Limiting the Scope of Bargaining and the “Union Veto”

The successful implementation of any government initiative depends on the performance of government employees, since government employees carry out government policy. In the process of collective bargaining, a government employee union can influence government operations and how policies are implemented through the drafting of performance standards and work rules.[23] In extreme cases, government employee unions can have the power to subvert programs or policies that have been properly enacted in law — a “union veto.”[24]

For instance, the intransigence of the Michigan Education Association, which refused to sign letters of understanding indicating that the union and its locals would cooperate with school districts in the creation of merit-pay programs for educational performance, undermined Michigan’s application for grants under the federal “Race to the Top” program and thwarted the purpose of legislation passed by the state Legislature.[25] This “union veto” was wielded by union officials who were not accountable to the public at large, but rather were driven by the narrow interests of government employees or the officials’ own ideological leanings.

There is no legitimate reason why the preferences of government employees or union officials should be privileged in this manner. Fortunately, the Legislature has already demonstrated that the union veto can be effectively nullified by removing issues from the scope of collective bargaining. For instance, school districts throughout the state have been able to save funds through the privatization of noninstructional services, such as food service, transportation and building maintenance. But prior to 1994, fearing the loss of members, unions sought and often succeeded in adding clauses to contracts that prohibited districts from privatizing noninstructional services.[26] In 1994, the Legislature amended PERA, making privatization of these services a prohibited subject of bargaining.[27] Since then, the privatization of noninstructional services has continued to spread steadily, resulting in significant savings for school districts and taxpayers.[28]

In light of the state’s experience with Race to the Top, the creation of merit-pay bonus programs would appear to be a subject that should be excluded from collective bargaining in local school districts. The Legislature should consider establishing basic parameters for teacher evaluation and merit bonuses and then allowing school boards to implement complying merit-pay programs without union recourse to collective bargaining.[*]

Similarly, teachers are already protected from politically motivated firings by the tenure system, so there is little need for contractually created procedures and standards relating to “for-cause” teacher dismissals.[29] Removing this subject from collective bargaining would do much to eliminate “the dance of the lemons”— the practice of shifting incompetent teachers from school to school while they continue to teach.

Mackinac Center research has shown that benefits for local government employees are substantially higher than those found in the public sector. Simply limiting health care and retirement benefit costs for government employees to the level found in the private sector would reduce the cost of state and local government by an estimated $5.7 billion annually, an amount that would certainly help balance state and local government budgets.[30] Currently these benefits are the subject of collective bargaining, and this bargaining process has resulted in an unjustified burden on Michigan taxpayers.

As we noted earlier, many school districts throughout the state have been pressured into purchasing health insurance through the Michigan Education Special Services Association, the MEA’s favored insurance administrator, in spite of the presence of other insurers that could provide equivalent coverage at lower cost to taxpayers.[31]

Earlier proposals for the creation of a state-controlled health-insurance program for public schools, which would have the effect of taking health insurance out of the realm of collective bargaining, deserve further consideration.[32] Public Act 487 of 1996, which enrolled most state employees hired after March 1997 in defined-contribution pension programs, may also serve as a model for legislation that would replace collectively bargained defined-benefit pensions with defined-contribution programs for future local government employees.[†][33] Taking this step would put individual workers in charge of their own retirements, while relieving school districts, many local governments and the state’s taxpayers from the obligation to guarantee government workers’ retirement incomes, a promise that has become uncommon in the private sector.[34] Collectively bargained benefits may be desirable, but fiscally sound public school systems and local governments are essential. In drawing up rules that govern benefits, the Legislature should be guided by sound fiscal policy, not a misguided commitment to preserve collective bargaining.

As the nonprofit Citizens Research Council has noted: “PERA is the predominant state statute governing public employee labor relations in Michigan. When a conflict has arisen between another state statute, charter provision, or local ordinance, and a provision of a contract negotiated under PERA, in virtually every instance the contract has been held to prevail.”[35] Our earlier report on PERA listed a string of Michigan court decisions that allowed contract provisions contradicting state and local laws to remain in effect.[36] CRC’s analysis went on to observe that this allowed local governments and unions to effectively bargain away state and local laws — a state of affairs that represents a direct challenge to democratic self-government.[37]

In order to ensure that taxpayers are protected from the risk of overly burdensome collective bargaining agreements and that collective bargaining does not infringe on matters of policy, contracts negotiated with government employee unions should be held as inferior to county and municipal charters and statutes, as well as to state laws. Contract terms that contradict the terms of state or local law should be considered “ultra vires” — beyond the authority of local officials and therefore void. Such a rule would provide taxpayers with the ability to set firm and lasting limits on collective bargaining through the local charter amendment process. If the state courts are unable to correct this error, the Legislature should act to restore the proper relationship between collective bargaining agreements and state and local law.

A cautionary note is in order here: In 1994, the Legislature attempted to address the problem of school districts’ being pressured into purchasing costly health insurance through the Michigan Education Special Services Association. PERA was amended to stipulate that the holder of an insurance policy (such as MESSA) was not a subject of collective bargaining. The language proved to be weak, however, and largely failed to place other insurance providers on a more competitive footing with MESSA. If the Legislature wishes to enact limits on collective bargaining subject matter, it should draft these broadly and clearly, with a complete understanding of what it wants to see bargained and what it wants to take off the table.

The Legislature should also pay attention to the question of how these prohibitions are enforced. The temptation for local officials and unions to ignore the law and reach agreements on prohibited subjects is very real, and the prohibitions themselves are not self-enforcing.[‡] Stricter limitations will likely increase the temptation of scofflaw bargaining. To the extent permissible under the state constitution, the Legislature should expand legal standing to sue over prohibited contract terms and should establish criminal sanctions for blatant violations, where the intent to encroach on prohibited subject matters is clear.

[*] A list of the prohibited subjects of bargaining appears in state law under MCL 423.215(3).

[†] The Legislature could go a step further and freeze the defined-benefit pensions for current employees, preserving their constitutionally protected accrued benefits. A defined-contribution program could then be established for their retirement savings during their future years of service.

[‡] For instance, the Mackinac Center Legal Foundation is currently litigating Chris Jurrians et al v. Kent Intermediate School District et al, a case brought by Kent County taxpayers against a number of Kent school districts, school board members and union officials for violating the state’s prohibition on bargaining over the privatization of noninstructional services. The lawsuit is being challenged by the districts and other defendants on grounds that the five taxpayers lack standing to sue.