Cook County Record

Tuesday, April 7, 2020

State high court says arbitrator can't order union pay raises unless lawmakers provide the money

By Scott Holland | Mar 24, 2016


The Illinois State Supreme Court has sided with the state in determining an arbitrator cannot order the governor to increase union pay if lawmakers have not yet authorized the spending.

Justice Mary Jane Theis wrote the majority opinion. Concurring in the judgment and opinion were Chief Justice Rita B. Garman as well as justices Charles E. Freeman, Robert R. Thomas, Lloyd A. Karmeier and Anne M. Burke. Justice Thomas L. Kilbride concurred in part and dissented in part, with a written opinion. The ruling reverses the judgment of the Cook County Circuit Court and the First District Appellate Court, both of which upheld an arbitrator who ruled in favor of the union.

At issue is the collective bargaining agreement between the state’s Department of Central Management Services and American Federation of State, County and Municipal Employees, Council 31 — specifically a 4 percent wage hike that was supposed to begin with the start of fiscal 2012 on July 1, 2011, part of a contract in effect from Sept. 5, 2008, through June 30, 2012.

During the Great Recession earlier this decade, the union and state agreed to $300 million in cost savings in order to avoid 2,500 state worker layoffs. Part of that agreement included deferring the scheduled wage increases so only 2 percent would take effect July 1, 2011, and the remaining 2 percent on Feb. 1, 2012. The state agreed to avoid layoffs and facility closures throughout fiscal 2012.

When Gov. Pat Quinn submitted his fiscal 2012 budget, the raises were included. However, after the Governor’s Office of Management and Budget reviewed the General Assembly’s subsequent appropriations bill, it determined the raise could not be implemented in 14 agencies. On July 1, 2011, the CMS’ acting director issued a memo advising directors of those agencies the raise couldn’t take effect.

On July 19, 2011, an arbitrator directed the state to pay the 2 percent wage increase and in so doing, per Theis’ opinion, “declined to consider the state’s constitutional and public policy arguments … citing his lack of authority.”

Though the circuit and appellate court agreed with the arbitrator, the state high court determined that decision violates the state constitution’s appropriations clause, as well as the Illinois Public Labor Relations Act. Theis explained how the court rejected the state’s initial challenge insofar as the arbitrator’s award “drew its essence” from the CBA language. However, if such an award “contravenes paramount considerations of public policy,” it can be deemed unenforceable.

With the power to appropriate public money vested solely in the General Assembly, Theis explained, the union deals negotiated with the state are subject to legislative appropriations. AFSCME argued this interpretation renders meaningless the collective bargaining process, a stance Theis wrote “is belied by its own bargaining history with the state. As AFSCME admits, some collective bargaining agreements have made wage increases expressly contingent on legislative appropriations.” That this is implied in the deal at issue, and not expressed, is insufficient to sustain AFSCME’s stance.

The opinion reverses the earlier judgments and vacates the arbitration award.

Kilbride’s dissent noted he could reverse the appellate court’s judgment but uphold the circuit court ruling. “The state employees’ contractual rights to raises continues under the contract clause” of the state constitution, he wrote, “even if that obligation cannot immediately be enforced because of lack of appropriations… public policy strongly favors holding the state to its contractual obligations.”

Since the circuit court ruled the state had an obligation to pay the raises “when it was able,” Kilbride said the lack of appropriations in the fiscal 2012 budget does not invalidate the contract, it simply makes those employees who did not get the raise eligible to file back wage claims. He argues the majority opinion essentially allows the state to cancel any of its contracts if lawmakers simply choose to not appropriate adequate funding.

“I believe the majority opinion interjects uncertainty into the State’s responsibility for its contracts and will likely impair its ability to secure future contracts with its employees and vendors,” he wrote. “Ultimately, the citizens, businesses and taxpayers of the state will suffer the consequences.”

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Illinois Department of Central Management Services