“WE INTERRUPT OUR REGULAR PROGRAMMING TO BRING YOU THIS SPECIAL REPORT” [Or: The ROUGH RIF ROAD]
John M. Sedor of Sedor, Wendlandt, Evans & Filippi, LLC
We are currently in the middle of a series of articles for AASB on interactions with people and things outside of the proverbial “schoolhouse gates.” And we will continue that series next month. In light of all the “interesting happenings” in Juneau, however, we are taking a deviation this month to consider the extent Reduction in Force (RIF) might be a helpful tool in these potentially tough times.
If education funding is substantially reduced for FY20, districts will need to move quickly and nimbly to address immediate revenue shortfalls. Administrators and Board members in many school districts have been contemplating many options including implementing a RIF as part of a response to this potential fiscal crisis. The statutory RIF process for tenured teachers, however, is anything but nimble and may prove a rather rough road for use as part of an FY20 solution.
Let’s start off with some basics. Most school districts budget 70-85% (or more) of their revenues toward personnel. So, in times of fiscal hardship it is personnel that is mathematically most likely to be cut. This is especially so where much of the remaining budgetary components are fixed costs difficult to reduce costs (e.g., fuel and electric).
When considering personnel, each category of personnel is governed by different rules. For example, the classified personnel is typically governed by a district’s classified employment policies, employee handbooks, and any Collective Bargaining Agreement (CBA) that may apply. There are no statutory provisions specifically addressing classified layoff.
A district has a separate set of legal obligations for non-tenured certificated employees. While there are often board policies that apply to their employment, nontenured teachers also have employment rights established by state law and any applicable CBA. State statute allows for a nontenured employee to be non-retained (not rehired to work the following school year) for “for any cause that the employer determines to be adequate.” AS 14.20.175. That “cause” can be concern about future funding for the district. [Note: some districts have CBA provisions that contractually (as opposed to statutorily) restrict layoff; so, these CBA’s must be reviewed carefully.] In addition, state statute requires that a nontenured teacher be given written notice of non-retention on or before the last day of the school term. AS 14.20.140. Again, some districts have CBA provisions that require notice of non-retention by an earlier date. If a district misses the date for notification of non-retention (whether set by CBA or statute), the nontenured employee may then have a contract right for the next school year which could eliminate the ability of the district to non-retain the nontenured employee even for reasons of fiscal necessity. Some say that timing is everything, and that adage applies to the delivery of notices of non-retention.
State law also provides for the reduction in force (RIF) of tenured certificated employees. Alaska Statute 14.20.177 permits a district to implement a layoff plan when it is necessary for the district to reduce its numbers of tenured teachers. The layoff of tenured teachers may only be for specific reasons, and there are structural mechanisms in the statute that make it difficult to implement a RIF as part of an immediate response to a reduction in funding by the legislature.
The RIF statute provides only two “triggering” events for a RIF of tenured employees. One is a decrease in school attendance. The other is that the “basic need of the school district determined under AS 14.17.410(b)(1) decreases by three percent or more from the previous year.” The threat of “basic need” being reduced (such as the Governor’s proposed budget) does not, in and of itself, constitute an actual reduction. Taken to its logical conclusion, the statute does not allow for a district to RIF tenured employees based on an anticipated need for a RIF. Speculation as to future funding is not one of the “triggers.” This is confirmed through a review of the legislative history. The RIF statute was enacted through HB 465 in 1996. The original version of HB 465 included four “triggers” for a RIF, including “triggers” that gave school boards more flexibility in determining whether a RIF was necessary. For example, under the original version of HB 465, a RIF could have been implemented if the board determined that “the district is not able to meet its financial obligations with available revenue” or “the district revenue averaged over the past five school years has failed to keep pace … with inflation …” The version of HB 465 that was ultimately adopted did not include those triggers and instead uses the more restrictive language.
Thus, in the absence of a decrease in school attendance, a RIF is only permitted under AS 14.20.177 if a district’s calculated basic need under AS 14.17.410(b)(1) drops by at least 3%. If the calculation remains the same but sufficient funding to meet the calculated basic need is not appropriated by the Legislature (or is successfully veto), a district might lose substantial funding and, potentially, not be able to trigger a RIF. See, AS 14.17.400 and .900. Regardless, the RIF triggers are limited.
The utility of a RIF is also limited by statutory timelines. The statutory RIF process requires that tenured teachers be notified of RIF by May 15, which means that for any RIF to occur a layoff plan would need to be properly developed and vetted in advance of that date. In the absence of timely written notice of a RIF, a tenured teacher is entitled to reemployment for the next year regardless of what the level of state funding may turn out to be. This notification deadline can functionally create a one-year lag; in other words, the practical ability to develop and properly consider a RIF plan and meet the May 15 notification deadline where state education funding has yet to be finalized may preclude a RIF this year though allow for a RIF one year from now (at the end of FY 20).
In conclusion, while a RIF of tenured staff is a statutory option that districts have to address shrinking revenue, it is, by design, not a quick or nimble tool. Implementation of a RIF this year will indeed be a Rough Road and counting on a RIF as the answer or part of the answer for responding to potential funding cuts that districts may experience in FY20 will likely come with significant risk.
“We now return you to our regular programming.”
Read the entire series on Interacting with the Outside World – School District Style:
Part one: Panic is not a Plan – Crisis Communications for School Districts by Clint Campion
Part two: Crisis Management: The Case of the Bickering Parents by Lea Filippi
Part three: Crisis Management: The Case of the Aggressive OCS Investigator by Allen Clendaniel
Part four: Crisis Management: “Shaken – Not Stirred …The Day the Open Meetings Act Collided with a 7.0 Earthquake” by John Sedor
Part five: Crisis Management: The Case of the Ominous Essay by Lea Filippi
Part six: Crisis Management: “Parallel Worlds: The Intersection between Schools and the Juvenile Delinquency System” By Clint Campion
More from Sedor, Wendlandt, Evans & Filippi, LLC:
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