Financial Urgency: D.C.A. Cases &
the Legal/Political Ramifications for
Florida School Districts
34th Annual
Spring Training Program
May 15, 2014
Prepared by Leonard J. Dietzen, III © 2014 Rumberger, Kirk & Caldwell, P.A.
Financial Urgency Statute
In the event of a financial urgency requiring modification of an
agreement, the chief executive officer or his or her representative
and the bargaining agent or its representative shall meet as soon
as possible to negotiate the impact of the financial urgency. If
after a reasonable period of negotiation which shall not exceed
14 days, a dispute exists between the public employer and the
bargaining agent, an impasse shall be deemed to have occurred,
and one of the parties shall so declare in writing to the other party
and to the commission. The parties shall then proceed pursuant
to the provisions of s. 447.403. An unfair labor practice charge
shall not be filed during the 14 days during which negotiations
are occurring pursuant to this section. § 447.4095, Florida
Statutes
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PERC Interprets Financial Urgency
In Walter E. Headley, Jr. Miami Lodge #20, FOP v. City of
Miami (38 FPER ¶ 330) FOP filed a ULP alleging in
pertinent part:
1) City acted improperly by invoking financial urgency
where none existed.
2) City failed to follow procedures in statute by making
unilateral changes in terms and conditions of
employment before completing the impasse resolution
process as set forth in 447.403, F.S. (2011).
© 2014 Rumberger, Kirk & Caldwell, P.A.
General Rule and Exception
Rule: If employees are represented by a bargaining agent,
the employer is prohibited from unilaterally changing a
wage, hour, term or condition of employment.
Financial urgency statute is a legislatively enacted
exception to this body of law. By applying it, an employer
may change a wage, hour, term or condition of
employment.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Definition of Financial Urgency
In Manatee Education
FEA, AFI v. School Board
of Manatee County, 62 So.
3d 1176 the court charged
PERC with defining the
term “financial urgency.”
© 2014 Rumberger, Kirk & Caldwell, P.A.
Definition of Financial Urgency
In re: Walter E. Headley the
hearing officer used the dictionary
definition of urgent and urgency
and defined financial urgency as
“a financial condition calling for
immediate attention, not
necessarily the condition of
financial emergency or
bankruptcy. The hearing officer
concluded that this is a financial
condition that is less than financial
emergency or a bankruptcy.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Further Clarification from PERC
In re: Walter E. Headley
PERC agreed with the
hearing officer’s conclusion
and added that a
determination of financial
urgency requires a close
examination of the
employer’s complete
financial picture on a caseby-case basis.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Good Faith Standard
When an employer invokes
§447.4095, F.S., it is held to
the standard of good faith as
defined in 447.203 (17), F.S.
Good faith is a matter of
intent; it is a state of mind
which is usually determined by
inference from a party’s
conduct.
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Avoiding an Unfair Labor Practice
To prove a violation of
447.501(1)(a) and (c), F.S.,
in declaring a financial
urgency the union must
show evidence that:
• the employer’s financial
assessment at the time
financial urgency was
declared was incorrect;
• or the employer was not
acting in good faith when it
declared financial urgency.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Test of Good Faith
An employer has acted in good
faith if, based on the totality of
the relevant information relied on
by the employer at the time it
declared the financial urgency, a
reasonable person acting in good
faith could reach the conclusion
that funding was not available to
meet the employer’s financial
obligations to its employees.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Union Rights Covered
PERC also determined that the employer
may unilaterally change an agreement after
concluding the statutory 14 day bargaining
period but before completing the impasse
resolution procedures as set forth in
447.403, F.S.
Union has a reasonable period to negotiate
the impact of the financial urgency, access
to impasse procedures and the right to
challenge declaration of financial urgency
by filing a ULP.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Headley, FOP v. City of Miami
On Appeal at the 1st DCA, Case No.
1D12-2116, from Appellant,
FOP's Initial Brief - Issues on appeal:
• Whether the City was experiencing a
financial urgency which required a
modification of the CBA; and
• Whether PERC erred in concluding
that the City could implement its
changes in the CBA prior to the
completion of the statutory impasse
procedure.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Headley, FOP v. City of Miami
On appeal at the 1st DCA, Case No. 1D12-2116, from Appellee,
City of Miami’s Answer Brief - Issues on Appeal
• Whether the budgetary shortfall in excess of $115-million faced
by the City of Miami constituted a “financial urgency” requiring
modification of the subject collective bargaining agreement
pursuant to section 447.4095, Florida Statutes.
• Whether the language and intent of section 447.4095
authorized the City of Miami to immediately modify the subject
collective bargaining agreement when faced with a financial
urgency before completion of the impasse process.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Headley, FOP v. City of Miami
On appeal at the 1st DCA, Case No. 1D12-2116,
Court affirmed PERC’s determination that City
properly invoked the procedures in section 447.4095
and thus, did not commit an unfair labor practice
when it unilaterally modified the bargaining
agreement.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Headley, FOP v. City of Miami
On appeal at the 1st DCA, Case No. 1D12-2116,
Court held:
• “Financial urgency is a dire condition requiring
immediate attention and demanding prompt and
decisive action, but not necessarily a financial
emergency or bankruptcy.”
• “Local government is not required to demonstrate
that funds are not available from any other possible
source to preserve the agreement”
© 2014 Rumberger, Kirk & Caldwell, P.A.
Headley, FOP v. City of Miami
On appeal at the 1st DCA, Case No. 1D12-2116,
Court held:
• “Instead the local government must only show that
other potential cost-saving measures and
alternative funding sources are unreasonable or
inadequate to address the dire financial condition
facing the local government.”
• “Impact bargaining only requires notice and an
opportunity to negotiate before the proposed
changes are implemented.”
© 2014 Rumberger, Kirk & Caldwell, P.A.
Headley, FOP v. City of Miami
On appeal at the 1st DCA, Case No. 1D12-2116,
Court held:
“The Legislature intended the phrase ‘negotiate the
impact’ in section 447.4095 to be a reference to
‘impact bargaining.’ The declaration of the financial
urgency and the 14-day negotiating period in the
statue are the notice and reasonable opportunity to
negotiate that is required in the context of ‘impact
bargaining.’”
© 2014 Rumberger, Kirk & Caldwell, P.A.
Headley, FOP v. City of Miami
On appeal at the 1st DCA, Case No. 1D122116, Court held:
• “If dispute still exists the local government
may immediately impose the modifications
to the bargaining agreement.”
© 2014 Rumberger, Kirk & Caldwell, P.A.
Hollywood Fire Fighters v.
City of Hollywood
The Constitutional right of public employees to collectively
bargain with their employer and the interrelated
constitutional right of a bargaining unit to be free from
government impairment of contracts with its employees
are at the heart of this appeal.
Hollywood Fire Fighters, Local 1375, IAFF, Inc. v. City of
Hollywood, 133 So. 3d 1042 (4th DCA 2014)
© 2014 Rumberger, Kirk & Caldwell, P.A.
Hollywood Fire Fighters v.
City of Hollywood
• Fourth District Court of Appeals disagreed with First
District’s application of Florida Supreme Court case
Chiles v. United Faculty of Florida, 615 So. 2d 671 (Fla.
1993).
• In Chiles the court held the right to contract protected by
the Florida Constitution severely limits the legislature’s
power to alter a contract.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Hollywood Fire Fighters v.
City of Hollywood
Florida Supreme Court’s test in Chiles
• The legislature has authority to reduce benefits in a CBA
only where it can demonstrate a compelling state interest.
• The legislature must demonstrate no other reasonable
alternative means of preserving its contract with public
workers, in whole or in part.
• The legislature must demonstrate that the funds are
available from no other possible reasonable source.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Hollywood Fire Fighters v.
City of Hollywood
Fourth DCA opinion
• Relying on Chiles to establish financial urgency, the City
was required to demonstrate that funds were available
from no other possible source.
• Court certified conflict with Headley to Florida Supreme
Court. Headley is still pending.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Guidelines for General Funds
The district school board shall maintain a general fund ending
fund balance that is sufficient to address normal
contingencies.
1) If at any time the portion of the general fund’s ending fund
balance not classified as restricted, committed, or nonspendable in the district’s approved operating budget is
projected to fall below 3 percent of projected general fund
revenues during the current fiscal year, the superintendent
shall provide written notification to the district school board
and the Commissioner of Education.
§1101.051, Florida Statutes
© 2014 Rumberger, Kirk & Caldwell, P.A.
Guidelines for General Funds
2) If at any time the portion of the general fund’s ending fund
balance not classified as restricted, committed, or nonspendable in the district’s approved operating budget is
projected to fall below 2 percent of the projected general fund
revenues during the current fiscal year, the superintendent
shall provide written notification to the district school board
and the Commissioner of Education. Within 14 days after
receiving such notification, if the commissioner determines
that the district does not have a plan that is reasonably
anticipated to avoid a financial emergency as determined
pursuant to § 218.503, the commissioner shall appoint a
financial emergency board that shall operate under the
requirements, powers, and duties specified in § 218.503(3)(g)
§1101.051, Florida Statutes
© 2014 Rumberger, Kirk & Caldwell, P.A.
Possible triggers of financial urgency
• Automatic step
• Increases in cost of
health care
• Teacher Allocation
Funds
• Performance pay plan
• Declining FTE
© 2014 Rumberger, Kirk & Caldwell, P.A.
Disclaimer
The information provided during this presentation is
not intended for legal advice. The presentation, and
any handouts which may accompany it, provide
general information on this topic and answers to
common questions about this issue. Please consult
an attorney to assure that this information, and your
interpretation of it, is appropriate to your particular
situation.
© 2014 Rumberger, Kirk & Caldwell, P.A.
Thank you!
Leonard J. Diezten, III, Esquire
Rumberger, Kirk & Caldwell, P.A.
P.O. Box 10507
Tallahassee, FL 32302-2507
(850) 222-6550
ldietzen@rumberger.com
© 2014 Rumberger, Kirk & Caldwell, P.A.