1-3100-15093-2

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE COMMISSIONER OF VETERANS AFFAIRS

 

 

Armstead B. Smith,                                   Petitioner,   vs.   City of St. Paul,                                  Respondent.	FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION

         

The above-entitled matter came on for hearing before Administrative Law Judge George A. Beck at 9:30 a.m. on November 21, 2002 at the Office of Administrative Hearings in Minneapolis, Minnesota.  The OAH record closed on the date of the hearing.

Dudley Younkin, Esq., Suite 300, Degree of Honor Building, 325 Cedar Street, St. Paul, MN 55101, represented the Petitioner, Armstead B. Smith.  John B. McCormick, Deputy City Attorney, 400 City Hall, and Courthouse, 15 West Kellogg Boulevard, St. Paul, MN 55102, represented the City of St. Paul.

NOTICE

          This Report is a recommendation, not a final decision.  The Commissioner of Veterans Affairs will make the final decision after a review of the record.  The Commissioner may adopt, reject or modify the Findings of Fact, Conclusions, and Recommendations.  Under Minn. Stat. § 14.61, the final decision of the Commissioner  shall not be made until this Report has been made available to the parties to the proceeding for at least ten days.  An opportunity must be afforded to each party adversely affected by this Report to file exceptions and present argument to the Department.  Parties should contact Clint Bucher, Department. of Veterans Affairs, 206c Veterans Service Bldg., 20 West 12^th Street, St. Paul, MN  55155, to ascertain the procedure for filing exceptions or presenting argument.

 

          If the Commissioner fails to issue a final decision within 90 days of the close of the record, this report will constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a.  The record closes upon the filing of exceptions to the report and the presentation of argument to the Commissioner, or upon the expiration of the deadline for doing so.  The Commissioner must notify the parties and the Administrative Law Judge of the date on which the record closes.

 

STATEMENT OF ISSUE

The issue in this case is whether or not the City of St. Paul reduced the Petitioner’s work hours in good faith and for a legitimate purpose.

Based upon all of the proceedings herein, the Administrative Law Judge makes the following:

          FINDINGS OF FACT

1.                 The Petitioner is an honorably discharged veteran.[1]

2.                 The City of St. Paul is a political subdivision of the State of Minnesota.

3.                 The Petitioner was hired as a Management Assistant II in the Division of Contract and Analysis Services of the City on February 8, 1999.  The division of Contract and Analysis Services is the purchasing division for the City of St. Paul.  The Petitioner performs duties as a buyer for the Division.

4.                 Effective September 7, 2002, the City reduced the Petitioner’s work hours from 40 hours to 28 hours per week through the end of 2002.  The City also advised Mr. Smith that his position would be cut to one-half time beginning January 1, 2003.[2]

5.                 In a memo dated August 2, 2002, the manager of the purchasing division told the Petitioner that the reduction in hours was being made for the following reasons:

I have found it necessary to take this step for several reasons.  As you know, earlier in the year, Mayor Kelly imposed a spending freeze on many items and departmental budgets.  As a result workload within the division has been lighter than in years past.  In addition, all City departments were asked to make budget cuts as of July 1, including Contract and Analysis Services.  The net impact of these events is that we do not currently need nor have the funding for six full-time buyer positions.  The adjustments are being made to your position because you are the least senior buyer in the division and because you have the lightest workload.  I have discussed this with Susan Feuerherm, and we believe it will be possible for you to accomplish your assignments within these reduced hours.[3]

6.     In a letter dated January 29, 2002, Mayor Randy Kelly imposed a city-wide freeze on hiring, capital outlay purchases and professional and personal service contracts.  He directed all departments to prepare spending reduction plans that would recognize proposed reductions in local government aid (LGA) from the State of Minnesota in the amount of 2.748 million in 2002 and 3.341 million in 2003.[4]

7.                 In a follow-up memo on January 30, 2002, the City’s budget director asked city managers to propose permanent spending cuts to the general fund with reduction scenarios of 1.5%, 2% and 2.5%.  He also asked managers to include proposals for restructuring, reorganization and merger.[5]

8.                 The City has a general fund budget of approximately $175,000,000.  Of this amount, $73,000,000 or 44% consists of LGA funding from the State.  The City’s total 2002 spending reduction for the period July 1 to December 31 was about 0.7% or $1.3 million of the $175,000,000 general fund budget.  The reductions were spread across most departments and included savings in the purchasing division by reducing hours or layoff.[6]

9.                 The purchasing division performs the buying and contracting for the City of St. Paul as well as surplus disposal.  By contract it also provides purchasing services for Ramsey County and a water utility.  The division is primarily operated through two special funds.  One is for the staff and operations of the buyers and the other for the staff and operations of the surplus function.  The division bills its customers for the use of its services.  Its bill to the City of St. Paul for purchasing services is taken from the general fund.

10.             The division’s work is generated by purchase requests from the departments.  The buyers partner with individual departments.  They are responsible for a wide range of purchases including construction projects, technology buying and purchases as diverse as bullets for the police department or a giraffe for the zoo.  The bidding process is regulated by statute and ordinance, and can be complicated.  The more complex work, such as construction contracts, are handled by the higher level positions.  The buyers can also generate work by contact with their departments.

11.             The present employees of the Division of Contract and Analysis Services performing buying functions are as follows:

Staff Person                      Title                                            Years in Division

Dale Stevens                     Management Assistant III                       7

Susan Feuerherm              Management Assistant IV                       14

Mark Evangelist                 Procurement Specialist                          11

Armstead Smith                 Management Assistant II                        4

Dianne Davis-Jones           Procurement Specialist                          13

Duane Kroll                       Management Assistant III                       9[7]

 

“Procurement Specialist” is a job title that buyers used to have before they were changed to the Management Assistant classification.

12.             Since 1986, the purchasing division has experienced a reduction in the number of purchases and contracts it has handled as well as a corresponding reduction in the number of its employees:

                              Total #                             

Year                       Transactions                     Total FTEs

1986                       2,690                                20

1987                       3,425                                20

1988                       3,412                                20

1989                       3,104                                20

1990                       3,010                                20

1991                       2,339                                20

1992                       1,910                                20

1993                       2,065                                20

1994                       1,748                                20

1995                       1,470                                18

1996                       1,321                                15

1997                       1,398                                15

1998                       1,598                                15

1999**                    1,709                                15

2000                       1,275                                14

2001                       1,304                                13

2002***                   1,044                                13.5

 

**Transaction number includes 132 transactions from two special projects (one time only)

***Number of transactions through October 31, 2002[8]

13.             The decline in transactions experienced by the purchasing division has resulted from some delegation of purchases to departments, the grouping of purchases into master contracts, and increasingly reduced departmental budgets for the past ten years.  The division also expects less purchasing with the transfer of funding for the courts in Ramsey County to the State in 2003.

14.             In mid-2002, the manager of the purchasing division was directed to cut $7,000 from her share of the general fund budget in 2002 and to also cut an additional $7,000 in 2003.

15.             The reduction of the Petitioner’s hours in 2002 resulted in a savings to the City of $10,335.14.[9]  The reduction of the Petitioner’s hours to half time in 2003 will result in a savings of $27,915.99.[10]

16.             During mid-2002 the purchasing division was advised that a half-time position that was then in the Human Rights Department would be placed in the purchasing division instead.  This position was responsible for a vendor outreach program (VOP) that was designed to encourage minorities to bid on city contracts.  The position had been in the purchasing division prior to 2001.

17.             When the VOP position was transferred into purchasing it was evaluated and assigned to the Management Assistant I class.  It was found to be less complex than the Management Assistant II level because it did not involve analytical skills and was more of a public relations position.  The manager of the purchasing division hired a college graduate with experience in outreach for this position.   She did not discuss the position with the Petitioner.  She did not discuss the position with the Petitioner because the VOP position required good communication skills, that she did not believe the Petitioner possessed.

18.             The purchasing division manager decided not to reduce the clerical staff because each clerical position was supporting two to three buyers and the VOP position was to be added.

19.             The Collective Bargaining Agreement between the City and the St. Paul Employees’ Union provides that if it is necessary to reduce the work force, employees will be laid off by class title within each department based on seniority.[11]

20.             City Civil Service rules concerning layoff provide that the appointing officer shall designate the class from which layoff shall take place and that layoffs within the class will be done on the basis of seniority. 

21.             The present manager of the purchasing division hired the Petitioner in 1999.  His initial evaluations were satisfactory and he was certified as a permanent employee in February of 2000.[12]  In late 2001, however, Petitioner’s supervisors became critical of his performance.[13]

22.             In January of 2002, the Petitioner received an unsatisfactory performance rating. He disagreed with this rating.[14]  The Petitioner’s supervisor cited inadequate communications with customers, low work productivity, poor customer service and failure to follow required procedures in support of this rating.

23.             The Petitioner was suspended without pay for one working day on April 16, 2002.  The employer cited inefficient and incompetent performance of duties, including inability to meet key customer deadlines, insufficient interactions with customers, failure to submit timely reports and poor communications.  The Petitioner was provided with specific suggestions for improvement.[15]

Based upon the foregoing Findings of Fact, the Administrative Law Judge makes the following:

CONCLUSIONS

1.                 The Commissioner of Veterans affairs and the Administrative Law Judge have jurisdiction in this matter pursuant to Minn. Stat. § § 14.50 and 197.481.

2.                 The Department of Veterans Affairs has complied with all relevant substantive and procedural requirements of law and rule including providing proper notice of this hearing.

3.                 The Petitioner is a veteran within the meaning of Minn. Stat. § § 197.46 and 197.447.

4.                 The City of St. Paul is a political subdivision of the State of Minnesota within the meaning of Minn. Stat. § 197.46.

5.                 Minn. Stat. § 197.46 prohibits the removal of a veteran from public employment except for incompetency or misconduct shown after a hearing, upon due notice and upon stated charges in writing.

6.                 The prohibitions against removal do not apply if the position was eliminated in good faith for some legitimate purpose.[16]

7.                 Whether a veterans position has been eliminated in good faith for a legitimate purpose is an affirmative defense for which the public employer has the burden of proof.[17]

8.                 The City of St. Paul has met its burden of proving that it reduced the Petitioner’s hours in good faith and for a legitimate purpose.

          Based upon the foregoing Conclusions, the Administrative Law Judge makes the following:

RECOMMENDATION

IT IS HEREBY RECOMMENDED: That the Commissioner of Veterans Affairs DISMISS the petition of Armstead B. Smith.

Dated this

6th

day of

December

2002.

 

                                                                

S/ George A. Beck

GEORGE A. BECK

Administrative Law Judge

Reported: Tape-recorded, 3 tapes.

No transcript prepared.

 

NOTICE

          Under Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail or as otherwise provided by law.

 

MEMORANDUM

A veteran employed by a public employer cannot be fired for incompetency unless the employer can prove just cause for a dismissal at a hearing.  The Veterans Preference Act, however, does not completely restrict a public employer’s exercise or control over its administrative affairs since positions can be abolished if done in good faith.[18]  But it is clear that if a job is abolished or a position reduced in hours for no reason other than to get rid of the veteran, the protection of the Veterans Preference Act will apply.[19] 

In this case the Petitioner’s performance has been the subject of criticism since the fall of 2001.  He received an unsatisfactory rating in January of 2002 and a one-day suspension in February of 2002.  Then, in the fall of 2002 his hours were reduced.  The Petitioner does not agree with the criticism leveled at him by his supervisors and believes that he has been treated differently from other buyers.  He suggests that the clerical staff should have been laid off since some were hired after him. 

Mr. Smith also believes that he should have been approached about the VOP position since he believes he has the communication skills necessary to handle the position.  He argues that his hours were reduced in order to force his resignation and that he has not had a chance to prove the criticisms leveled at him as false.  He does not believe that the City has demonstrated that this is a good faith reduction due to budgetary requirements and argues that the addition of a half-time position to the Department without consulting Mr. Smith about the position demonstrates the Department’s lack of good faith.

Whether a public employer abolished a position in good faith is a question of fact and the burden is on the employer to establish this affirmative defense by a preponderance of the evidence.[20]  In determining whether a position has been abolished in good faith, the courts have looked at several factors, including:  (1) whether the reasons articulated by the employer have a legitimate, factual basis,[21]  (2)  whether the job duties previously performed by the veteran have been reassigned to others,[22] and (3) whether the substance of the decision to abolish the veteran’s position was an objective and reasonable exercise of administrative discretion.[23]

          In this case there is no evidence that indicates that the Petitioner’s job duties have been assigned to others.  Rather, he is expected to accomplish his share of the declining workload in what will be, during 2003, a one-half time position. 

The City has also established a legitimate factual basis for the reduction in hours based upon its declining workload and its need for cuts in its budget.  The employee conceded that there have been budgetary problems and the record demonstrates a continuing need on the part of City departments to reduce their spending.  Additionally, it appears that this need will be accelerating rather than declining in the near future.  The City has also demonstrated that the purchasing division has less need for buyers due to a reduced level of purchasing and contracting.  The data submitted indicates a decline in the number of employees in the division over the years due to a decline in work.[24]  Although the Petitioner suggests that clerical help could have been cut, it appears that this had been done earlier and that the remaining clerical staff was needed to support the buyers.  Therefore, the reasons given by the employer to the employee in its notice of reduction of hours have a legitimate factual basis in this record.

          The employer has also demonstrated that its action was an objective and reasonable exercise of its discretion.  The reduction in hours was done on the basis of seniority.  Among the buyers Mr. Smith was the lowest in terms of the number of years in the division.[25]  This is an important factor in demonstrating an objective decision.  Neither does the failure to offer Mr. Smith the VOP position demonstrate an arbitrary decision.  The position had been classified as a Management Assistant I position and Mr. Smith holds a Management Assistant II position.  Combining both positions would create an administrative problem and possibly a union grievance.  Although the employer was responsible for the MA I classification it appears to have been done rationally based upon the qualifications needed for and the job duties to be performed by the position.  Since the employer had criticized the Petitioner earlier in the year for communication problems with Division customers, it does not seem arbitrary to fail to consider him for the new VOP position which requires outreach into the community.

          The Veterans Preference Act affords a veteran the opportunity for a close examination of an abolition of his or her position or a reduction in hours, especially where the employee is subject to criticism of his or her performance.  The evidence presented, however, supports the City’s contention that it reduced Petitioner’s hours for legitimate management reasons and not as a pretext for demotion of the employee.  While the Petitioner had some alleged performance problems, the ALJ is persuaded that the reduction in hours was made rationally due to budget problems and a declining need for buyers within the purchasing division.  It is therefore recommended that the Commissioner of Veterans Affairs dismiss the Petition for Relief.

                                                                                          G.A.B.