No. 53 M.D. Appeal Docket, 1983, Appeal from the Order of the Commonwealth Court at No. 2164 C.D., 1981, which affirmed the Orders of the State Civil Service Commission at its Docket Nos. 3163, 3164, 3210, 74 Pa. Commw. Ct. 45;
Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Larsen, J., dissents. Zappala, J., files a dissenting opinion.
Appeals were taken to Commonwealth Court by the Commonwealth of Pennsylvania, Department of State (Department), from a decision of the Civil Service Commission which ordered the reinstatement of individuals who had been furloughed from their positions of employment in the Bureau of Professional and Occupational Affairs (Bureau), an agency of the Department of State responsible for twenty-two occupational licensing boards. Commonwealth Court affirmed the Civil Service Commission's order of reinstatement. Commonwealth, Department of State v. Stecher, 74 Pa. Commw.Ct. 45, 459 A.2d 851 (1983). The instant appeal ensued.*fn1
Appellees, the individuals who had been furloughed from the Bureau, performed administrative functions related to the functioning of the Commonwealth's occupational licensing boards, including budgeting, legislative review, complaint processing, drafting of regulations and procedures, rationalization of operations, and general supervisory tasks. During the period preceeding July 1, 1980, the Bureau had been incurring expenditures at a deficit level, i.e. spending more than it was appropriated. The Bureau had been permitted to carry-over such deficits from one fiscal year to another until, on July 1, 1980, the Secretary of Budget and Administration directed all Commonwealth agencies to refrain from overspending their appropriations. In response to this budgetary constraint, the Bureau found it necessary to reduce its spending. It eliminated certain programs and furloughed a number of employees, including appellees. The furloughs went into effect on August 27, 1980, whereupon duties previously performed by appellees were reassigned
to other personnel in the Bureau, and appellees' positions were abolished.
On October 16, 1980, however, a supplemental appropriation of $378,000 was made to cover the Bureau's deficit for the 1980-1981 fiscal year. The Civil Service Commission took administrative notice*fn2 of this appropriation, and found that the Bureau's lack of funds was thereby cured. The Department argued that the furlough of appellees was justified, not only by a lack of funds, but also by a lack of work in the Bureau. A "furlough" is defined by Section 3(s) of the Civil Service Act, 71 P.S. § 741.3(s), as a "termination of employment because of lack of funds or of work." When there has been called into question the validity of a furlough, the appointing authority has the burden of going forward with proof to establish a prima facie case justifying the furlough, viz. that the furlough resulted from a lack of funds or a lack of work. 4 Pa.Code § 105.15. The Civil Service Commission did not accept the Department's claim that there was a lack of work, and, consequently, held that the furloughs were not justified beyond the date of the supplemental appropriation. Appellees were, therefore, ordered reinstated with back pay from October 16, 1980.
In rejecting the Department's argument that there was a lack of work, the Commission reasoned that no
credible distinction could be drawn between the lack of work justification and the lack of funds basis for initiating the furloughs. The Commission stated,
Although the appointing authority has attempted to establish the lack of work argument separate from that of lack of funds, we do not find that distinction credible. It is to be expected that in any furlough action the elimination of positions results in some reorganization and reassignments of duties to compensate for the lost services of the employes designated for furlough. That the appointing authority in the present action knew of its need to furlough and had sufficient time to devise compensating assignments does not alter the fact that a lack of funds was the essential cause of the decision to furlough. It is our view that the mechanism devised to compensate for the loss of furloughed employes does not itself create a lack of work independently justifying the furlough.
(emphasis added). We do not agree that, merely because furloughs are initiated at a time when there happens to be a lack of funds, the furloughs cannot be justified upon the independent basis that there exists a lack of work, even where the lack of work results from a reassignment of duties among employees. Indeed, the "mechanism designed to compensate for the loss of furloughed employees," to wit reassignment of duties, can, in itself create a lack of work independently justifying a furlough. Granted, management's action in this case may have been precipitated at a time when there was a lack of funds, i.e. at a time when management could no longer afford to continue its inefficiencies by supporting unnecessary employees in an organization where there was a lack of necessary work, but this does not diminish the extent to which the furloughs were, ultimately, the result of the fact that there was not enough work in the bureau as to require that the employees be retained.
When an appointing authority perceives that an employee's services are no longer required, in that the
amount of work the employee is performing does not warrant his retention in view of the fact that the employee's work can more efficiently, from a cost or operational standpoint, be performed through reassignment to others, the employee may be furloughed on grounds of lack of work. In Department of Public Welfare v. Magrath, 14 Pa. Commw.Ct. 257, 321 A.2d 403 (1974), Commonwealth Court dealt with this principle. In that case, the director of a state hospital had concluded that few surgical procedures were being performed by the hospital's staff surgeon, and, hence, the director initiated a program to have surgery performed by nonstaff surgeons on a fee basis. This program was found to create a lack of work that justified the furlough of the staff surgeon who had previously performed surgery at the hospital. As stated in Magrath, 14 Pa. Commw.Ct. at 260-261, 321 A.2d at 404,
When [the staff surgeon's] position was eliminated and the work formerly done by him either dispensed with or otherwise arranged for, there existed a condition of lack of work which justified his termination. We have examined the record with the utmost care and can find no evidence that the appointing authority has subverted civil service ...