PERC restricts negotiations of health care contributions
Once again, PERC has continued its assault on the scope of negotiations in the public sector in a recent decision involving the timing of negotiations over Chapter 78 contributions. In a decision involving the Clementon Board of Education, PERC recently held that parties cannot negotiate reductions in health insurance contributions, even if the four-year progression of increased payments is completed under Chapter 78, if the parties are in mid-contract at the time the four year progression is completed. PERC’s decision imposes the narrowest possible interpretation of the right to negotiate changes in health insurance contributions under Chapter 78. In doing so, PERC has continued to restrict and limit negotiations over issues which used to be negotiable.
The facts in the Clementon Board of Education case were as follows. The board and a local teacher’s association were parties to an agreement which was effective from July 1, 2011 through June 30, 2014. The fourth year of Chapter 78 contributions began on July 1, 2014, which would be the first year of any successor agreement that the parties were negotiating. The contract which expired on June 30, 2014 included a provision setting employee health insurance contributions based upon 1.5 percent of base salary, which was the statutory contribution level before Chapter 78 was enacted. The contract language was not changed after Chapter 78 became effective in 2011, even though the ratcheted increases in contributions still occurred because of the Chapter 78 requirements.
The union argued that the contribution levels should automatically drop back to 1.5 percent of base salary once the fourth year of contributions was completed on June 30. PERC disagreed and held that the prior contract’s provision for contributions at 1.5 percent of base salary would not automatically be reinstated once the fourth year of Chapter 78 contributions was completed. Instead, PERC concluded that employee contributions would continue at the percentage in effect at the completion of the fourth year, unless, and until, the parties negotiated a lower contribution rate.
However, PERC went even further. It concluded that the employees would also be required to continue to pay the maximum Chapter 78 percentage until the expiration of the contract if the parties negotiated a multi-year contract which extended beyond June 30, when the fourth year of contributions was completed. In other words, the parties could not negotiate a lower contribution rate while the contract was in effect. PERC held that only if the parties agreed to a one-year contract, which would then expire on June 30, could the parties then negotiate a different contribution level, because only then would the fourth year of contributions have been completed.
PERC’s decision continues a disturbing trend in which the agency has restricted the scope of negotiations in significant areas, and taken the most anti-employee interpretations possible. In doing so, PERC has made it more difficult for the parties to bargain over issues which have typically been considered negotiable issues in the past. While this decision involved a local board of education and teachers, PERC will undoubtedly apply the same principles to other public employees, including law enforcement officers.
We suggest that local PBAs that are reaching the conclusion of the four-year progression of contributions under Chapter 78 consult with their attorneys about the best way to address negotiations of lower contribution rates, particularly if contracts are also expiring. There are strategies which may be available to offset the impact of this decision. There also are different ways to lower contribution rates to reduce the impact on a public employer. But clearly, PERC has made it much harder to negotiate lower rates.