In the Matter of the State Voluntary Furlough Program by Samuelpowers


									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

       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

       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.


        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.


       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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