Perc M-dcps and Utd Sm-2010-100 Decision 5-11

8/2/2019 Perc M-dcps and Utd Sm-2010-100 Decision 5-11

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STATE OF FLORIDA

PUBLIC EMPLOYEES RELATIONS COMMISSION

In the Matter of Special Magistrate)Proceedings )

between ))

Miami-Dade County Public Schools )) Case No. SM-2010-100)

and ))

United Teachers of Dade, AFT, )NEA, FEA, AFL-CIO )

Before: Robert B. Hoffman, Special Magistrate

Appearances:For UTD: Mark Richard, Esq. Phillips, Richard & Rind, P.A.For the M-DCPS: Christopher F. Kurtz, Esq.

Place of Hearing: Miami, Florida

Date of Hearing: March 22, 2011Briefs Received/Hearing Closed: May 2, 2011Date of Decision: May 18, 2011

RECOMMENDED DECISION

I. Introduction and Background

This is an impasse proceeding pursuant to Sec. 447.403 of the Florida Statutes and

Florida Administrative Code Rule 38D-19.005. Following efforts to resolve their differences

through collective bargaining, and the declaration of an impasse, the parties, Miami-Dade

County Public Schools (M-DCPSor the District) and United Teachers of Dade, AFT, NEA,

FEA, AFL-CIO (UTD or the Union), submitted their unresolved issues relating to wages and


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health insurance. It rejected the 2-step salary proposal due to its recurring nature and the

uncertainty of the economy as it adversely affected the M-DCPS. The District offered first to

pass the 7.9% premium increase to the employees for dependent coverage, and a proposal to

absorb the 7.9% increase. It rejected the Unions wage proposal and instead offered a one-time

1% service incentive with a cost of $13 million. The Union rejected the 1% offer in or about

December 2010. The same 1% offer was accepted in November 2010 by another union with a

bargaining relationship with the District, AFSCME.

In January 2011, the new Florida governor submitted a state-wide proposed budget which

cut education funding by $1.7 billion or 10-percent. If adopted M-DCPS maintains it would have

a revenue reduction of $200 million. As of the date of this hearing the budget was pending in the

state legislature, but then passed on May 15, 2011.

On February 14, 2011 the District made two decisions regarding both its wage and health

insurance offers. First, it wrote the Union that it was withdrawing the 1% offer. The District

explained elsewhere that the concern was the governors budget adversely affecting revenue and

it wanted to keep the $13 million as a hedge against this and other revenue cuts. Testimony from

the District is that the 1% offer was made at a time, in November 2010, when the District

believed it had assurances from the governor-elect that education would be held harmless

when budget cuts would be proposed. The Union responded on February 15 that the District was

retaliating against the Union for wanting to maintain the status quo while engaged in bargaining.

Secondly, the District advised the Union on this date that it would provide the unit with

an open enrollment period for health insurance. Superintendent Carvalho wrote employees

covered by three of the unions, plus UTD covered employees that open enrollment to make

changes would begin on February 16 and end on March 1. He wrote: The Districts position is


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to fully absorb this years 7.9% increase. This subsidy is the equivalent to a $25 million increase

to employeescompensation.

There is little disagreement that the District has serious financial problems as a result of

decreases in revenue sources, especially resulting from the recession that has adversely affected

property values and jobs. These matters will be set forth in more detail in the positions of the

parties concerning wages.

To summarize their positions on the two impasse issues: The Union maintains there is an

agreement on health insurance. It has accepted the Districts status quo proposal and the District

has so told employees when it notified them of the open enrollment for insurance that it has

agreed to absorb such costs. At this hearing the District took the position that an agreement on

health insurance only exists if there is an agreement on salaries. The District argues that it cannot

afford any salary increase and if one were imposed on it, the consequence would be layoffs in

order to pay for them, even one costing $13 million. The Union maintains that although it seeks

the step increases, it is realistic enough to realize that it cannot happen given the Districts

current financial condition. Its brief concludes:

Although the Unions members deserve that and more, the Union recognizes that it iswithin this Magistrates discretion to find an equitable resolution. Equity requires that theUnions members get something for the 2010-2011 fiscal year, whether in the form of aone-percent bonus or otherwise.

B. Resolution of the Issues at Impasse

Any recommendation made from this Special Magistrate process comes from a

consideration of the factors deemed relevant by the Florida legislature. Section 447.405 sets the

standard for rendering the recommended decision as a just settlement. This Special Magistrate

wrote about what is just in Okeechobee County Board of County Commissioners and

International Union of Operating Engineers Local 487, SM-2006-0049 (2006):


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What then achieves a settlement of this dispute that is just? This is the standard prescribed by the

Florida legislature to resolve impasse disputes. It is not something that is imposed by the Special

Magistrate as a standard. And the word "just" in its plain, ordinary meaning cannot be clearer: "In

accordance with or adhering to the principles of justice; fair." The Random House College

Dictionary (1980)

`The overall SM scheme provides latitude within this statutory framework for the Special

Magistrate to weigh the significance of these factors and then reach a conclusion that reflects a

fair and reasonable recommendation of the impasse issues. It is not a gathering of points for

winning each factor. Rather it is a consideration of which factor or factors should be decisive

when examining the overall issue for these parties. The five statutory factors in 447.405 include:

(1) Comparison of annual income with same or similar work of public employees showing like orsimilar skills under the same or similar working conditions in the local area;

(2) Comparison of annual income with similar public employees in similar public employeegovernmental bodies of comparable size within the state;

(3) The interests and welfare of the public;(4) Comparison of peculiarities of employment in regard to other trades or professions, such as

intellectual qualifications and others listed;(5) Availability of funds.

In Miami-Dade County and TWU local 291, (SM-X00037) (Hoffman 2000) the SM

defined what happens with these factors:

In arriving at a recommended decision, the Special Magistrate must give weight to some or all ofthe five factors listed in Section 447.405. The bottom line for this recommendation is essentiallywhether, using this Section as the criterion, the evidence at the hearing establishes that a proposalis fair and reasonable. (Emphasis added)

Finally, 447.405 contemplates that the Special Magistrate is not solely bound by these

factors: . . . the factors, among others, to be given weight by the Special Magistrate in arriving

at a recommended decision shall include . . . . The following articles are at impasse:

1. Health Insurance

a. Union Position

Although the Parties are technically at impasse over health insurance, beginning in March

2011, the District implemented open enrollment for the bargaining unit. As stipulated to at the

hearing, the Union and the District are recommending that the Magistrate recommend the current


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operational implementation of health insurance that has been in effect since March 2011 as his

final recommendation. For the 2010-2011 fiscal year, health insurance for the UTD bargaining

unit cost the District approximately $18.5 million. The Union recognizes that the District should

get credit for this amount. Nonetheless, it should be recognized that health insurance costs to

teachers has also increased due to the Districts institution of banding based on salary. As

testified to by Ms. Diana Urbizu, the Districts Administrative Director in the Office of Labor

Relations:

Q: Now, because you went to banding, some teachers got a small raise, but [it] caused themto go into the next band for dependent insurance?A: Yes.

Q: Which means they could have lost money; they could have lost their raise [last years] bygoing into another band?A: They could have, yes.Q: In fact, some did?A: Im sure some did.

Therefore, although the Union recognizes the benefit of the District absorbing some of the health

insurance costs, the economic reality is that teachers get less money because of health insurance

costs. It bolsters the notion that teachers need some recognition at some levelin terms of salary.

b. M-DCPS Position

The District considers health insurance as an integral part of an employees compensation

and the Districts goal during negotiations was to obtain an agreement on both wages and health

insurance. The rationale for the Districts position was that the funding for both wages and

health insurance comes from the same source and the District needed to know what the budget

liability would be for the next fiscal year. Health insurance cost concerns have plagued both

employers and unions for many years. To address these escalating costs, the District recently

implemented a self-insurance program. This program, which started in calendar year 2010, saved

the District from $72 million worth of increases had it stayed fully insured with its then-current


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health insurance carrier. Despite these efforts, the District was faced with a $25 million increase

(7.9%) in the cost of health insurance for calendar year 2011. Payment for these costs come from

the same pot of dollars used to pay salaries. Therefore, funds were limited and the District

needed an agreement on both health insurance and wages.

Employee cost for dependent coverage is attractive compared to comparable public

employers such as Broward Schools, Palm Beach Schools and Miami-Dade. Although South

Florida has the highest cost of health insurance in the country, M-DCPS subsidizes dependent

coverage more than any other school district in Florida. Despite these high costs, M-DCPS has

offered to continue providing free health insurance for its employees while heavily subsidizing

dependent coverage. In 2011 alone, M-DCPS is subsidizing health insurance by $60 million.

The economic realities of health insurance are amplified by the current economy and the

gloomy forecasts for the subsequent fiscal year. The current economic climate is not something

that occurred overnight. In 2007, the Special Magistrate opined on a similar matter involving

Nassau County and IAFF, SM-2007-026, (decided August 20, 2007) and wrote:

. . . when the County conditioned its proposal on changing this provision [health insurance], it didso only in light of the economic realities it faced, i.e., the financially burdensome increases incosts that have accompanied health insurance in recent years. Thus, while on one hand it seemedunfair to impose such a condition, the economic reality is that the payment of wages, the highestcost item in a budget, must be impacted by the costs of other compensation paid to employees.

Any examination of what is just and reasonable must take into account the realities of the

enormous costs for health insurance. However, because the District places a high priority on

health insurance for its employees, the District is willing to pay the entire cost increase, which

for the UTD unit is $18.5 million as part of a total compensation agreement.

c. Recommended Decision

The Superintendent was clear in his February 15, 2011 letter to all union represented

employees of the District: The Districts position is to fully absorb this years 7.9% increase.


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He made that statement in connection with opening enrollment for the coming year. There was

no reference made that fully absorb meant only absorbed if the wage settlement, whether zero

or something else, was satisfactory enough to the District or depended on the entire

compensation package. His letter was a clear notification to these employees that the District had

decided to fully absorb the increase. Moreover, the proposal made to the Union in wri ting

contains no conditioning of it on a wage proposal.

The Special Magistrate is thus not being asked to make a recommendation as to which

sides offer is just. The issue is whether there was an agreement made after impasse as to the

Districts offer that no longer makes health insurance an issue. As found above, the Special

Magistrate concludes a mutual understanding existed that health insurance would be kept at the

status quo irrespective of any wage settlement. The health insurance proposal made by the

District is, therefore, recommended.

2. Salary

The Special Magistrate concludes that it is in the best interests of all of those reading this

Recommended Decision to fully understand and appreciate the depth of the positions taken by

these two parties on this critical issue. In so doing, the positions are somewhat lengthy. But their

importance cannot be diminished, which makes it necessary to have them despite their length.

a. The Districts Position

In an impasse proceeding such as this, the first two factors, as well as the fourth factor,

"are of secondary importancebecause the overriding constraint on [the school district] is lack

of money." Gadsden County Sch. v. Gadsden Educ. Staff Prof'l Ass'n , Case No. SM-2008-037

(Nov. 10, 2008). Therefore, an impasse proceeding such as this "turns on the fifth and third

statutory factors, the 'availability of funds' and the 'interest and welfare of the public.'" Id.


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As to the availability of funds, the FY2010-11 budget stands at just under $4.3 billion, a

remarkable $1.6 billion drop from a mere three years ago. Over that time, property values

plummeted, the global economy crashed, the employment market dried up, and the Districts

student enrollment steadily declined. In the face of such a drastic decline in revenue, the District

has used four guiding principles to serve as a roadmap in navigating a way through this financial

debacle. These guiding principles are: improve student achievement; protect the classroom;

protect the workforce; maintain fiscal viability of the District. In that light, the FY2010-11

budget is highlighted by the following: No RIF of full-time teachers; protects the most

vulnerable members of our workforce; no cuts to the arts; further reduces class size; improves

the credit rating outlook; no tax increase or increase in locally-controlled millage.

During the budget process, the District was confronted with numerous cost increases for

mid-year salary agreements, new textbooks, increase in charter school costs, class size

compliance, reserve and tax collection requirements mandated by law, a separate Health

Premium Subsidy Reserve due to uncertainty of calendar year 2011 self insurance program, and

a substantial reserve to protect employees and programs in advance of a possible mid-year

reduction in State revenue, as well as the loss of all ARRA State Stabilization funds in FY2011-

12. Even though the Districts revenues increased by $89 million, the District had $147 million

in major cost increases and $85 million needed to be cut from the budget.

These issues were also confronting the District when negotiations commenced with the

Union for fiscal year 2010-2011. The District advised the Union that there were insufficient

funds to pay for their salary proposal. There is no argument that the District values its employees

and that these employees deserve salary increases. However, the District must balance these


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concerns with its obligation to be fiscally responsible, especially when the forecasts for public

education funding are so pessimistic.

The Districts revenue will be reduced. General fund revenues have decreased $300

million since 2007-2008. If not for ARRA funds and Education Jobs funds, the District would be

facing an additional loss of over $182 million. At the same time, the Districts reserves were

irresponsibly low. The District needed to increase its reserves to 3% as required by state law.

Further, state law now requires school districts to budget as though the district was going to

collect 96% of local taxes (95% the previous year). Since recent experience showed that the

District has been only able to collect, at most, 94.5% of local taxes, the District set up a reserve

fund of 1% in the event the full 96% of taxes is not collected.

Combining the decreases in revenues and the increases in costs, M-DCPS had to reduce

the budget for the 2010-2011 fiscal year by approximately $85 million. M-DCPS cut its central

offices of $8 million. Since 2008, central office costs have been reduced by $45 million, or 52%.

$26 million of maintenance projects were brought in-house. Other cuts included transportation

savings by altering the bell schedule of schools ($4 million), phasing out selected high school

programs ($7 million), changing ratios for gifted teachers ($7 million), changing teacher ratio

supplements ($8 million), aligning ESE allocations with state guidelines ($18 million) and

eliminating certain ESOL supplemental allocations ($6 million).

The Union was aware of the Districts budget issues because their representatives

attended School Board meetings when the budget was being discussed. The Union agreed with

the Districts priorities of protecting the classroom and maintaining the fiscal viability of the

District. However, if the Union's raises are funded there would be a potential loss of more jobs.


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The District budgeted for a mid-year holdback because during the last three years there have

been holdbacks from the Legislature. This money was put aside to protect employees.

During negotiations, the District offered the 1% non-recurring service incentive because

it had earlier received assurances from the Governor that education would be held harmless (the

1% came from reserves of $29 million which were from non-recurring revenue). Unfortunately,

when the Governors budget was released in January, those assurances were no longer true. As a

result, the District withdrew its 1% offer, opting instead to keep these funds as protection against

further cuts and to protect the workforce.

The Unions three witnesses agreed that the District is in dire financial shape. Despite

these dire economic circumstances the Union proposed a 2-step salary increase that would cost

the District almost $110 million. The Union admits that the District cannot afford their proposal.

Incredibly, the Union proposes that the District raise taxes to pay for these salary increases,

despite the fact that the Mayor of Miami-Dade County was recently recalled for raising property

taxes and supporting employee raises. Raising taxes during these tough economic times is not

only politically unfeasible it hurts the very citizens the District is serving.

Although the Union claims that the District has failed to increase the millage rate, failed

to ask the voters to tax themselves further (during a time when many people are unemployed and

losing their homes to foreclosure) and failed to file suit against the State for failure to adequately

fund education, it is the District that must answer to the citizens of this community, not the

Union. Other than raising taxes or suing the State, the Union did not present any viable

alternatives. In any event, there is no guarantee of success, rendering these potential revenue

sources as speculative at best. If the District is to fund salary increases, it must do so from the

funds available in the budget today. While the Union agreed that the District was woefully


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underfunded by the State, even going as far as stating that other Florida school districts were

benefiting from revenues that should be coming to Miami-Dade County Schools, the Union

presented no credible evidence that funds were available to pay for these raises.

The Unions exhibits show contract settlements of various Florida school districts for the

last three years. However, they are not a true comparison of what the employee takes home at

the end of the day. To accurately compare salary increases one must review both an employees

salary plus the cost of health insurance. For example, a teacher could receive a 2-step salary

increase yet pay much higher health insurance costs than a teacher in a neighboring county. A

school district may have funds for a salary increase because it passed on all the healthcare costs

to the employee. Therefore, simply listing salary increases for other school districts provides no

useful information for comparing compensation.

As to the interest and welfare of the public factor, M-DCPS has made very difficult

decisions in reducing its budget to make up for the unprecedented decrease in revenues coupled

with the increase in essential costs. It has tried to avoid impacting educational programs, and

every effort has been made to try and avoid laying off additional employees. This next year is

predicted to be the worst financial year for M-DCPS since the great depression due to the

following major factors: 1) Federal funds, received via State Fiscal Stabilization funds,

comprises 5% of the Districts general fund and fund 5% of the workforce.

M-DCPS accepted this funding to keep from laying off 2,000 employees. Unfortunately this

money will expire at the end of the 2010-2011 fiscal year. 2) Property values have dropped 30%

in the last two years and are forecast to drop an additional 6% next year. This affects the

Districts capital fund and employees funded by capital (maintenance and construction) are

facing layoffs. 3) The District received $73 million in Education Job funds. However, the


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District used $35 million of these funds to hire 500 teachers to meet class size requirements. If

the District did not hire these teachers, it was facing up to $16 million in penalties from the State.

This money could have been used for teacher raises if class size requirements were not in place.

The Districts major objective is damage control, not employee raises. None of the

current budgets being discussed in Tallahassee fill the enormous hole being left by the expiration

of State Fiscal Stabilization funds. Exacerbating this dreary budget forecast is the Governors

proposal to reduce the Base Student Allocation (BSA) to levels not seen since 2002-2003. M-

DCPS cannot maintain a school district and give raises to employees when the building block of

educational revenuesthe BSAis so low it is equal to what it was nine years ago.

Due to all the previous reductions in M-DCPS' budget, any additional cuts made to fund

the Union's salary step increases will result in additional layoffs. Employees are a very valued

commodity. They are the frontline people who are in front of our children every day. If the

District cannot deliver essential services to our students, then the interest and welfare of the

public is harmed because education is the core mission of the District. More importantly, it

means possibly degrading the quality of education the students receive.

The District was able to offer the 1% non-recurring service incentive because of certain

assurances from the current Governor of no cuts to education this year. However, this did not

happen. The 1% offer was withdrawn because the Governors proposed budget had such an

adverse effect on the District that it would have been very irresponsible to continue offering it.

No one envisioned a 10% decrease in basic funding to the Florida Education Finance Program.

The amount of money needed to fund the 1% service incentive can save the jobs of 750

paraprofessionals, 500 office employees or 330 teachers. Losing any of these employees would

severely compromise the standards of service provided by M-DCPS to the community. Putting


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additional people on the unemployment rolls adds to the unemployment problem of the

community at large.

M-DCPS also has to consider the issue of fairness to its other employees and the

community at large. M-DCPS has not offered recurring salary increases to any other union.

AFSCME is the only bargaining unit that received the 1% service incentive primarily because

they accepted it early during negotiations and they recognized that if they waited the money

might not be available at a later date. In the name of fairness, M-DCPS believes that all its

employees should share in the burden of reducing M-DCPS' budget. In order to balance its

budget, it is essential that M-DCPS expeditiously reduce its operating expenses, and all

employees be treated the same.

b. Union Position

Although the Unions members deserve the proposed salary increase made by the Union,

and more, the Union candidly recognized that the $110 million it would take to fund this

proposal may not be feasible based on the current economic situation. However, throughout

negotiations and the impasse hearing, the Union made it abundantly clear that there were creative

options to address the steps and salary needs. Despite the Unions efforts to find a flexible

balance to benefit both parties, the District steadfastly refused to budge. The Districts

unwillingness to provide any increase to the Unions wages undermines the public welfare of this

state. The District offers zero while the Union seeks some financial recognition for these highly

dedicated educators. Florida law requires the Magistrate to weigh the publics welfare in

reaching a final recommendation. Florida Statutes 447.405(3).

Despite the Districts argument that it has no money, the evidence showed that a major

reason for this is the Districts own choice not to pursue such monies. It has failed to exercise


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local funding options, including raising the millage rate. Florida Statutes 1011.71(3) gives

school districts the power to levy an additional 0.25 mills for critical capital outlay needs or for

critical operating needs. All that is required to trigger the funds for these 0.25 mills is a super

majority vote of the school board. For the 2010-2011 fiscal year, the District could have raised

approximately $49 million with a 0.25 mill increase. The District never even floated this option

out to the public, or opened it up for discussion.

The District had the further power to levy additional millage for school operational purposes

up to the 10-mill constitutional limit. Fla. Stat. 1011.71(9) (2010). The District could have

exercised this power by local referendum. If the District would have levied the 10-mill max, it

would have raised $419 millionmore than enough to solve the fiscal issues it has raised. This

is particularly irresponsible considering that fifty-two of Floridas sixty-seven school districts

took advantage of the quarter mill option to raise revenues.

Also, the District failed to pursue constitutionally mandated funds from the state. Article

IX, Section 1 of the Florida Constitution requires the state to pay for the costs of reducing class

size. Despite this constitutional requirement, the evidence showed that the Florida Legislature

allocated nearly $271.4 million less than the State Board of Education determined was necessary

to meet mandates under the class size constitutional amendment. The District had the option to

sue the state or even object publicly to the inadequate funding, but instead chose to do nothing.

The Districts acquiescence and silence cost it $36 million.

The District failed to pursue the state under the constitutional requirement of equitable

funding. Since 2006-2007 the District has given more to the state than it gets back. It receives the

least funds per student than any of the seven largest Florida Districts. For example, Duval

County receives $275 more per UFTE. If the District were to actively pursue equitable funding


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to receive the same amount that Duval County receives, it would gain $94.7 million. The

Districts failures to raise revenues and pursue state fund ing resulted in losses between $107.7

million and $549.7 million. This is the public school system, and the public was never given the

option to discuss the possibility of a millage rate increase.

If the District is not directed to raise revenues, and can just always give teachers zero, there

is no incentive for the District to address the teacher salary crisis. Rather than just publishing a

chart showing the huge disparity between what Miami-Dade gives versus what Miami-Dade

gets, if the District were forced to find some money to fund a raise, the District would be more

likely to go to the State to get the money necessary to run the fourth largest school system in the

country. Article IX, Section 1 of the Florida Constitution: the education of children is a

fundamental value of the people of the State of Florida. Education must be properly funded for

this provision to mean anything.

The District withdrew its proposal for a 1% bonuswhich AFSCME already received.

While it is true that UTD members rejected the bonus as unfair, M-DCPS never inserted a penny

into the budget for salary increases. The District took the position that regardless of the cost, it

was incapable or not authorized to offer anything that has a cost next year. According to the

Districts Labor Relations Director, itsbargaining team was instructed to try to see what [they]

can do to help [their] teachers, [their] employees, but were never allowed to give any kind of

salary increase. Now, despite the directive to try to help the teachers and support professionals,

the District disingenuously asserts it cannot fund even the one percent bonus.

This bonus is still some recognition of the value of the educational workforce. Even more

appalling, the District benefitted from the Unions prior concessions. However, not one penny

generated from the Unions prior efforts was ever dedicated to giving teachers even one dollar of


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a raise. M-DCPS has never made itself amenable to discuss any compromise or joint resolution.

Such a stance is not in the publics best interest. The teachers have worked hard to achieve

successes in education. However, the Districts actions provide no incentive to become a teacher.

If teachers receive nothing in the 2010-2011 fiscal year, all they will have received in three

years is a two-step increase. That means that a teacher making $38,750 will have received a raise

of just $250 in three yearsjust $0.22 a day. These are the people who work so hard that Florida

is ranked fifth academically in the nation, yet for their hard work they are told there is nothing

left for any increase. This is demoralizing, and will only push qualified candidates into other

fields. The school system and the public deserve better.

The statutory notion of respecting the publics welfare in an impasse proceeding has its

genesis in equity. As became clear during the hearing, the Union shared in the burden of the

Districts fiscal difficulties. The Unions concessions were even recognized in the March 3, 2011

report from Moodys Investors Service:

Financial improvement since fiscal 2008 was accomplished by making over $400 million inexpenditure cuts, negotiating favorable three-year union contracts, and averting significant health

care cost increases by going self-insured. Union concessions, related to salary freezes and furloughdays were important contributors in conjunction with other cost saving measures and conservativebudgeting.

However, now that there is improvement, the teachers and other bargaining unit employees get

no share of the benefit.This is inequitable, and cannot be perpetuated.

By Florida Department of Educations (FDOE) standards, the Districts financial health

is improving. Moreover, Jewell Gould, Director of Research for the American Federation of

Teachers, testified that with the assistance of this Union, the District has been able to raise its

reserves from $4 million to over $96 million. In fact, the Districts own Revenue Trend exhibit

showed an increase for the 2010-2011 fiscal year in both Total General Fund Revenues and

Funds Available to Balance. Although the District focused on the more negative aspects from the


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Ratings Agencies, Mr. Gould pointed out the strengths in the Districts finances, including good

financial management practices and a low to moderate debt burden. 1 He praised the joint effort

of the Union and the District in turning the school system around, and noted that these efforts

have resulted in improved credit ratings, which in turn has led to further investment in the

District.

In fact, the District has felt comfortable enough with its financial position to take on an

exceptional liquidity riskregarding higher interest rates. If the District has been willing to take

on that risk to do business, why not take even a portion of the risk for labor, and for the

professionals who hold up this school system?

The Special Magistrate is obligated to consider comparable school districts in reaching a

recommendation. The evidence showed that of the comparable school Districts, every district

other than Dade and Broward has received something in two out of the past three years. All of

the comparable Florida school districts face the same economic challenges as M-DCPS. The

state budget cuts affect the other superintendents in the exact same way the Florida Education

Finance Program cuts impact Dade. All of the statutory rules and administrative regulations

regarding budgetary and spending restraints are identical for these school systems. But there is

one critical differenceevery other school system has found some way to give teachers

something in terms of salary in two out of three years.

The global economic crisis cannot be the sole answer to everything that faces the

District. The hardworking professionals of this bargaining unit deserve what their counterparts in

other school districts have receivedsomething. The Union has presented several options to the

1 Mr. Gould also pointed out discrepancies in the way the District presented its financial health at the hearing, andhow it presents it to investors. (32 percent tax base decline presented at the hearing, while just 10-12% losspresented to the rating agencies); (Statement at hearing that enrollment hadnt changed, but ratings agency reportsreflecting influx of Haitian immigrants).


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District throughout this process. Whether it is in the form of a bonus, a step, or a raise, there

must be something more creative than zero. There must be some professional respect. There

must be some recognition of the educators. A zero cannot serve justice, nor can it meet the

requirements of Chapter 447.

c. Recommended Decision

The Special Magistrate agrees with the District that the two most relevant 447.405

factors are the availability of funds and the interest and welfare of the public. Clearly, the

first factor is most crucial. If funds are not available then it is difficult to have the public interest

override this money factor. Its a dilemma that in these times is not uncommon . Quoting from an

interest arbitration involving teachers in another state, where the dilemma was much the same as

here:

The Board of Education is placed squarely in the middle of these financing problems. On onehand, they must provide for the citizenry the best possible education for the children of the area.On the other hand, they must answer to those same citizens for the use of the tax dollars.Unfortunately, millage issues seem to be the area where already-overtaxed voters get theirrevenge. Unless the Oscoda area constituents soon realize the importance of their support, theirchildren will have no classrooms in which to learn. The burden of supporting the capitalexpenditures of a school system should not fall totally upon the teachers, although some restraint

in wage demands is advisable.2

The dilemma is even greater some 40 years later. School Districts are dependent not only

on those tax dollars from the state, but an array of subsidies and grants from the federal

government, state programs and complex formulas for distributing all of these monies.

Obviously with the devaluing of property the revenue is less from property taxes, the main

source of revenue. And with the State of Florida through its new governor proposing a drastic cut

in school funding of some $700 million (that passed just prior to the issuance of this decision),

the already strapped District now must face the potential of even less revenue. To its credit, M-

2Osoda, Mich. Area School Board, 55 LA 568 (Block, 1970)


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DCPS has reduced its costs by over $500 million in three years, while at the same time

protecting the classroom from any cutbacks.

The parties came to this Special Magistrate with the notion that he either confirm that the

District has no available funds to pay any wage increase (the Districts position), or find some

innovative and creative ways to discover how to pay for an increase for the teachers (the Union

view). Clearly the parties have been at it for many months trying to find these ways. They have

their experts and have analyzed the budget, revenue options and cost saving measures inside and

out. For the Special Magistrate to find something that they could not find is suggesting that he

resort to some unknown or even magical powers. Neither party has suggested that the money

could be found in any budget item. Short of dismantling programs, laying off employees, or

substantially tapping the reserve fund, there seems on the face of it little that can be done to even

recommend a something increase now sought by the Union. The District has made a strong

case for the unavailability of funds for the Unions recurring step salary increase proposal. To

burden the District with this ongoing obligation in the face of both the revenue drain and

increased costs, would be unreasonable and not in the interest of any just settlement.

Whether the 1%, onetime payment, the offer made by the District in late 2010, rejected

by the Union at that time and then taken off the table complexly by the District in early 2011, is

also unjust and unreasonable is worthy of a number of comments. These comments are made

with the objective of achieving a prompt, peaceful, and just settlement of this dispute as set

forth in 447.405.

1. The interest and welfare of the public statutory factor cannot be ignored, even in the

face of the above financial concerns. As seen, arbitrator Block well stated years ago that support

for teachers is vital if the public expects them to produce quality education, let alone the


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buildings to make it happen. Its an obligation that Florida citizens even placed in their

constitution in Article IX, Section 1:

[T]he education of children is a fundamental value of the people of the State of Florida. . . . .Adequate provision shall be made by law for a uniform, efficient, safe, secure, and high quality

system of free public schools that allows students to obtain high quality education.

This high quality is seen, for example, by a top 5 ranking given to Florida schools. Making and

keeping it that way for the welfare of the citizens of Miami-Dade County is obviously the

ongoing responsibility of the District. As such, the District must weigh against this obligation is

its obligation to have a balanced budget and to not bankrupt the system. But it is not without any

precedent, as pointed out at this hearing, that the District has seen fit to find room in its budget

after declaring there was none. And as such, even in these dire economic times, providing

teachers with at the least some signal of recognition through an increase of any value, sends an

important message to them that the District is looking out for them. It also sends an important

message to the Countys citizens, and in particular the parents of children in this District that

within its means M-DCPS can provide some support, however, minor for the teachers of their

children. Even more so, it can do it without burdening the public.

2. The 1% District offer, or some variation, is the best way to provide teachers with that

recognition. It meets the criteria expressed by the District of not being recurring. Its a onetime

payment that does not burden the District beyond this year. And it can be done in ways that are

less burdensome for the one year, such as making the amount .5% or even .75% as first offered.

It can be paid in two stages, with the first payment upon ratification and the second after six

months. And that payment can be conditioned on the financial ability to make the payment at

that time. Section 407. 4095 could be invoked then for the 14 day impact bargaining period

regarding any change that is a financial urgency. Or, the payment would be spread out over a

number of pay periods. There is no limit to the variations that can be utilized.


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3. The consideration for this one time increase must take into account the series of events

that led the District to offer the 1%, AFSCME to accept it, UTD to reject it, the changed

economic circumstances that followed and the District withdrawing it. The economic conditions

that existed, or rather the political situation that existed when the offer was made dramatically

changed when the Governor took office in January 2011. The offer was made at a time when the

District believed through assurances that the education budget would be protected from any

cutbacks. And even though the District believed it could not afford any recurring increases, it felt

comfortable with this onetime payment offer. It no longer felt comfortable with it once the

Governor announced that the education budget would be cut in his proposed budget.

UTD rejected the 1% without knowing that the budget would be slashed, much the same

as the District did not know. To now maintain that its too late to revive it because of a proposed

budget (now passed), and to flatly state that no increase will be offered, is to in effect deprive its

core value employees of even the smallest of any financial recognition.

4. It appears from the Districts position that the financial urgency of this current

situation is such that even allowing the 1% to be paid now to AFSCME would be of concern.

And as shown at the hearing, the District certainly has both the statutory right under Section

447.4095 that allows a public employer the right to re-open contract negotiations with its

bargaining units for a 14 day period,3 or to contractually change it as it has done in the past with

UTD.

Q. Ms. Urbizu, aren't you allowed, under Florida law, if it's a fiscal urgency, to take the money

back? . . . Can't you, under Florida law, do a fiscal urgency? . . . Can't you ask AFSCME for themoney back under Chapter 447?A. We could ask AFSCME for the money back.. . .

3 In School Dist. of Manatee County, CA-2008-067 (2009) PERC declared: It seems clear that the statute[447.4095] is intended to provide public employers and bargaining agents an opportunity to engage in abbreviatedimpact bargaining when faced with a financial urgency modification of an agreement.


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Q. Ms. Urbizu, didn't you declare and take away a pay raise that was in the last contract fromthese teachers?A. I said that already. I said, in '08-'09, we were not able to pay the increase in the year threedue to inadequate funding.Q. So, you have the right, either contractually or statutorily, to take the 1-percent back fromAFSCME. You have that authority, correct?A. We do.

That it has taken no steps to do so, suggests that the urgency is not so urgent to take those

steps. It thus leads to the reasonable question as to whether there is room in the budget or the

reserve fund for either the 1% payment, or any of the variations discussed above.

5. The actual cut back in the states education budget affecting the District is somewhat

offset by another adopted change passed by the legislature. Teachers will now be required to pay

3% of their salaries into the Florida Retirement System.4 This new law now allows the District to

recoup some of the loss from the state budget. But at the same time it means even less money for

teachers. The savings for this District would be substantial, although obviously not enough to

make up for the expected drop in state funds. Urbizu testified:

Q. So, when you said the governor's budget was going to hit you for another -- you said 200million, roughly, right?A. I said the governor's budget shows a 10-percent --

Q. Cut to you?A. -- cut -- no, cut to education. And that may, may, because that budget has not been approvedyet.Q. But, you used the figure of 200 million, I think?A. Yes, 200 million.Q. But, isn't it true that part of his proposal is to make all these teachers pay for their FRSretirement and the School District wouldn't be paying that and you would get 50 to 60 or 70million savings to the District?A. Yes, but that hasn't passed yet, either.Q. I understand, but you just told this magistrate, woe is me, $200 million possible cut in thebudget, but you didn't say that the effect on the District might be 130, because he's taking pensionmoney out of their pockets, did you?A. No, I didn't say that.

There is no cost analysis in evidence to determine the amount of savings to the District. But it

can be generally concluded that given the now passed 3% contribution, as opposed to the

4Measures that Passed in Floridas Legislative Session, Miami Herald, May 15, 2011.


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Governors proposed 5%, the range would be $35 to $50 million.5 The upshot is that the some

$200 million proposed budget concern that led the District to withdraw the 1% is actually not

that high, given this savings from retirement. The reduction is coming out of the pockets of the

teachers who have contributed to the Districts cut backs in previous years with concessions.

Recognizing that the teachers are not just having their wages frozen and getting zero, but

are now actually getting less than zero, suggests that some form of recognition by the District is

appropriate, especially given that the District continues to take the position that it remains proper

to do so for AFSCME.

6. The Special Magistrate is not recommending an increase that would put employees on

layoff. The District has made much of the fact that the 1% cost of $13 million would affect a

large number of jobs. But as seen above, it can be spread out, apportioned so that only one-half is

paid in the event of a financial urgency at six months. And, inasmuch as the original 1% proposal

relied on the reserve fund,6 no budget item from the general fund is needed.7 With the reserve

fund in good shape, taking this small portion to pay for this one time percentage will go a long

way to making the settlement a just one.

7. It must be kept in mind that it does not take much to make this settlement just in

accordance with 447.405. The Union is asking only for something that is more than zero. In

the realm of offers seeking increases it is unique. It suggests strongly that the Union is fully

5 A very rough estimate would be taking the reported statewide average teachers salary of $46,700, which is likelylower that the average in this District, and multiply it by 3% and then by 27,678 employees. The result is $38.5

million.

6 Judith Marte, Chief Budget Officer testified: THE SPECIAL MAGISTRATE: The 1-percent service incentivethat was offered to the Union, was that in your budget? THE WITNESS: When we initially did the budget, we putin the reserves . . . It was a non-recurring revenue.

7 Moreover, the FDEs Office of Funding and Financial Reporting projects a substantial increase in the Districtsunreserved fund from $96 million to $156 million by June 30, 2011, making its financial condition ratio almostdouble from the previous year. The Districts Budget Chief testified that there may not be any substantial increasesto the capital reserve fund.


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aware of the Districts economic plight. It no longer seeks the step increases that would recur

every year. And it no longer even seeks to put a number on the amount of an increase. Not doing

so demonstrates the Unions willingness to work with the District, and at the same time to make

certain that the dignity of its bargaining unit can still be maintained through these difficult times.

The latter point should not be overlooked by the District and should be measured against what

little it would take to recognize it.

8. Of somewhat lesser weight are the statutory comparison factors. Noteworthy is that of

the seven largest districts, M-DCPS will have the lowest cumulative raise during the last three

years. It will also be the only District, other than Broward which is still in negotiations, to not

receive an increase in two out of the last three years. Given the lack of any cost comparison and

other related information needed to adequately make a meaningful comparison, the Special

Magistrate places more relevance and weight on the availability of funds and public interest

factors, as already noted, as will be further discussed.

9. The Union raises a number of arguments regarding what the District should be or

should have done to raise revenue. The Special Magistrate agrees with M-DCPS that the political

climate is not good for raising taxes, especially going to the voters or even using the

supermajority powers of the Board without voter approval. This is best seen in the recent state-

wide elections in Florida, and more particularly the overwhelming votes that ousted two County

Commissioners as recently as March 2011 and a previous vote casting out the Mayor. To thus

raise millage rates in this climate, even in public hearings, is unrealistic and counterproductive

to other efforts that can be made (see below). There is simply too much evidence out there

showing that voters are in no mood to increase any taxes, regardless of the reasons.


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10. Seeking redress for money already taxed and not fairly distributed is a major point

that voters in this County would likely want to hear. They want to be assured that that their

children are receiving high quality education and that it is being accomplished by a fair and

equitable application of the adequate provision guarantees in the state constitution. A certain

formula exists for payments to the District from the state that should be grounded in these

constitutional mandates.8 It is undisputed that since 2006-2007 the District is getting less than

what the Countys taxpayers are giving. Of the largest seven school districts, six of them receive

more funds for full time students than M-DCPS, even though the cost of doing business and

living in Miami-Dade County are higher than any the districts in their counties.

This failure to achieve equitable funding meant a funding loss to M-DCPS in a range

from $22.7 million to $94.7 million. Union official Joe Minor, a specialist in government and

labor relations, testified:

The equity funding gap, again, this is primarily driven by DCD. Miami-Dade County, under thisnew formula, is somehow not as expensive as Jacksonville. It's not as expensive as BrowardCounty. It's clearly -- living here, it's clearly as expensive or more expensive. Our healthinsurance costs are higher. District cost differential is explicitly in law for higher personnel costs.

So, salary, insurance costs, all the things associated with hiring and retaining high qualitypersonnel, somehow the State is saying that we can do that cheaper than, again, Jacksonville. Andwe haven't pursued that, either.9

8 Florida Department of Education 2010-11: Funding For Florida School Districts. FEFP funds are primarilygenerated by multiplying the number of full-time equivalent (FTE) students in each of the funded educationprograms by cost factors to obtain weighted FTE students. Weighted FTE students are then multiplied by a basestudent allocation and by a district cost differential in the major calculation to determine the base funding from stateand local FEFP funds. Program cost factors are determined by the Legislature and may represent relative costdifferences among the FEFP programs. Also see Doing the Math. Southern Office, The Council of StateGovernments, October 2004. The non-voted millage rate is set by the State legislature each year. It then

appropriates those funds which are apportioned by FEFP.

9Minor also testified to a $36 million CSR funding gap, but never explained what it meant. He testified: CSRfunding gap, again, very clear evidence of what the State's obligation was by their own math. We know exactlywhat they gave us, and we know what the immediate loss to Miami-Dade County Schools was, which was $36million. A Union exhibit states: Failure to achieve the CSR funding need as determined by the FLDOE cost theDistrict $36 million. The Unions opening statement referred to a constitutional class size amendment requiring theState to pay for the costs of reducing class size. The District received $36 million less from the legislature for thisallocation. The prospect of successfully suing the State for this money seems dim in light of its current financialstatus.


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The Special Magistrate understands that the formula used by the Florida Education Finance

Program is not necessarily one that reflects a 100% equitable distribution. For example, there

may be districts that reside in counties that have the ability to raise more revenue and that a

utilization factor is applied that can be either positive or negative.10

Why that factor, or the entire application of the formula has resulted in the District

receiving less than these other districts since 2006-2007, in significant amounts, must raise

considerable concern if it continues. District Superintendent Carvalho recognized this dichotomy

when he wrote Florida State Senator Wilson on December 17, 2010. He emphasized that a

priority for the District in the upcoming legislative session would be to provide level funding to

school districts. . . . But apart from this effort, given that the recurring differences amount to

considerable money to the District, it should be urged that the District pursue other options as

well. It is important for the District to show not only its teachers, but the citizens of this County

that it is cognizant of this unfairness and is seeking actively to level out the playing field of local

property tax money coming back to this District.

And finally, using these efforts is an element when considering the Special Magistrate

statutory factor of the interest and welfare of the public. Obviously it does not produce any

immediate funds. But, as noted, pursuing this more comprehensive effort may reasonably

suggest to the public that the District needs the money and is making an all-out effort to make

certain in the future that it has it. If and when teachers seek some increase the District will be in a

position to respond to the Union, the Board and the public that it has pursued or is pursing these

means to assure that money is available for its teachers and the District is not being

shortchanged.

10Funding For Florida School Districts. Florida Department of Education 2010-11. Doing the Math. SouthernOffice, The Council of State Governments, October 2004.


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In sum, the Special Magistrates recommendation is that the Districts ability to pay

increases is severely hampered. In these circumstances, however, a sufficient basis exists, as

discussed above, for the District to seriously consider the factors relating to availability of funds

and the public interest and welfare and the points made concerning them. The Special Magistrate

concludes that the thrust of those considerations warrants a recommendation that the District

adopt a one-time, non-recurring percentage salary increase that will not impose a hardship on the

District resulting in layoffs of any employees.

CONCLUSION

These recommendations are made in light of all the evidence presented at this hearing,

including the arguments and written submissions of the parties. The Special Magistrate has made

these recommendations to reflect the objective set forth in Sec. 447.405 of achieving a prompt,

peaceful and just settlement of the dispute between these parties.

_____________________________

Robert B. HoffmanSpecial Magistrate

_____________

At Fort Myers, Florida this 16th day of December, 2010. Each party has been duly served. The

decision is released as of receipt electronically.

Perc M-dcps and Utd Sm-2010-100 Decision 5-11

Documents

Transcript of Perc M-dcps and Utd Sm-2010-100 Decision 5-11