Why the furloughs?


POSTED: Sunday, October 25, 2009

By July it had become clear to all sides—the public worker unions, the counties and the state—that worker furloughs would be the tool to solve Hawaii's labor stalemate.

Friday was the first day of unpaid furlough days for many state workers, including public school teachers. The state shut down many critical offices and services, most notably Hawaii public schools. The disruption to so many island families left many wondering why the state and public worker unions did not come up with another solution during contract negotiation.

In Star-Bulletin interviews with key players, differing versions emerge about who first raised the furlough idea. But it is clear that other options—such as straight pay cuts or widespread across-the-board layoffs—were rejected by both the unions and employers early in the negotiation process.

Some rough consensus formed at a July 6 late-afternoon meeting between the counties, the four public employees unions and the state.

State chief negotiator Marie Laderta walked out of the meeting to protest that the unions had not come up with a formal proposal, but the other state employers—the University of Hawaii, the schools, the courts and state hospitals—remained.


After Laderta left, the federal mediator kept all parties in the building and worked out an agreement, although it was not a settlement.

“;It was going to be a furlough plan,”; Randy Perreira, Hawaii Government Employees Association executive director, said during an interview last week. “;Not all the details were worked out, but it was going to be a furlough.”;

After the HGEA settlement was finally signed earlier this month, Honolulu Mayor Mufi Hannemann had said furloughs were what the counties wanted, not pay cuts or layoffs.

Because of that broad agreement, the issue of furloughs for school teachers represented by the Hawaii State Teachers Association was never really questioned, according to those involved with the teacher talks.

The Board of Education rejected layoffs early on because cutting teachers would mean that class sizes would increase, said Garrett Toguchi, board chairman.

But Toguchi was vague about the decision to furlough versus just cutting worker pay, saying the actual negotiations were confidential.

“;I can't tell you why we didn't go for wage reductions or holidays,”; he said.

However, Toguchi did say that the board didn't care for wage cuts because of the long struggle to raise teacher salaries in Hawaii. “;Also everyone had direction from the governor that we were looking at furloughs—it was a safer plan to stick with,”; Toguchi said during an interview last week.

Gov. Linda Lingle said in a written response to questions that the state's first plan in 2008 was for the unions to take a graduated pay cut. Those earning a lower salary would take a smaller cut of between 1 and 3 percent, while those in higher brackets would take cuts of between 6 and 8 percent.

That was rejected by Dayton Nakanelua, the United Public Workers executive director. Lingle said Nakanelua “;first suggested that the state consider furloughs.”;

Perreira said he did not know about the UPW suggestion, but noted that Lingle had also backed a furlough. UPW officials did not respond to requests for comment.

“;The employer (state) first proposed it to us. It was in a meeting here in our conference room in March or April. As far as we are concerned it was a concept proposed by the employers in lieu of straight pay cuts or layoffs,”; Perreira said.

Wil Okabe, president of the HSTA, said his union was agreeable to furloughs because “;it doesn't affect the master agreement.”;

Okabe said the furloughs that shut the schools are also big money savers.

He said the DOE's rule of thumb is that each school day costs the state $5 million, with $3 million in teacher costs. The extra $2 million, Okabe says, are overhead expenses to run the schools, to provide for food and janitorial services, electricity, water and support staff.

Asked why the union did not look to either taking the furloughs during other times, such as at the end of the school year, Okabe said it would have affected other unions such as the UPW and also might have cut teacher's service credits because they would not have worked enough in the spring quarter to earn service credits for retirement.



The signs of economic crisis that would result in state workers facing layoffs and furloughs started in January. Here are the major events leading up to the dramatic cuts:

» Jan. 9: Council on Revenues lowers the forecast for tax collections this year and in 2010.

» March 12: Gov. Linda Lingle says she is meeting with unions and counties and doesn't want “;to raise taxes or lay off employees.”;

» April 25: Budget Director Georgina Kawamura writes to Randy Perreira, HGEA executive director, saying furloughs are a preferable alternative to layoffs. “;The governor has stated categorically that she does not support layoffs,”; Kawamura says.

» April 28: Perreira writes back saying HGEA worries about Lingle proposal to demand 32 furlough days over two years.

» May 28: Council on Revenues lowers tax revenue forecast further. Lingle calls drop “;severe”; and promises to meet with staff over the weekend.

» June 1: Lingle says “;we now have a government that we cannot afford,”; and announces plan to furlough all state employees three days a month. Plan estimated to save $688 million over two years.

» June 16: Public worker unions file for injunction to block furloughs in state court. Four county mayors break with precedent and announce their own union package, saying they will bargain with county workers. In the past, the state handled negotiations for both state and counties.

» June 18: Lingle details furlough plan and announces that the Department of Education and University of Hawaii budgets will be restricted by 14 percent, the amount equivalent to labor savings from a three-day-a-month furlough.

» July 2: Judge Karl Sakamoto throws out Lingle's furlough plan. Lingle says she will try to reduce the budget shortfall by negotiating union contracts to get savings and by continuing to find additional cuts in state departments.

» July 8: Tax collections for fiscal 2009 are worse than expected.

» July 9: Four county mayors announce they have agreed to “;an understanding in principle”; for a new contract. Union sources say the mayors agreed to push for furloughs of state and county workers this year and in 2010.

» Aug. 4: Lingle announces layoffs for 1,100 state employees and orders furloughs for 900 “;exempt excluded”; state workers.

» Aug. 27: Council on Revenues changes fiscal 2010 tax collection forecast from 0 to down 1.5 percent.

» Aug. 28: Lingle halts exempt worker furlough plan for two weeks, saying that she thinks there is movement in contract talks. Meanwhile, the HGEA reports that state and union have exchanged proposals containing furloughs.

» Aug. 31: HGEA's Perreira says new Council on Revenues projection means “;it is more likely the administration will resort to layoffs.”; HGEA warns workers to expect furloughs, but adds that it is “;unlikely the state can continue to support the number of employees on the payroll without generating additional revenue.”;

» Sept. 4: In a statewide Internet address, Lingle says while her administration goes ahead with the legally required binding arbitration meeting on state employee contracts, she is planning “;a reshaping and right-sizing”; of government and services.

» Sept. 18: HSTA settles with state, Board of Education and Department of Education. Contract calls for 17 furlough days a year for those on a 10-month schedule and 21 furlough days for those working 12 months.

» Oct. 2: The contract with the HGEA must be approved by at least one of the four mayors along with the governor. Lingle says state will now negotiate with unions to find added savings.

» Oct. 14: HGEA tentatively agrees to a contract calling for 18 furlough days in 2009 and 24 furlough days next year.

» Oct. 23: The first Furlough Friday.