A state judge keeps Newark teachers on edge about health benefits

Cerf and Christie: Will they determine health benefits for Newark teachers?
Cerf and Christie: Will they–and George Norcross– determine health benefits for Newark teachers?

The future of health benefits for 4,000 Newark teachers and their families is still precarious despite a recent court ruling that stopped the state from unilaterally changing prescription drug providers.  Although both the Newark Teachers Union (NTU) and the state-appointed schools superintendent claimed victory after a Jan. 29 court hearing, the truth is the issue is still unresolved.

Superior Court Judge Donald Kessler did temporarily stop Christopher Cerf, Gov. Chris Christie’s agent running the city’s schools, and NTU President John Abeigon declared a “victory” for the union. At the same time, Cerf put out a statement saying Kessler supported his view that the superintendent has the “management prerogative” to unilaterally change the prescription provider.

So who won?

Both, really.  And neither.

Now that a transcript of the court session has been released, it’s clear what really happened.

Abeigon was right: Kessler stopped Cerf from choosing a provider recommended by a brokerage firm run by George Norcross III, the Democratic boss of South Jersey and a Christie ally.

“Individuals don’t have  the right to change the status quo, and the status quo was altered by the Newark Public Schools,” Judge Kessler explained when he issued a temporary restraining order against Cerf.

But—and it’s an enormous but—Kessler also said he leaned toward ultimately allowing Cerf to choose the provider because of the doctrine of “management prerogative”—the ability of administrators to make decisions without collective bargaining.

“It makes no sense to the court that the Newark Public Schools could not for the benefit of the public, for the benefit of the students it serves, obtain a less expensive policy with the same or substantially similar benefits,” Kessler  said.

“Otherwise, you’re taking the authority away from the school, its managerial discretion, to operate a budget.”

The reason neither side won is this: The case isn’t over yet. Kessler is expected to hold a hearing early in April to make a final decision on what, in his mind, is the central question:  Will be the benefits provider chosen by Cerf and Norcross’s firm—Benecard—provide the same or substantially similar benefits to the school employees and their families?

If Kessler agrees the benefits are similar, then Cerf wins and he chooses the politically-connected firm that was founded by Douglas Forrester, a Republican candidate for both governor and US senator. If not, then the decision to choose a provider stays where it is now, with the Newark Supplemental Fringe Benefits Fund (SFBF).

And this is where things really get both complicated and important. The SFBF was created more than 40 years ago after years of strife between the NTU and the city school board. The fund, rather than the school district, was empowered by a bargaining agreement to provide benefits to school employees.

The fund was headed by eight trustees, four appointed by the NTU, four by the school board.

That was in 1972. In 1995, the state took over the powers of the school board. For more than 20 years, the state administration left the fund alone.  Cerf, however, who came to Newark through a deal between Christie and Newark Mayor Ras Baraka, has demonstrated in previous court cases a strong animus against public employee unions—and he decided to ignore the fund, remove the current provider (GPP) and install Benecard. All of that announced in a letter released Dec. 30, the day before New Year’s Eve, with the schools closed and public business—and media attention– shut down.

Cerf used the excuse of the $75 million school budget shortfall to change providers. That shortfall was the fault of his predecessor, protégé, and hiree, former state superintendent Cami Anderson.  Cerf claims hiring Benecard will save some $880,000.

Kessler clearly bought that argument. “The board is in serious financial trouble,” said Kessler, although he was talking about Cerf, not the board.

But the NTU and its SFBF members make another argument that gets to the core political issue:  The Newark schools had previously agreed that, if the district wants to save money on benefits, it must go through an open bidding process. Cerf did not go through a bidding process. Norcross’s firm recommended Benecard and Cerf bought it.

Ryan DiClemente, the NTU’s lawyer, argued that, if Cerf really wanted to save money, he would go through an open bidding process.  “If the intention was to save money, what’s a better way than go through the open bidding process  required by the C.B.A.(collective bargaining agreement)?  That never happened. They hired Conner Strong (Norcross’s company).”

The Newark school board has passed resolutions insisting on open bidding for items like health benefits—but Cerf has ignored the board. And Kessler said state law allows the hiring of firms—even politically connected firms—without bidding.

If Kessler sticks to his narrow view—that he will set aside the Cerf decision only if benefits are not “substantially similar”–then the NTU will have lost a major political battle.  The union, already weakened by years of litigation and arbitrary state decisions, will have lost a fight to maintain its relevance among members.

It could face the same fate as the union representing school administrators.  At the same time that Cerf chose his personal favorite prescription drug provider, he also imposed a financial settlement—without bargaining—on the City Association of School Administrators (CASA).

Although Baraka and Cerf have formed an alliance, some school leaders have expressed concern about the future. At one board meeting, member Antoinette Baskerville-Richardson, once an NTU member on the SFBF, wondered aloud whether Cerf wasn’t engaging in “union busting.”

6 comments

  1. thetruth

    The devil is in the details of the new plan. Who has the burden of showing that the BeneCard plan is “substantially equal” and what must be shown to prove it is “substantially equal”. I would assume the burden is on the Cerf side to demonstrate this, however, the Newark Union will surely have to have an expert come in and do a study of every possible variable between the two plans (deductibles, co-pays, drugs covered, definitions, drug approval process etc.). Doing a study of all the possible variables is no easy task considering the number of possible variables involved between the two plans. Someone better make sure the alleged $880,000 in so called savings to the school system is not coming out of the pockets of employees by way of direct or indirect increased costs to them.

    Bob Braun: Your comment is spot on. The judge spoke of the evidentiary burden issue. While Cerf has better access to information, the union will need expertise to show how the plans differ. My impression from the judge’s words is that he eager to hand “management prerogative” to Cerf, forget nearly 50 years of prior practice in Newark, and get the case out of his court and sent over to PERC.

  2. Mr. Outside

    So my take on it is this; once local control is returned back to the city of Newark, it won’t be all “Kumbayah,” and “I’d Like To Buy The World A Coke.” The City (Mayor Baraka) will assume management responsibility, as well as the ultimate management prerogative. That means his interests will no longer align with the strange bedfellows we’ve seen over the past twenty years. It’s important to highlight that before the state takeover in 1995, NTU and the board/city were at opposing ends of the aisle in many issues, including the budget.

    Both Newark teacher strikes in 1970 and 1971 were precipitated by differences between the city/board and NTU over the nature of then-school reforms and the budget. Mayor Baraka would appear to be hedging his position, coming into the realization that Candidate Baraka probably over-leveraged himself on the promise that when he became mayor, all Newark citizens would become mayor. Heavy is the head that wears the crown. The City of Newark faces it’s own budget shortfall. Should, local control be returned back to the city, it would be at a most inopportune time for the Mayor, whose budget is in tatters, and is in peril of being taken over by the state.

    Local control of the Newark Public Schools would be Baraka’s untimely billion dollar bastard; a child support payment this administration would not be able to make. But Cerf offers a political hedge. Cerf is the hatchet man Baraka needs to set the stage for city to assume local control and the management prerogative.

    The fact is, regardless of whether Cerf became Superintendent or not, neither the state, nor the city is in a position to finance the money-pit that has become of The Newark Public Schools. To save face, Christie fired Cami Anderson, and issued a statement intimating he would be authorizing the return of local control (and fiscal liability) back to the City. Baraka accepted a transition to local control on the basis that there be a scapegoat (Cerf) to draw the ire for unpopular management decisions.

    But this is an old boys network. Christie, Cerf, and Norcross have all been in the tank for management, and for a long time. This is Baraka’s first rodeo.

    I keep wondering. Cerf was better off as a consultant for The Newark Public Schools With Global Education Advisors, as CEO of Amplify Insight (before it tanked), as CEO at Edison Learning. He’s had a storied and successful professional life. What could have possibly brought him to Newark? Again? This is a man attracted to power and influence. This is a man who has leveraged his political and business affiliations to achieve positions of power and influence. What position of power and influence could have possibly bought him back to Newark?

    I wonder if Mayor Baraka knows.

  3. booklady

    Mr Outside,
    Your comment, as usual, offers much to mull over. Re Cerf: With Foundation for Newark’s Future winding down, there’s not much left for consultant fees. He was probably more strategic than successful as Edison Learning president. See Jersey Jazzman “The Problems with Chris Cerf” July 24, 2012 “When the stock price of Edison tanked, Cerf and CEO Chris Whittle engineered a buyout … with funds from the Florida teachers pension.” His short stint at Amplify was not a success, and he may not have realized that Murdoch doesn’t care enough about education to hold a firm (in ’96 Murdoch sold Scott Foresman to Pearson rather than invest in new textbooks). So the Newark SAS position at $90-100K more than his prior commissioner job might have looked acceptable.
    Cerf could work that 3-year contract, then get himself a prof slot at a NJ university, and end up with 10 years/vested NJ pension which his former hire Christie decries.

  4. Mythology

    A good question about why is Cerf working for the state in Newark Mr. Outside. I believe it’s because he is trying to lock down his retirement benefits. He is a man that has reached an age when these types of things become very important. I always wonder how are concerned citizens going to save the children of Newark once these opportunists move on. There is so much to do in order to offer a quality education to the children of Newark again. Basically, what has been lost is the concern for the children’s future to become life long learners. We all have failed them by not having our state government enforcement the laws that protect them. For example, a qualified district superintendent not an appointed one. One that would be hired on a national level. It’s just heartbreaking to see children lose their educational opportunities so early in life because of systemic indifference.

  5. Abigail Shure

    Christie plans to transfer teacher pension and health insurance liabilities from the state to the municipalities.

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