Last year, as the tsunami of economic woes washed over the country, colleges scrambled to deal with suddenly unaffordable labor contracts that had been negotiated in better times. Some institutions asked their unions to reopen contracts—with mixed results. Others bravely held their economic ground, using a patchwork of short-term measures to balance their budgets. Still other institutions negotiated renewal agreements, despite the financial uncertainty.
This season colleges face new challenges. Earlier stopgap measures may now be inadequate. One-time federal stimulus money may be gone. State budgets are still in free fall. No one knows what impact the economy will have on the number of students who will apply for next year. The amount of anticipated tuition revenue remains uncertain.
What does that mean if you are an administrator now heading into labor negotiations? How can you obtain the best results for your institution?
First, you must recognize that bargaining is an educational process. In addition to the normal preparation that goes into negotiating, you should be ready to show how the economy affects the institution in particular and not simply rely on general statements about the country’s economic condition. While not overstating the case—long-term credibility remains vital—you should do your best to effectively translate to the union what may be obvious to your finance department. You should explain exactly what the budget people grapple with, and if necessary, bring documentation and experts to the table to back it up. Negotiating teams should never assume the employees or the union know the same economic factors that the administration does.
For example, in negotiations unions may contend that, although the country may be in distress, the institution is not—the college has plenty of students and applicants, so revenues cannot be that bad. They may argue that there are too many administrators and that administrators are paid too much—and that, by the way, those administrators are incompetent. They may claim that too much is spent on football, that there are too many building projects, that the president’s house is too ornate, that the institution invested poorly in the market and mismanaged the budget. They will assert that their people should not have to forgo normal pay increases, especially because everyone is overworked. You should acknowledge those claims and be prepared to respond.
Second, you should show in detail what steps the college has already taken to deal with the downturn, such as suspending administrative raises, instituting hiring freezes, borrowing money, reducing staff, and taking other cost-saving actions—as well as any efforts it is making to raise revenues.
Third, you should be prepared to defend what your administration has spent money on. For example, if unions focus on why the college has continued construction projects, it would be useful to explain the rationale for those projects and the budgetary difference between capital funds and operational funds.
What if your institution has labor contracts in full force for another year or two but faces compelling reasons to cut costs immediately? Should you ask the unions to voluntarily reopen the contracts to discuss compensation concessions?
You should carefully weigh the pros and cons. The decision is consequential, not just for the present but also for the long-term relationship between the college and its employees.
On the plus side, if a union is willing to reopen its contract and forgo or reduce, say, a scheduled 4-percent pay increase, the institution may retrieve thousands in previously anticipated expenses. A union’s willingness to forgo pay increases can directly lead to saved jobs by eliminating or reducing the need for layoffs. It can help lower tuition and fee hikes for students, and it will be more equitable to nonunionized employees upon whom the college may have imposed a pay freeze. Asking for other givebacks, such as suspending payments to TIAA-CREF for a limited time, may also help solve a short-term economic problem.
But there are downsides, too. From the point of view of a long-term relationship, an administration invests political capital if it makes unions ask to revisit their contracts. A union is no more obliged to reopen a binding contract than the administration would be if inflation soared to higher levels than anticipated when the contract was first negotiated. Unions will remember the “favor” they granted and at some point will seek some form of repayment.
In addition, you may not get an agreement to reopen—and a refusal by a union to reopen a contract may suggest to nonunionized employees that the best protection for them lies in a collective-bargaining agreement. Another consequential problem may occur if some unions agree to reopen and others don’t, creating problems on your campus in terms of equitable treatment.
Further, you may risk opening up too many issues. Even if the union agrees, it has the right to propose changes in the contract as well. You will probably have to concede to some counterdemands or risk being criticized for not acting in a reciprocal fashion.
If you do decide to reopen a contract, or if you have a contract up for renewal, what is the best approach?
At some struggling campuses, administrators will have to concentrate on sheer economics above all else and introduce proposals that include such things as salary freezes, involuntary furloughs, smaller or suspended pension contributions, and changes in the basic health-insurance plans, such as greater co-pays, or higher employee contributions to the premium. Proposals for reducing professional development, travel funds, and sabbaticals for faculty and professional staff may also be on the table.
Those areas are the bread and butter of labor negotiations and directly affect the costs of labor agreements. But the real costs go far beyond the bright-line compensation commitments. You should critically evaluate your union contracts not only through the narrow lens of the next couple of years but also from a more expansive, longer-term perspective. The economic crisis serves as a reminder of how quickly things can change. As you approach bargaining, you must assess the underlying language of a contract and determine whether it allows you to effectively deal with future contingencies in areas such as:
Workload. How burdensome are workload guarantees? If, for example, a full-time faculty-union contract has strict limits on class size, asking the union to raise those limits can reduce the number of adjunct faculty members who need to be hired. If a faculty-union contract restricts course assignments to only certain periods of the day, changing such language to allow for more flexibility might reduce the need for hiring part-time lecturers. Or if a staff contract has workload restrictions—for instance, a campus-police contract that requires at least three officers on patrol—allowing leeway in that area can reduce the need to fill vacancies.
Layoff language. Can articles in contracts about layoffs be streamlined and made more cost effective? That might involve shortening the time frames for putting a layoff in place or trimming overly generous severance or notice periods. In faculty contracts, it should involve being sure that nonreappointments are not considered layoffs or retrenchment. Ideally, the definition of layoff should be restricted to the termination of an appointment before its expiration or the termination of a tenured faculty member.
Other operational changes. Such changes can include the ability to have reduced work weeks or furloughs, the avoidance of a guaranteed number of hours of work per week, and flexibility on academic calendars. In the faculty area, you might try to modify contracts to allow for shorter notices when people are not reappointed, so you can respond more rapidly to economic downturns. You should avoid long-term contracts, especially for adjunct faculty members. Such agreements will limit your ability to reduce employees through nonreappointments in the future.
Financial-contingency clauses. You might consider protective language to deal with unforeseen economic contingencies when revenues fail to meet expectations. For public institutions, these can include clauses that automatically reopen the contract when legislative support is not forthcoming or when rescissions occur. Or you might consider a general clause that allows your institution to reopen the contract whenever it faces a demonstrable fiscal crisis.
Voluntarism. Management cannot usually discuss adjustments to compensation or other working conditions with individual employees unless the collective-bargaining agreement authorizes it. Thus, you might modify contracts to include the right of administrators to discuss voluntary cuts in hours or furloughs with individuals, or to allow administrators to talk to faculty or staff members about buyouts or customized early retirement packages.
These are guidelines, but it is worth remembering that each labor negotiation is different. Moreover, the labor-management relationship is a long-lasting one. You must assess what to do at the bargaining table in any given year in the context of the common history of those involved, the current circumstances, and the future of the relationship. Your decision about whether or not to follow some of these suggestions should be measured against the backdrop of the long-term relationship as well as short-term budget sheets.
