The Business of Education: March 2013

This is a great case of where select individuals in the Assembly and Senate have an extreme disconnect from the actual operations of a school district and the ability of management in this cases School Business Administrators in partnership with Boards of Education to effectively oversee and administer services in a fiscally responsive manner providing cost savings to resident tax payers.

S1191/A3960 - Establishment more county-wide control in the area of school district services

03/21/2013 Received in Assembly and referred to Assembly Education Committee. THIS BILL WILL HAVE A SIGNIFICANT IMPACT ON SCHOOL DISTRICTS. YOU ARE URGED TO CONTACT YOUR ASSEMBLY REPRESENTATIVES AND INDICATE THAT YOU OPPOSE THIS LEGISLATION.

SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO SENATE COMMITTEE SUBSTITUTE FOR

SENATE, No. 1191

STATE OF NEW JERSEY

DATED: MARCH 4, 2013

The Senate Budget and Appropriations Committee reports favorably a Senate Committee Substitute for Senate Bill No. 1191.

This substitute bill permits counties to establish a county-wide purchasing system to provide custodial or food services, or both, to school districts within the county. This simply grows county government which in some counties has proven ineffective in their ability to maintain tax stability and more importantly decrease taxes through reductions in spending. These contracts would be awarded to contractors using the competitive contracting process set forth in the “Local Public Contracts Law,” P.L.1971, c.198 (C.40A:11-1 et seq.). If a county establishes a county-wide purchasing system and a school district in the county is currently using a private contractor for the service, the district will be required to participate in the county-wide contract.This position eliminates the board’s ability to consider alternative service selection based on other criteria beyond price alone. Where district’s are currently and effectively operating within a profit margin beyond break-even it usurps the rights of management to evaluate continuation of the existing company or consider going out to look at the market through a competitive request for proposal (RFP) or public bid. The county established program should be a viable consideration amongst other companies, thereby preserving the best price and service through fair and open competition.

In addition, a district that is using its own employees to provide custodial or food services will be required to participate in a county-wide contract if it determines to privatize the service Again, loss of considerable options. Prior to participating in the county-wide contract, however, the district will be required to meet certain criteria, including holding a public hearing on the proposal to participate, providing a period during which the public will have the opportunity to submit comments on the proposal, and providing written responses to the comments This is contrary to effective management as the requirement serves as a barrier to consideration of outsourcing and complicates an already difficult public policy decision. Ultimately, the decision should rest with the elected representatives at the local level as the decision impacts the community – not the county.

A district in these circumstances will not be permitted to participate in the county-wide contract during the term of an existing collective bargaining agreement with employees who will be affected by the participation in the county-wide contract, and after the term of the agreement, the district may participate only after:

(1) providing written notice to the majority representative of employees in each collective bargaining unit affected by participation in the county-wide contract and to the New Jersey Public Employment Relations Commission; and

(2) offering the majority representative the opportunity to consult with the district to discuss the decision to participate in the county-wide contract and the opportunity to engage in negotiations over the impact of participation This would be a major setback to the collective bargaining process for school districts as they would lose significant bargaining leverage at the table by favoring unions and the status quo in ineffective districts. Why would custodial members ever consider agreement to outsourcing of their jobs?

Each employee replaced or displaced as a result of the district’s participation in the county-wide contract would retain all previously acquired seniority and would have recall rights whenever the district’s participation in the county-wide contract terminates.

Any administrator whose position is eliminated due to a countywide purchasing system will receive terminal leave pay pursuant to N.J.S.A.40A:65-19 of the "Uniform Shared Services and Consolidation Act."

The substitute also provides protection for food or custodial services employees employed on school district premises during a transition to employment by a successor contractor, which is defined in the substitute as a contractor that has been awarded a food or custodial services contract. Under the provisions of the substitute, a successor contractor must offer employment during a 90-day transition employment period to all service employees providing food or custodial services employed by the predecessor employer, whether that predecessor employer is a school district or another contractor providing food or custodial services for the school district. The successor contractor is prohibited from discharging, without just cause, a retained employee during that transition period, and must perform a written performance evaluation for each retained employee at the end of the transition period. In many cases this is the reason for considering the outsourcing in order to separate ineffective employees from the district.

Employees whose performance was satisfactory, must be offered continued employment by the successor contractor. This provision would apply in the case of participation in a county-wide contract for food or custodial services, in the case of a district privatizing these services, or in the case of a change from one private contractor to another private contractor for these services.

The substitute includes a provision that applies to all subcontracting by any of the following employers: any local or regional school district, educational services commission, jointure commission, county special services school district, county college, State college, public college or university under the authority of the Secretary of Higher Education, or board or commission under the authority of the Commissioner of Education or the State Board of Education. Under this provision, during the term of an existing collective bargaining agreement covering its employees, the employer is prohibited from entering into a subcontracting agreement which affects the employment of those employees. Following the term of a collective bargaining agreement, the employer is permitted to enter into a subcontracting agreement only if the employer provides similar notice and opportunity to negotiate over the impact of the subcontracting agreement as described above in relation to the decision by a school district to participate in a county-wide contract. As in that case, each employee replaced or displaced because of a subcontracting agreement would retain all previously acquired seniority and would have recall rights when the subcontracting terminates.

FISCAL IMPACT:

This bill is not certified as requiring a fiscal note. This may be the case; however, it will have a sever negative fiscal impact on districts who are currently managing these services effectively and at a cost savings with the outside companies.

As reported by New Jersey School Boards - The following legislation hampers district's ability at the table as it weakens the bargaining process for management as leverage taken away with respect to cost containment in salary and other terms and conditions of the contract that permit sustained continuation of employment for select groups. I for one have never been a strong proponent of outsourcing with respect to custodial/maintenance operations; however as the Chief Financial Officer for the district, often I state the obvious when dealing with represented groups, "Do not price yourself out of a job!"

Absent the ability to subcontract or outsource at will, district's loose a credible option and key bargaining chip at the table.

http://www.njsba.org/news/sbn/20130319/senate-approves-subcontracting-arbitration-bills.php

The state Senate on Monday passed by a 22-15 vote a bill that would limit the ability of school districts and higher education institutions to enter into subcontracting agreements for services such as busing, custodial or cafeteria services.
The bill, S-1191, would make subcontracting much more difficult by making such decisions a mandatory subject of negotiations. The bill also places significant obstacles in front of school boards that have not yet subcontracted services, but desire to do so.
S-1191 would impose onerous, pro-union requirements such as extensive notice and comment periods, as well as transitional employment for affected employees, which appear intended to preclude school districts from privatizing food or custodial services altogether, regardless of whether such a decision makes sense from a managerial or fiscal standpoint.
NJSBA opposes the bill. In 2009, the Association performed a survey into subcontracting. Approximately 40 percent of school districts responded, reporting savings through subcontracting that totaled at least $34.3 million annually.
Sample Resolution Available NJSBA has created a sample resolution that boards can adopt to demonstrate their opposition to the bill. NJSBA’s position statement on the legislation contains additional information.