State arbitrators, despite the recession, have continued to recommend annual teacher salary increases of at least 4 percent over the past two years, according to a review by The Press of Atlantic City of 10 state reports.

Those recommendations by fact-finders with the Public Employment Relations Commission, or PERC, have contributed to Gov. Chris Christie’s call to reform the arbitration process.

Christie wants to limit employee contract settlements to 2.5 percent for wage and benefit increases and revise the state arbitrator’s role. Legislation to implement those changes was introduced June 10.

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But the New Jersey Education Association, or NJEA, says a drop in negotiated salary increases this year shows the current system does work and that the proposed bills put artificial limits on contracts, which will create more problems in the long run.

Data compiled by the New Jersey School Boards Association shows the average negotiated teacher salary increase rose from 4 percent in 2000-2001 to a high of 4.7 percent in 2004-2005 before slowly starting to drop to 4.35 percent in 2009-2010.

The raises in recent years were awarded during a time of unemployment and stagnant wages in private industry. New Jersey lost 207,800 jobs from December 2007 to December 2009, and unemployment rose from 4.3 percent statewide to 9.7 percent, state Labor Department statistics show. Many in private industry received no raises in those years.

Teacher salary increases negotiated since January dropped to 3.35 percent for 2010-2011, according to a June survey of 21 districts by the New Jersey School Boards Association, a full percentage point below last year’s average. If an additional 11 districts that agreed to wage freezes next year are included, the average increase drops to 2.14 percent. Most of those contracts were negotiated without PERC fact-finding.

Locally, Cape May City settled in March and will provide 4 percent raises each year for 2009-10, 2010-11 and 2011-12. Middle Township settled in January at 3.5 percent for each of the same three years.

By contrast, state Department of Labor data show average private sector salary hikes began dropping much sooner, increasing by an average of just 2.5 percent in 2008, the most recent year available, with salaries for jobs such as retail and real estate actually decreasing.

Christie spokesman Michael Drewniak said the lower salary increases for teachers are too little, too late.

“The system is out of whack,” he said. “Regardless of what arbitrators are supposed to do, their decisions have swung in favor of labor and have contributed to the skyward curve of raises.”

NJEA spokesman Steve Baker said the recent settlements show local unions are responding to the economy by taking lower raises and agreeing to changes in benefits.

The role of PERC

While contracts are negotiated locally, the role of PERC arbitrators is crucial in setting the tone when the parties can’t agree. The mission of PERC is to prevent or promptly resolve disputes, and its position is expected to be neutral.

“One of the hopes is always to bring the parties together to settle to save time and money,” said Robert Angelo, a professor with the Rutgers School of Labor and Management Relations. “It’s like settling a case out of court.”

Districts can spend thousands of dollars on legal and/or negotiator fees during local negotiations. If PERC gets involved, there are additional costs for the PERC mediators. The Buena Regional School District, which went through fact-finding in 2009, spent $32,854 on district legal costs during negotiations and split the $13,814 PERC fact-finder’s fee with the teachers union.

Richard Gwin, director of the PERC Conciliation and Arbitration Section, said the state mediator is brought in when districts and local unions reach an impasse. If no agreement is reached, the process goes to fact-finding. PERC recommends three fact-finders; each side can eliminate one. The fact-finder also attempts to mediate a settlement, but if that is not successful, a formal report with recommendations is prepared.

Prior to 2003, the school board could impose its last best offer. An NJEA-endorsed state law passed in 2003 now requires both parties to continue to what is called superconciliation — basically more mediation. Five districts reached that level in the past three years: Ramsey in 2008; Camden County Vocational, Marlboro and Maurice River Township in 2009 and Scotch Plains-Fanwood in 2010, according to data from PERC.

Since the 2003 law took effect, the percentage of districts going to fact-finding increased from 20 percent to 32 percent, according to a PERC report in 2008. School officials said the fact-finding reports tend to rely so heavily on contracts already in place in neighboring districts that it is difficult to make substantial reductions. Many settle before the fact-finder’s report simply to save thousands of dollars in PERC fees.

Data provided by PERC show 52 cases were referred to fact-finding in 2007-2008, and 45 were settled before the report was issued. In 2008-2009, 41 cases went to fact-finding and 33 were settled before the report was issues. In 2009-2010, 63 contracts have been referred to fact-finding. So far there has been one report and 12 settlements.

A proposed new bill would reinstate the “last best offer” provision. The bill would also require that PERC choose the fact-finder rather than allowing the choice to be made by the district and union from the three names submitted by PERC.

Two cases, two results

Two local districts, Maurice River Township in Cumberland County and Buena Regional in Atlantic County, went to fact-finding in 2009.

In September 2009, after two years of failed negotiations, PERC fact-finder Thomas Hartigan recommended that the Buena Regional school board give teachers annual raises of 4.7 percent in both 2008-2009 and 2009-2010, and 4.4 percent for 2010-2011. In October, that agreement was approved, with the addition of a fourth year at 4.4 percent.

“The board was looking to go lower (to 4 percent),” superintendent Walt Whitaker said. “But it’s all built against averages (of other districts). Today, 4 percent would be generous. When we started, it was considered low. “

In July 2009, PERC fact-finder Frank Cocuzza recommended Maurice River Township give teachers annual raises of 3.75 percent, 4 percent and 4.25 percent over a three-year contract period that would run from September 2008 to June 2011.

In his report, Cocuzza noted that his 4-percent average recommendation was at “a level at which we may see future settlements hovering, at least until our current economic woes begin to dissipate.”

Still, the school board, which had offered 3 percent, balked.

An agreement was finally reached last month, giving teachers 3.75 percent retroactively for 2008-2009 and 2009-2010, and 2.5 percent for 2010-2011 and 2011-2012. Since they settled before May 21, employees will not have to pay 1.5 percent into their health insurance costs until their next contract.

“When we stopped and looked around at everything going on around us, it was just time to work together,” Maurice River Township Education Association Ray Hocker said. “We’re both satisfied it’s over.”

Township school superintendent John Saporito said he believes an agreement was reached because there finally was a realization of how much taxpayers are struggling.

“People (in the union) felt like they weren’t being respected,” he said. “But that wasn’t the issue at all.”

Several local districts settled new contracts before completing fact-finding, or are in the fact-finding process now. Hamilton Township teachers settled prior to fact-finding in May for 3 percent raises and a health plan with higher co-payments. They will also be able to delay contributing 1.5 percent to their health plan until their next contract.

Greater Egg Harbor Regional is in the fact-finding process. Mullica Township is waiting for the fact-finder’s report.

“We know (fact-finders) tend to reiterate what is already out there,” Mullica superintendent Richard Goldberg said. “They are slow to respond to change. We’ll see if the numbers are really coming down.”

What changed

School officials said it took this year’s dramatic fiscal crisis and the threat of massive layoffs to get unions to lower their demands.

“The fact-finders just come in and talk about where salaries have been in the past, not where they are now,” said Shelly Schneider, superintendent of the Millville school district, which settled its contract in May before completing the fact-finding process.

Teachers there will get a 3.75 percent raise for 2009-2010, accepted a wage freeze for 2010-2011 and will get a 3.25 percent raise for 2011-2012. Since they settled before May 21, employees will not have to contribute 1.5 percent to their health insurance until the contract ends, an incentive both sides said contributed to reaching a settlement.

“Our people did step up to do the right thing,” Millville superintendent Shelly Schneider said. The wage freeze will allow the district to bring back 14 people.

Baker said recent settlements show the current negotiating process works and that local unions respond to local needs.

PERC reports reviewed by The Press show the fact-finders did increasingly recognize the recession. But every report also includes a comparison of contracts in neighboring districts, many settled before the recession. Contracts generally run for three years, and each year about a third of all contracts are up for renewal, creating a cycle of salary increases that is hard to break and changes slowly.

“Comparables are what fact-finders use to benchmark jobs and costs,” Rutgers’ Angelo said. “I understand why school boards get frustrated. But the unions get frustrated, too, because they want more.”

Angelo said a mediator’s role is to try to find a middle ground both sides can accept, if not really like. There must be some pressure to settle, he said, and this year Christie is providing that pressure.

Baker said the current agreements show local unions are responding to local needs. He said complaints are unfair and short-sighted.

“Everyone is complaining now that teachers get more than private-sector workers,” he said. “But no one wants to remember when they were getting less.” He said when the economy recovers, a 2.5 percent cap on raises could discourage people from wanting to become teachers.

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