Rauner scores big win over union on contract talks

By Kim Geiger – Chicago Tribune 

An Illinois labor board declared Tuesday that Gov. Bruce Rauner and the state’s largest employee union are at an impasse in negotiations, clearing the way for the Republican governor to attempt to impose his terms on a new contract.

The unanimous ruling puts an already wobbly state government in uncharted territory. The union has never gone on strike. But that will become an option if Rauner enforces the offer he left on the table.

There’s still some time, however, for the two sides to plot their next moves.

The Rauner administration and the American Federation of State, County and Municipal Employees Local 31 are awaiting a written ruling from the Illinois Labor Relations Board, but spokesman Anders Lindall said the union already anticipates appealing the decision in state court. In the meantime, the union called on the governor not to implement the disputed contract and instead to restart negotiations.

“Nothing coming out of this decision compels the governor to seek to impose (his terms),” Lindall said. “He is free to come back to the bargaining table, and we think that in the public interest, in the interest of every Illinoisan … that he should do that, that he should come back to the bargaining table and join us in doing that hard work of compromise.”

The Rauner administration, meanwhile, suggested the union should “partner with us as we consider how best to implement the contract.”

“Today’s decision is fair for taxpayers and state employees,” Rauner spokeswoman Catherine Kelly said in a statement. “As a result of this agreed-to process, the state can now implement its contract, saving the taxpayers more than $3 billion over four years.”

Rauner’s last, best and final offer included no across-the-board guaranteed salary increase, but provided for $1,000 bonuses linked to work attendance, a series of new health care options with premiums ranging from $188 per month to $427 per month depending on employee salary, new rules that prevent overtime from kicking in before an employee has worked 40 hours in a week, and reduced holiday pay, among other things.

The labor board, which is made up of five political appointees, determined that the parties were at impasse — a technical stage in negotiations that allows the governor to attempt to impose his final offer. In doing so, the panel rejected a recommendation from an administrative law judge. The judge, citing a failure by Rauner’s negotiators to provide AFSCME with information about a number of its proposals, had suggested allowing Rauner to implement his terms on some items while sending the state back to the negotiating table on others.

Although the labor board agreed that the state had erred in not providing AFSCME with the requested information, its members were quick to dismiss the judge’s two-part solution. Instead, they chose to employ a legal approach suggested by Rauner’s lawyers, in which deadlock over a single issue could be considered enough to put a stop to the talks.

That issue was subcontracting. It was the first issue the two sides broached in the contract talks, and it was the last issue to come up in January before Rauner’s team declared that it would seek the labor board’s opinion on impasse. A Rauner negotiator cited the disagreement over subcontracting as a reason for referring the matter to the board.

At the crux of that dispute is Rauner’s desire to make it easier for the state to subcontract to the private sector for services ordinarily performed by state workers. Rauner’s team initially wanted unlimited ability to subcontract, saying it needed flexibility to find cost savings to get the state’s finances in order. AFSCME rejected that proposal outright.

The Rauner administration came back with a modified proposal for what’s known as “managed competition,” where the union would compete with private companies in bidding for contracts. The two sides spent months trading language on the idea, discussing it over the course of 21 bargaining days.

On the day that the Rauner team decided the talks were deadlocked, AFSCME had proposed adding language requiring that bids from private contractors would have to “meet the standard of greater efficiency, economy or other related factors” — language that the administration already had made clear it opposed.

“Subcontracting was the insurmountable issue that really got to the heart of the beliefs of both parties,” said labor board member Keith Snyder, a former mayor of Lincoln appointed by Rauner last year. “Dealing with what the state is trying to deal with in terms of financial crisis, and AFSCME trying to deal with protection of jobs and members’ jobs and things like that.”

While the state labor panel is comprised of five people appointed by the governor, Snyder is one of just two who joined the board after Rauner took office. The others were first appointed under past administrations.

AFSCME’s Lindall criticized the board for going against the recommendation of the administrative law judge. The union spokesman accused the Rauner administration of having “sabotaged the collective bargaining process” but reiterated the union’s long-held public position that it does not want to go on strike.

“We have long contended that the governor is trying to impose his unfair terms or force state workers, if they don’t want to accept those, to go out on strike,” Lindall said. “We think that a strike would be harmful to the people of Illinois, and Gov. Rauner’s path of chaos and confrontation is not in the public interest.”

The animosity between the governor and AFSCME dates to the 2014 campaign, when candidate Rauner made it known he would be willing to shut down the government and fire public workers if that’s what it took to achieve his objectives. His disdain for AFSCME also was apparent in his preferred nickname for the union: “Af-scammy.”

Rauner’s opposition to the union is both ideological and political.

AFSCME has long been allied with Democrats in state government, helping fuel their political campaigns with donations and on-the-ground help from its army of members. The union’s key function is to negotiate a master collective bargaining agreement that covers roughly 40,000 state government workers and sets the terms for the health benefits offered to current and retired state employees.

It’s a dynamic that Rauner has derided as a conflict of interest because the union can work to influence the outcome of elections, then sit across the negotiating table from those it helped to elect.

Rauner’s personal fortune allowed him to self-fund much of his 2014 campaign, and he ran as someone who would not be beholden to organized labor, which he blamed for much of the state’s financial woes. That raised the stakes on the contract talks as Rauner set out to make good on the promise that electing an “outsider” would make it possible to weaken the union’s influence on state finances.

From the beginning, AFSCME viewed the contract negotiations as just one piece of a broader Rauner-led assault on union power in Illinois. In one of his first acts as governor, Rauner tried to halt the practice of unions collecting fees from nonunion workers. He also called for banning campaign contributions by unions and called for the creation of “empowerment zones” where voters could decide to limit union influence.

All of that formed the backdrop for negotiations. AFSCME Executive Director Roberta Lynch’s opening remarks on the first day of contract talks made reference to Rauner’s past statements about “corrupt union bosses” and “sweetheart deals,” and she repeatedly questioned whether the state intended to bargain in good faith.

For a total of 67 days over the course of nearly a year of contract talks, AFSCME’s more than 230 bargaining representatives, led by Lynch, sparred with the Rauner administration’s negotiators in meetings that often were overseen by federal mediators.

In her 400-page retelling and analysis of the negotiations, Labor Board Administrative Law Judge Sarah Kerley described the talks as “atypical” from the start, and marked by a “battle mindset on both sides of the table.” Even the process of establishing ground rules for negotiations was contentious and took weeks to resolve. At times, the disagreements turned profane, with Lynch at one point telling a Rauner negotiator to “get the (expletive) out!”

AFSCME’s distrust of the Rauner administration ran so deep that the union spent much of the year waging a parallel effort to take the matter out of Rauner’s hands by pushing legislation that would allow an independent arbitrator to step in. Twice, the Democrat-led General Assembly passed legislation allowing for the arbitrator, and twice Rauner vetoed the measure.

So by the time Rauner referred the dispute to the labor board in January 2016, two shadows were looming over the talks: the governor’s anti-union political stance and the union’s efforts to get around him in the midst of negotiations.

As is standard in any negotiation, both sides started out with wish lists that were unacceptable to the other side.

Rauner wanted to delete a number of provisions in the expired contract, including restrictions on subcontracting and rules for filling positions after layoffs. He took aim at the state workers’ 37.5-hour workweek, saying overtime shouldn’t kick in until 40 hours had been worked. The administration wanted to freeze wages and institute a merit pay system that would reward high performers with nonpensionable bonuses. And it sought to increase the worker-paid share of health care costs.

AFSME wanted a 2 percent pay raise in the first year of the contract followed by 3 percent increases for the following years. The union also wanted to add bereavement leave and expand parental leave for state workers. On health care, the union wanted to add benefits without increasing the cost to workers.

In bargaining sessions, the two sides moved slightly, but some lines were clearly drawn. Kerley concluded that there was indeed a deadlock over certain issues, including subcontracting, holiday scheduling and vacation. But she reasoned that there was still room to negotiate on other issues, including wages and health care, since the administration hadn’t provided requested information and was seeking to make changes that can’t be imposed unilaterally.

But Kerley also provided commentary on the process that called into question whether either side had good reason to believe they’d ever reach a deal.

“After weeks and weeks hearing testimony of the parties on the status of negotiations and reviewing the record in this case, I am left with the firm impression that the state felt an urgency to reach a resolution while the union was content to negotiate by infinitesimal increments,” Kerley wrote in her recommendation to the labor board. “There is certainly evidence in the record to support that the union did not believe it would reach agreement at the bargaining table. From the very early days of negotiations, the union accused the state of seeking to destroy the union, pointing, in part, to many proposals the state ultimately withdrew.”

AFSCME contends that even given the labor board’s ruling, Rauner can’t implement all of his contract changes since some, like the merit pay system, would require employees to voluntarily waive their legal rights to have their pay count toward their retirement pensions.

The labor board decided to sidestep that issue. In a nod to the likelihood that the contract dispute will land in court, board Chairman John Hartnett declined to let the board weigh in. “It may be for some other body to determine,” Hartnett said.