The Economic Crisis:
Furloughs, Layoffs & Demotions of
Professional & Non-Professional Employees
Presented by:
FOX ROTHSCHILD LLP
Mark W. Fitzgerald, Esquire
Recent developments:


This past February, the Pennsylvania
House Introduced HB 855 which is
intended to relax the generally
stringent process in Furloughing
employees for economic reasons.
The Bill in its current form has been
pulled.
HB 855
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Seeks to add economic furloughs to
the reasons articulated in Section 1124
of the School Code
Significantly modify the process of
suspending and/or demoting based on
seniority only.
Reduce the Due Process requirements
when suspending or furloughing staff
PSBA Testimony


The position of PSBA, which is
identical to that of PASBO on this
subject is available.
The bill in its current form is not likely.
We are anticipating approval of
allowing District to furlough for
economic reasons. Seniority will likely
be the challenge.
Status of Current
Legislation

In all likelihood, the removal of the
house and senate bill at this juncture
will set up a compromised piece of
legislation where Districts will obtain
mandate relief in the form of economic
furloughs but still be required to
address seniority provisions under the
School Code.
In the meantime….
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We are confronted with the current
legal restrictions and an
economic/funding crisis.
What are our options when
furloughing and/or demoting?
What legal hurdles are present?
The Furlough and
Demotion Process
A step by step approach to ensure
legal compliance
The First Step: Who are
the Employees?

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The first step in dealing with such an issue
is to identify the classification of the
employee.
If the employee is a non-professional
employee, the next level of inquiry is
whether there is anything in an applicable
collective bargaining agreement or board
policy that determines the manner upon
which an employee would be furloughed
and/or demoted.
The First Step: Who are
the Employees?

In the absence of a collective
bargaining agreement or a board
policy, generally, a non-professional
employee’s position can be eliminated
simply by a board motion eliminating
the position and establishing an
effective date of the elimination of the
position.
More Complications

If there is a unionized employee
(whether professional or nonprofessional) and that employee is
furloughed or demoted and the work
that that employee performed goes to
a non-bargaining unit employee or
entity, subcontracting concerns arise.
Subcontracting is extremely difficult
under the current state of
Pennsylvania law.
More Complications:
When Furloughing
Non-Professional Staff
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Seniority lists for non-professional
employees are notoriously outdated
and incomplete.
More problematic is defining the class
of employees within a nonprofessional bargaining unit.
We do not want a custodian bumping
an instructional aide!
Demotions of
Professional Employees
Section 1151 of the School
Code
Section 1151 –
Demotions

[T]here shall be no demotion of any
professional employee either in salary or in
type of position without the consent of the
employee, or, if such consent is not
received, then such demotion shall be
subject to the right to a hearing before the
board of school directors and an appeal in
the same manner provided in the case of
the dismissal of a professional employee.
Section 1151 –
Demotions

Demotions are considered a “removal
from one position and an appointment
to a lower position; it is a reduction in
type of position as compared with
other professional employees having
the same status.” Filoon v. Middle
Bucks Area Vocational Technical
School, 634 A.2d 726 (1993).
Power of Demotions

Demotions can be one of the most
powerful tools available with respect to
professional employees. Courts
generally do not interfere with the
rationale of a school board in
demoting a professional employee.
Section 1151 –
Grounds for Demotions

The courts have held that any rational
reason is sufficient to support a
demotion and that a demotion will be
overturned only if it is shown that the
demotion was arbitrary or capricious.
Power of Demotions

Further, demotions can be for
budgetary or financial reasons, while
furloughs of professional employees
cannot. In other words, an economic
justification for demoting an employee
is not arbitrary or capricious.
Demotion Examples
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Principal or vice principal reassigned as teacher.
Supervisor reassigned as teacher.
Autonomous administrator placed under the
supervision of another administrator.
Principal of an elementary school reassigned to
a newly created position “Coordinator of
Elementary Programs.”
Classroom teacher to an Itinerant Title I teacher
who functioned mainly as an aide.
Reasons for Demotions
Upheld by the Courts
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School district reorganization
Enrollment decline
Abolition of position
Cost savings/budget
Job performance
Refusal of employee to follow directions
Employee not certified
Section 1151 –
Demotions


The demotion provisions of the School
Code are applicable to professional
employees only.
Where a professional employee
performs services for the school
district that are not professional in
character, the employee is not
protected by Section 1151 of the
School Code.
Demotion Procedures
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Procedural requirements of the Code must be
strictly adhered to.
Employee is entitled to a notice of demotion
and right to a hearing if not providing consent.
Section 1151 requires a hearing if the employee
does not consent to the demotion.
Only the school board, and not the
administration, can impose a demotion, either
after the hearing or upon consent from the
employee.
Demotion Procedures

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As the result of Mifflinburg, professional
employees would likely have the right to
grieve the demotion under their Collective
Bargaining Agreement instead of a hearing
before the school board.
While employees may find arbitrators to be
a more sympathetic fact-finder, an actual
arbitration may not occur until months after
the demotion became effective.
Demotion Procedures:
Important Question

Does Seniority play into demotions?
– Is it a pure or realignment demotion?
– What are the reasons for the demotion?
Demotion Issues

Employees who are demoted may be
eligible for Unemployment
Compensation Benefits.
Suspending a Professional
Employee in Pennsylvania
The Current laws of Furloughing
Furlough of Professional
Employees

Considerations under Section 1124
and 1125.1 of the School Code
Statutory Grounds for Suspension of
Professional Employees Under the
School Code

Section 1124 states:
“Any board of school directors may
suspend the necessary number of
professional employees, for any cause
hereinafter enumerated:
(1) Substantial decrease in pupil
enrollment in the school district;
Statutory Grounds for Suspension of
Professional Employees Under the
School Code
(2) Curtailment or alteration of the
educational program on recommendation of
the Superintendent, concurred in by the
Board of School Directors, approved by the
Department of Education, as a result of
substantial decline in class or course
enrollment or to conform with standards of
organization or educational activities required
by law or recommended by the Department
of Education.
Statutory Grounds for Suspension
of Professional Employees Under
the School Code
(3) Consolidation of schools,
whether within a single district,
through a merger of districts, or as a
result of joint board agreements,
when such consolidation makes it
unnecessary to retain the full staff of
professional employees.
Statutory Grounds for Suspension
of Professional Employees Under
the School Code
(4) When new school districts are
established as the result of reorganization
of school districts pursuant to Article II.,
subdivision (i) of the Act, and when such
reorganization makes it unnecessary to
retain full staff of professional employees.
Statutory Grounds for Suspension of
Professional Employees Under
the School Code

The four (4) grounds previously
mentioned are the only grounds upon
which a school district may furlough a
professional employee. Attempts to
furlough professional employees beyond
those grounds will not be unsuccessful.
Furlough for Budgetary
Reasons?
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Unfortunately no, if that is your only
justification.
In Warwick Board of School Directors vs.
Theros, 430 A.2d 268 (1981), in overturning
the Board decision to furlough a
professional employee, the Court noted the
school district eliminated a non-mandated
supervisory positions to reduce budgetary
deficits. None of the enumerated reasons
from Section 1124 were listed in conjunction
with the need to reduce fiscal deficits.
Furlough for Budgetary
Reasons?

Although school districts may not
suspend professional employees for
reasons not enumerated in Section
1124, where the reasons do exist,
suspensions are proper even if
motivated by financial considerations.
Substantial Decrease in Pupil
Enrollment – Section 1124(1)
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Most suspensions of school district
employees, until recently, were based on a
substantial decrease in pupil enrollment.
Courts have allowed school districts to
determine what constitutes “substantial
decrease” in enrollment.
No precise definition of substantial decrease
exists under the School Code or through
case law.
Substantial Decrease in Pupil
Enrollment – Section 1124(1)

In Phillippi v. School District of Springfield
Twp., 367 A.2d 1133 (1977), the
Commonwealth Court said school boards
must exercise sound discretion and board
action will not be disturbed absent a
showing that discretion was abused, or that
the action was arbitrary, based on a
misconception of law or ignorance of facts.
Substantial Decrease in Pupil
Enrollment – Section 1124(1)

1.
2.
3.
4.
5.
Under the Phillippi standard, the following
has been deemed a substantial decrease
by the Courts:
114 students over 10 years
486 students over 5 years
661 students over 6 years
250 students over 3 years
30 students in one department over 6
years
Substantial Decrease in Pupil
Enrollment – Section 1124(1)

In Colonial Education Ass’n v. Colonial
School District, 645 A.2d 336 (1995), the
court described two methods in which a
substantial decrease can be proven:
– Evidence of a general, cumulative decline
over a reasonable time.
– Evidence of a decrease from one year to
the next that is so prominent as to not
require the other years as part of the
analysis.
Substantial Decrease in Pupil
Enrollment – Section 1124(1)
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Caution
In Colonial Education Ass’n v. Colonial
School District, the court held an 18
year look back period was too long,
absent justification for such a long
period of time.
Substantial Decrease in Pupil
Enrollment – Section 1124(1)
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While most cases are based on actual
decreases of enrollment, school districts
may also be able to consider projections of
future pupil enrollment in order to justify an
1124(1) reason for furlough.
Relying exclusively on projected enrollment
may be problematic, however, in order to be
successful under this prong of 1124.
Curtailment or Alteration of
Educational Programming
Section 1124(2)
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This is the prong we have seen most often over
the last several years as enrollment has
generally increased making Section 1124(1) less
applicable.
If a school district proceeds to furlough a
professional employee under Section 1124(2),
several criteria must be met in order to
effectuate the furlough.
Probably the most confusing of the Section
1124 options.
Curtailment or Alteration of
Educational Programming
Section 1124(2)

Section 1124(2) requires the satisfaction of
the following criteria:
1. Recommendation of curtailment or
alteration by District Superintendent.
2. Concurrence in such action by the Board.
3. Approval of such action by the Department
of Education.
4. Curtailment or alteration of educational
programming as a result of: (1) substantial
decline in class or course enrollment; or (2) to
conform with standards of organization or
educational activities required by law or
recommended by PDE.
Curtailment or Alteration of
Educational Programming
Section 1124(2)

If one of the four conditions is not
satisfied, a suspension will not be
permitted. Shegelski v. Mid Valley
School District, 677 A.2d 367 (1996).
Curtailment or Alteration of
Educational Programming
Section 1124(2)

Approval of the Secretary of Education as
part of the process.
– No statutory provisions govern the
substance or the procedure by which PDE
approves a suspension under Section
1124(2).
– PDE has issued a Basic Education Circular
(BEC § 1124) on the topic.
BEC §1124
4 Categories

Based on the BEC, a curtailment/alteration of
programming will be approved by the
Department under the following 4 categories:
1. Substantial decline in enrollment in a
class
or course.
2. Conform with standards of
organization.
3. Required by law.
4. Recommendations from PDE.
BEC §1124
 PDE
will review requests for curtailment or alteration of the
educational program using the following criteria:
All requests must include board action as recorded in board
minutes as evidence of approval of the school district’s board
of school directors.
Substantial Decline in enrollment (category 1)
- The Department will approve a request to curtail or alter an
educational program if the district establishes that such a
request is the result of substantial decline in class or course
enrollment. To establish such a standard, the school district
must submit data evidencing the following:
BEC §1124 (Category 1)
– a. that enrollment in the class or
course has decreased at least 20%
from the school year five years
prior; or
– b. that enrollment for the class or
course is less than ten students.
BEC §1124 (Category 1)
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Caution: Enrollment is on a per class or per
course basis under this BEC and Section
1124(2) where a suspension is necessitated
by lower enrollment in a particular program.
Whereas, under Section 1124(1) the
analysis was generally decrease of pupil
enrollment across the District that justified a
suspension.
BEC on §1124(2)
(Category 1)
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Caution II
School boards may not avoid the
requirements of Section 1124(2) for
approval by PDE by characterizing a
suspension as necessitated by declining
pupil enrollment when it was actually
precipitated by curriculum reorganization/
decrease in a specific program.
BEC §1124 (Category 2)
Category 2
 The Department will approve a school district’s
request to curtail or alter an educational program
if it can establish the curtailment or alteration is
necessary to conform with standards of
organization. To establish:
– The District must submit certified information from the
superintendent demonstrating the requested
curtailment or alteration will effect a change in the
organization or curriculum that results in a more
effective educational program.
BEC §1124
(Categories 3 and 4)
Categories 3 and 4
 PDE will also approve a curtailment and
alteration of programming if such a request
is either:
(a) based on activities recommended by PDE;
(b) required by law
-In both circumstances, a district superintendent
must identify and certify the recommendation
from PDE or law that drives the decision to curtail
or alter programs.
BEC §1124

Nothing precludes a school district from
requesting a curtailment/alteration of
programs based on all 4 categories if
applicable. In such an instance, the district
will need to provide evidence to PDE to
justify each category, however.
Application of Section 1124
for Temporary Professional
Employees
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The reasons that justify furlough of
professional employees appear to be
applicable to temporary professional
employees as well.
Though the case law is a bit messy
Generally, what is a furlough of a
tenured employee, is a contractual “
non-renewal” of a TPE
Application of Section 1124
for Temporary Professional
Employees
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A good case study and cautionary tale
on the likely applicability of Section
1124 of the Code and TPEs can be
found in the arbitration of the North
Penn School District and the North
Penn Education Association. (2010)
(Buchheit)
North Penn v. NPEA
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The Association grieved the non-renewal of
three TPEs even though the Association
stipulated the Board had justifiable reasons
under the school code
It was the Association’s position, however
that regardless of the substantive
justifications, the Board failed to
procedurally adhere to the Code. ( the
Association cites Cigarski, a 1980
Commonwealth Court decision)
North Penn v. NPEA
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The Board argued that the Code
provisions applicable to PEs is not
applicable to TPEs. (rely on the Phillipi
holding which states clearly the Code
is not applicable to TPEs), thus the
procedural requirements did not apply
as well
North Penn v. NPEA
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Scott Buchheit, a seasoned arbitrator,
agreed with the Association.
Regardless of whether the Board has
the reasons or not, the procedural
requirements of Section 1124 and the
BEC
You Have the Authority to
Suspend, Now What?
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The grounds for suspension is half the
battle. The next question that must be
asked is whether the proper employee or
employees have been selected?
Section 1125.1 sets forth the following rules
pertaining to the selection of employees to
be suspended:
Section 1125.1 –
Persons to be Suspended

(a) professional employees shall be
suspended under Section 1124 in inverse
order of seniority within the school entity of
school employment. Approved leaves of
absences shall not constitute a break in
service for purposes of computing seniority
for suspension purposes. Seniority shall
continue to accrue during suspension.
Section 1125.1 –
Persons to be Suspended

(b) where there has been a
consolidation of schools, departments
or programs, all professional
employees shall retain the seniority
rights they had prior to the
reorganization or consolidation.
Section 1125.1 –
Persons to be Suspended

(c) A school entity shall realign its
professional staff so as to insure that
more senior employees are provided
with opportunity to fill positions for
which they are certificated and which
are being filled by less senior
employees.
Section 1125.1 –
Persons to be Suspended
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(d)(1) no suspended professional employee shall be
prevented from engaging in another occupation during
suspension.
(d)(2) suspended or demoted employees shall be
reinstated on the basis of seniority within the school
entity. No new appointments shall be made while there
are suspended or demoted employees available who are
properly certified.
(d)(3) to be considered available, a suspended
employee must annually report in writing his current
address and his intent on accepting the same or similar
position offered.
Section 1125.1 –
Persons to be Suspended

Nothing in Section 1125.1 shall be
construed to supersede or preempt
any provisions of a collective
bargaining agreement negotiated by a
school entity and the exclusive
bargaining representative of the
employee in accordance with the
Public Employe Relations Act.
Persons to be Suspended
Some Considerations & Ongoing
Disagreement

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Staff Realignment: straight line versus
checkerboard realignment. Employer
argument for “straight line” versus
employee argument for “checkerboard”
realignment.
Courts have been consistent in not
requiring checkerboard realignment.
Godfrey v. Penns Valley Area School
District, 449 A.2d 765 (1982).
Persons to be Suspended
Some Considerations and Ongoing
Disagreement

Overall, the issue of who is to be
suspended under Section 1125.1 is
fact intensive. Moreover, the rights
and responsibilities of the suspended
under the Act leaves many question to
be answered, many of which have not
been completely addressed by the
courts.
Noteworthy
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School Boards can bargain the issue of
Seniority as it pertains to furloughs
with professional bargaining units.
Most do not have such provisions
within their contracts.
If the law does not change, possibly
something to consider.
TPEs and applicability of
Section 1125.1
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While Section 1124 is likely applicable
in the non-renewal of TPEs, Section
1125.1 is not.
In other words, seniority is not part of
the analysis when non-renewing a
TPE.
Employee Hearing Rights Under
Sections 1124 and 1125.1


Section 1125.1(f) states a decision to
suspend shall be considered an
adjudication within the meaning of the
Local Agency Law.
Therefore, an affected employee has a
right to a hearing should they desire.
Employee Hearing Rights under
Sections 1124 and 1125.1

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An employee is entitled to reasonable
notice of the right to a hearing and the
opportunity to be heard.
A hearing is not mandated, however.
Should a hearing actually take place, it
would look very similar to that of a
employee dismissal matter.
Suggested Process in a nutshell:
Curtailment/Alteration of
Programming

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First, to the extent your district is
considering furloughs, your superintendent
must be in the process of justifying a
curtailment of programming as part of an
overall board resolution
It is suggested the Administration consult
with legal counsel on particular procedural
considerations
Suggested Process in a
nutshell

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
Once a resolution is passed, which
includes the recommendations of the
superintendent, submit immediately
the request to PDE
Earlier the better, PDE was very slow
last year in responding.
Once PDE has approved, identify the
proper individuals to furlough
Suggested Process in a
nutshell


Notify the employee of the
determination and their individual right
to a hearing.
The employee may chose an
arbitration under the Collective
Bargaining Agreement instead of a
Local Agency Hearing before the Board
Suggested Process in a
nutshell

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Generally, pre-deprivation hearings are
not required under this process.
For demotions, pre-deprivation
proceedings are only required when
demoting for reasons of performance.
Current Position of PDE

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From reports, PDE has liberalized the
approval process this year.
We have sought and received approval from
PDE this year on the curtailment of full day
kindergarten for economic reasons.
It is advisable to contact Steve Fisher at
PDE to discuss your curtailment proposal in
advance of board action in order to assure
PDE will approve the measure
Contact Information
Mark W. Fitzgerald, Esq.
FOX ROTHSCHILD LLP
610-397-6500
mfitzgerald@foxrothschild.com