The Economic Crisis: Furloughs, Layoffs

1
The Economic Crisis Furloughs, Layoffs
Demotions of Professional Non-Professional
Employees

• Presented by
• FOX ROTHSCHILD LLP
• Mark W. Fitzgerald, Esquire

2
Recent developments

• This past February, the Pennsylvania House
  Introduced HB 855 which is intended to relax the
  generally stringent process in Furloughing
  employees for economic reasons.
• The Bill in its current form has been pulled.

3
HB 855

• Seeks to add economic furloughs to the reasons
  articulated in Section 1124 of the School Code
• Significantly modify the process of suspending
  and/or demoting based on seniority only.
• Reduce the Due Process requirements when
  suspending or furloughing staff

4
PSBA Testimony

• The position of PSBA, which is identical to that
  of PASBO on this subject is available.
• The bill in its current form is not likely. We
  are anticipating approval of allowing District to
  furlough for economic reasons. Seniority will
  likely be the challenge.

5
Status of Current Legislation

• In all likelihood, the removal of the house and
  senate bill at this juncture will set up a
  compromised piece of legislation where Districts
  will obtain mandate relief in the form of
  economic furloughs but still be required to
  address seniority provisions under the School
  Code.

6
In the meantime.

• We are confronted with the current legal
  restrictions and an economic/funding crisis.
• What are our options when furloughing and/or
  demoting?
• What legal hurdles are present?

7
The Furlough and Demotion Process

• A step by step approach to ensure legal compliance

8
The First Step Who are the Employees?

• The first step in dealing with such an issue is
  to identify the classification of the employee.
• If the employee is a non-professional employee,
  the next level of inquiry is whether there is
  anything in an applicable collective bargaining
  agreement or board policy that determines the
  manner upon which an employee would be furloughed
  and/or demoted.

9
The First Step Who are the Employees?

• In the absence of a collective bargaining
  agreement or a board policy, generally, a
  non-professional employees position can be
  eliminated simply by a board motion eliminating
  the position and establishing an effective date
  of the elimination of the position.

10
More Complications

• If there is a unionized employee (whether
  professional or non-professional) and that
  employee is furloughed or demoted and the work
  that that employee performed goes to a
  non-bargaining unit employee or entity,
  subcontracting concerns arise. Subcontracting is
  extremely difficult under the current state of
  Pennsylvania law.

11
More ComplicationsWhen Furloughing
Non-Professional Staff

• Seniority lists for non-professional employees
  are notoriously outdated and incomplete.
• More problematic is defining the class of
  employees within a non-professional bargaining
  unit.
• We do not want a custodian bumping an
  instructional aide!

12
Demotions of Professional Employees

• Section 1151 of the School Code

13
Section 1151 Demotions

• There shall be no demotion of any professional
  employee either in salary or in type of position
  without the consent of the employee, or, if such
  consent is not received, then such demotion shall
  be subject to the right to a hearing before the
  board of school directors and an appeal in the
  same manner provided in the case of the dismissal
  of a professional employee.

14
Section 1151 Demotions

• Demotions are considered a removal from one
  position and an appointment to a lower position
  it is a reduction in type of position as compared
  with other professional employees having the same
  status. Filoon v. Middle Bucks Area Vocational
  Technical School, 634 A.2d 726 (1993).

15
Power of Demotions

• Demotions can be one of the most powerful tools
  available with respect to professional employees.
  Courts generally do not interfere with the
  rationale of a school board in demoting a
  professional employee.

16
Section 1151 Grounds for Demotions

• The courts have held that any rational reason is
  sufficient to support a demotion and that a
  demotion will be overturned only if it is shown
  that the demotion was arbitrary or capricious.

17
Power of Demotions

• Further, demotions can be for budgetary or
  financial reasons, while furloughs of
  professional employees cannot. In other words, an
  economic justification for demoting an employee
  is not arbitrary or capricious.

18
Demotion Examples

• Principal or vice principal reassigned as
  teacher.
• Supervisor reassigned as teacher.
• Autonomous administrator placed under the
  supervision of another administrator.
• Principal of an elementary school reassigned to a
  newly created position Coordinator of Elementary
  Programs.
• Classroom teacher to an Itinerant Title I teacher
  who functioned mainly as an aide.

19
Reasons for DemotionsUpheld by the Courts

• School district reorganization
• Enrollment decline
• Abolition of position
• Cost savings/budget
• Job performance
• Refusal of employee to follow directions
• Employee not certified

20
Section 1151 Demotions

• The demotion provisions of the School Code are
  applicable to professional employees only.
• Where a professional employee performs services
  for the school district that are not professional
  in character, the employee is not protected by
  Section 1151 of the School Code.

21
Demotion Procedures

• Procedural requirements of the Code must be
  strictly adhered to.
• Employee is entitled to a notice of demotion and
  right to a hearing if not providing consent.
• Section 1151 requires a hearing if the employee
  does not consent to the demotion.
• Only the school board, and not the
  administration, can impose a demotion, either
  after the hearing or upon consent from the
  employee.

22
Demotion Procedures

• As the result of Mifflinburg, professional
  employees would likely have the right to grieve
  the demotion under their Collective Bargaining
  Agreement instead of a hearing before the school
  board.
• While employees may find arbitrators to be a
  more sympathetic fact-finder, an actual
  arbitration may not occur until months after the
  demotion became effective.

23
Demotion Procedures Important Question

• Does Seniority play into demotions?
• Is it a pure or realignment demotion?
• What are the reasons for the demotion?

24
Demotion Issues

• Employees who are demoted may be eligible for
  Unemployment Compensation Benefits.

25
Suspending a Professional Employee in Pennsylvania

• The Current laws of Furloughing

26
Furlough of Professional Employees

• Considerations under Section 1124 and 1125.1 of
  the School Code

27
Statutory Grounds for Suspension of Professional
Employees Under the School Code

• Section 1124 states
• Any board of school directors may suspend the
  necessary number of professional employees, for
  any cause hereinafter enumerated
• (1) Substantial decrease in pupil enrollment in
  the school district

28
Statutory Grounds for Suspension of Professional
Employees Under the School Code

• (2) Curtailment or alteration of the educational
  program on recommendation of the Superintendent,
  concurred in by the Board of School Directors,
  approved by the Department of Education, as a
  result of substantial decline in class or course
  enrollment or to conform with standards of
  organization or educational activities required
  by law or recommended by the Department of
  Education.

29
Statutory Grounds for Suspension of Professional
Employees Under the School Code

• (3) Consolidation of schools, whether within a
  single district, through a merger of districts,
  or as a result of joint board agreements, when
  such consolidation makes it unnecessary to retain
  the full staff of professional employees.

30
Statutory Grounds for Suspensionof Professional
Employees Underthe School Code

• (4) When new school districts are established as
  the result of reorganization of school districts
  pursuant to Article II., subdivision (i) of the
  Act, and when such reorganization makes it
  unnecessary to retain full staff of professional
  employees.

31
Statutory Grounds for Suspension of Professional
Employees Under the School Code

• The four (4) grounds previously mentioned are the
  only grounds upon which a school district may
  furlough a professional employee. Attempts to
  furlough professional employees beyond those
  grounds will not be unsuccessful.

32
Furlough for Budgetary Reasons?

• Unfortunately no, if that is your only
  justification.
• In Warwick Board of School Directors vs. Theros,
  430 A.2d 268 (1981), in overturning the Board
  decision to furlough a professional employee, the
  Court noted the school district eliminated a
  non-mandated supervisory positions to reduce
  budgetary deficits. None of the enumerated
  reasons from Section 1124 were listed in
  conjunction with the need to reduce fiscal
  deficits.

33
Furlough for Budgetary Reasons?

• Although school districts may not suspend
  professional employees for reasons not enumerated
  in Section 1124, where the reasons do exist,
  suspensions are proper even if motivated by
  financial considerations.

34
Substantial Decrease in Pupil Enrollment
Section 1124(1)

• Most suspensions of school district employees,
  until recently, were based on a substantial
  decrease in pupil enrollment.
• Courts have allowed school districts to determine
  what constitutes substantial decrease in
  enrollment.
• No precise definition of substantial decrease
  exists under the School Code or through case law.

35
Substantial Decrease in Pupil Enrollment
Section 1124(1)

• In Phillippi v. School District of Springfield
  Twp., 367 A.2d 1133 (1977), the Commonwealth
  Court said school boards must exercise sound
  discretion and board action will not be disturbed
  absent a showing that discretion was abused, or
  that the action was arbitrary, based on a
  misconception of law or ignorance of facts.

36
Substantial Decrease in Pupil Enrollment
Section 1124(1)

• Under the Phillippi standard, the following has
  been deemed a substantial decrease by the Courts
• 114 students over 10 years
• 486 students over 5 years
• 661 students over 6 years
• 250 students over 3 years
• 30 students in one department over 6 years

37
Substantial Decrease in Pupil Enrollment
Section 1124(1)

• In Colonial Education Assn v. Colonial School
  District, 645 A.2d 336 (1995), the court
  described two methods in which a substantial
  decrease can be proven
• Evidence of a general, cumulative decline over a
  reasonable time.
• Evidence of a decrease from one year to the next
  that is so prominent as to not require the other
  years as part of the analysis.

38
Substantial Decrease in Pupil Enrollment
Section 1124(1)

• Caution
• In Colonial Education Assn v. Colonial School
  District, the court held an 18 year look back
  period was too long, absent justification for
  such a long period of time.

39
Substantial Decrease in Pupil Enrollment
Section 1124(1)

• While most cases are based on actual decreases of
  enrollment, school districts may also be able to
  consider projections of future pupil enrollment
  in order to justify an 1124(1) reason for
  furlough.
• Relying exclusively on projected enrollment may
  be problematic, however, in order to be
  successful under this prong of 1124.

40
Curtailment or Alteration of Educational
ProgrammingSection 1124(2)

• This is the prong we have seen most often over
  the last several years as enrollment has
  generally increased making Section 1124(1) less
  applicable.
• If a school district proceeds to furlough a
  professional employee under Section 1124(2),
  several criteria must be met in order to
  effectuate the furlough.
• Probably the most confusing of the Section 1124
  options.

41
Curtailment or Alteration of Educational
ProgrammingSection 1124(2)

• Section 1124(2) requires the satisfaction of the
  following criteria
• 1. Recommendation of curtailment or alteration
  by District Superintendent.
• 2. Concurrence in such action by the Board.
• 3. Approval of such action by the Department of
  Education.
• 4. Curtailment or alteration of educational
  programming as a result of (1) substantial
  decline in class or course enrollment or (2) to
  conform with standards of organization or
  educational activities required by law or
  recommended by PDE.

42
Curtailment or Alteration of Educational
ProgrammingSection 1124(2)

• If one of the four conditions is not satisfied, a
  suspension will not be permitted. Shegelski v.
  Mid Valley School District, 677 A.2d 367 (1996).

43
Curtailment or Alteration of Educational
ProgrammingSection 1124(2)

• Approval of the Secretary of Education as part of
  the process.
• No statutory provisions govern the substance or
  the procedure by which PDE approves a suspension
  under Section 1124(2).
• PDE has issued a Basic Education Circular (BEC
  1124) on the topic.

44
BEC 1124 4 Categories

• Based on the BEC, a curtailment/alteration of
  programming will be approved by the Department
  under the following 4 categories
• 1. Substantial decline in enrollment in a class
  or course.
• 2. Conform with standards of
  organization.
• 3. Required by law.
• 4. Recommendations from PDE.

45
BEC 1124

• PDE will review requests for curtailment or
  alteration of the educational program using the
  following criteria
• All requests must include board action as
  recorded in board minutes as evidence of approval
  of the school districts board of school
  directors.
• Substantial Decline in enrollment (category 1)
• - The Department will approve a request to
  curtail or alter an educational program if the
  district establishes that such a request is the
  result of substantial decline in class or course
  enrollment. To establish such a standard, the
  school district must submit data evidencing the
  following

46
BEC 1124 (Category 1)

• a. that enrollment in the class or course has
  decreased at least 20 from the school year five
  years prior or
• b. that enrollment for the class or course is
  less than ten students.

47
BEC 1124 (Category 1)

• Caution Enrollment is on a per class or per
  course basis under this BEC and Section 1124(2)
  where a suspension is necessitated by lower
  enrollment in a particular program.
• Whereas, under Section 1124(1) the analysis was
  generally decrease of pupil enrollment across the
  District that justified a suspension.

48
BEC on 1124(2) (Category 1)

• Caution II
• School boards may not avoid the requirements of
  Section 1124(2) for approval by PDE by
  characterizing a suspension as necessitated by
  declining pupil enrollment when it was actually
  precipitated by curriculum reorganization/
  decrease in a specific program.

49
BEC 1124 (Category 2)

• Category 2
• The Department will approve a school districts
  request to curtail or alter an educational
  program if it can establish the curtailment or
  alteration is necessary to conform with standards
  of organization. To establish
• The District must submit certified information
  from the superintendent demonstrating the
  requested curtailment or alteration will effect a
  change in the organization or curriculum that
  results in a more effective educational program.

50
BEC 1124(Categories 3 and 4)

• Categories 3 and 4
• PDE will also approve a curtailment and
  alteration of programming if such a request is
  either
• (a) based on activities recommended by PDE
• (b) required by law
• -In both circumstances, a district
  superintendent must identify and certify the
  recommendation from PDE or law that drives the
  decision to curtail or alter programs.

51
BEC 1124

• Nothing precludes a school district from
  requesting a curtailment/alteration of programs
  based on all 4 categories if applicable. In such
  an instance, the district will need to provide
  evidence to PDE to justify each category, however.

52
Application of Section 1124 for Temporary
Professional Employees

• The reasons that justify furlough of professional
  employees appear to be applicable to temporary
  professional employees as well.
• Though the case law is a bit messy
• Generally, what is a furlough of a tenured
  employee, is a contractual non-renewal of a TPE

53
Application of Section 1124 for Temporary
Professional Employees

• A good case study and cautionary tale on the
  likely applicability of Section 1124 of the Code
  and TPEs can be found in the arbitration of the
  North Penn School District and the North Penn
  Education Association. (2010) (Buchheit)

54
North Penn v. NPEA

• The Association grieved the non-renewal of three
  TPEs even though the Association stipulated the
  Board had justifiable reasons under the school
  code
• It was the Associations position, however that
  regardless of the substantive justifications, the
  Board failed to procedurally adhere to the Code.
  ( the Association cites Cigarski, a 1980
  Commonwealth Court decision)

55
North Penn v. NPEA

• The Board argued that the Code provisions
  applicable to PEs is not applicable to TPEs.
  (rely on the Phillipi holding which states
  clearly the Code is not applicable to TPEs), thus
  the procedural requirements did not apply as well

56
North Penn v. NPEA

• Scott Buchheit, a seasoned arbitrator, agreed
  with the Association.
• Regardless of whether the Board has the reasons
  or not, the procedural requirements of Section
  1124 and the BEC

57
You Have the Authority to Suspend, Now What?

• The grounds for suspension is half the battle.
  The next question that must be asked is whether
  the proper employee or employees have been
  selected?
• Section 1125.1 sets forth the following rules
  pertaining to the selection of employees to be
  suspended

58
Section 1125.1 Persons to be Suspended

• (a) professional employees shall be suspended
  under Section 1124 in inverse order of seniority
  within the school entity of school employment.
  Approved leaves of absences shall not constitute
  a break in service for purposes of computing
  seniority for suspension purposes. Seniority
  shall continue to accrue during suspension.

59
Section 1125.1 Persons to be Suspended

• (b) where there has been a consolidation of
  schools, departments or programs, all
  professional employees shall retain the seniority
  rights they had prior to the reorganization or
  consolidation.

60
Section 1125.1 Persons to be Suspended

• (c) A school entity shall realign its
  professional staff so as to insure that more
  senior employees are provided with opportunity to
  fill positions for which they are certificated
  and which are being filled by less senior
  employees.

61
Section 1125.1 Persons to be Suspended

• (d)(1) no suspended professional employee shall
  be prevented from engaging in another occupation
  during suspension.
• (d)(2) suspended or demoted employees shall be
  reinstated on the basis of seniority within the
  school entity. No new appointments shall be made
  while there are suspended or demoted employees
  available who are properly certified.
• (d)(3) to be considered available, a suspended
  employee must annually report in writing his
  current address and his intent on accepting the
  same or similar position offered.

62
Section 1125.1 Persons to be Suspended

• Nothing in Section 1125.1 shall be construed to
  supersede or preempt any provisions of a
  collective bargaining agreement negotiated by a
  school entity and the exclusive bargaining
  representative of the employee in accordance with
  the Public Employe Relations Act.

63
Persons to be Suspended Some Considerations
Ongoing Disagreement

• Staff Realignment straight line versus
  checkerboard realignment. Employer argument for
  straight line versus employee argument for
  checkerboard realignment.
• Courts have been consistent in not requiring
  checkerboard realignment. Godfrey v. Penns
  Valley Area School District, 449 A.2d 765 (1982).

64
Persons to be Suspended Some Considerations and
Ongoing Disagreement

• Overall, the issue of who is to be suspended
  under Section 1125.1 is fact intensive.
  Moreover, the rights and responsibilities of the
  suspended under the Act leaves many question to
  be answered, many of which have not been
  completely addressed by the courts.

65
Noteworthy

• School Boards can bargain the issue of Seniority
  as it pertains to furloughs with professional
  bargaining units.
• Most do not have such provisions within their
  contracts.
• If the law does not change, possibly something to
  consider.

66
TPEs and applicability of Section 1125.1

• While Section 1124 is likely applicable in the
  non-renewal of TPEs, Section 1125.1 is not.
• In other words, seniority is not part of the
  analysis when non-renewing a TPE.

67
Employee Hearing Rights Under Sections 1124 and
1125.1

• Section 1125.1(f) states a decision to suspend
  shall be considered an adjudication within the
  meaning of the Local Agency Law.
• Therefore, an affected employee has a right to a
  hearing should they desire.

68
Employee Hearing Rights under Sections 1124 and
1125.1

• An employee is entitled to reasonable notice of
  the right to a hearing and the opportunity to be
  heard.
• A hearing is not mandated, however.
• Should a hearing actually take place, it would
  look very similar to that of a employee dismissal
  matter.

69
Suggested Process in a nutshell
Curtailment/Alteration of Programming

• First, to the extent your district is considering
  furloughs, your superintendent must be in the
  process of justifying a curtailment of
  programming as part of an overall board
  resolution
• It is suggested the Administration consult with
  legal counsel on particular procedural
  considerations

70
Suggested Process in a nutshell

• Once a resolution is passed, which includes the
  recommendations of the superintendent, submit
  immediately the request to PDE
• Earlier the better, PDE was very slow last year
  in responding.
• Once PDE has approved, identify the proper
  individuals to furlough

71
Suggested Process in a nutshell

• Notify the employee of the determination and
  their individual right to a hearing.
• The employee may chose an arbitration under the
  Collective Bargaining Agreement instead of a
  Local Agency Hearing before the Board

72
Suggested Process in a nutshell

• Generally, pre-deprivation hearings are not
  required under this process.
• For demotions, pre-deprivation proceedings are
  only required when demoting for reasons of
  performance.

73
Current Position of PDE

• From reports, PDE has liberalized the approval
  process this year.
• We have sought and received approval from PDE
  this year on the curtailment of full day
  kindergarten for economic reasons.
• It is advisable to contact Steve Fisher at PDE to
  discuss your curtailment proposal in advance of
  board action in order to assure PDE will approve
  the measure

74
Contact Information

• Mark W. Fitzgerald, Esq.
• FOX ROTHSCHILD LLP
• 610-397-6500
• mfitzgerald_at_foxrothschild.com