Justices Decline Case on Buffalo, N.Y., Wage Freeze
The U.S. Supreme Court refused last week to hear a challenge by a group of Buffalo, N.Y., school unions to a state fiscal-oversight board’s power to set aside labor contracts and impose a wage freeze to help the city and its school district emerge from a budget crisis.
The justices declined without comment April 30 to get involved in the battle between the seven unions representing Buffalo school employees and the Buffalo Fiscal Stability Authority, which was created in 2003 to address what the New York state legislature declared was “a severe fiscal crisis” in the city.
The city partially finances the 38,000-student Buffalo district. The city had increasingly relied on state aid to shore up its budget deficits; state aid had grown from $67 million in 1997-98 to $128 million in 2002-03, with projections for continued deficits for years to come, according to court papers.
The Fiscal Stability Authority imposed the wage freeze in April 2004 on the city and certain other covered agencies, including the Buffalo school district. For school employees, including teachers, the freeze meant that a negotiated 2 percent pay increase did not take effect as planned.
According to district budget documents, the wage freeze saved $3.1 million in the district’s 2004-05 general-fund budget of $491 million. The city’s contribution to that year’s budget was $51.5 million.
The Buffalo Teachers Federation, an affiliate of both the American Federation of Teachers and the National Education Association, led six other school employee unions in challenging the wage freeze as a violation of the contracts clause in Article I of the U.S. Constitution, which prohibits the states from passing any laws “impairing the obligation of contracts,” and of the 5th Amendment’s “takings” clause, which bars the government from taking property without just compensation.
Both the U.S. District Court in Buffalo and the U.S. Court of Appeals for the 2nd Circuit, based in New York City, rejected the lawsuit on both grounds.
“An emergency exists in Buffalo that furnishes a proper occasion for the state and BFSA to impose a wage freeze to protect the vital interests of the community,” said the opinion last September for a unanimous three-judge panel of the appeals court. The wage freeze was reasonable, and the legislature was under no obligation to raise taxes as an alternative, the court said.
The unions appealed to the Supreme Court only on the contracts-clause question in Buffalo Teachers Federation v. Tobe (Case No. 06-1168). They argued that the federal courts of appeals were divided on the proper standard of review for state legislative actions that impaired the contracts of political subdivisions such as cities and school districts.
A. Vincent Buzard, a lawyer for the Buffalo Fiscal Stability Authority, said the Supreme Court’s refusal to hear the unions’ appeal removes the last bit of doubt about the wage freeze, although some other lawsuits by city employees’ unions are pending. The freeze remains in effect for city and school district employees, he said.
“The wage freeze has been critical for the attempt to put Buffalo back on an even fiscal keel,” Mr. Buzard said.
Philip Rumore, the president of the Buffalo Teachers Federation, said school employees are frustrated because they have received no raises for three years.
“It’s been devastating for morale,” he said.
Meanwhile, the school board is in line to get a significant increase in state funding over the next four years, as a result of state court rulings in a lawsuit over equity in school finance, Mr. Rumore said.
But the fiscal authority “seems to have no interest in lifting the wage freeze,” he said.
Even when the freeze is lifted, Mr. Rumore added, “you don’t get that money back.”
Vol. 26, Issue 36, Page 25