Illinois Supreme Court Rules State Is Not Bound by CBA to Pay Wage Increases if State Fails to Appropriate Sufficient Funds

In a ruling issued by the Illinois Supreme Court on March 24, 2016, the Court found that, as a matter of public policy, the State of Illinois could not be compelled to pay a wage increase under its existing collective bargaining agreement with the American Federation of State, County and Municipal Employees, Council 31 (AFSCME), where the General Assembly had failed to appropriate sufficient funds to pay for the increase. Although an arbitrator previously ruled that the State was required by the CBA to immediately pay the wage increase, the Court vacated the award.

In finding the arbitrator’s award to be against public policy, the Court relied upon a specific provision in the Illinois Public Labor Relations Act (PLRA) which states that employers and unions may negotiate multi-year CBAs “subject to the appropriation power of the employer,” as well as a provision in the Illinois Constitution which requires the General Assembly to “make appropriations for all expenditures of public funds by the State.” 5 ILCS 315/21; Ill. Const. 1970, art. VIII, § 2(b).

In sum, the Court held that the public policy supporting the appropriation of funds to cover State expenditures overrode the State’s contractual obligation under the CBA. Importantly, although this case clearly impacts multi-year CBAs between the State of Illinois and public sector unions, it does not appear to impact CBAs between school districts and their unions, which are governed by the Illinois Educational Labor Relations Act (IELRA). Unlike the PLRA, the IELRA has no provision that makes collective bargaining agreements subject to the appropriation of the employer. Nor is there a corresponding constitutional provision that mandates public school districts to make appropriation for all expenditures of funds.

Please contact Mike Loizzi or Ellen Rothenberg with your labor law inquiries.

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