Freedom Foundation

Senate Wants Collective Bargaining Reforms As Part Of Budget Deal

As the Washington State Legislature enters its second special session, collective bargaining reforms remain an ongoing issue in stalled budget negotiations between the Democrat-controlled House and the Republican Senate.

As originally proposed, the Senate budget proposed a plan for state employee compensation that differed from the collective bargaining agreements (CBAs) negotiated by Gov. Jay Inslee and state employee unions last year. Instead of providing percentage-based raises to state employees as specified in the CBAs, the Senate proposed giving state employees a flat $2,000 raise over the next two years.

Labor unions and legislative Democrats cried foul, arguing that the Legislature can only reject or rubber-stamp the CBAs as negotiated, rather than proposing alternatives. While there was nothing illegal about the original proposal, a new budget proposed by the Senate last week takes a different approach.

Rather than proposing an alternate state employee compensation plan, the new proposal funds all of the new state employee CBAs, but makes the funding contingent on passage of several structural reforms to the collective bargaining process.

The proposed reform package was introduced by Sen. John Braun (R-Centralia) as SB 6126. It received a hearing in the Senate Ways and Means Committee last week.

According to Sen. Braun, the purpose of the legislation is to increase the “transparency, understanding and predictability” of the collective bargaining process. Many of the reforms have been supported by the Freedom Foundation in the past.

Despite an appeal from Sen. Braun to offer constructive criticism on the legislation, six union representatives, the Office of Financial Management and the Association of School Administrators all categorically opposed the bill. The Freedom Foundation was the lone organization to speak in support of the reforms.

Reform 1: Closing a loophole in the state Open Public Meetings Act that allows collective bargaining negotiations over taxpayer dollars to take place behind closed doors between labor unions and public officials they helped elect. Under SB 6126, all future negotiations would be open to the public.

Greg Devereux of the Washington Federation of State Employees argued against the transparency provision, stating, “We’re not aware of any serious negotiations at any level — international, national, state or, for that matter, in the state Legislature — that are open to the public.”

When Committee Chair Sen. Andy Hill (R-Redmond) pointed out that 13 states, including Oregon and Idaho, provide for complete or partial public access to collective bargaining, Devereux responded, “I just don’t think you’re going to have the serious discussions in public. It just doesn’t happen.”

Devereux’s statements appear to be at odds with the position of his parent union, the American Federation of State County and Municipal Employees (AFSMCE), which argues strongly that the federal Trans-Pacific Partnership trade deal should be publicly negotiated. The union has decried “deal-making in the dark,” and argues that closed-door trade negotiations are “undemocratic.”

Dan Steele of the Washington Association of School Administrators echoed union arguments against transparency and asked for school district negotiations to be exempt from the open meetings requirement.

Similarly, John Lane of the Office of Financial Management contended that, “The public negotiation of contracting provisions would not improve the process and would inhibit an open dialogue necessary for reaching a final decision in a complicated matter.”

When pressed by Sen. Steve O’Ban (R-Lakewood), however, Lane could not come up with a single example of “a sensitive communication in the course of negotiations” that would be exposed if negotiations were open.

Perhaps the strongest argument in favor of transparency came from Sen. Hill, who grilled Lane with a series of rhetorical questions:

“We have public unions, they represent their workers, and they negotiate the best deal they can get, which is clearly their role, and it serves a valid role. And then dues are subtracted from employees’ paychecks automatically by the state, correct? Yes, so it’s automatically deducted from the paychecks so the employee never sees it and sent directly to the union, correct? At no charge by the state, we do that for free? Yeah, we do it for free. So we deduct it. Now, can employee unions make contributions to political campaigns? Yes, so we take money out, then employee unions can spend literally millions on a governor’s race, correct? So they literally can make contributions to help someone get someone elected, which is fine, but then the same person who may have received those contributions is then behind a closed door negotiating for wage increases? Doesn’t that seem a little – first of all that’s much different from the private sector, I would argue – but isn’t that one reason why we might want to make these a little transparent?”

Reform 2: Requiring the Joint Committee on Employment Relations (JCER) to meet at least six times a year to discuss collective bargaining. The committee was created by the 2002 Personnel System Reform Act, which established collective bargaining for state employees. Sec. 41.80.010(5) of the PSRA directs the governor to,

“…periodically consult with the committee regarding appropriations necessary to implement the compensation and fringe benefit provisions in the master collective bargaining agreements, and upon completion of negotiations, advise the committee on the elements of the agreements and on any legislation necessary to implement the agreements.”

However, no governor, including Inslee, has seen fit to consult with the committee since its creation. Establishing specific obligations for JCER would be a step towards restoring the Legislature’s rightful control over the collective bargaining and appropriations process, which is currently dominated by the executive branch.

Joe Kendo of the Washington State Labor Council (WSLC) argued against the increased role for JCER, contending that the committee has simply “chosen never to meet.” However, the committee has no statutory obligations or responsibilities under current law. Further, because collective bargaining is currently off limits to even members of the Legislature, any such meetings would not likely be very productive without participation from the governor’s office.  

Michelle Woodrow of Teamsters 117 stated that SB 6126, “appears to expand the legislative role in bargaining and we do not support that expansion.”  

But collective bargaining is inherently about the appropriation and expenditure of tax dollars, a role appropriately reserved to the Legislature by the state constitution. The power to tax and spend is too significant to be vested in a single individual – the governor – and properly belongs to the people’s elected representatives.

As Sen. Braun pointed out at the hearing, state collective bargaining,

“…kind of flips the entire system on its head. Where the governor and OFM are negotiating very detailed collective bargaining agreements and deciding how they’re going to spend money and then the Legislature is given the opportunity to say ‘yes’ or ‘no,’ which is just the reverse of how we normally do it where the Legislature spends a lot of time and effort figuring out how we’re going to spend money and then, of course, the governor has the veto power.”

From the unions’ perspective, however, it is much easier to pressure a single elected individual into granting concessions than a governing body of 147.

Regardless, expanding JCER’s role is only a small step towards increased legislative oversight of the process.

Reform 3: Directing the Office of Financial Management (OFM) to maintain a web library of state employee CBAs. OFM already maintains such a website, but is not statutorily obligated to do so. Additionally, SB 6126 would direct OFM to perform an analysis and post a summary of each of the CBAs.

Devereux described the requirement that the state CBAs be summarized by OFM as “overly prescriptive” and asked “why we’re singling out” state employee contracts. State employee CBAs determine the expenditure of billions of taxpayer dollars. They are uniquely expensive and uniquely prescriptive, controlling much of the state’s relationship with its employees. CBAs are lengthy and complex documents. While unions might benefit from limiting the public’s ability to find and understand state employee contracts, taxpayers and policymakers would be well served by having analyses and summaries of the CBAs readily available.

Ideally, all public-sector CBAs, including those at the city, county and school board levels, should be collected and posted online, as other states have done. Bipartisan legislation creating such a library passed the Senate earlier this session but stalled in the House.

Reform 4: Eliminating interest arbitration as a means of resolving disputes in collective bargaining for non-uninformed (primarily law enforcement-related) public employees, including partial public employee groups like individual provider home care aides, family child care providers and language access providers. OFM explains interest arbitration as follows: 

“When the employer and union negotiate to impasse on a mandatory subject of bargaining, the parties hire an impartial third party arbitrator. This arbitrator conducts a formal hearing in which the parties present their positions. The arbitrator then reviews the testimony and supporting evidence and decides on what the contract language should be by issuing an arbitration award.”

However, in the public sector, interest arbitration involves surrendering control over the process to an unelected, unaccountable third party. Since arbitrators have a tendency to split the difference in disputes, interest arbitration encourages labor unions to make exorbitant demands that an employer can’t agree to in the hopes that an arbitrator will award the union more than it could successfully bargain for.

Reform 5: Clarifying that Individual Provider home care aides (IPs) are not eligible to participate in the Public Employees Retirement System (PERS), since these workers are considered public employees “solely for the purposes of collective bargaining.” Though the Senate budget funds a new defined-contribution 401(k)-style retirement plan for IPs as negotiated in the CBA (available here), SB 6126 specifies that the state’s contributions to the program cannot exceed 3 percent of IPs’ wages. According to the Plan Sponsor Council of America, the average employer’s contribution to a 401(k) is about 4.5 percent of wages.

The tentative CBA requires a state retirement contribution of $0.23 for every hour worked by IPs. SEIU 775 claims that average pay for an IP is currently about $12 an hour, which would make the retirement benefit about 1.9 percent of wages for the average IP. However, the tentative CBA also increases IPs’ wages, which means that the state’s retirement contribution will be less than 1.9 percent of wages for the average provider during the 2015-2017 biennium.

The upshot: The Senate budget funds all of the retirement benefits negotiated in SEIU 775’s tentative CBA, and the 3 percent cap in SB 6126 would allow the state’s retirement contributions to roughly double as a percentage of IPs’ wages to a level somewhat below the average private sector employer’s 401(k) contribution.

Due to the ambiguity of the initiative that created collective bargaining for IPs, SEIU 775 is the only union that can negotiate over retirement benefits with the state. Sen. Braun argued that the Senate’s plan was an attempt “to craft a solution to a very isolated case that is reasonable… and predictable for the state… We’re trying to find an agreeable solution, but recognize this is different from anything else we do in state government.”

Nevertheless, SEIU 775 members spoke strongly against the legislation, with one claiming it would “condemn us to working until we die.”

Another IP claimed that, “Home care workers like me are paid poverty-level wages, with one in five caregivers eligible for some kind of public assistance.” That may well be true, but caregivers do not appear much more likely to receive public assistance than any other Washingtonian.

According to the U.S. Department of Agriculture, 1,088,175 (15.4 percent) of Washington’s population of 7,061,530 participated in just a single public assistance program — Supplemental Nutrition Assistance Program (SNAP) — in 2014.

Reform 6: Define “financially feasible.” Under current law, OFM must certify state employee CBAs as “financially feasible” for the state before the governor may submit funding requests for the CBAs to the Legislature. However, because the law sets no parameters for what financial feasibility means, the process simply becomes a political tool the executive branch may use to provide cover for its actions.

If a poor economy makes funding state employee CBAs politically difficult, OFM can say the contracts are infeasible and the governor can avoid submitting them to the Legislature. When this happened under Gov. Christine Gregoire in 2008, the Washington State Labor Council complained that “‘feasible’ is in the eye of the beholder.” If, as happened last year, an improving economy provides cover for higher state employee salaries, OFM can certify the contracts as feasible even if tax increases would be needed to pay for them.

Under SB 6126, CBAs would be considered feasible if: (1) they can be paid for using existing revenue sources; or, (2) the increase in costs from the previous CBAs is no more than 3 percent. Providing parameters for financial feasibility would add significance and objectivity to OFM’s determination and help ensure that the CBAs negotiated by the governor are fiscally responsible.

Predictably, union lobbyists objected to any limit on their ability to extract taxpayer-funded concessions from the governor, with Devereux stating, “We know of no other legislation in the country that curtails creativity and restricts bargaining in such a manner.”

While the exact legislation may or may not exist in other states, Washington would be far from the only state to place financial limits on collective bargaining should SB 6126 be adopted.

Public-sector collective bargaining is prohibited entirely in North Carolina, South Carolina and Virginia. In Texas, Tennessee and Georgia, collective bargaining is limited to only select types of public employees. In recent years, states like Idaho and Wisconsin have taken steps to significantly limit the scope of collective bargaining for public employees.

Conclusion: State employee collective bargaining laws have not been seriously reexamined since the PSRA was passed in 2002. There’s nothing sacred about these statutes, however, and many provisions deserve closer scrutiny or outright reconsideration. SB 6126 proposes a smart series of reforms that deserve to be seriously considered. Contrary to union claims, the reforms proposed by SB 6126 are quite modest, even taken cumulatively.

If state employee unions are willing to surrender pay raises for their members rather than accept the reforms in SB 6126, it will confirm that government union executives are more interested in protecting their own systemic power and privilege than working for the tangible interests of state employees.