Budget Adjustment Bill Gives a Short-Term Disincentive for Unions to Make Concessions

Wednesday, June 1, 2011 at 9:41 PM by

Legislators passed the budget adjustment bill with the intent of severely curtailing collective bargaining rights of public employees at the state and local level. Ironically, their actions may have the unintended short-term effect of making it more difficult for unions to make financial concessions.

The budget repair bill, part of which is currently tied up in court as Act 10, was justified in part as a way to make it easier for local governments to impose significant compensation cuts on local employees without having to bargain with the unions. Removing the ability for public employees to bargain on benefits and limiting their ability to bargain on wages would (in theory) make up for the steep cuts in local aid in the Governor’s 2011-13 budget. Local governments have pointed that the governor’s cuts exceed the amount that can be recouped in compensation cuts to local employees by a significant amount. We explored this topic in an April 13th blog post.

Republicans in the Legislature have indicated that if Act 10 is not upheld by the courts, they may pass it again. One way or another, these provisions look likely to become law. Once Act 10 is upheld or re-passed, the provisions limiting collective bargaining will go into effect when union contracts expire or – and this is the part that makes it difficult for unions to offer concessions – when the contract is modified.

A number of local public employee unions have indicated their willingness to re-open their contracts to make concessions that would prevent staff layoffs and service reductions. If so, they better do it quickly, because once Act 10 provisions go into effect, unions that voluntarily work with local governments to reopen their contracts and make concessions will be subject to all the provisions in Act 10. That means that if unions make a good-faith effort to make financial concessions through a modification of their contract, the result will be that they will be immediately limited in their rights regarding arbitration, union dues, fringe benefits, and other areas.

Alan Borsuk has a recent editorial in the Milwaukee Journal Sentinel describing how this conundrum is being played out in Milwaukee Public Schools (MPS). The Milwaukee School Board and the Milwaukee Teachers’ Education Association reached a four year agreement last September, long before the Governor proposed restrictions on collective bargaining rights. With MPS subject to significant reduction in state aid, some have called on MPS teachers to reopen their contract. MPS teachers are reluctant to do so, in part because reopening the contract would in essence void their collective bargaining rights.

There’s some possibility that instead of reopening the contract, local governments and unions could pursue Memorandums of Understanding (MOUs) to modify the contracts. This approach would have the advantage of allowing concessions without technically reopening the contracts. But it’s not known for sure how Act 10 would affect these agreements, which would likely be non-binding and voluntary on the part of both parties. The efficacy of MOUs as a tool for allowing public workers to make concessions is at best questionable.

In the long-term, Act 10 (again, assuming it goes into effect) will affect all unions, as their contracts expire. But the in short-term, Act 10 will make it harder for unionized public employees to make voluntary concessions. If the Governor and Legislature are truly interested in giving local governments the “tools” they need to help manage the cuts in local aid, they will amend Act 10 to remove these disincentives for unions to agree to contract modifications. As Milwaukee Mayor Tom Barrett said, “Let’s not have the guillotine fall on the union if they agree to come back to the table.”

Tamarine Cornelius

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