It took a state-appointed financial control board to freeze salaries of Buffalo city employees, but once the 38-month freeze ended, employees argued they should be elevated to higher salary steps they would have achieved if there not been a freeze.

In a case that should be watched by other financially squeezed municipalities, the Buffalo Fiscal Stability Authority will ask the state Court of Appeals to overturn lower court decisions granting higher steps to employees (here).

As the Buffalo News reports:

After Buffalo’s 38-month wage freeze was lifted in July 2007, the city and control board argued that employees were entitled to move only one step on the salary ladder, even if the wage freeze had caused them to miss several negotiated pay increases based on years of service.

In November 2007, State Supreme Court Justice John A. Michalek ruled that thousands of employees must be placed on the salary steps they would have attained had the control board not imposed a wage freeze.

An appellate court, which upheld the lower court decision in June, denied the city’s request for permission to appeal to the Court of Appeals. The control board plans to take its case directly to the high court.

The outcome of the appeal could have a big impact on the financially struggling city. According to the News (here),

Chief Financial Officer Barbara J. Smith said placing thousands of teachers and school administrators on higher salary steps would cost $111 million through 2013, including retroactive pay dating back to mid-2007, when the wage freeze was lifted.

The system has included about half the liability in its current spending plan. But Smith said finding another $55.5 million for higher salaries over the next several years could trigger painful cuts. While some costs could be absorbed by anticipated staff shrinkage tied to projected reductions in student enrollment, officials said the ruling could force the system to make additional cuts of nearly $40 million by 2013.

Meanwhile, the city would face nearly $9 million in additional personnel costs.

Originally Published: NY Public Payroll Watch

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