The opinion of the court was delivered by: Dan Pellegrini, Judge
Argued: December 13, 2011
BEFORE: HONORABLE DAN PELLEGRINI, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE MARY HANNAH LEAVITT, Judge
OPINION BY JUDGE PELLEGRINI*fn1
Lancaster County (County) appeals from an order of the Pennsylvania Labor Relations Board (Board) affirming a decision of the Hearing Examiner that the County committed an unfair labor practice in violation of Section 805 of the Public Employe Relations Act (PERA)*fn2 by refusing to implement an interest arbitration award (Award) because the County did not meet its burden of demonstrating that implementation of the Award would require legislative enactment. Discerning no error in the Board's decision, we affirm.
The American Federation of State, County and Municipal Employees, District Council 89 (AFSCME) and the Lancaster County Commissioners (Commissioners) were parties to a collective bargaining agreement which set forth the conditions of employment for corrections officers at the Lancaster County prison. That agreement expired on December 31, 2008, and the parties were unable to reach a new agreement. An impasse was declared, and the parties referred the dispute to an arbitration panel pursuant to Section 805 of the PERA. Subsequently, the arbitration panel issued an Award directing the County to pay shift differential, wage and longevity pay increases to the bargaining unit employees each year for the three-year period running from January 1, 2009, through December 31, 2011.
The County did not appeal the Award and implemented the provisions for 2009. However, after meeting several times and consulting the County's legal counsel, the Commissioners passed a resolution stating in their determination that the financial terms of the Award for 2010 and 2011 would require the appropriation of funds or levying of taxes and, therefore, they rejected the financial provisions of the Award. Section 805 of the PERA states that, "decisions of the arbitrators which would require legislative enactment to be effective shall be considered advisory only." 43 P.S. §1101.805. According to the Commissioners, implementing the financial provisions of the Award would cost up to $650,000 and there was no extra money in the 2010 prison budget or the general fund budget to cover these additional costs.*fn3 Given the County's deteriorating financial situation and the alleged lack of funds, the Commissioners determined that implementing the financial terms of the Award would require the appropriation of funds or a tax increase; therefore, the Commissioners believed the financial terms were advisory only. When the County failed to implement the wage increases in January 2010, AFSCME filed a charge of unfair labor practices with the Board under Sections 1201(a)(1) and 1201(a)(5) of the PERA.*fn4
Michael Messina (Mr. Messina), a labor economist in AFSCME's department of research and collective bargaining services, testified before the Hearing Examiner. Mr. Messina provides technical assistance during collective bargaining, such as negotiating contracts, evaluating the financial health of employers, and overseeing the development of compensation and benefit surveys. With respect to this case, Mr. Messina was asked to calculate the cost of the financial provisions of the Award which the Commissioners failed to implement. Mr. Messina testified that if the County had implemented the financial provisions of the Award for 2010, it would have cost an additional $484,833. This total included $387,000 for the wage increase, $15,496 for the shift differential increase and $48,000 in overtime. Mr. Messina was also asked to determine whether there was sufficient financial flexibility within the County's budget so that a tax increase would not be required in order to fund the Award. To this end, Mr. Messina reviewed the County's Comprehensive Annual Financial Reports and County budget documents for the past 10 years. According to Mr. Messina, these documents demonstrated that the County had a tendency to over-estimate its total expenditures for its prison operation and typically spent less than anticipated. Mr. Messina also testified to an approximate $3 million excess in the County's general fund at the end of 2010.
Scott F. Martin (Commissioner Martin), a Lancaster County Commissioner since 2008, testified that the Commissioners typically presented a proposed budget to the public every year on the day before Thanksgiving. The Commissioners then voted on the budget during a public meeting held around the third week of December. Tax rates were usually set at this same meeting as well.
Commissioner Martin testified that the County budget for 2010 had not yet been approved when the Commissioners voted to treat the financial provisions of the Award as advisory. Prior to passing the 2010 budget, the Commissioners met in executive session 3 or 4 times and met with counsel to specifically discuss the Award provisions for 2010.
Commissioner Martin testified that in making the decision that the financial terms of the Award were advisory, the Commissioners considered the national economic downturn; the dire financial status of the Commonwealth; that housing new starts were down throughout the County; the County was going through a difficult budget impasse; utility costs were rising; and the County had experienced a sharp increase in unemployment. Commissioner Martin stressed that for the first time in the County's history, it was forced to cut jobs, eliminating 19 positions in December 2009, and 7 more in July 2010. In addition, the County had to consolidate various departments, entities were taking a 10 to 15% pay cut, and the Commissioners were considering whether to totally eliminate the Lancaster County Human Relations Commission due to lack of funding. Commissioner Martin testified that they decided not to give any pay increases in 2010 to any County employees, and that the Commissioners tried to treat the County's union and non-union employees the same as far as wage increases. According to Commissioner Martin, implementing the Award for 2010 would have cost up to $650,000 and would have required a tax increase in order to cover this cost. When asked why he believed he did not have to implement the Award, Commissioner Martin stated:
[The Board of Commissioners] didn't believe we had the funding in order to do that. And we knew, given the fact -- that basically would have had us raising taxes, increasing the millage rate in order to generate those additional revenues. And that's a legislative action, and that's not something that the elected board was willing to do.
(Reproduced Record (R.R.) at 126a). However, Commissioner Martin also admitted that there was approximately $3 million left in unreserved funds in the County's general fund for the 2010 fiscal year.
Andrew Sapovchak (Mr. Sapovchak), an auditing/accounting supervisor for the County Controller's Office, testified that the County typically did not have transfers between departments throughout the year, and the prison used almost 100% of its budget every year. According to Mr. Sapovchak, the County tried to have enough money in the general fund balance going into a new calendar year to cover the first two months expenses until taxes were received. Mr. Sapovchak testified that less than 5% of the County's general fund budget for 2009 was unreserved, which was significantly lower than the 12 to 15% recommended by bond rating agencies.
Margaret Weidinger (Director Weidinger), the Director of IT and Budget Services for the County, also testified that 2010 was a tough budget cycle for a lot of County departments, and it was the first time that employees actually lost their jobs for financial and economic reasons. According to Director Weidinger, the County's ending balance had been decreasing over the past few years, and it was projected to end the 2010 year with a $9 million cash ...