Appeal of Milton School Dist., 92-212

• Decision Date: 20 May 1993
• Docket Number: No. 92-212,92-212
• Citation: 137 N.H. 240,625 A.2d 1056
• Parties: , 83 Ed. Law Rep. 285 Appeal of MILTON SCHOOL DISTRICT (New Hampshire Public Employee Labor Relations Board).
• Court: New Hampshire Supreme Court

Page 1056

625 A.2d 1056

137 N.H. 240, 83 Ed. Law Rep. 285

Appeal of MILTON SCHOOL DISTRICT (New Hampshire Public Employee Labor Relations Board).

No. 92-212.

Supreme Court of New Hampshire.

May 20, 1993.

Kidder & Lawson, Laconia (Bradley F. Kidder on the brief and orally), for petitioner, Milton School Dist.

James F. Allmendinger, Concord, Staff Atty., NEA-New Hampshire, by brief and orally, for respondent, Milton Educ. Ass'n.

JOHNSON, Justice.

The petitioner, Milton School District (district), appeals a decision of the New Hampshire Public Employee Labor Relations Board (PELRB) ordering the district to pay members of the respondent, Milton Education Association (association), certain salary benefits. The main issue on appeal is whether, for purposes of maintaining the status quo after a collective bargaining agreement (CBA) has expired but before a new one has been reached, a school district must increase the salaries of its educators at the start of the new school year in accordance with salary schedules contained in the expired CBA. We hold that a school district is not required to pay such "step increases" under these circumstances. Questions subsidiary to this issue are whether an "automatic renewal" clause is a cost item and whether approval of the Town of Milton's legislative body (town) is necessary to make such a clause enforceable. We answer these questions in the affirmative and, therefore, reverse the PELRB's decision regarding the step increases. The district also asks whether, to maintain the status quo, it must comply with a provision of the expired CBA regarding lunch supervision duties even though the provision was never approved by the town. We hold that it must and therefore affirm the PELRB's decision regarding these supervision duties.

We first address the issues of the step increases and the automatic renewal clause and relate the facts necessary to resolve them. In early 1989, the district and the association signed a CBA, effective from September 1, 1989, until August 31, 1991. Salaries under the CBA were specified in a schedule according to levels of training and experience. Each year of an educator's experience was equivalent to one "step" in the salary schedule; consequently, a salary increase paid because of an educator's additional year of experience was known as a step increase. In October 1990, the district and the association signed an amendment to the CBA, which stated, "This agreement shall automatically renew itself for successive terms of one year or until a successor agreement has been ratified." This duration amendment was never submitted to or approved by the town.

By the time the CBA expired in August 1991, no new CBA had been signed, and the district eventually began paying the members of the association at their 1990-91 salary levels. The association complained to the PELRB, asserting that while collective bargaining for a new contract was still in progress, the district should pay the educators according to the 1990-91 salary schedule, and not simply the 1990-91 salaries. In other words, the association argued that the district must include step increases in the educators' 1991-92 salaries.

The PELRB agreed. In arriving at its conclusion, the PELRB focused on the CBA duration amendment, ruling preliminarily that, as the amendment was supported by adequate consideration, it was enforceable. The PELRB then stated:

"Turning to the language of the [amendment], we find that it provides for automatic renewal 'for successive terms of one year or until a successor agreement has been ratified.' This means to us that the parties intended all the provisions of the CBA to remain in full force and effect for successive terms of one year or until replaced by a later agreement. The language of the [amendment] is clearly an 'automatic renewal' or 'evergreen' clause such as has been considered by this Board in the past. For example, in Interlakes Teachers (Decision No. 86-52, August 7, 1986), we said, 'The existing contract did not contain an automatic renewal clause which would have given everyone an automatic "step increase." ['] This case is the converse of that, suggesting that the existence of the automatic renewal clause would be grounds for the step increases. This reasoning is also consistent with our decision in Newfound Area Teachers Association (Decision No. 91-109, December 16, 1991) after the Sanborn decision (133 N.H. 513, August 14, 1990) where we again noted that 'the existing agreement did not contain an automatic renewal clause which would have given all of the teachers an automatic "step raise." ['] Thus, our analysis, both before and after Sanborn, leads us to conclude that there is entitlement to step increases under the facts of the instant case."

The PELRB did not specifically address the question whether the "automatic renewal" clause was a cost item requiring the approval of the town.

On appeal, the district argues that (1) the automatic renewal clause was a cost item; (2) as a cost item, the automatic renewal clause was unenforceable because it was never approved by the town; and (3) in the absence of an enforceable automatic renewal clause, the district was not required to pay step increases during collective bargaining once the previous year's CBA had expired. We agree.

First, we hold that the automatic renewal clause was a cost item. RSA 273-A:1, IV (1987) defines cost item as "any benefit acquired through collective bargaining whose implementation requires an appropriation by the legislative body of the public employer with which negotiations are being conducted." An automatic renewal clause fits squarely within this definition. Such a clause continues the previous year's CBA until a new agreement is reached and therefore is, in essence, a multi-year contract with no termination date. As each year's contract obviously contains cost items, the automatic renewal clause must be classified as a cost item.

The association cautions us to accord deference to the ruling of the PELRB below, see Appeal of State Employees' Ass'n, 120 N.H. 690, 694, 422 A.2d 1301, 1304 (1980) ("the legislature has vested the PELRB with authority initially to define the terms of the collective bargaining statute ... [and] in the absence of an error of law, [this court] will not overturn a ruling of the PELRB unless we find that the board abused its discretion" (citations omitted)), but as the PELRB made no ruling on this particular question, there is no ruling to which we can defer. Moreover, in another recent case, the superior court found that the duration of a contract was in fact a cost item, and this court upheld the finding as reasonable under the circumstances of that case. City of Portsmouth v. Assoc. of Portsmouth Teachers, 134 N.H. 642, 650, 597 A.2d 1063, 1068 (1991). Based on the plain wording of RSA 273-A:1, IV, and our holding in City of Portsmouth, we conclude that the PELRB here erred as a matter of law in not ruling that the automatic renewal clause is a cost item.

Next, we hold that the automatic renewal clause was unenforceable because the town never approved it. RSA 273-A:3, II(b) (1987), concerning the submission of cost items, states:

"Only cost items shall be submitted to the legislative body of the public employer for approval. If the legislative body rejects any part of the submission, or while accepting the submission takes any action which would result in a modification of the terms of the cost item submitted to it, either party may reopen negotiations on all or part of the entire agreement."

We recently interpreted this statute, declaring that it "in essence divests the school [district] of its authority to bind the town to future appropriations without action by the school district voters." Appeal of Sanborn Regional School Bd., 133 N.H. 513, 520, 579 A.2d 282, 285 (1990). Because the town never approved the automatic renewal clause, the district could not bind the town to the future appropriations contained within the clause. Id.

Although our decision in Sanborn makes it plain that the town is not bound by the automatic renewal clause, neither Sanborn nor RSA 273-A:3, II(b) explicitly answers the question whether the district and the association, the parties to the contract, are bound. Under RSA 273-A:3, II(b), neither party may enforce a CBA if the legislative body rejects the cost items in it, see Appeal of Franklin Education Assoc., 136 N.H. 332, 334, 616 A.2d 919, 920-21 (1992) (legislative body rejected cost items contained in contracts; the contracts, "contingent upon the items' approval, are not binding"), but the statute does not specifically address the situation before us, where the cost items were never submitted to the town in the first place. We conclude, however, that the two situations are functionally equivalent. It would elevate form over substance to make a distinction here between the town specifically rejecting a cost item and the town simply never approving the item. Either way, the town has not approved the cost item, and either way, a binding, but unfunded CBA could prove injurious to the school system as a whole. Accordingly, we determine that the district was not bound by the automatic renewal clause. Given our interpretation of RSA 273-A:3, II(b), the association's arguments regarding consideration and general contract law are irrelevant.

Next, we address whether, in the absence of an enforceable automatic renewal clause, the district was required to pay step increases during collective bargaining after the previous CBA had expired. We hold that it was not. To resolve this issue, we need look no further than the PELRB's order which we repeat for purposes of clarity:

"The language of the [amendment] is clearly an 'automatic renewal' or 'evergreen' clause such as has been considered by this Board in the past. For example, in Interlakes Teachers (Decision No. 86-52, August 7, 1986), we said, 'The...