In the Matter of the State Voluntary Furlough Program Fiscal Year 2009 DOP Docket No. 2008-4745 (Merit System Board, decided June 25, 2008) The Acting Commissioner, Department of Personnel (DOP), submits for the Merit System Board’s (Board) review and consideration an evaluation of the effectiveness of the continued relaxation of the eligibility criteria for the voluntary furlough program. Anika Andrews, Chelsea Du Brul, Alessandra Duck, Meghan Gosselink, Kumari Jayakody, Cecile M. Murphy, Jennifer E. Myers, and Cathryn Schaffer, employees of the Department of Environmental Protection (DEP) and Geraldine Callahan, Ruth Carter, Brandy Connaughton, Amy Donlon, Kristen Heinzerling, Katherine Hunt, Colleen Malloy, Susan Oljiat, Andrew Reese, Elizabeth Renaud, Susan Saroca, and Tirza Wahman, employees of the Department of Law and Public Safety (DLPS), petition the Board to continue to extend its relaxation of the eligibility criteria for the voluntary furlough program through fiscal year 2009. By way of background, in accordance with N.J.S.A. 11A:6-1.1 and N.J.A.C. 4A:6-1.23(a), the purpose of the voluntary furlough program is to lessen the need for reductions in force by allowing State employees in the career, senior executive or unclassified services to take up to 30 days off from work without pay in a calendar year, with accrual of leave time, anniversary dates and seniority treated as if the employee is in pay status. N.J.A.C. 4A:6- 1.23(c) provides that voluntary furlough may consist of shorter work days, intermittent days off or consecutive days off. A voluntary furlough may be used for any purpose except sick leave, as a leave without pay due to disability or to seek or engage in alternate employment. While N.J.A.C. 4A:6-1.23(d) provides that employees may extend a voluntary furlough beyond 30 days, such an extension is limited to a maximum of 60 days and must be taken in blocks of 10 work days. Additionally, while on furlough extension leave, the employee must pay the full premium amount (employer’s and employee’s share) to continue receiving health benefits coverage. In In the Matter of the State Voluntary Furlough Program (MSB, decided December 19, 2007), the Board directed the DOP to complete an evaluation of the effectiveness of the continued relaxation of the eligibility criteria for the voluntary furlough program and to present its findings to the Board prior to the end of fiscal year 2008. At the time the Board requested this evaluation, it questioned the benefit of the continued relaxation of the eligibility criteria for the program given the fact that the Executive Branch had been under a hiring freeze since December 2005 and numerous experienced employees had retired from State service. Particularly, the Board noted that the public still requires and should expect the same level of service from its government and had concerns that if it continued to relax the eligibility criteria, State agencies would be faced with the dilemma of performing the same, and possibly, more work, with fewer employees. Thus, while relaxation of the rules governing the voluntary furlough program may have been appropriate in the past, the operations of all Executive Branch agencies necessitated an evaluation of the effectiveness and potential cost savings of the entire voluntary furlough program. In the attached report, Voluntary Furlough Data Report, State of New Jersey, Calendar Years 2006, 2007, & 2008 To Date (Voluntary Furlough Report 2008), the DOP provides the Board with its findings and recommendations regarding continuation of the relaxation of the eligibility criteria for the Voluntary Furlough program. The petitioners from the DEP present that enhanced benefits provided by relaxing the voluntary furlough rules have assisted them to care for their children as well as provide public service. They state that if the rule relaxation is not continued, they will be in a desperate situation as they will not have adequate time to make caregiving arrangements for their children. Additionally, these employees present that the program benefits the State, saves money, and provides those employees who are caregivers for their children a better quality of life. These petitioners further state that they received short notice of the Board’s impending review of this matter and assert that this places them in a precarious position regarding the scheduling of the child care needs for the summer. In this regard, they emphasize that they have relied on the past rule relaxations when scheduling their child care arrangements for the summer. In their request to the Board, the petitioners from DLPS present that at the Board’s meeting on December 19, 2007, former Commissioner Rolando Torres indicated that the DOP would be contacting DLPS in order to suggest that it implement some sort of flexible work schedule program because the voluntary furlough program is not designed for this purpose. As such, until DLPS takes final action in accordance with this suggestion, the petitioners request that the Board continue its relaxation of the voluntary furlough eligibility criteria. The petitioners explain that even though they took advantage of the enhanced benefits provided by the program, they continued to carry full time caseloads but willingly took a cut in pay because they were prohibited from utilizing flex-time, compensatory time, alternative workweeks, telecommuting, or any other program available Statewide to provide work-schedule flexibility or the ability to be compensated for work done at home. Moreover, they state that approval of voluntary furlough time is at the discretion of their immediate supervisors, who must indicate that the workload of the section will not be adversely impacted by the approved furlough. In fact, the petitioners emphasize that they still carry and handle full-time caseloads, are available and work regularly without pay during furlough time, and arrange their schedules to meet their clients’ needs. The petitioners from DLPS further state that relaxation of the eligibility criteria for continuation of health benefits is important for a number of reasons. For example, under the current rule relaxation, voluntary furlough can be requested and used in one half-hour to full day increments. However, prior to relaxation, flexibility was limited after the first 30 days because of the necessity of managing employee health benefit payments. As such, voluntary furlough days taken from day 31 through 90 are required to be approved in blocks of 10 days and used in full day increments. The petitioners note that this eliminates the possibility of participants using an hour a day to be home earlier with their children. Additionally, the petitioners point to the fact that the Board’s prior orders relaxing the requirements all indicate that only 10% of the employees participating in the program utilize more than 30 days of voluntary furlough. Thus, when evaluating the effectiveness of the program, they request that the DOP solicit input from their supervisors and clients regarding the quantity and quality of their work. Under these circumstances, the petitioners request that the Board continue relaxation of the eligibility criteria. In the Voluntary Furlough Report 2008, the DOP found that a total of 7,972 furlough transactions were processed between January 1, 2006 and April 22, 2008 that resulted in a total of 57,720 furlough days taken. The number of employees who took up to 30 days of furlough declined from 1242 in 2006 to 968 in 2007, however, for calendar year 2008 to date, it appears that the figure would return to the 2006 number. Additionally, over the time period covered in the report, furlough usage by female employees constituted 88% of the total days taken (50,619 days) while male employees constituted 12% (7,101 days). Of those employees who took voluntary furlough, most took 30 days or less. The report also indicates the following salary savings realized as a result of the program: 2006 - $6.3 million; 2007 - $4.7 million, and to date 2008 - $2.1 million. Those employees who took more than 30 days of furlough were also required to pay an employee contribution toward their health benefits. Based on its review of this data, the DOP questions the utility of continued rule relaxation for unlimited furlough, i.e., extension beyond 90 days as specified in the rule. The DOP notes that only 3% of all Executive Branch employees (2,215 out of over 72,000) participated in the program over the time of the study. Further, among participants in the program, only 3.71% (56 out of 1508 employees) in 2006; 2.95% (34 out of 1152 employees) in 2007; and 2.12% (10 out of 472 employees) in 2008 (as of April 22, 2008) took more than 90 days of furlough. Thus, the DOP projects the impact of not continuing the rule relaxation will be de minimis. Moreover, the salary savings for those who took more than 90 days of furlough were: $389,000 for 2006; $170,000 for 2007, and $130,000 for 2008. It is noted for the record that on September 1, 1994, the DOP provided the Board a report on the Voluntary Furlough Pilot Program for its consideration when adopting rules for the problem. The stated purpose of the pilot program was to reduce salary expenses and in turn reduce potential layoffs of State workers. During the first two years of the program (fiscal years 92 and 93), the pilot program was offered with a stated 30-day limit on the number of days employees could use in a calendar year. However, additional 30-day furloughs were granted, sometimes consecutively and without limit. The pilot program was renewed in fiscal year 94, which stipulated a 45-day limit per furlough, which also permitted extensions beyond 45 days. A final phase of the pilot program was instituted in the first quarter of fiscal year 95 that allowed for 30 days’ furlough within that three- month time frame. A determinative factor in restricting the program to 30 days within a calendar year was that N.J.S.A. 52:14-17.31 required State employees to have full-time status to be eligible for the State Health Benefits Program. In fact, one of the guidelines for the pilot programs stipulated: It is not permissible to convert part-time employment to full-time employment via the furlough program. Part-time employees do not receive health benefits and would not be eligible for health benefits under the furlough program. Thus, it was determined that if employees were permitted substantially more than 30 days’ furlough, they would effectively be part-time workers because they would be able to work only four days per week for nearly the entire year, considering the State’s 13 paid holidays. Indeed, if the voluntary furlough program were extended to 45 days, then employees could work a four-day week the entire year and continue to receive health benefits. At the time, the DOP found that this would be fundamentally unfair to the State’s actual 3,400 part-time workers who forgo paid health benefits. The 1994 report also emphasized that the desire to reduce salary expenses must be balanced with the need to maintain public services. Specifically, it was underscored that: Simply put, it is not a service to taxpayers to employ and pay benefits to people whose productivity we can or must do without for large portions of the working year. When considering the adoption of rules for the voluntary furlough program, the Board was also mindful of the issue of child care expressed by many of those who participated in the pilot program. However, the 1994 report underscored that voluntary furlough must be viewed, not in isolation, but as part of a generous package of benefits and optional leaves of absences, paid and unpaid, afforded to State employees. With these considerations in mind, the Board adopted the provisions of N.J.A.C. 4A:6-1.23 permitting up to 30 days of voluntary furlough in a calendar year, with the option of requesting up to 60 days furlough extension, without the loss of seniority and with the maintenance of health benefits. The Board also notes that it has relaxed the eligibility requirements for the voluntary furlough program for the last six fiscal years (2003 through 2008). Stated differently, since the adoption of the voluntary furlough rule in January 1995, the Board has relaxed the eligibility requirements 6 out of 14 years, or 43% of the time the rule has been in existence. CONCLUSION Based on the present record, it is evident that the continued practice of relaxing the eligibility criteria for the voluntary furlough program is not appropriate. The Board is mindful that all State agencies, in this current budgetary crisis, are now faced with the dilemma of performing the same, and possibly more work, with fewer employees. Moreover, it cannot be ignored that continued relaxation of the program constructively creates a pool of “part-time” employees who receive the same health benefits as those employees who are unable to participate in the program. This is fundamentally unfair. Further, when considering the soaring costs of health benefit coverage to the employer, a factor not covered in either of the reports, it is questionable as to how much the State actually saves when compared to the loss of an employee’s services over an extended period of time. As stated in the 1994 report, it is not a service to taxpayers to employ and pay benefits to people whose productivity we can or must do without for large portions of the working year. As noted earlier, the Board has relaxed the provisions of N.J.A.C. 4A:6- 1.23 6 out of the 14 years that the rule has been in existence. In other words, for almost half of the time that the rules concerning voluntary furlough have been in place, the Board has relaxed the requirements to permit leave of more than 90 days with the continuation of employee seniority and paid health benefits for all periods of voluntary furlough. Nonetheless, the Board is cognizant of the fact that other alternatives such as Flextime programs (N.J.A.C. 4A:6-2.6), alternative workweeks, including four day workweeks (N.J.A.C. 4A:6-2.7), and adjusted hours of operation (N.J.A.C. 4A:6-2.8) may be better options to explore that would not result in the loss of either services to the State or employee salary and benefits. Additionally, other alternatives, such as a pilot program in telecommuting, could be developed in order to balance the work needs of the appointing authorities with the family care needs of employees. See N.J.A.C. 4A:1-4.3. However, as the petitioners from the DLPS persuasively argue, these programs are not all available and utilized the same way by each State agency. Thus, the Board is persuaded by the petitioners’ arguments that the lack of viable alternatives, in conjunction with the relatively short time frame in which they received notice that the enhanced voluntary furlough program benefits may be expiring, put them in difficult positions with respect to their child care planning needs. Under these circumstances, the Board finds that a limited continued relaxation of N.J.A.C. 4A:6-1.23(a), N.J.A.C. 4A:6-1.23(c)2 and N.J.A.C. 4A:6- 1.23(d) is appropriate up to December 31, 2008. However, this will be the final extension and the rule relaxation will not be continued beyond December 31, 2008. In the interim, the Board directs that the DEP and DLPS report to the DOP (or its contemplated successor, the Civil Service Commission) by October 1, 2008 how they plan to accommodate the needs of their employees through alternatives other than extended voluntary furlough. These agencies should determine the impact of the voluntary furlough program on their operations and work to develop flexible work schedule programs that can meet the needs of both the appointing authority as well as employees. The Board also encourages all State appointing authorities to work with the appropriate collective bargaining representatives to utilize existing permissible alternatives such as flextime, alternative workweeks, and adjusted hours of operations to assist their employees. Finally, the Board emphasizes to all State appointing authorities as well as collective bargaining representatives to advise their employees and/or membership of this decision so that they can plan their personal and family obligations accordingly. ORDER Therefore, it is ordered that the voluntary furlough eligibility criteria be relaxed as provided herein up to December 31, 2008. In so doing, the restriction on outside employment will not apply to Title 32 military service. This will be the final extension and the rule relaxation will not be continued beyond December 31, 2008. This is the final administrative determination in this matter. Any further review should be pursued in a judicial forum.
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