Appeal from the Appellate Court for the First District; heard
in that court on appeal from the Circuit Court of Cook County,
the Hon. Nathan M. Cohen, Judge, presiding.
JUSTICE MORAN DELIVERED THE OPINION OF THE COURT:
The circuit court of Cook County entered a declaratory judgment holding that the board of education of the city of Chicago (Board) had breached its collective bargaining agreement with the Chicago Teachers Union (Union) by closing schools on June 16, 1977, one day before the date provided by the official school calendar. In addition to an accounting, the court ordered the Board to pay employees covered by the agreement for the day on which schools were closed. The appellate court affirmed. 89 Ill. App.3d 861.
There is but one question to be resolved: Are the employees covered under the collective bargaining agreement entitled to one day's salary?
On October 13, 1976, the Board and the Union entered into a collective bargaining agreement for the school year of September 1, 1976, to August 31, 1977. Provisions were made for annual salaries for teachers and career service employees. On February 23, 1977, the Board adopted a recommendation, for the purpose of reducing the deficit in the Board's budget, that allowed the general superintendent of schools to lay off employees for three days during June 1977. In a press release dated March 24, 1977, the superintendent announced that the "Chicago Public Schools will close one day early in June rather than the three days originally contemplated." As stated above, the schools were then closed one day early, on June 16, 1977. The union sought arbitration, alleging that the one-day layoff violated its collective bargaining agreement with the Board. The Board brought an action to enjoin arbitration. The Union counterclaimed to compel arbitration and, by amendment, claimed breach of contract and sought declaratory relief and an accounting requiring the Board to pay its employees the one day's salary. The circuit court enjoined arbitration and entered the order described earlier.
As the appellate court noted, testimony before the trial court predominantly pertained to the financial condition of the Board and the circumstances surrounding the collective bargaining agreement. In short, the record reveals the Board had a budgeted deficit of funds for fiscal 1976-77 of approximately $115.3 million. This amount was comprised of a $63.3 million accumulated deficit plus a projected $52 million operating deficit. To permit the appearance of a balanced budget when appropriations for the total of the individual line items exceeded the anticipated revenue (see section 34-44 of the School Code (Code) (Ill. Rev. Stat. 1975, ch. 122, par. 34-44) requiring a balanced budget), the budgeted deficit was offset by two negative "pro-rata" line-item appropriations totaling $115.3 million. The pro-rata line item designations consisted of a negative $91.66 million appropriation, following a $506 million appropriation for teachers' salaries, and a negative $23.64 million appropriation, following a $132 million appropriation for civil service salaries. The above salary appropriations as well as the negative pro-rata appropriations were applied to the Educational Fund, the primary fund to which salary costs were charged.
The 1977 annual financial report shows that at the conclusion of the 1976-77 fiscal year, the Educational Fund had an operating surplus of about $13.2 million, representing revenues in excess of expenditures for current operations. During that same period, the Board reduced its accumulated deficit by almost $17.2 million. The record also shows that, out of $19.1 million the Board expected to receive from State aid and taxes, only $1.4 million was realized. The February 23, 1977, recommendation adopted by the Board providing for a three-day layoff at the end of the school term was one of the measures designed to compensate for the discrepancy. This recommendation was the second phase of a plan adopted by the Board directed at eliminating the accumulated deficit, but the first time a recommendation for an early school closing was adopted. The annual financial statement showed that at the close of the fiscal year the Educational Fund had a total deficit of approximately $70.6 million. The record reveals it would cost the Board about $2.8 million to pay the teachers one day's salary.
The essential portions of the contract as it concerns this review are:
36-1. The annual salaries of all teachers and the prorated monthly segments thereof are set forth in the teacher salary schedules attached hereto as Appendix A. Such schedules and all other provisions governing compensation and remuneration contained in Appendix A are hereby made a part of this Agreement.
36-2. The annual salaries of all career service employees in the bargaining unit and the prorated monthly segments thereof are set forth in the career service salary schedules hereto attached in Appendix A. Such schedules and all other provisions governing compensation and remuneration contained in Appendix A are hereby made a part of this Agreement."
Appendix A specifically incorporated salary schedules into the contract. Schedule 1A provided for the "[b]asic schedule of school month salaries and annual salaries based upon a 6-hour day during regular school term of 39 weeks for regularly appointed members of the teaching staff * * *." (The annual salary included the payment of 10 days of vacation so that it was based upon 41 weeks of pay for 39 weeks of employment.) In addition, paragraph 44-31 of the agreement provided:
"The BOARD shall maintain a school calendar in which: Employees scheduled for 39 weeks shall receive their annual salary (including vacation pay) prorated over 41 weeks (39 school weeks and two weeks of vacation). * * *"
Finally, paragraph 36-3 of the agreement provided:
"In accordance with the provisions of the School Code of Illinois, salary schedules and compensatory and remuneration provisions in this Agreement shall be subject to the terms, provisions, and conditions of the appropriations therefore contained ...