Legality of furloughs challenged

PHOTOGRAPHER: Sara Foss

With states mired in the worst fiscal crisis since the Great Depression, many governors are considering furloughs — time off without pay — to save money.

But furlough proposals are often met with legal challenges.

Last week a federal judge temporarily blocked Gov. David Paterson’s plan to furlough 100,000 state workers for one day each week.

U.S. District Judge Lawrence Kahn said public employee unions demonstrated that their members would be irreparably harmed if they lost 20 percent of their wages or salaries during the weeks they were ordered not to work. The unions contend the furloughs violate the U.S. Constitution’s protection of contracts.

According to the National Conference of State Legislatures, 16 states proposed furloughs to balance their 2011 budgets. (The list does not include New York.) So far only six of those plans have been enacted.

Furlough plans vary from state to state.

In Arizona, where furloughs were enacted, the state budget requires most state workers to have six mandatory days off without pay in each of the next two fiscal years.

In California, last month a state appeals court prolonged furloughs for tens of thousands of state employees, requiring them to take three days off each month, but the state is still awaiting a final decision on the legality of the furloughs. If the unions win their suit, furloughed employees could collect back pay and interest.

In Hawaii, the Hawaii Government Association agreed to 42 furlough days, which will span fiscal year 2010 and 2011.

First time

This is the first time New York has attempted to furlough state employees.

In his ruling, Kahn found that the state has a legitimate interest in acting during a fiscal emergency but said the unions’ arguments raised doubts “as to whether a legitimate public purpose is present.” The lawsuit was filed by the Civil Service Employees Association, the Public Employees Federation, the United University Professions and the New York State Teachers Union.

Bob Ward, director of fiscal studies at the Nelson A. Rockefeller Institute of Government, said Kahn’s ruling indicates that he thinks there’s a good chance the unions will win “on the merits.” The state has the option to appeal, but “I’m not sure the federal courts could consider the state’s fiscal crisis [something] that should overrule the contracts,” he said.

Other legal experts believe that Paterson is unlikely to prevail in court.

In an interview with the Buffalo News, Rebecca Givan, an assistant professor and expert in collective bargaining at Cornell University’s School of Industrial and Labor Relations, said that “it’s very difficult to void the provisions that are in a union contract.”

The state budget for 2010-11 is now 46 days late. Legislators are trying to figure out how to plug a $9.2 billion budget gap; Paterson had said that the furloughs would save $30 million a week. Paterson called for the furloughs after the unions rejected other ideas, such as postponing 4 percent raises.

Kahn’s order also requires Paterson to release this year’s 4 percent raises to union workers.

Since the recession began in 2007, almost all states have instituted hiring freezes, eliminated vacant positions or laid off or furloughed employees.

In fiscal year 2010, half the states implemented furloughs, according to Todd Haggerty, an analyst with the State Legislatures conference. He said that most states are still developing their budgets for fiscal year 2011, and that if revenues remain stagnant, more states will probably consider furloughs to plug budget gaps.

A 2010 report from The Pew Center on the States suggests that the recession will permanently alter the size of state governments.

“As governors have slashed thousands of jobs, layoffs and furloughs of public employees have become an increasingly common way for states to save money,” the report says. “They are effective because government’s biggest cost, just as in the private sector, is labor. … What will be the long-term effect of these reductions on states and residents? Many state jobs will not be refilled, which could strain the ability to provide services. … The targeting of state employees is affecting morale; some managers say they will have trouble energizing deflated workers going forward in the mission of state government.”

Union power

Ward said that if the state Legislature isn’t allowed to furlough state employees, Paterson is likely to lay people off.

“The governor is trying to save jobs,” he said. “Lt. Gov. [Richard] Ravitch has pointed this out. A victory for the unions makes layoffs more likely. I don’t think anyone is questioning the governor’s ability to lay off state workers.”

The showdown over furloughs, Ward said, is part of a larger battle Paterson is waging over the amount of power the labor unions have. “A lot of the state’s work force policy is dictated by the unions,” he said. “In some cases, that’s not a healthy thing.”

Stephen Schmidt, chairman of the economics department at Union College, said that the New York state work force is large and highly unionized, and that it was unlikely the recession would inspire the state to rethink the size of its work force.

“Economically, it would be a good thing to look at,” Schmidt said. New York, he said, is a state where taxes are higher and there are more services than other states, but the state’s government is dysfunctional and there are a lot of patronage jobs.

“It would be great if the state would look at how many employees it needs,” he said. “But I doubt they’re going to take this opportunity to say, ‘How do we cut surplus jobs? How can we make government more efficient?’ They’re trying to figure out how to get through this budget cycle.”

According to the federal Bureau of Labor, New York’s state work force has decreased by 2.6 percent, from 263,200 employees in February 2009 to 256,300 employees in February 2010.