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Afscme Local 1025 v. Sioux Falls School District

IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA


November 16, 2011

AFSCME LOCAL 1025,
PETITIONER AND APPELLEE,
v.
SIOUX FALLS SCHOOL DISTRICT,
RESPONDENT AND APPELLANT, SIOUX FALLS EDUCATION ASSISTANTS ASSOCIATION,
PETITIONER AND APPELLEE,
v.
SIOUX FALLS SCHOOL DISTRICT #49-5 AND BOARD OF EDUCATION,
RESPONDENT AND APPELLANT.

APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA THE HONORABLE JOHN L. BROWN Judge APPEAL FROM THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT MINNEHAHA COUNTY, SOUTH DAKOTA THE HONORABLE WILLIAM J. SRSTKA, JR. Judge

The opinion of the court was delivered by: Zinter, Justice

#25935-a-SLZ

ARGUED OCTOBER 05, 2011

[¶1.] AFSCME Local 1025 (Local 1025) and the Sioux Falls Education Assistants Association (SFEAA) filed grievances against the Sioux Falls School District (District). The unions alleged that the District violated the parties' labor agreements when the District provided 2.5% wage increases for the 2008-2009 school year. The issues on appeal are: whether the grievances were filed too late; and if not, what the proper wage increases were following a change in a school funding statute that was used in the agreements to determine wage increases.

Facts and Procedural History

[¶2.] Local 1025 and SFEAA are unions representing certain non-instructional employees of the District. The unions negotiated labor agreements with the District covering wages and other terms of employment for a six-year term (July 1, 2007 through June 30, 2013). Both agreements provided for a 10% salary increase the first year. Increases for years two through six were to correlate with the percentage change in what the agreements referred to as the "State Rate." The State Rate is defined in the agreements as "the 'Per Student Allocation' as defined in [SDCL] 13-13-10.1(4)." The per student allocation in SDCL 13-13-10.1(4) is set by the Legislature each year. It is the money the Legislature appropriates (on a per-pupil basis) to school districts for education funding. See Davis v. State , 2011 S.D. 51, ¶¶ 19, 20, 30, ___ N.W.2d ___. The parties agree that the appropriate wage increase for the 2008-2009 school year should be the percentage change in the per student allocation (the State Rate) approved by the 2008 Legislature. This dispute arose because, unlike prior years, the 2008 Legislature increased the per student allocation by two alternative percentages and the parties cannot agree which percentage applies. [¶3.] The 2008 legislation originated as Senate Bill 187.*fn1 Section 1 of Senate Bill 187 amended SDCL 13-13-10.1(4) by increasing the 2008-2009 per student allocation by 3%. Section 2, however, (later codified as SDCL 13-13-10.6) provided that the 2008-2009 per student allocation would increase by only 2.5% if a school district did not certify to the Secretary of Education that the district would increase its average teacher salary and benefits by at least 3% and that it would spend an additional $22.64 of the new per student allocation on teacher salaries and benefits. There is no dispute that the District's pre-existing contract with its teachers already required the District to provide more than a 3% increase in the average teacher salary and benefits for the 2008-2009 school year. [¶4.] On April 8, 2008, the District called a meeting for all unions affected by Senate Bill 187. Although it appeared that the District's contract with its teachers would satisfy Senate Bill 187's requirement for the 3% increase in per student allocation (the State Rate), the District Superintendent indicated that the District only intended to increase Local 1025 and SFEAA members' wages by 2.5%. The District did, however, offer a 3% increase to the members of Local 1025 and SFEAA if they would approve a memorandum of understanding (MOU) agreeing that a 3% increase was not required by the parties' labor agreements. The MOU also required the union members to agree that future State restrictions on local district spending (like that found in Section 2 of Senate Bill 187) would not be considered part of future State Rate increases as that term was used in the labor agreements.*fn2

[¶5.] On April 14, Local 1025 called the District Superintendent and advised that its members had voted to reject the MOU. Local 1025 also sent an email on April 18 stating its belief that it was entitled to a 3% raise under the existing agreement. Similarly, SFEAA sent the Superintendent an email on April 17 stating that it had been advised by counsel that it was entitled to a 3% raise without signing the MOU. On April 23, SFEAA advised the Superintendent that SFEAA's members had voted to reject the MOU.

[¶6.] On May 12, the District certified to the Secretary of Education that it would increase its average teacher salary and benefits by at least 3% and spend the additional $22.64 on those salaries and benefits. This certification complied with the requirements of Section 2 of Senate Bill 187 (SDCL 13-13-10.6) and entitled the District to receive the 3% increase in per student allocation referenced in Section 1 of Senate Bill 187 (SDCL 13-13-10.1(4)). Nevertheless, the District's Board of Education subsequently adopted a budget on June 23 that only granted a 2.5% wage increase for the members of Local 1025 and SFEAA.

[¶7.] The parties' agreements contained grievance procedures that were substantively the same. Class grievances were defined as complaints by more than one employee "concerning the interpretation of or application of the existing provisions" of the agreements. Both agreements required that grievances be filed within thirty days of the alleged "violation," or within thirty days of when through reasonable diligence the violation should have been discovered.

[¶8.] On June 18, the District received a written grievance from Local 1025. The grievance identified the "violation" as the: "Denial of wage increase . . ." as required by the agreement. Local 1025 requested "to be made whole [with a] 3% increase instead of 2.5% . . . ." On July 10, the District received a written grievance from SFEAA stating its "problem" was: "The District has misinterpreted . . . [the] Agreement. The state funding formula for the 2008-2009 school year for all Sioux Falls School District Employees [was] 3% not 2.5%." The SFEAA grievance indicated the incident date was June 23, 2008, the day the District implemented the wage increase. SFEAA requested "that [its members] be paid 3% plus interest . . . to be made whole when this grievance process is complete."

[¶9.] The District denied both grievances as untimely. Local 1025 and SFEAA subsequently petitioned the Department of Labor to review the matter. The Department dismissed both grievances as untimely. The unions then appealed the Department's decision to circuit court. The sixth judicial circuit court, Judge Brown presiding, concluded that the grievances were timely. Judge Brown reversed and remanded the matter to the Department to determine the correct percentage wage increase.

[¶10.] On remand, all parties moved for summary judgment. The Department concluded that the members of Local 1025 and SFEAA were entitled to a 3% wage increase for the 2008-2009 school year. The District then appealed that decision to circuit court. Following a change of venue, the second judicial circuit court, Judge Srstka presiding, affirmed the Department. The District now appeals to this Court, contending that the grievances were untimely and that the members of Local 1025 and SFEAA were only entitled to a 2.5% wage increase.

Decision

[¶11.] A resolution of these issues requires interpretation of the parties' agreements and the statute referenced in those agreements. Contract and statutory interpretation are questions of law we review de novo. Leonard v. State ex rel. S.D. Real Estate Comm'n , 2010 S.D. 97, ¶ 8 n.1, 793 N.W.2d 19, 22 n.1.

[¶12.] The Department lacks jurisdiction over a grievance that is not timely filed in conformity with grievance procedures. Cox v. Sioux Falls Sch. Dist. 49-5 , 514 N.W.2d 868, 871 (S.D. 1994). The District argues that Local 1025's and SFEAA's grievances were not filed within thirty days of the time the unions should have, through reasonable diligence, discovered the District's purported violation of the agreements. The District points out that the agreements defined a grievance as a complaint concerning an "interpretation" or application of the agreements. The District argues that Local 1025 and SFEAA were fully aware of the District's interpretation by April 18 and April 23: those were the dates the respective unions notified the District that they disagreed with the District's interpretation of Senate Bill 187's effect on the agreements. Therefore, the District contends that the June 18 and July 10 grievances were filed beyond the thirty-day time limit.

[¶13.] Local 1025 and SFEAA argue that the latest time to file a grievance was not triggered until the Board voted on June 23 to implement the 2.5% wage increase. Local 1025 and SFEAA contend that notwithstanding the Superintendent's interpretation of Senate Bill 187, a misapplication of the agreements did not occur until the District implemented the 2.5% wage increase on June 23. We agree with the unions.

[¶14.] We are mindful of the District's argument that the purpose of the grievance procedure is to resolve grievances at the earliest possible time; e.g., with the District before the Department of Labor. We also acknowledge that it may have been possible to file a grievance with the District regarding the Superintendent's April interpretation of Senate Bill 187's effect on the agreements. But in determining when the last grievable "violation" occurred, the District incorrectly focuses on the word "interpretation" to the exclusion of the word "application" in the definition of grievance. Under the parties' agreements, a grievance could be filed "concerning the interpretation of or application of the existing provisions of this agreement." (Emphasis added.) "In its ordinary sense, the term 'or' is a conjunction indicating an alternative between different things or actions." Zoss v. Schaefers , 1999 S.D. 105, ¶ 6 n.2, 598 N.W.2d 550, 552 n.2. Therefore, Local 1025 and SFEAA were entitled to grieve alternatives: violations involving interpretations or applications of the agreements.

[¶15.] The official grievance filed by Local 1025 alleged that the violation was the "[d]enial of wage increase." See supra ¶ 8. The denial of a proper wage increase occurred on June 23 when the Board*fn3 applied Senate Bill 187 to the labor agreement and implemented the 2.5% wage increase. The grievance filed by SFEAA also cites the grievance's incident date as June 23 -- the day the Board implemented the 2.5% wage increase. We conclude that even if Local 1025 and SFEAA missed the deadline for grieving the Superintendent's "interpretation" of the agreements, the unions did not miss the deadline to grieve the District's "application" of the agreements. Because the District did not purportedly misapply the agreements until the Board implemented the 2.5% wage increase at its June 23 meeting, Local 1025's*fn4 and SFEAA's grievances were timely.*fn5

[¶16.] With respect to the merits, the parties agree that the labor agreements required an annual percentage increase in salary that correlated with the percentage increase in the State Rate. The agreements, however, also provided that the parties would meet to determine the effect on salaries if changes were made in the State funding formula: State Rate is the "Per Student Allocation" as defined in section 13-13-10.1(4). If during the six-year term in the contract there is a change in the State funding formula for education, the District and the Union will meet to determine the effect on the salary portion of the agreement.

[¶17.] The District points out that this language required the parties to meet and modify the percentage salary increases to correspond with new changes in the funding formula (other than the anticipated increases in the per student allocation). The District contends that the provision in Senate Bill 187 requiring it spend an additional 3% on teacher salary and benefits as a condition of receiving a 3% increase in per student allocation was such a change in the State's funding formula. The District further contends that the new 2008-2009 per student allocation was the 2.5% increase under Section 2 of Senate Bill 187 (SDCL 13-13-10.6) for non-certifying schools rather than the 3% increase referenced in Section 1 (SDCL 13-13-10.1(4)) for schools that certified they would increase their average teacher salary by 3%.

[¶18.] We assume without deciding that Senate Bill 187's teacher salary requirement constituted a change in the State's funding formula.*fn6 We further acknowledge that the decision to increase teachers' salaries by 3% was discretionary in each South Dakota school district. Nevertheless, on May 12, 2008, the Sioux Falls District certified that it would provide a 3% increase in average teacher salary and benefits as required by Section 2 of Senate Bill 187 (SDCL 13-13-10.6). That certification left no contingency remaining, and the District's per student allocation increased by 3% under Section 1 of Senate Bill 187 (SDCL 13-13-10.1(4)).*fn7 And because the District's per student allocation referenced in SDCL 13-13-10.1(4) increased by 3%, the State Rate in both labor agreements increased by 3%. Therefore, when the District subsequently met on June 23 to implement wage increases, the members of Local 1025 and SFEAA were contractually entitled to a 3% salary increase. We affirm the Department and circuit court's conclusion that the District violated the terms of the agreements by implementing a percentage wage increase other than the percentage change in the per student allocation referenced in SDCL 13-13-10.1(4) (2008). [¶19.] GILBERTSON, Chief Justice, and KONENKAMP, SEVERSON and WILBUR, Justices, concur.


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