Commonwealth, Department of State v. Stecher

OPINION OF THE COURT

FLAHERTY, Justice.

Appeals were taken to Commonwealth Court by the Commonwealth of Pennsylvania, Department of State (Department), from a decision of the Civil Service Commission which ordered the reinstatement of individuals who had been furloughed from their positions of employment in the Bureau of Professional and Occupational Affairs (Bureau), an agency of the Department of State responsible for twenty-two occupational licensing boards. Commonwealth Court affirmed the Civil Service Commission’s order of reinstatement. Commonwealth, Department of State v. Stecher, 74 Pa.Commw.Ct. 45, 459 A.2d 851 (1983). The instant appeal ensued.¹

Appellees, the individuals who had been furloughed from the Bureau, performed administrative functions related to the functioning of the Commonwealth’s occupational licensing boards, including budgeting, legislative review, complaint processing, drafting of regulations and procedures, rationalization of operations, and general supervisory tasks. During the period preceeding July 1, 1980, the Bureau had been incurring expenditures at a deficit level, i.e. spending more than it was appropriated. The Bureau had been permitted to carry-over such deficits from one fiscal year to another until, on July 1, 1980, the Secretary of Budget and Administration directed all Commonwealth agencies to refrain from overspending their appropriations. In response to this budgetary constraint, the Bureau found it necessary to reduce its spending. It eliminated certain programs and furloughed a number of employees, including appellees. The furloughs went into effect on August 27, 1980, whereupon duties previously performed by appellees were reassigned to other personnel in the Bureau, and appellees’ positions were abolished.

On October 16, 1980, however, a supplemental appropriation of $378,000 was made to cover the Bureau’s deficit for the 1980-1981 fiscal year. The Civil Service Commission took administrative notice² of this appropriation, and found that the Bureau’s lack of funds was thereby cured. The Department argued that the furlough of appellees was justified, not only by a lack of funds, but also by a lack of work in the Bureau. A “furlough” is defined by Section 3(s) of the Civil Service Act, 71 P.S. § 741.3(s), as a “termination of employment because of lack of funds or of work.” When there has been called into question the validity of a furlough, the appointing authority has the burden of going forward with proof to establish a prima facie case justifying the furlough, viz. that the furlough resulted from a lack of funds or a lack of work. 4 Pa. Code § 105.15. The Civil Service Commission did not accept the Department’s claim that there was a lack of work, and, consequently, held that the furloughs were not justified beyond the date of the supplemental appropriation. Appellees were, therefore, ordered reinstated with back pay from October 16, 1980.

In rejecting the Department’s argument that there was a lack of work, the Commission reasoned that no credible distinction could be drawn between the lack of work justification and the lack of funds basis for initiating the furloughs. The Commission stated,

Although the appointing authority has attempted to establish the lack of work argument separate from that of lack of funds, we do not find that distinction credible. It is to be expected that in any furlough action the elimination of positions results in some reorganization and reassignments of duties to compensate for the lost services of the employes designated for furlough. That the appointing authority in the present action knew of its need to furlough and had sufficient time to devise compensating assignments does not alter the fact that a lack of funds was the essential cause of the decision to furlough. It is our view that the mechanism devised to compensate for the loss of furloughed employes does not itself create a lack of work independently justifying the furlough.

(emphasis added). We do not agree that, merely because furloughs are initiated at a time when there happens to be a lack of funds, the furloughs cannot be justified upon the independent basis that there exists a lack of work, even where the lack of work results from a reassignment of duties among employees. Indeed, the “mechanism designed to compensate for the loss of furloughed employees,” to wit reassignment of duties, can, in itself create a lack of work independently justifying a furlough. Granted, management’s action in this case may have been precipitated at a time when there was a lack of funds, i.e. at a time when management could no longer afford to continue its inefficiencies by supporting unnecessary employees in an organization where there was a lack of necessary work, but this does not diminish the extent to which the furloughs were, ultimately, the result of the fact that there was not enough work in the bureau as to require that the employees be retained.

When an appointing authority perceives that an employee’s services are no longer required, in that the amount of work the employee is performing does not warrant his retention in view of the fact that the employee’s work can more efficiently, from a cost or operational standpoint, be performed through reassignment to others, the employee may be furloughed on grounds of lack of work. In Department of Public Welfare v. Magrath, 14 Pa. Commw.Ct. 257, 321 A.2d 403 (1974), Commonwealth Court dealt with this principle. In that case, the director of a state hospital had concluded that few surgical procedures were being performed by the hospital’s staff surgeon, and, hence, the director initiated a program to have surgery performed by nonstaff surgeons on a fee basis. This program was found to create a lack of work that justified the furlough of the staff surgeon who had previously performed surgery at the hospital. As stated in Magrath, 14 Pa.Commw.Ct. at 260-261, 321 A.2d at 404,

When [the staff surgeon’s] position was eliminated and the work formerly done by him either dispensed with or otherwise arranged for, there existed a condition of lack of work which justified his termination. We have examined the record with the utmost care and can find no evidence that the appointing authority has subverted civil service requirements by simply engaging another person [non-staff surgeon] to perform his work.

Thus, the Magrath decision stands for the reasonable proposition that the appointing authority, in the exercise of its management discretion, may eliminate a position, and, thus, furlough an employee for lack of work, when services the employee performed may be more efficiently performed by other means.

Similarly, in Vovakes v. Commonwealth, Department of Transportation, 71 Pa.Commw.Ct. 3, 453 A.2d 1072 (1982), a department’s abolition of a managerial position, undertaken in connection with a reorganization designed to streamline the functions of the department and to increase its efficiency, was held to be a legitimate exercise of the department’s managerial prerogative. In Vovakes, the court aptly noted that, “the laws of this Commonwealth have committed to the various administration officials, not to the Civil Service Commission or the courts, decisions as to what best promotes the efficiency of the agency’s services to the public.” Id. at 7, 453 A.2d at 1074. Decisions as to what tasks should be performed, and by whom, are particularly within the realm of an agency’s management officials. If an agency seeks to accomplish its mission in a more efficient manner, by redistributing work among its employees, it is pursuing a commendable administrative objective. It can be said that, almost as a general rule, governmental institutions claim to be understaffed, and ráre indeed is the agency that admits to having an excess of employees. Governmental agencies so easily become myopic as to their purposes, losing sight of the goal of adequately serving the public at the lowest possible cost to the taxpayers.

Although, quite obviously, when a particular position has been eliminated there is no longer work in that position, the courts below have held that the mere abolition of a position is not sufficient, in itself, to automatically establish a “lack of work” that justifies an employee’s exposure to being furloughed. Rather, the focus has been upon whether there has in fact been a lack of work created by reorganizational streamlining efforts. See Silverman v. Department of Education, 70 Pa.Commw.Ct. 444, 454, 454 A.2d 185, 190 (1982); Vovakes v. Commonwealth, Department of Transportation, 71 Pa.Commw.Ct. at 7 n. 8, 453 A.2d 1074, n. 8. In the present case there was presented unrefuted testimony that appellees’ positions were eliminated, that a reorganizational streamlining did in fact occur, and that management in good faith believed that the work of the Bureau could more efficiently be conducted in the absence of the positions which were eliminated. We believe the appointing authority has, by this showing, met its burden of demonstrating that the furloughs were proper.

The evidence indicates that the duties performed by the appellees were transferred to other personnel in the Bureau, meaning that the work previously performed by them is still ■ considered necessary and is still being done. Some would suggest that this fact alone supports a finding that there was no lack of work such as to cause or justify appellees’ furloughs. The mere fact that duties assigned to appellees were reassigned to other personnel in the Bureau is not indicative that there was created by the reassignment an overload of work for the remaining employees to perform. Nor does it indicate that there had been sufficient work for the furloughed employees to perform, or that, in an efficiently organized workplace, the employees would have tasks to complete.

Indeed, a furloughed employee may have had a less than full load of work to perform, and co-workers may also have had a sufficiently less than full workload as to be capable of assuming, without overwhelming difficulty, the duties of a furloughed employee. To use an extreme example, if an employee had only one hour of realistic work to perform during an eight hour shift, and, upon furlough, that employee’s work were reassigned to another employee who normally had only three hours of realistic work to perform during the. same eight hour period, it would be untenable .to suggest that, merely because the duties of the furloughed employee continue to be performed by another employee, there was no lack of work in the Bureau. Rare indeed would be the governmental employee who could be furloughed if the applicable test were to be whether any of his duties would continue to be performed by other workers. Such a rule would lead to an obviously ridiculous result, such as where ah employee who does absolutely nothing in the course of a day’s employment other than open one letter, answer one phone call, or stamp one document, would have to be retained. It is inconceivable that this was the intent of the legislature in creating the Civil Service system.

It is a managerial prerogative to reallocate work to enhance operational efficiency and to effect cost savings. To limit management’s power in this area would be to draft a blueprint for an ever-expanding bureaucracy, which naturally will tend to fuel institutional growth and taint the very purpose of our government. Government exists to serve the people, and should be manned by the fewest number of employees who can accomplish the task of serving the citizenry in the most efficient and least costly manner possible. To interpret the Civil Service Act as constraining reassignments of employees’ duties, when management undertakes to eliminate what it believes to be unnecessary employees, would impose an impenetrable obstacle to attainment of greater efficiency in government, and would be, in effect, an outline for a handbook on inefficiency. The Civil Service Act was never intended to serve as a guarantee of lifetime employment, and, in view of its express provision authorizing furloughs based upon lack of work, does not require that employees be retained when workloads do not necessitate their continued presence.

Inasmuch as the Commission erred in holding that appellees’ furloughs had not been shown by the Department to have been justified on grounds of lack of work, the appellees are not entitled to reinstatement.

Order of the Commonwealth Court reversed.

LARSEN, J., dissents. ZAPPALA, J., files a dissenting opinion.

1 . This case was reassigned to this writer on June 19, 1984.

2 . As to the propriety of the Commission’s taking official notice of the supplemental appropriation, we note that an administrative agency may take notice of any matter that may be judicially noticed by a court. 1 Pa.Code § 35.173. Accordingly, in Snipas v. Department of Public Welfare, 46 Pa.Commw.Ct. 196, 405 A.2d 1366 (1979), it was held to be proper for the Civil Service Commission to take official notice of the legislature’s failure to pass a budget. Similarly, in the instant case, it was proper for the Commission to take notice of the supplemental appropriation, since it is within the Commission’s province to take official notice of the enactment of relevant legislation. Evidence was adduced at the hearing that the Department had requested the supplemental appropriation, and that the appropriation had been passed by the legislature and presented to the Governor for signature. The Governor signed the bill eight days after the hearing, this being ten months prior to issuance by the Commission of its adjudication.