On April 29, 2005, John Ring retired from his job as a city employee. He had worked for Madison's Community Development Authority (CDA), painting apartments for $21.29 an hour.
Within a week, Ring was back painting CDA-owned apartments. He never submitted an application or any other paperwork. There was no written contract. The jobs Ring got were not put out for bids. He was given the same set of keys as before. He still used paint and supplies purchased by the CDA. Except now, he was paid by the job, at $1 to $1.50 per square foot - purportedly a much higher rate than the city could have obtained had it bid the jobs.
The deal was brokered by Kelley Simonds, housing maintenance supervisor for the CDA, which owns and runs the city's 875 units of public housing. At Ring's retirement party, which took place after Ring was back painting CDA apartments, Simonds jokingly asked whether anyone "had given him any shit" about his new deal. "No, and I don't care," Ring replied, according to subsequent testimony.
But others did care. Ring's former union, the Building and Construction Trades Council of South Central Wisconsin, filed a grievance charging that this arrangement violated the union's contract with the city. (Ring's position as a CDA painter was not refilled.) The city said it had a right to do as it did.
The matter went to arbitration. Hearings were held and both sides submitted briefs. Early this year, the arbitrator, Sharon Gallagher of the Wisconsin Employment Relations Commission (WERC), sided with the union, ruling that Ring was not a true independent contractor. She ordered the city to pay the union an amount equal to what it had paid Ring in his new capacity - about $80,000.
Here's where the city's conduct gets even more questionable. The CDA, backed by the City Attorney's Office, contested Gallagher's ruling in circuit court. That was audacious in itself, since, says WERC general counsel Peter Davis, "the law makes it very difficult, and intentionally so, to successfully overturn an arbitrator's award." Of the roughly 125 or so cases his agency decides each year, only "one or two" are contested.
Given precedent decisions, the city could not merely contend that Gallagher got the wrong result. Parties agree up front to accept an arbitrator's judgment, whether they like it or not. So the city staked its case on the only grounds the law allows - by arguing that Gallagher had shown "evident partiality or corruption" and exceeded her powers.
The city's smashmouth approach to handling this dispute undercuts the prevailing view of Madison as a union-friendly employer. But David White, a staff rep for Council 40, says it's "part of a larger pattern of conduct."
While unions like his that represent city workers have good relationships with Madison's elected officials, "when it comes to the agencies, it's a whole different matter."
The CDA's housing unit, in particular, is seen as hostile. Gallagher, in her decision, made passing reference to Simonds' "cavalier...bad-faith attitude toward the union." Union leaders and others say the unit seems to be on a mission to replace union workers with contractors.
"If Kelley gets his way," one CDA employee warned union reps, "he'll contract out the whole department."
Simonds denies this, saying that as a former union steward, "I'm not trying to run anybody out." But, when positions open through attrition, he believes "it's prudent not to replace individuals [but] to contract out." He cites growing financial pressure on the agency due to inadequate funding and increased mandates from the federal government, which provides nearly all of the CDA's budget.
In 2004, the unit had four full-time painters; now it has one. In 2003, it had two full-time carpenters; now it has none. A budgeted custodial position has remained vacant. Overall, the agency has gone from having 59 full-time-equivalent employees in 2002 to just 43.5 this year. Two more positions are slated to be cut in 2008.
Meantime, the amount of money spent on contractors has risen dramatically. In 2005, the unit didn't even have a budget category for painting; its 2007 adopted budget allocates $123,000 for outside painters. The amount spent annually on janitorial services rose from $1,200 in 2002 to $45,000 this year. During the same period, the amount spent on maintenance contracts rose from $900 to $26,000. (The unit's proposed 2008 budget maintains approximately current funding levels in all three of these categories.)
White says the union made repeated requests for information on the unit's use of outside contractors over a period of many months, but no information was provided. Finally, this summer, he submitted a formal open records request for invoices showing how much the unit spent "for mowing, landscaping, cleaning apartments, making repairs in and around CDA housing property, trash hauling and all similar work" going back to January 2006.
In response, he received six pages of untabulated invoice dates and amounts paid to four outside companies: Allen Cleaning Service, TC Carpets, GOT JUNK and Messner. They show that the unit spent $112,815 for these services last year and $73,295 through July 23 of this year.
In addition, the City Comptroller's Office says the CDA has since January 2006 paid $583,197 to BK Builders, which sources say does much of the work once performed by union carpenters.
Agustin Olvera, Housing Operations Division director, defends the increased use of contractors: "We've found that in contracting out, we can get work done at a lower price." He maintains that only $85,000 of the $583,000 spent on BK Builders is for work-order projects of the sort once performed by the two union carpenters, who together made $133,674 a year.
Overall, Olvera says, "We have been able to lower our operating costs" by contracting out (emphasis added). Simonds explains that money for staff salaries must come from the agency's operating budget, but contracted work can be paid for using capital funds: "I'm not sure anybody knows how long we can do that. It's just something we do."
Both White and Isthmus have asked the CDA for copies of its contracts with these outside companies, without success. "I don't think there are any contracts," says White. "I suspect they don't exist."
Union leaders also say the CDA avoids putting large jobs up for bid by hiring the same contractors for small jobs again and again. (The CDA has different bidding rules than other city agencies but Simonds says he's been bringing his process more in line since "having a more flexible process is not equal to the punishment I take for it.")
White says the released data, however incomplete, "shows the CDA has been spending an unconscionable amount of money on things that union personnel should have been doing.;What the data doesn't show is what work the CDA got for this money, so I can't tell if they got a 'deal' for this expenditure or if they got, er, taken to the cleaners."
Representatives of labor in Madison have long been concerned about the increased reliance on outside companies by the CDA's housing unit.
"We've been bringing it to Labor Relations' and the mayor's attention for about two years," says John Neis, a steward with Local 60, which represents the largest share of city of Madison workers. "It's, 'Why do you keep on doing this?'" (Madison Mayor Dave Cieslewicz has personally discussed these issues with Olvera, according to an email this summer from his chief of staff to unions reps.)
Neis, who works at CDA, says these outside companies are more expensive and less efficient than city workers. For instance, he says Messner gets paid to mow lawns at CDA properties a certain number of times per year, whether or not it's needed. During this summer's extended draught, when others avoided this chore for weeks at a time, the CDA's lawns were still getting mowed.
"It's just such a colossal waste of money," says Neis.
And even if money is on occasion being saved, says White, "it would likely be because the contractor hired people for low wages and benefits.";City Attorney Michael May confirms the CDA is "a separate political and legal entity," like the Overture Center, and thus can "choose which of the city's ordinances [it is] subject to." And it chooses not to be subject to the city's ordinance requiring that companies hired to perform work pay a "living wage."
But the worst part about this growing reliance on outside firms, CDA employees say, is that much of the work being done is substandard. "Our staff oftentimes has to go back in and redo what we've already paid the contractor to do," says one worker.
Work on CDA apartments - painting, cleaning, repairs - is commonly done after one tenant leaves and before another moves in. The CDA worker says employees showing units sometimes make "dry run" visits before bringing by prospective tenants "because you never know what you're going to find when you walk in, and you don't want to show the applicant that you're in shock."
Another CDA worker says city employees can perform a variety of tasks, as needed, but contractors do only certain jobs. "It's costing CDA far more" to hire outside firms, states this employee, who believes city staff could, with better management, do much of the work being contracted out. "We're just pissing money away."
If the CDA is indeed relieving itself of public funds in a way that's contrary to the public interest, it is doing so with the full support of the city of Madison. In challenging arbitrator Gallagher's ruling, the City Attorney's Office pulled out all of the stops.
Some of its attacks were directed at the Building and Trades Council, for having the audacity to complain about Ring's job transmogrification.
"No matter how couched, no matter how presented, this purported grievance is nothing more than a transparent attempt by this union to prevent John Ring, and only John Ring, from working for the Community Development Authority," lectured one of the city's briefs, written by Assistant City Attorney Larry O'Brien. "If there is circumvention involved, it is an attempt by the union to circumvent the plain grant of authority to the city to contract out for work."
But, in keeping with its burden under existing case law, the city's harshest attacks were aimed at Gallagher, who WERC's Davis says has in more than 25 years on the job earned a reputation as fair and "very competent."
Not according to the city of Madison.
"The award shows partiality to the union's positions," the city charged. "We submit that the award reflects, at every turn and every conclusion, the arbitrator's intention to select the union's evidence or discount the city's and interpret the law and contract provisions to achieve a desired end."
In other words, because Gallagher reached a decision with which the city of Madison disagrees, she's crooked.
The arguments offered by the city in support of this astounding position were, on their face, uniformly ridiculous.
For instance, Gallagher had found that the city violated the terms of its collective bargaining agreement by not notifying the union that Ring was back on the job in a new capacity. The city, through O'Brien, argued that the union had forfeited its right to notice because it had not filed grievances in earlier instances when required notice was not provided: "The union's lack of action led Simonds to believe that there was no need to formally notify the union," as the agreement requires.
On Aug. 31, unnoticed by local media, Dane County Judge Bill Foust issued a 27-page decision that rejected each and every one of the city's arguments as "without merit."
Foust said the union's failure to grieve earlier violations did not constitute a waiver of its contractual rights. He found "nothing unduly prejudicial" in Gallagher's judgment that Simonds had acted in bad faith, and ripped "the city's own less-than-cooperative attitude toward the union."
"In summary, the city utterly fails to meet its burden of demonstrating 'evident partiality' by clear and convincing evidence," Foust concluded. "Rather, what does emerge is that in each instance cited, Gallagher drew reasonable inferences from the evidence and the picture was simply not favorable to the city."
The union's win could not possibly have been more decisive. In the end, though, it opted to settle for a pittance.
At about the same time as Foust issued his ruling, the Building and Trades Council tentatively agreed to forgo the $80,000 award in exchange for the city's agreement to not lay off the CDA's one remaining painter, and to hire a second union painter for at least a full year. (The money would have not gone to the union, which spent thousands of dollars in legal fees litigating this case, but to the pool of available union painters.) The agreement was finalized this week.
"We were not out to punish the city financially," says Scott Vaughn, the union's executive director. "All we really wanted was work."
Indeed, Vaughn says curbing the use of outside firms has become the union's "number-one priority" in contract talks: "We've offered to forgo a pay increase if the city would agree to language against subcontractors that results in the loss of union jobs."
The union wanted the jobs so badly and felt it was in such a weak position it even relaxed its earlier demand that the CDA keep two painters for two full years, instead settling for one. And Vaughn now takes a conciliatory tone toward the city, which berated his union's motivations and tried to crush it in court.
"A mistake was made by a low-level manager, and we were able to rectify things," he says. "We think it's a win-win."
