In a case handled by Lusk & Albertson, Arbitrator Charles Ammeson issued an Opinion and Award on January 17, 2011 affirming the Walled Lake Consolidated School District’s decision to privatize custodial services before the expiration of the District’s collective bargaining agreement with the union that represented its custodians. The privatization saved the District approximately $3.5 million dollars a year over the costs the District would have otherwise incurred.
The union’s grievance alleged the District’s mid-contract privatization violated several provisions of the collective bargaining agreement, including the recognition clause. The District raised three defenses to the grievance: that it had not been filed in a timely fashion and, therefore, was not arbitrable; that the collective bargaining agreement did not include a provision specifically prohibiting subcontracting and, therefore, privatization was a right reserved to management; and, that, in any event, Section 15(f)(3) of the Public Employment Relations Act (PERA) would effectively “trump” any contract provision that purported to prohibit privatization. The Arbitrator ruled in the District’s favor based on the second argument and, therefore, did not reach the third argument.
Section 15(f)(3) of PERA, which was enacted almost 15 years ago, made privatization a prohibited subject of bargaining. More recently, Section 15(f)(3) was amended to require districts to provide affected unions an equal opportunity to bid for the work that was being privatized. Privatization efforts have increased in recent years as state financial support for public education has diminished at the same time labor and other costs have increased. The Opinion and Award in this case stands for the proposition that, in many cases, school districts do not have to wait until their labor contracts expire before considering and implementing privatization solutions. Of course, districts considering privatization should consult with their attorneys concerning the specific facts, circumstances and legal requirements applicable to their situations.