned between employees and taxpayers? Certainly the rate in which our expenses are growing - which really means the rate in which our cost of compensation and benefits is growing - has to be reduced significantly simply because our revenue is being significantly reduced. There are only two knobs to turn:  1) the number of people on the payroll; and, 2) the per-capita compensation and benefits costs. Neither is adjusted without anguish.

SB5 takes the nuclear option off the table while we try to work this out.  I think that's a good thing, because a strike is first and foremost harmful to the children of our community.

So how does a negotiating impasse get resolved in this Bill? The process is described in Section 4117.14, beginning at line 7998:

  • 4117.14(C) If the parties are unable to reach an agreement, any party may request the State Employment Relations Board (SERB) to intervene. (line 8083)

    SERB will then appoint a mediator to try to bring the parties to agreement.

    Interestingly, at this point, both SERB and the school board would be required to post "conspicuously" the last offers from both the union and school board on the school district web site. This gives the public a chance to review the offers and let their feelings be known while negotiations are still underway. I think this is a good thing.

  • 4117.14(C)(1) Any time after the appointment of a mediator, either party may request the appointment of a fact finder.

    This person is appointed by SERB from its list of qualified persons. The fact finder will gather information and make recommendations for resolution of the remaining disputes. The fact finder is not permitted to disclose these recommendation to the public.

    If either 60% of the union membership or 60% of the "legislative body" - the school board - reject the fact finder's recommendations, the recommendations are publicized and the process moves to the next step. Again, this creates an opportunity to hear feedback from the community.

  • The school board, or a committee of the school board, conducts a public hearing at which both the school board and the union are required to explain their positions with respect to the report of the fact finder. At the conclusion of the hearing, the school board votes to accept either the board's last offer, or the union's last offer.
There is some understandable concern on the part of the unions about this last step. After all, why would the school board ever choose to reject its own last best offer in favor of the last best offer made by the union?

All I can say is that strange things happen in politics. It's no small thing that this section of the Bill requires that this last step take place in the full bright light of public scrutiny. There is little question that such a hearing would be attended by hundreds of union members, and probably hundreds of community members. It would be the same kind of scene as that we've been witnessing at the Statehouse this week. I'm not sure exactly where we would hold such a hearing in Hilliard - one of the high school gyms?

The point is, would a school board stick to its last best offer in such a situation, or yield to the union position?  We won't know until we get there --- and I hope we don't.

So with or without the right to strike, both parties need to bring empathy and reasonableness to the bargaining table this time around. I don't think the public has a lot of tolerance for strong arm tactics by either side right now, especially when it hurts the kids.

When it comes to the kids, they expect us all to be on the same side.

Merit Pay

The new language for ORC 3317.13 (see SB5 as passed, beginning at line 4672) describes a process which must be used to evaluate teachers according to merit. In that process, the School Board must consider all of the following:

  • the level of licensure the teacher has achieved; 
  • if the teacher is "highly qualified" as defined in ORC 3319.074
  • a "value-added measure" the School Board establishes to determine the performance of students in that teacher's classroom; and 
  • the results of an evaluation of the teacher, which might be in the form of a peer-review process negotiated with the union.

I'm a big fan of merit pay. More accurately, I'm a big fan of compensation systems that give each employee a chance to be rewarded with something meaningful to that employee. The trick is to find out what specific reward would motivate each individual, and find a way to provide that reward when an individual achieves certain agreed-upon results.

Unfortunately, we tend to think money is the only reward appropriate in an employment situation - it's certainly the easiest to administer - and I think that leads to the creation of ineffective and expensive compensation programs.

I think it's safe to say that most folks don't go into teaching for the money. But they don't go into it to fill out forms or teach to the test either. Nor do they want to be expending more energy managing classroom behavior than they do imparting knowledge. If we want to effectively reward the teachers, maybe we need to start by figuring out ways to diminish the bureaucracy and behavioral issues they have to deal with, and let them spend more time teaching. Then yes, let's measure their performance objectively, and reward appropriately. Let's look beyond money as being the only form of reward.

But this SB5 fails to change any of this. Both the unions and the management will continue to attempt to resolve performance/reward discussions with a contentious dialog about pay and benefits.

The reality is that if SB5 passes, we're going to enter an extremely painful period of trying to figure out how to turn this ambiguous law into a working collective bargaining agreement (CBA) with the unions. You can bet that the lawyers and consultants are licking their chops about this one. With the stroke of a pen, this law will create a whole new industry to advise school boards and unions how to architect and negotiate radically new CBAs.

I'm not so sure SB5 isn't really a jobs bill for the lawyers and consultants.

Sharing of Health Insurance Costs

The current CBAs with the teachers and staff specify that the employee pays 10% of the contribution necessary to fund our self-insured plan. Right now, the total contribution is $473.74/mo for single coverage, and $1,279.08/mo for family coverage, meaning that the employee pays $47.37/mo and $127.91/mo respectively.

The original version of SB5 required employees to pay 20% of the cost of health insurance coverage. This has been reduced to 15% in the amended bill that was passed by the full Senate (Section 3313.202(B)(1), see line 3872). Current CBAs will remain in force until their expiration (12/31/11 in the case of ours), but this says that no matter what is negotiated into the next agreement, the employee contribution to health coverage is going to increase by at least 5%. In dollars, that would be around $25/mo more for single coverage, and $65/mo more for family coverage.

I don't know what the Senate was thinking on this - that insurance costs are somehow isolated from the rest of the negotiation process?  Does anyone doubt that sometime during the process of negotiating the compensation components of the next CBA, that someone on the union side will say "we want X to help cover the cost of increased insurance contributions"?

Seniority no longer the sole basis for order of layoffs

In principle, I think this is a good thing as well. If a school board finds itself in the regrettable position where folks have to be laid off, doesn't it make sense to cut the people who are least effective?

The catch is figuring out a layoff process which all accept as fair, and not capricious. More opportunity for the lawyers...

In summary...

This conversation is far from over. Regardless of what the House decides, or what gets presented to the Governor, we're going to have another go at it during the budget process. After all, it was through the last budget bill that Governor Strickland implemented most of his changes to school operations, notably the so-called Evidence Based Model.

Nor is this some haphazard political process. The Republicans control both houses of the General Assembly as well as the Governor's seat, and they are executing a well-planned strategy to stage these bills in preparation for the budget battle. But as we saw with the Senate vote on SB5, things are not going to necessarily go according to party lines, and our lawmakers are going to individually weigh the political benefits vs the political cost of their votes.

So who knows how it's going to turn out.   I have no problem with the teachers, police officers, firefighters and other unionized public employees going down to the Statehouse and making their views known. And I respect those who support the Bill doing the same. Free Speech one of our most cherished Constitutional rights, and many have died to create and to defend that right.

I just wish those folks could do so without resorting to insults and childish behavior.


  1. I suspect some changes to this Bill. I am hopeful that is does not damage the relationship with firefighters and police officers. The other state employees have taken unpaid days so in effect they have taken a pay cut. Just wondering
    why we dont get up in arms about all the corporate bank and investment greed that helped put us in this financial state. This is not acceptable either.

    Teachers in smaller, less affluent districts
    may see some major cuts which is unfortunate.
    Because of lack of tax base they will suffer.

    The positive note is that perhaps we can use this to stop the unsustainable growth in tax rates, and in spending by the board. I am in total agreement on the step raises. There should be more than a liveable min. for teachers

    However, this bill will allow taxpayers to insure that the tax increases can be reasonable
    and that negotiation should know be Never to be allowed in our buildings. Once this passes a specific rule must be written in Hilliard, though I doubt that 4 of the 5 board members will support this. They have too much invested in the campaign support, and keeping things
    happy happy happy for the employees. The parents do not have "free speech" as noted by one of our board members.

  2. This legislation would give our school board more options in the negotiations. Question is, will the board utilize those options? I doubt it.

  3. Overall I am in favor of the provisions in the bill, but I am wondering what the final version will look like. The health insurance requirement has already changed from 20% to 15% - what further dilutions might we see?
    As far as the unions attempting to negotiate higher salaries to make up for increased costs in benefits I only have one question, and that is for THEM - Don't you get it????? We simply cannot afford to maintain a cost-neutral position! This is all about saving the taxpayers money, NOT keeping you whole. I remember a letter in SNP from 3-4 years ago where an actual teacher tried to claim she was taking a pay cut due to the 5% contribution in the first year of the present contract, when simple math proved that even a 1st year teacher was coming out far ahead considering their 7% salary hike between steps and base. Of course that was when steps were kept as secret as possible - in the community meeting even Dale McVey tried to sidestep the steps until a member of the audience called him on it. The Board can simply not let that kind of nonsense occur again - it MUST maintain a stance that is truly going to lower the increases in total compensation to a reasonable level for this day and age. We are going to hear the same position from the unions when the employees share of retirement contributions increases (if that even occurs) They MUST understand that the ultimate goal is to break the trend on the 2 year levy cycle, with each 2 years requiring a higher and higher millage.
    I think what I might like best about the bill, and really hope it remains in the final version, is the increased transparency of the negotiations. Finally! - when an impasse is reached, we will be able to see what is causing it. I have always felt that the current system is patently unfair to the taxpayers; as well it leads to conjecture as well as out and out mis-truths from both sides. My only fear is that we know the union supporters will turn out in large numbers for any type of public meeting - will the taxpayers do the same? And will they be vocal about what they really want, or expect, from the union side? Speaking out comes with risks to the taxpayer, particularly if they have students in the schools. That is why we need the Board to be thinking of us as much if not more, than the union, and when the union is throwing support to the board at election time, I fear that will continue to be a problem.
    I followed some of the Dispatch forums on SB5 and was appalled at some of the outrageous claims that we all hate teachers and want them to work for less than a "living wage". Our teachers in the HCSD have it a heck of a lot better than many state employees, and quite a bit better than many other school districts. I'll be anxiously awaiting the new contract to see if both sides agree with that or if we are going to see more of the 'woe is me" scenario. And whether the Board agrees with them or with us.

  4. I'll respond with multiple comments here.

    First, on the negotiation process. Paul, you've fallen into the trap that the Democrats and Unions have laid for you.

    Negotiations do NOT take place between the unions and the School Board, no more than negotiations in Hilliard City take place between the unions and the City Council.

    In both instances, and in EVERY public sector negotiation, the negotiations occur between the unions and the ADMINISTRATION.

    Yes, the administration acts under the instruction of the board, but the point to the change in SB5 is to make the process transparent, and at the end of the day, make the elected officials actually accountable.

    If things go down to the wire, the board will need to make a decision, but not between it's own offer and that of the unions, but between the administrations offer and that of the unions.

    It's a subtle, but incredibly important difference.

    At the end of the day, the board answers to the voters, and if they railroad the unions over the objections of the voters, they'll pay the price; and if they agree to excessive union demands over the objections of the voters, they'll the pay the price there too.

    Please don't perpetuate the myth that negotiations happen unions and elected officials - they don't.

  5. Merit Pay -- Paul, you raise some good points. But there is a bigger picture here that we can now see after the budget proposal has been released.

    I had an opportunity to go to Governor Kasich's "town hall" meeting. Here's some interesting stats:

    50% of students at State Universities in Ohio take 6 years to graduate for a 4 year degree (go figure). This costs the State a ton of money.

    Kasich would like to see 3 year degrees offered. (This would not mean less education -- the same content delivered in 3 years.)

    He mentioned rewarding teachers (K-12) who can teach more than a year's curriculum in a year. (The budget details a $50 per teacher per student bonus for this.)

    He also mentioned extending the whole AP-classes-in-high-school across the State.

    Add this up: it means paying K-12 teachers more money in the form of bonuses so kids are not only better prepared for college, but in most instances would have 1-2 years of college credits under their belt when they leave high school. (Currently, it is possible for a HCSD student who takes all the AP offerings to graduate college in 2.5 years if they put their minds to it.)

    Clearly, if we can get our kids through college more quickly, the State saves money.

    Merit pay in SB5 is only the tip of the iceberg here.

  6. Healthcare Cost Sharing -- Paul, this is more than healthcare costs; this was also in tandem with pension contributions. Essentially, the State is requiring that public sector employees in the state pay their share. Some of them get it all for nothing. Some even get their pension contributions paid for.

    The reason for the change is, IMHO, simple: it is designed as a deterrent for people who work in the public sector solely for the benefits. This will without any doubt result in a slow reduction of State employees once people realize the gravy train is no more. It will also in some cases result in public sector employees shifting the benefits to their spouse.

    And, it will force the public sector entities to move away from "Cadillac" healthcare plans.

    All of which is designed to save taxpayers money.

  7. Seniority:

    The current system is capricious. Anything is better than what we currently have.

    Age discrimination laws and civil service protections will go a long way to protect long-serving teachers. No one is going to lose their job simply because they've been teaching a long time.

    Even fiscal hawks like myself wont let the administration get away with that.

    Incidentally, Kasich at the Town Hall Meeting gave the example of the ex-military, second-grade "Teacher of the Year" in Dayton, who was laid off 2 weeks later... and now works in a nice Suburban school district. The losers were the inner-city kids in Dayton...

  8. Linking pay and performance has been an ongoing social experiment in this country for over 20 years, and I fear that schools may be perched to jump on board just as the rest of us are starting to give up on the idea. The idea comes from behavioral psychology - stimulus/response, bells and salivating dogs. We're learning that humans are more complex than that. Don't take my word for it - check out "Drive" by Dan Pink or even this research by Roland Fryer on the link between student performance and teacher incentives in New York Public Schools.

    What leads to performance more than pay is a culture of engagement, where people are connected in purpose and spirit, and they support, encourage, and confront each other with results and outcomes always being the goal. Reversing the trend of slipping performance is a leadership challenge, not a call for a new compensation program.

  9. Shad: Thanks for your comment. I think you and I are much in agreement on this.

    I've mentioned before that I have a nephew who is a US Marine, and is now assigned to a Wounded Warrior battalion because of combat injuries he suffered in Iraq. It's hard enough to just become a Marine, much less fight on the front lines. They certainly don't do it for the money.

    There is no one-size-fits-all reward system for employee teams. Some are indeed motivated by money - those who go into commissioned sales are usually such people.

    In the technology world I came from, engineers were often motivated by the kind of projects they were assigned to work on, and the team they had a chance to work with. Money was part of the equation, but certainly not the whole.

    I'm all for implementing a truly effective performance/reward system, but to make it work, it would take an order of magnitude more leadership skill and engagement that our current school management is accustomed to investing.

  10. >>> I'm all for implementing a truly effective performance/reward system, but to make it work, it would take an order of magnitude more leadership skill and engagement that our current school management is accustomed to investing.

    Then, maybe it's time to change that management?