Fox's Mark Fitzgerald Provides Testimony to Pa. House Education Committee Regarding Furloughs of School District Employees

Mark Fitzgerald, a member of Fox Rothschild's Education Law Group, provided testimony regarding economic furloughs for school district employees on March 3, 2011. Here is an excerpt of his testimony:

 

 

We have first hand perspective of the budget crises hitting every type of school district in the Commonwealth. From your wealthiest to some of your poorer districts, the economic crisis that has hit local governments does not discriminate. Complicating the situation is the Act 1 index limitations to levy taxes. In all respects, revenue streams to allow districts to stay solvent are withering. In this environment, school districts must have flexibility within their budget to control costs. Such flexibility begins with the ability to more freely control its personnel and management of staff.  I believe I can speak from direct experience as to the important role flexibility can play in a school district’s management of its staff, especially in these trying economic times.

 

Pennsylvania and its citizens have been faced with, and continue to struggle through, some of the most trying economic times in recent memory. In terms of the economic environment for school districts, we are truly facing an unprecedented new fiscal reality. Not a single school district in the Commonwealth is immune from the continued economic downturn facing the country. In fact, because school districts are so reliant on property taxes to fund their respective budgets, the last few years and the next several years will show an ever decreasing revenue stream for school districts as property values and real estate transactions have tumbled.  Many school districts in Pennsylvania are attempting to balance ongoing and increasing costs. As a result, school districts are looking for greater flexibility in managing those costs.

 

Unfunded and underfunded mandates serve only to exacerbate the already difficult fiscal situations school districts face.  For example, increased healthcare costs for employees, rising pension obligations for employees, and increased special education costs, is putting significant pressure on every budget. The burden to fund those ever increasing costs are being placed on local revenue, which has contracted significantly.

 

With regard to payroll costs for employees, it is no secret that the vast majority of a school district’s budget goes toward personnel costs. For 2008-2009, employee salary and benefits accounted for 62.4% of school district expenditures for Pennsylvania public school districts. While school districts recognize this is money well spent because experienced staff is a primary component to student achievement, school districts require the flexibility to make decisions as to who are the best qualified and most effective employees for the school district.

In an Act 1 environment, where school district budgets are prepared on an accelerated schedule, flexibility and certainty in developing that budget is of the most vital importance. To that end, school administrators and school boards need to have the ability to review their budgets, and reduce staff for fiscal reasons. Currently, school districts are limited in how they can furlough professional staff based on outdated language from the Pennsylvania School Code.

 

School districts are currently only able to suspend professional employees as outlined under Section 1124 of the Public School Code. These circumstances are: (1) when there has been a substantial decrease in pupil enrollment in a district; (2) through curtailment or alteration of an educational program as a result of substantial decline in class or course enrollment or to conform with standards of organization or education activities required by law or recommended by PDE; (3) consolidation of schools or school districts; or (4) as the result of reorganization of a school district. These limitations offer very little flexibility to school districts looking to manage their human capital.

 

The argument has been made that furloughing employees for economic reasons would lead to the elimination of course offerings. We do not believe that is the case, and, in fact, will likely have the opposite effect. Over the past several years, the courses which have been eliminated under the standards just listed include entire course offerings of arts, music, band, and other non-core academic programs. In other words, if the course was not mandated, it was often a candidate for being cut. The question remains, is it preferable for a school district to eliminate entire swathes of arts, music and other education programs, rather than employees so that programs may still be offered? The suspension of employees for economic reasons, while an unfortunate by-product of a downturned economy, could serve to save valuable courses and programs that students might otherwise lose.

Section 1151 of the School Code provides for the demotion of professional employees. While this section does not make mention of demotions for economic reasons, case law has established that school districts are permitted to demote professional employees for economic reasons, so long as such demotions are not arbitrary and capricious under the law. Expanding the provisions of Section 1124 would similarly allow school districts to furlough employees for economic reasons. As a result, far less staff will be affected and more courses and programs will be maintained. Under such a standard, superintendents would be empowered to review the entire school system as a whole to identify where reduction in staff will need to occur.

 

It remains clear that even if the economy does begin to rebound during this fiscal year, school districts will continue to face huge budget deficits. With the Act 1 index set to contract even further in the coming years, flexibility to furlough professional staff for economic reasons is a necessity.

 

Under current law, even if a school district is granted a furlough under Section 1124 of the School Code, Section 1125.1 of the School Code mandates a last in - first out process of staff reduction. In other words, regardless of performance in the classroom, connection with students and staff, and/or the ability to provide cutting edge educational instruction, the only factor currently determining who keeps their job following a furlough is seniority. In all respects, such a mandate is highly arbitrary and has led to problem educational results for students. It is highly problematic that seniority alone drives who stays and who goes. Such a process punishes school districts for hiring new staff, and has hurt the profession in terms of continuity of new and seasoned teachers educating children. Bottom-line, it is arbitrary that a teacher who has never taught in a certified area could bump a seasoned teacher who has taught in a certified area simply due to seniority. As an example, under current laws, a District may receive approval from the Department of Education to curtail a music program under Section 1124 of the School Code. As a result the District then identifies the least senior teacher within the program to furlough under Section 1125.1 of the Code. It is not uncommon such a teacher holds multiple certifications. In this example, this teacher may have never taught students in one of her certification areas, yet she would have the ability to bump a less senior teacher with real years of experience teaching students in a subject area.

 

Provisions that allow school districts to consider performance-based factors and qualifications to teach or hold a particular position, rather than merely seniority, enable school districts to retain those professional employees who are the most effective in their positions with the district. Residents of each school district duly elect school board members to make decisions that are in the best interest of the district, the taxpayers and most importantly, the students. Those school board members hire administrators who are well-trained in evaluating the effectiveness of their professional employees. As I mentioned earlier, demotions of professional employees for economic reasons are deemed legal if such demotions are not arbitrary and capricious. Undoubtedly, if all furloughs, including economic furloughs, allowed for multiple factors in combination to determine which employee to furlough (performance based, need based, seniority), such a process would not be arbitrary.

Private sector employers have the ability to make adjustments to their workforces when hit with difficult economic times. School districts are not only unable to furlough professional employees for economic reasons, but are also constrained in other aspects of managing their workforce. School districts must provide full hearings to employees facing a demotion from full-time to part-time employment. Further, under transfer of entity provisions in the Public School Code, in some instances, school districts must first offer employment to displaced employees from other schools that have closed before offering employment to other candidates. Unchaining school districts from these burdensome requirements, as well as allowing the furlough of professional employees for economic reasons, would provide greater flexibility to districts.

 

The ability to furlough professional employees, as well as other measures that provide mandate relief and flexibility to school districts, will give school boards options in difficult economic times rather than forcing the districts to cut or reduce programs for students or increase property taxes. Allowing these staff reductions based on criteria such as performance, certification and qualification to teach a particular grade or subject, rather than solely on seniority, ensures that the educational program will continue with the best qualified individuals rather than those who have the most seniority.

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