The recent decision of Judge Rolf M. Treu in Vergara v. California Teacher’s Association has sent shudders through California’s once invincible unions. The plaintiff’s statewide student class action lawsuit was led by accomplished lawyer Theodore Boutrous on behalf of the reformist group Students Matter, whose activities have been heavily funded by Silicon Valley mogul David F. Welch.

Illustration by Barbara Kelley
Hoover senior fellow Richard Epstein.

Judge Treu’s decision struck down three essential pillars of the standard teacher’s union contract. It first took aim at the standard California teacher’s contract, which awards tenure after as little as 16 months of services. It next gave a thumbs down to the elaborate procedural devices a school district has to go through to dismiss a teacher for incompetence. As Student Matters reports: “Out of 275,000 teachers statewide, 2.2 teachers are dismissed for unsatisfactory performance per year on average, which amounts to 0.0008 percent.” Finally, Vergara nixed the current “last in, first out” seniority system, under which the only grounds for dismissing a teacher is the reverse order in which they are hired, wholly without regard to classroom performance and subject matter need. All of these practices undercut the effectiveness of student education and waste taxpayer dollars. This is why educational professionals like Secretary of Education Arne Duncan are supporting the California decision, to the immense dissatisfaction of Randi Weingarten, President of the American Federation of Teachers.

Do We Need Teacher Unions?

The California Teachers Union justifies these rules on the ground that they are needed to combat the danger that craven public school administrators will resort to arbitrary and vindictive personnel decisions on such vital topics as hiring, firing, assignments, pay, promotion, and punishment. The rigid union contract serves as a protection against such so-called arbitrariness. It is notable, of course, that all non-union businesses, in education and elsewhere, confer far greater levels of discretion to management without personnel being abused left and right.

The two key elements that unions leave out of their equation are reputation and competition. A school district, or indeed any employer, who acts as irrationality as the teachers union assumes that principals and administrators will not be able to recruit or retain the teachers whom it wants. Bad news travels fast, and competitive forces will go a long way to restrain abuse by offering contracts that develop more sensible grievance procedures to deal with matters of employee discipline and dismissal. Indeed, one serious downside of unionized schools is that that they have to hire administrators who can endure the rigors of collective bargaining negotiations and constant scrapes with aggressive union representatives. The cycle thus feeds on itself, as disgruntled teachers can point to unwise administrative decisions that make teachers boiling mad, and stoke yet another pro-union burst of support.

In this difficult setting, education takes a back seat to potential strikes and archaic work rules. None of these persistent problems arise in non-union charter schools, where management issues are handled with a great deal more aplomb than in the union context. The proof here is in the pudding. Union schools are stagnant operations in which bad schools never fail. But the charter school market is far more dynamic. As Karl Zinsmeister reported some months ago in the Wall Street Journal, both failure and success receive their just deserts in the charter school market, which explains why their performance has dramatically improved in recent years: “Nationwide, 561 new charter schools opened last year, while 206 laggards were closed.”

The large charter school networks develop replicable models whose test scores now clearly outperform those of public schools with entrenched financial support. There is a waiting list for getting in to charter schools; there is clearly a demand for their services. Sound public policy would encourage their maximum development, which would reduce the high taxes paid to trap children of all backgrounds in inferior public schools. With the help of charters, competition will dominate the state-created monopolies in education.

A Constitutional Question?

In many ways, the most difficult challenge in this case is to come up with a credible constitutional theory that explains why Judge Treu should have intervened as he did. The provisions of the California Constitution are not obviously adapted to this particular task. It contains the standard federal constitutional guarantees of due process and equal protection, and two other provisions that deal with the operation of the educational system in more general terms.

SECTION 1. A general diffusion of knowledge and intelligence being essential to the preservation of the rights and liberties of the people, the Legislature shall encourage by all suitable means the promotion of intellectual, scientific, moral, and agricultural improvement.

SECTION 5. The Legislature shall provide for a system of common schools by which a free school shall be kept up and supported in each district at least six months in every year, after the first year in which a school has been established.

In Vergara, Judge Treu went somewhat over the top in claiming that the shortfalls he found in the current union contracts were reminiscent of the system of segregated schools that the Supreme Court struck down in Brown v. Board of Education in 1954. Racial discrimination by the government rightly receives the strictest level of scrutiny on any and all theories of government because it provides an easy axis for unscrupulous politicians to transfer privileges, opportunities, and wealth to their own groups.

No one can claim that union preferences rise to the level of racial discrimination, but their long-term effects are nonetheless insidious, so much so that one can ask the question of how the legislature can encourage the promotion of intellectual and scientific institutions when it voluntarily cedes enormous monopoly power to teachers unions so that they can bargain for a set of favors that would never be tolerated in a competitive market. And make no mistake about it, that privileged position is exactly what all unions have obtained, not only with respect to the particular terms that were attacked by Judge Treu, but more particularly with respect to the unsustainable pensions that have taken cities like San Jose, with whom I have worked, to the brink of financial ruin. In this regard, the root of the problem is not the particular manifestations of union power struck down in Vergara, deplorable as they may be. Rather, it is the entire system of collective bargaining negotiations that leads to the result in which whole student populations, as well as the public, suffer from a system that is designed to entrench special benefits for one group at the expense of the population at large.

The question is how to find some way to attack the underlying disease instead of looking solely at the symptoms, which are all too painful. The serious gap in our constitutional design lies in the simple fact that the document itself contains fairly sensible limitations on the direct application of the traditional government powers of taxation and regulation. But by the same token, the constitutional text is far weaker in imposing limitations on the way in which the government chooses to distribute its benefits in standard market transactions. A moment’s reflection, however, will show that the risk of government giveaways to favored groups of any description is every bit as substantial as the risk of government expropriation. By way of simple comparison, no corporate board is allowed to enter into sweetheart deals with key officers and directors under which they receive valuable assets for a tiny fraction of their market price. A wide range of derivative actions is made available to shareholders suing in the name of the corporation to unravel the transaction.

Exactly that difficulty arises when legislatures put in place institutions that empower unions to gain monopoly benefits, whether in cash, pensions, or work rules, that come at the expense of both school students and the public at large. In 1987 I wrote an article The Public Trust Doctrine, which stood for the proposition “nor shall public property be given away for private use, without just compensation.” The public trust doctrine announced by the United States Supreme Court in the 1892 decision of Illinois Central Railroad v. Illinois represents an effort to reach that conclusion in connection with land grants, and there is no reason why it cannot apply with equal force to one-sided labor contracts that result when the legislature arms unions with the right to negotiate collective bargaining agreements on behalf of its members. That statutory grant of power against the state for a select group of individuals against the whole represents, in the most literal sense of the term, a per se breach of the duty of loyalty that legislatures owe to their citizens, much as corporate boards owe to their shareholders.

The question then arises of whether this decisive attack on union dominance amounts to a form of unprincipled judicial activism. Just that charge could be leveled against a group of the decisions on which Judge Treu placed great weight: the Serrano v. Priest litigation (1971–1977). Those cases required, in the name of equal protection, that the state equalize the finances across all school districts in order to equalize educational opportunities for students. I have serious misgivings about the decision in the Serrano line of cases because it rests on a much more dubious theory of government intervention, namely the Equal Protection Clause of the federal Constitution, and the various California provisions, which are intended to secure massive redistribution through judicial power. In this instance, it led to a surrender of local control over school districts that transferred power from parents to the state legislature.

The point here is simple enough. Tread very carefully in dealing with government interventions that want to take wealth from some and give it to others. The first line of attack should always be to knock out inefficient monopolies that hamper the efficiency of all school districts, which has far more unambiguous consequences for social welfare. The difficulty with Judge Treu, then, is that he did not go far enough. Don’t just stop with the most invidious provisions of union contracts, but instead knock out the entire system of state collective bargaining and branch. 

overlay image