Responding to the May Revise — Options for School and Community College Employers

05.19.2020

The Governor’s May Revision (“May Revise”) to the 2020-2021 fiscal year budget calls for unprecedented cuts to State educational funding, including 10% cuts to the Local Control Funding Formula (LCFF) (for K-12), 10% cuts to the Student Centered Funding Formula (SCFF) (for community colleges), and significant cuts to numerous additional programs.  These cuts may be just a starting point, as the Legislature intends to consider further budgetary adjustments in August and September, and may reduce funding for programs accordingly.

Compounding these budgetary uncertainties is the still-developing COVID-19 public health emergency, as well as related safety concerns associated with any return to in-person instruction. 

For K-12 employers, the instructional model (i.e. traditional, distance education, or a hybrid) for 2020-2021 remains highly uncertain, and, thus, both facilities needs and staffing needs are also unclear.  K-12 employers also may face significant uncertainty in levels of student enrollment and attendance.  Many community college employers are planning for a primarily distance-education instructional model, but may nevertheless face significant fluctuations in student enrollment, and in some cases may see significant increases, but without additional funds to educate those students.

The Education Code identifies a number of options for districts in fiscal distress, including county office fiscal oversight, State emergency apportionments, appointment of a State Trustee, etc. (Ed. Code Sections 42127.3, 42127.6, 41320 et seq., 41325 et seq., 41329.51 et seq.; 84040).  It is not clear, however, that these options will be available in the current budget climate.  In 2009, for example, the Superintendent of Public Instruction publicly stated that no emergency loans would be available.

In short, school and community college employers are facing the most challenging fiscal situation in modern memory, with very little in the way of a safety net, and high levels of uncertainty in planning for virtually all aspects of operations.

In the midst of this fiscal uncertainty, reductions in staffing levels, personnel expenses, work days/hours, class size, and other matters will be necessary steps for many employers.  Employers will also need to plan for possible mid-year shifts to alternate instructional models (if the situation worsens, or if an effective vaccine is developed).  Although many uncertainties remain, there are nevertheless specific options — including bargaining and layoff — that employers should consider now as they plan for the 2020-2021 year.  Those options include:

Layoffs

• K-12 Certificated Employees

Education Code section 44955.5, sometimes referred to as the “summer layoff statute,” allows K-12 districts to lay off certificated employees, after the usual March 15 layoff timeline has passed, when certain fiscal conditions are present.

The usual timeline for certificated layoffs requires initial action by the governing board to identify “particular kinds of services” subject to reduction or discontinuance, and preliminary notice to affected employees, by March 15, hearings to be conducted by May 7, and final notices to employees by May 14.

Education Code section 44955.5 permits a similar process to occur in the summer months, as follows:

“During the time period between five days after the enactment of the Budget Act and August 15 of the fiscal year to which that Budget Act applies, if the governing board of a school district determines that its total revenue limit per unit of average daily attendance for the fiscal year of that Budget Act has not increased by at least 2 percent, and if in the opinion of the governing board it is therefore necessary to decrease the number of permanent employees in the district, the governing board may terminate the services of any permanent or probationary certificated employees of the district, including employees holding a position that requires an administrative or supervisory credential. The termination shall be pursuant to Sections 44951 and 44955 but, notwithstanding anything to the contrary in Sections 44951 and 44955, in accordance with a schedule of notice and hearing adopted by the governing board.”

Thus, the trigger for a summer certificated layoff is a determination by the governing board, based upon the final Budget Act, that the increase in the district’s “total revenue limit” per unit of ADA is less than 2 percent.  (Changes in the Education Code enacted as part of the Local Control Funding Formula make clear that the summer layoff process is still available, notwithstanding the change in terminology.)

A simple way to think of summer certificated layoffs is as a mirror of the traditional March - May statutory timeline, but in June - August.  Thus, March 15 becomes June 15, and May 14 becomes August 14.  This is only an approximation, however, since the timeline commences “five days after the enactment of the Budget Act” and the date on which the Budget Act will be enacted (i.e., signed by the Governor) remains uncertain. The State Constitution requires that a budget be passed by June 15.  We expect it will be signed shortly thereafter, but it is possible the budget could be enacted as late as Monday, June 29, meaning that the “window” for governing board action on certificated layoffs could open as late as Monday, July 6. Because these timelines are uncertain, early preparation and flexibility of timing in response to the Legislature and Governor will be of critical importance for any districts contemplating summer layoffs. 

Regardless of when the Budget Act passes, however, the process, including hearings if requested by affected employees, final board action, and termination notices to laid off employees generally will need to be concluded by August 14.  For more information on this topic, please register for our upcoming webinar series.

School districts that are contemplating summer layoffs therefore should be preparing now for governing board action to initiate the process as soon as is practicable after passage of state budget, on or about June 15, 2020.  Preparations should include the following:

1. Review the Collective Bargaining Agreement to see if there are any constraints to taking action (e.g. class size limits)
2. Review and update certificated seniority list, and confirm accuracy of critical information such as seniority dates, assignments, credentials, and other information that may be needed based on local circumstances
3. Review and confirm accuracy of classification of temporary and long-term substitute certificated employees
4. Prepare draft board resolution (a) making a finding that the budget conditions of Section 44955.5 are present, (b) identifying particular kinds of services to be reduced or discontinued and (c) setting a schedule of notice and hearing
5. Conduct preliminary layoff analysis based on seniority list, to identify affected employees according to seniority rules of the Education Code
6. Identify tentative schedule of governing board meetings for initial and final action on the layoff, including calling special meetings if necessary
7. Make sure your district has a current contract with the Office of Administrative Hearings for administrative law judge services. OAH requires such a contract to schedule a layoff hearing

• Community College Academic Employees

Unlike for K-12 districts, the Education Code makes no provision for summer layoffs of regular full-time faculty.  Thus, community college districts that did not initiate faculty layoffs for 2020-2021 according to the usual March 15 timeline will not be able to initiate such layoffs now based on the May Revise and whatever the final state budget may hold.  Release of temporary adjunct instructors, however, may remain available, subject to any constraints of local collective bargaining agreements.

• Classified Employees (K-12 and Community Colleges)

The usual rules for layoff of classified employees continue to apply.  In general, these require governing board action to eliminate positions due to lack of work or lack of funds, and 60 days’ advance notice to affected employees prior to the layoff taking effect.  Depending how clearly and comprehensively a district’s existing CBA addresses matters such as seniority, bumping, and reductions in hours, some discussions with the exclusive representative for classified employees may be needed in advance of implementation, to identify those employees who will be subject to layoff, and to confirm the process by which affected employees will receive notice and be afforded an opportunity to exercise any bumping rights.

Negotiations

• Certificated/Academic Unions

School and community college districts may have to consider negotiated changes to compensation and related items, such as a reduction in force, salary roll back or reduction in benefits, to balance the budget.  During the great recession, school districts were relieved of the duty to provide 180 days of instruction, which enabled the districts to negotiate additional furlough days with certificated and classified unions.  In the current case, however, given the Governor’s statement concerning the potential loss of education during the COVID-19 crisis, it seems unlikely that school districts will be afforded the same flexibility.

1. School districts should review existing class size language to determine if there is flexibility to conduct a summer layoff. Pay special attention to language concerning K-3 Grade Span Adjustment.  If there is not sufficient flexibility, a school district must negotiate the flexibility with their union.  This same analysis should be completed even if a school district chooses to forego a summer layoff; as layoff for 2021-2022 will also require flexibility.
2. School and community college districts should review existing contract language to determine if they have the ability to open salary/benefits for 2020-2021. If they do, a sunshine proposal should be submitted for Board approval and an initial proposal should be presented to the Association.  Once this occurs, the union is under an obligation to negotiate in good faith with the employer.
3. If a collective bargaining agreement is “closed” for 2020-2021, Associations are often willing to re-open salary/benefits when doing so could avoid or otherwise lessen the impact of a layoff. If agreement to reopen cannot be reached, the CBA should be reviewed to determine other options to compel negotiations or implement changes.  This should be done in consultation with legal counsel.

• Classified Unions

1. Classified layoff statutes provide school and community college districts with more flexibility than a certificated layoff. School and community college districts should review their overall staffing and see if there are areas for staff reductions.
2. School and community college districts should review existing contracts to determine if they have the ability to open salary/benefits for 2020-2021. If they do, a sunshine proposal should be submitted for Board approval and an initial proposal should be presented to the Association.  Once this occurs, the union is under an obligation to negotiate in good faith with the employer.
3. Even if the collective bargaining agreement is “closed” for 2020-2021, classified associations may be willing to enter into a layoff mitigation agreement that provides the short term financial flexibility the employer requires, while simultaneously limiting the impact of any layoff.

• General Advice

Start early: Even though the budget may not be concrete, it is important to start the “concessions” conversation with the unions as soon as possible.  Many districts will be facing impasse with their associations.  The process could take a year to complete!  Moreover, the process does not begin until PERB appoints a mediator.  In recent years, PERB has become less willing to grant impasse, thereby appointing a mediator, particularly where the parties have only met on a few occasions.  Moreover, the Governor has recently extended the impasse timelines under the EERA by 60 days (Executive Order N-63-20), making it highly unlikely that employers will be able to complete the impasse process in a timely manner.

Governing Board Resolution Prior to July 1 To Preserve Options Regarding Salary Reduction For Unrepresented Employees

Employers who are considering salary cuts or furloughs may also wish to consider adopting a resolution prior to July 1 stating that employee salaries are uncertain and subject to reduction.

Such resolutions are a response to long-standing California precedent, holding that Governing Boards are barred from reducing salaries for certificated employees after July 1.  ABC Federation of Teachers v ABC Unified School District, (1977) 75 Cal.App.3d 332, 338 142 Cal.Rptr 111, 114 citing Rible v Hughes, (1944) 24 Cal.2d 437, 444.  Similar principles arguably apply to classified employees.  (Education Code Sections 45160, 45162).

The scope and utility of such resolutions is unclear.  PERB has held, for example, that the July 1 deadline is inapplicable to represented employees.  See San Francisco Community College District (1979) 3 PERC 10127, p. 399.  Anaheim Secondary Teachers Association v. Anaheim Union High School District (1982) 6 PERC 13078, PERB Dec. No. 201.

Nevertheless, adopting a resolution of this sort may put employers on stronger legal footing in the event a salary cut or furlough is required.  Employers should consult with legal counsel regarding the text and utility of such a resolution, specific concerns relating to unrepresented employees, and requirements for notifying employees.

Emergency/Unilateral Authority To Impose Salary/Benefit Cuts

If all other options outlined above have been fully considered and employers still lack sufficient funds to both maintain established salary/benefit levels and to educate students, something must give.  In such cases, employers may consider unilateral action — outside of the normal bargaining process — to reduce salary/benefits.

Unilateral cuts should be considered only as a last resort, and should be taken in consultation with legal counsel.  Prior to engaging in unilateral action, school districts should consider whether any further cuts may be made to their budgets, and, if specific items are considered and rejected, should be prepared to explain why such cuts were not viable.

For example, PERB has recognized, however, that School districts may take unilateral action — under a “business necessity” theory — when faced with an “actual . . . emergency which leave[s] no real alternative to the action taken and allows no time for meaningful negotiations before taking action,” and which arose as an “unavoidable result of a sudden change in circumstances beyond the employer's control.”.  (Calexico Unified School District (1983) PERB Dec. No. 357; Lucia Mar Unified School District (2001) PERB Dec. No. 1440.)

Employers may also have “emergency” or “management rights” language in their Collective Bargaining Agreements which may authorize unilateral salary/benefit cuts in the event of fiscal emergency.

Please contact the authors or your usual AALRR attorneys with any questions regarding this Alert.

_{This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.} 

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