A look at the law behind cancellation of teachers' contract

Legally speaking, can the School Reform Commission really do this?

Legislation authorizing the takeover of the Philadelphia schools, signed in 1998 and implemented a few years later, gives the state broad powers to manage the financial affairs of the district, and it is on that basis that the SRC canceled its contract Monday with the teachers union.

Public employee contracts enjoy broad, if not absolute, legal protections in Pennsylvania, but the SRC says the legislature created a carve-out for Philadelphia schools, and subsequent amendments only bolstered its powers.

It is what lawyers call an issue of first impression, a legal question never before fully tested by the courts, lending an element of uncertainty to the commission's tactic.

To force the matter, the SRC filed a lawsuit against the teachers union Monday, asking Commonwealth Court to uphold its decision to cancel its contract with the teachers, thus requiring them to pay a portion of their health insurance costs.

The union, which has called the SRC's action "cowardly," has promised a legal response.

The SRC's "approach is interesting and appropriate," says labor and employment lawyer William J. Flannery of Post & Schell P.C. of Center City, who represents school boards, municipal governments, and other entities on collective bargaining matters. "What the district is doing is trying to get a jump start on this."

As a tactical matter, the SRC's decision to go to Commonwealth Court suggests a legally savvy approach that, if successful, could short circuit years of litigation and put on a fast track its plan requiring teachers, school nurses, and others covered by the contract to pay into their health insurance fund.

That is because the case turns on a handful of narrowly drawn legal questions that focus on what the legislature intended when it authorized the takeover of the financially strapped district, and what impact if any subsequent changes in the law may have. Lawyers for both the teachers union and the SRC did not respond to request for comment.

Flannery said courts were often loathe to jettison normal procedures when it comes to resolving disputes, and typically conflicts over what is permitted under a collective bargaining agreement are sorted out by the Pennsylvania Labor Relations Board, or by an arbitrator.

But Commonwealth Court may feel this case has special import because it raises legally unresolved issues and because it poses a question of pivotal public importance - perhaps the very financial survival of Philadelphia's public school system.

Commonwealth Court is an intermediate-level appeals court that hears disputes involving government agencies, among other matters.

By going directly to an appeals court to test the legal basis of its actions, the SRC, which asserts that its changes to the teacher health plan will save tens of millions of dollars annually - in order to "restore essential resources such as books, paper supplies, and staffing" - may well succeed in dramatically accelerating the process of judicial review.

"I think the court would give serious consideration to entering an order for declaratory judgment," Flannery said.

Broadly speaking, the SRC asserts two legal arguments. It argues on the one hand that the teachers' contract had expired and that following 110 meetings over 21 months, both sides were at an impasse, giving the SRC the option to upend the agreement.

It cites state Supreme Court precedent that it says permits public employers to impose the proposals they made during negotiations once contract talks break down.

But, because there are no state Supreme Court cases bearing on the current dispute, lawyers on both sides are traversing unchartered legal territory.

In its complaint, the SRC contends that Act 46, the original legislation authorizing the Philadelphia school takeover, gave the state broad authority to manage the School District's finances, to the point of withholding city sales tax receipts if the Pennsylvania education secretary concluded that the district had failed to implement reforms.

And as part of the original mandate, the act gives the SRC the authority to cancel collective bargaining agreements, if needed. The five-member SRC, three of whose members are appointed by the governor and two by the mayor, says that while the legislature amended the original law to include other school districts, exempting collective bargaining agreements in those jurisdictions from cancellation, it let stand that power for the Philadelphia district.

"In short, the General Assembly conferred extraordinary powers upon the SRC and the School District, with the intent of giving them a much freer hand than other public employers when it comes to collective bargaining during a period of financial distress," the SRC complaint says.

Whether that argument will fly is another question. Flannery says he expects that the teachers union, when it responds to the complaint, will ask for an injunction barring the SRC from imposing changes to the health plan until the matter is hashed out in court.

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