Contract duration refers to the number of years a contract is scheduled to remain in effect -- that is, the period from its effective date to its scheduled expiration date. Act 88 of 1983 makes contract duration a negotiable issue.
Most public school contracts in Pennsylvania set expiration dates 3-5 years from the date of signing. However, contracts for longer periods (e.g., seven years) are not rare.
Advantages of relatively long contracts
Relatively long contracts (i.e.,more than three years) are that they provide school districts with stability in labor relations and facilitate long-range fiscal planning.
- Negotiations are costly, absorbing large amounts of administrative time and energy. Very short contracts (one or two years in duration) would lead to a continuing state of uncertainty and potential controversy.
- An early agreement to negotiate a relatively long contract may facilitate barganing by providing both the board and the union with flexibility in seeking mutually acceptable compromises. For example, a board may be willing to grant a larger salary increase in the final year of a long contract, or a union may be willing to accept a lower one in exchange for receiving a raise "up front."
- Longer contracts enable boards to project future budgets with a reasonable level of accuracy. This is important in planning for major expenditures, such as building a new school or improving existing facilities.
Disadvantages of relatively long contracts
The principal disadvantage of longer contracts is that they entail more economic risk to a school district if revenues fall below projected levels, as they may easily do for reasons beyond local board control. For example...
- State funding may remain flat or even decline.
- Regulatory changes known as unfunded mandates may entail unanticipated new costs.
- Some districts are vulnerable to changes in their local revenue base (e.g., if a plant or other major employer closes).
- The yield of state-managed pension funds may fall sharply during bear markets, and these unfunded liablities can be passed down to local school districts.
Note that Pennsylvania Act 1 of 2006 limits the legal authority of school boards to increase property taxes above a formula-based ceiling The passage of this law led many observers to predict that boards would insist on shorter contract duration than had been the previous norm. At the end of 2008 this prediction had not been fulfilled.
Ability to change contract terms
Contract duration can be modified by the written agreement by both parties. Boards and unions often negotiate "early bird" agreements well before the expiration date of an existing contract – e.g., in the third year of a contract originally scheduled to run for four years. Note also that, if board and union negotiators fail to reach an agreement before a contract’s expiration date, they invariably agree that the terms of the existing contracts remain in effect. Although newspaper accounts frequently repeat claims that teachers are "working with a contract," the accurate phrase is "working under terms of the previously negotiated contract."