Slide 1 – Title Page; Collective Bargaining Module

Slide 2 – Contents
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•	Legal basis
•	Roles and responsibilities
•	Collective vs collaborative
•	Determining the amount of funds available
•	Determining how to distribute salary funds
•	Balance between salaries and benefits
•	Conclusions
Notes: Presentation targeted for finance officers in the collective bargaining process. The collective bargaining process has an impact on the overall financial management of the school district. It is therefore important for finance officers to understand the process.

Slide 3 – Legal Basis – Florida Constitution	
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•	Article I, Section 6
•	Right to work regardless of union membership
•	Right to collectively bargain
•	Public employees denied right to strike
Notes: Florida is a “right to work” state which means that union membership is not required for a person to get a particular job, even if the position is part of a bargaining unit.
The Florida Constitution protects public employees’ rights to collectively bargain.
Public employees are prohibited from going on strike in the State of Florida.

Slide 4 – Legal Basis – Florida Statutes
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•	Chapter 447, Part II
•	Establishes Public Employees Relations Commission (PERC) to oversee process
•	Defines all parties and terms used in bargaining process
•	Specifies legal structure and guidelines for the bargaining process including remedies for violations
Notes:  The collective bargaining process is tightly controlled for public employees in the state.
Slide 5 – Roles and Responsibilities
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•	PERC – oversees the bargaining process and provides rulings on unfair labor practice charges
•	School Board – legislative body that provides direction to superintendent or designee regarding bargaining offers in executive session; also serves in a quasi-judicial role to resolve an impasse
•	Superintendent or designee – chief executive officer representing the views of the school board
•	Union Chief Negotiator – represents the positions of the bargaining unit

Slide 6 – Roles and Responsibilities Cont.
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•	Bargaining team – specific role varies depending on type of bargaining process; general role is to support the superintendent or his/her designee or the union chief negotiator by providing input 
•	Chief Financial Officer – primary role in process is to advise superintendent and school board on recommended salary and/or benefit offer; may also be a member of bargaining team although this should be avoided when possible due to perception that CFO may have authority to change board approved offer
Notes: The CFO reports either directly or indirectly to the superintendent. Therefore, he/she must understand the priorities of the board/superintendent regarding compensation issues. In light of that understanding, he/she must be very open and frank in explaining compensation options and consequences. The response is not “no, we cannot do that” but “if we want to accomplish that, here are the options available and here are the consequences of each.”
A CFO can serve as a member of the bargaining team. This sometimes leads to conflict since the CFO is sometimes perceived to have the ability to modify the school board’s offer. In a smaller district not serving on the bargaining team may not be an option.

Slide 7 – 
Chart: 
The chart is organized as a line of succession for the bargaining process.
Notes: The Public Employees Relations Commission oversees the bargaining process. They help resolve disputes or may step in if agreement cannot be reached.
The bargaining unit selects a labor organization or union to represent them in the collective bargaining process.
The superintendent and/or designee meets with the school board in executive session to determine the compensation offer to make.
The superintendent and/or designee then bargains with the union in an attempt to arrive at an agreement on all contractual issues, including compensation.

Slide 8 – What Happens if the Sides Cannot Agree?
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•	One side declares impasse
•	Mediator/special magistrate appointed
•	Special magistrate holds hearings to determine facts
•	Special magistrate issues recommendations
•	Both sides can accept or reject all or portions
•	Any disputed items are presented to the school board at a hearing
•	School board decides resolution and recommends that items be sent out for ratification
•	If not ratified, school board may impose for remainder of fiscal year
Notes: The collective bargaining process is somewhat circular. The school board initially authorizes an offer. Then the collective bargaining process takes place. If the two sides cannot come to agreement, one or both sides declare impasse. A special magistrate may be appointed and will hold hearings to determine facts. Once this process has concluded, a report is issued with the special magistrate’s recommendations. If any of the items are still in dispute, the items come before the school board for ultimate resolution. So essentially the process begins with the school board providing direction for any compensation offer or other bargainable issues and then may end with the school board ruling on what the final compensation or agreement will be.

Slide 9 – Traditional vs Collaborative Bargaining
Source: U.S. Dept. of Labor and Wisconsin Employment Relations Commission, (Washington D.C., 1991)
Chart:
The chart is organized by comparing traditional and collaborative bargaining.
Notes: There are two basic approaches to collective bargaining - traditional and collaborative. The matrix above describes differences in the two approaches. One main difference in the approaches is that in the traditional approach information is withheld whereas in the collaborative process, information is shared. The collaborative process requires that both teams be trained in the process. It is a problem-solving process as opposed to a confrontational process. Although the collaborative process is very effective in resolving many issues, compensation issues, and especially salary issues, often cause the bargaining process to regress back toward a more traditional approach.

Slide 10 – Traditional vs Collaborative Bargaining Cont.
Source: U.S. Dept. of Labor and Wisconsin Employment Relations Commission, (Washington D.C., 1991)
Chart:
 The chart is organized by comparing traditional and collaborative bargaining.
Notes: These are more characteristics of the traditional vs collaborative approach.

Slide 11 – Determining Compensation Funds Available
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•	Process can vary by district and even change from year to year
•	Review bargained contracts to determine if there are automatic triggers for compensation increases
•	Determine school board priorities, including non-compensation items
•	Determine superintendent priorities, including non-compensation items
•	Determine compensation needed to attract and retain qualified staff
Notes: There is no one way to determine the amount of funds available for compensation. This section identifies items to consider in the process. These items include prior contractual commitments, board and superintendent priorities, and funds needed to attract and retain qualified staff. Other considerations are the quality of revenue and expenditure forecasts, the current reserve levels, trends and requirements regarding those reserve levels.

Slide 12 – Determining Compensation Funds Available Cont.
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•	Determine anticipated General Fund revenues
o	Review information from all available sources including FELL, FSBA, FADSS, FDOE and district liaisons
o	Review Economic and Demographic Research (EDR) forecasts
o	Review Governor’s Proposed Budget
o	Review early data from legislative session from House and Senate positions
o	Review final Conference Report data from legislative session including First FEFP Calculation that includes estimated tax base and millage information
o	Review Second FEFP Calculation in July that includes actual certified tax base and millage information
Notes: Various support organizations provide information regarding state revenues and appropriations, especially during the legislative session. Economic and Demographic Research (EDR) provides forecast information throughout the year. The Governor releases his proposed budget in late January or early February, except in general election years when it is earlier. It usually includes the latest information on anticipated state revenues and demonstrates the Governor’s priorities on how to distribute those funds. The information coming from the early reports of the House and Senate use the latest EDR forecast data and also demonstrates their priorities. The First FEFP Calculation, as part of the Conference Report, gives enough detailed information to nearly finalize the school district budget. This report is still using estimates for tax rolls. Once the certified tax rolls and millage rates are set, the Second FEFP Calculation becomes the basis for the budget presented to and adopted by the school board.

Slide 13 – Determining Compensation Funds Available Cont.
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•	Determine anticipated general fund revenue that will be available to apply toward compensation
o	Use total revenue method
o	Use per student method
•	Determine anticipated non-recurring funds that will be available, if needed, to apply to non-recurring compensation such as bonuses
Notes: One fundamental principle is that non-recurring funds such as reserves should only be used for non-recurring purposes such as bonuses. Only recurring revenues should be used to cover recurring salary and benefit costs.
Although the current reserve level, sometimes measured by the financial condition ratio (FCR), should not be relevant to the amount of recurring revenues to be used for recurring compensation costs, it is relevant to the ultimate final compensation offer. For instance, if the FCR has been declining over a period of years, it may be an indicator of an imbalance in the budgeting process and will need to be corrected. This imbalance may be caused by previous settlements from the collective bargaining process. Conversely, if the FCR is steadily rising and is beyond what is considered adequate, it may be that there is an imbalance in the budgeting process and some of the funds going into fund balance may actually be recurring and eligible for compensation increases.
Finally, the absolute amount of reserves may be an issue. If reserves are dangerously low, some recurring funds may have to be used to build or replenish those reserves until they are at an adequate level. If reserve levels are sufficient, some of these funds may be used to pay for non-recurring compensation such as bonuses.
Regardless of the level of reserves, unions many times perceive reserves to be funds available for compensation and will attempt to include them in the collective bargaining process.

Slide 14 – Determining Compensation Funds Available Cont.
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•	Determine actual cost of potential offers 
o	Determine cost of 1% increase in salaries based on current staff
o	Determine cost of benefits associated with 1% increase in salaries
o	Determine cost of other benefits such as health insurance to maintain current benefits and for each potential modification
o	Determine what portion of any offer will be paid by an alternative fund source other than the general fund such as grants, Food Services, etc. (used to deduct from total cost to determine general fund revenue needed)
Notes: In order to determine the impact of any potential available compensation funds, the cost of the various components of compensation must be determined. The cost of a 1% increase in salaries and benefits should be determined as a starting point to determine what a revenue increase can fund. Several members of each bargaining unit will normally be funded from grant funds or from the Food Services program. If the funds to pay for compensation increases are to come from those sources, this cost should be either deducted from the cost of the compensation increase or these funds should be added to the General Fund revenue dollars available.

Slide 15 – Determining Compensation Funds Available Cont.
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•	Total revenue method
o	Begin with total anticipated General Fund revenues
o	Less amount needed to cover baseline budget
o	Less workload adjustment for schools and departments
o	Less increase in restricted/categorical funds
o	Less new mandates or priority new initiatives
o	Less non-compensation price-level adjustments
Notes: This method uses total forecast revenues, focusing on incremental revenues to cover workload and price-level adjustments. If there is to be a change in level of service, this process will need to reflect that change.

Slide 16 – Determining Compensation Funds Available Cont.
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•	Per student method (FTE)
o	Begin with total anticipated General Fund revenues per FTE
o	Less per FTE amount needed to cover baseline budget
o	Less per FTE increase in restricted/categorical funds
o	Less per FTE new mandates or priority new initiatives
o	Less per FTE non-compensation price-level adjustments
(Note: no need to adjust for workload)
Notes: The net result is the dollar amount available per FTE to fund compensation issues. This method eliminates the need to calculate the impact associated with workload changes. If there is to be a change in level of service, this process will need to reflect that change.

Slide 17 – Distributing Salary Funds
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•	Establish priority for use of available recurring funds
o	Between bargaining units or other employee groups 
o	On salary schedule or as other compensation or benefits
o	Where on salary schedule to place funds such as on beginning of schedule or at end
o	How much for performance components
o	As supplements
o	As adjustments based on degree level
o	As special adjustments for critical needs positions
•	Determine if non-recurring funds are available to cover non-recurring costs such as bonuses, if needed as part of the compensation offer
Notes: If salary offers are to be different between bargaining units or other employee groups, a long-term strategy should be in place to justify and explain the differences. Generally districts should prioritize salary funds for the salary schedule to take full credit for salary dollars offered. This helps make the district more competitive with its peers. Conversely, pressure may be applied to put funds in other areas depending on real or perceived deficiencies in those areas.

Slide 18 – Balance Between Salaries and Benefits
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•	Revisit priorities of board and superintendent
•	Determine peer comparisons of salary schedules and benefits plans
•	Determine what, if any, portion of salary offer is contractual
•	Determine what portion of benefits package is contractual or legally required
•	Determine if the benefits can be modified through plan design or through premium changes
•	Always keep in mind that the goal is to attract and retain a highly qualified staff
Notes: As mentioned throughout this module, decisions are based on priorities established by the school board and superintendent. If a district is to be competitive with its peers or surrounding districts in recruiting and retaining highly qualified staff, it must have a salary schedule that is competitive. In addition, the benefits package may not solely attract new recruits but is a factor in the recruitment process. The benefits package may be the deciding factor regarding whether an employee is effectively recruited or retained.  Therefore, districts must focus on providing a competitive salary schedule while being aware of the benefits packages offered by competitors.

Slide 19 – Benefits and Considerations
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Health Insurance
•	Self-insured plan
•	Risk is borne by the plan (school district) 
•	Plan design and board contributions and/or employee premiums are result of bargaining process
•	Dependent  coverage/cost may be the  result of bargaining process
•	Service providers are contracted (third party administrators, hospital /physician networks)
•	Claims are covered by the plan (school district)
•	Must comply with Federal ACA requirements
Notes: With self-insured health insurance plans, the risk associated with claims cost is borne by the school district. Usually the health insurance plan is set up as a separate trust fund, however, deficiencies in the plan must be covered by the school district, usually from its General Fund. Each year the plan is reviewed by the Office of Insurance Regulation to determine if its reserves are adequate. Because this risk may be too great for smaller districts to accept, self-insured plans are most prevalent in middle to large school districts. Positive results associated with a well-managed plan may create savings for the plan which are retained in the plan and may lead to lower future premiums or expanded benefits.
Self-insured plans can be more flexible in plan design to meet the needs of employees. The plan design changes can be balanced against the overall cost of the plan and this cost can be negotiated to determine what portion will be paid by the district and what portion will be paid by the employees. The plan must comply with the Federal Affordable Care Act (ACA) requirements.

Slide 20 – Benefits and Considerations Cont.
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•	Capitated plan
o	Risk is borne by insurance company
o	Plans are selected from those offered by the insurer(s)
o	Board contributions/employee premiums are negotiated for the plans selected
o	Dependent coverage/cost may be part of negotiation process
Notes: Because risk is borne by the insurance company, this type of plan may be more appealing to smaller districts. This type of plan may offer less flexibility in determining plan design. Cost containment may be more difficult under this type of plan. Any savings from the plan are retained by the insurance company. However, positive results over time should result in lower premiums. If the current insurer does not adjust future premiums due to sustained positive results, the district may have to use its positive trends to seek a replacement insurer.
Negative performance experience will lead to higher premiums.

Slide 21 – Benefits and Considerations Cont.
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Life insurance
•	Coverage level negotiated
•	Cost set by insurer
Discretionary benefits – employee paid
•	Types offered may be negotiated
•	Payments made through payroll deductions
•	Includes items such as long-term disability insurance, additional life insurance, dental insurance, vision insurance
Notes: Most districts offer and pay for life insurance at a specified negotiated level for their employees. Districts may also offer other discretionary benefits as a result of collective bargaining. These discretionary benefits are paid by employees through payroll deductions.

Slide 22 – Conclusions
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•	Collective bargaining has a legal basis in the state constitution and applicable laws
•	The roles and responsibilities are defined in statute
•	Parties may utilize traditional or collaborative approaches to the bargaining process
•	The amount of funds available for compensation and other bargainable issues must be determined using whatever methodology is most successful and consistent

Slide 23 – Conclusions Cont.
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•	The funds available must be distributed based on the plan that best addresses competing priorities
•	A proper balance must be achieved in compensation between salaries and benefits
•	Health insurance plans may be self-insured or fully capitated, depending on the needs or circumstances of each district
•	The result of a successful collective bargaining process is when the district is able to effectively  accomplish student learning by recruiting and retaining a highly qualified staff