January 2009 - Personnel Issues Raised By Recent Budget Cuts

DUFF, WHITE & TURNER, L.L.C.
Attorneys and Counselors at Law

Post Office Box 1486 Columbia, South Carolina 29202           Telephone 803/790-0603 Facsimile 803/790-0605

SCHOOL LAW
"ISSUE OF THE MONTH"
December 2008

PERSONNEL ISSUES RAISED BY RECENT BUDGET CUTS

The recent budget cuts, with the likelihood of significantly decreased state funding for the 2009-10 school year, have left South Carolina school districts struggling to find ways to trim expenses. Though often viewed as an option of last resort, many districts are considering percentage cuts in employee salary and/or employee furloughs. Some districts also are evaluating the possibility of reductions in force (RIF), which generally result in not only the elimination of positions, but also in the termination of employees. Any district considering salary reductions, furloughs, and/or reductions in force should keep in mind that there are a number of statutory requirements, as well as practical considerations, that impact these budget-cutting measures.

Employee Furloughs

In response to budget cuts, many state agencies, including the State Department of Education, have instituted employee furloughs ranging from several days to a week or more. A furlough is a temporary lay-off from work often used by employers seeking to cut costs without letting workers go permanently. While state agencies generally have discretion when to institute a furlough and to determine which employees will be subject to the furlough, a school district is required to comply with the requirements of Budget Proviso 1.52 in order to implement a furlough.

To implement a furlough under Proviso 1.52, a school district must send certification to the State Department of Education, with copies to the Chairman of the Senate Finance Committee and the Chairman of the House Ways and Means Committee, stating that the district has exhausted all available funding flexibility and that the furlough is necessary to avoid a year-end deficit and a RIF. The certification also must outline all steps that the district has taken to avoid a year-end deficit. Significantly, Proviso 1.52 only allows a district to furlough certain employees, stating that no instructional personnel nor support staff as classified by the State Department may be furloughed. Based on the State Department’s classifications, teachers and teacher assistants, who make up the bulk of a district’s workforce, may not be furloughed, while administrators and non-instructional support personnel, such as custodians and food service workers, are not protected by Proviso 1.52.

It should be noted that Proviso 1.52 contains further language stating that the Proviso “shall not abrogate the terms of any contract between any school district and its employees.” The significance of this language is discussed below.

Reductions in Salary and Contract Term

Many districts have included a provision in the contracts they issue to certified employees stating that the district has the discretion to “require a pro-rata reduction of salary, a reduction in the term of this contract and pro-rata reduction in salary, or a termination of this agreement.” Such language may give a district the right to reduce an employee’s salary, as well as to reduce an employee’s contract days, resulting in a corresponding reduction in salary.

It should be noted, however, that with regard to teacher salaries, there are a number of statutory provisions that impact a district’s ability to reduce a teacher’s salary. First and most importantly, the number of days teachers must work, as well as teachers’ minimum salary, is set by law. Thus, districts may not reduce the number of days that teachers are required by law to work or reduce their pay below that which is required under the State mandated minimum salary schedule. With respect to local salary supplements paid by districts, State law does allow districts to reduce local supplement amounts so long as they do not fall below the supplement amount paid to the teacher during the prior year.

Along these same lines, administrators must be paid at least what they would earn on the State mandated minimum salary schedule for teachers, according to their years of experience and education level. However, a district may reduce any additional amount paid for administrative duties. More specifically, an administrator’s salary could be cut by a certain percentage, or the number of days on their contracts could be reduced, so long as the reduction in contract term or the percentage cut in pay is implemented across the board for all similarly situated administrators.

Districts also may consider reducing the number of days that non-certified employees work or reducing the amount of their salaries. In order to support a district’s discretion to make such a reduction, any written notice that districts give non-certified employees setting forth their salary and number of work days should include a statement noting that the district reserves the right to reduce the salary and/or the number of work days in the event of a loss or reduction in any amount of state, local or federal funding.

RIFs

Districts may also consider eliminating administrative, teaching, or classified positions pursuant to their RIF policy. Although districts’ RIF policies vary, consideration of some basic rules will help ensure that any RIF is successfully implemented. As an initial matter, if a position is eliminated, the individual holding the position is not necessarily the employee who will be terminated. In determining which individual is affected by the position elimination, districts must look at all similarly situated employees to determine the individual who will be reassigned and/or terminated as a result ofthe position elimination. For example, if an aide position at a particular school is eliminated, the individual holding that position may not be the employee who will be terminated. Rather, a district would need to look at all aides in the district, review the factors to be considered under the district’s RIF policy, such as qualifications and years of experience, and determine which aide should be terminated. If the aide being terminated is not the aide holding the position being eliminated, the remaining aide normally would be reassigned to the position held by the aide who will be terminated.

Regarding teacher RIFs, the same general principles apply in that the individual who holds the position being eliminated may not be the individual whose employment will be terminated. For example, if an English position at one high school is to be eliminated, the district needs to look at all teachers in the district who are certified to teach secondary English, weigh the factors to be considered as specified in the RIF policy, and determine how staff will be reassigned within the district and/or terminated as a result of the position elimination. Likewise, if an administrative position is eliminated, the individual holding that administrative position may have the right to move into a lower level administrative position as a result of their seniority, qualifications, etc., and “bump” an individual from the lower level administrative position. The individual who has been “bumped” may then have the right to “bump” another employee at a lower level position. Thus, the individual terminated as the result of an administrative position elimination is likely to be a teacher, rather than an administrator.

Because any employee terminated as the result of a RIF is being let go for economic, rather than performance or conduct, reasons, the Employment and Dismissal Act will not apply. Most RIF policies do, however, provide some hearing rights for those employees who are terminated as the result of a RIF. However, when employees are merely reassigned, rather than terminated, as the result of a position elimination, the hearing procedures provided in the district’s RIF policy may not apply. Rather, the reassigned employee may have the right to file a grievance under the district’s grievance policy, as would any employee who objected to an involuntary reassignment not associated with a RIF. Additionally, many RIF policies require districts to offer re-employment to employees who have been terminated pursuant to a RIF, should a position for which the employee is qualified become available within a prescribed period of time following the termination. State law also gives priority for rehire to certified personnel who have taught in a district for at least one year and who are dismissed for economic reasons to fill any vacancy for which they are qualified that occurs within two years from the employee’s date of dismissal.

The current budget crisis is an unfortunate reality that all districts must confront and respond to in a way that meets the needs of students while acknowledging that measures may have to be taken that affect personnel. Because such measures may be unpopular not only with employees, but also with the community, districts must thoughtfully and carefully plan the process in a way that adheres to state law and is equitable and consistent.

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