The Budget Process in Four Simple Steps

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by Mark Wolf

It is hard to believe that it is already the beginning of February and budget season is upon us! For many of you, you are already off and running. This article explains the budget process in four simple steps. It also serves as a reminder that ORS 192.670 requires governing bodies (to the extent reasonably possible) to make public meetings accessible by telephone, video, or other electronic means and to allow written testimony by email or other electronic means.

Budget Process in Four Simple Steps

If you have not already done so, the first step in the budget process is to appoint a budget officer. Typically, the budget officer is the chief executive officer (i.e., the fire chief or the city administrator), but your finance officer or even your attorney may function as the budget officer.

Step two is to review the composition of your Budget Committee. Your Budget Committee consists of the members of your governing body and an equal number of appointed electors. The appointed members of the Budget Committee may not be officers, agents, volunteers, or employees of your entity. If for some reason you cannot find enough electors for the Budget Committee, you may still move forward with the budget process. Just make sure that your minutes reflect the efforts you made to recruit citizen members.

Your third step is to make a copy of your proposed budget available for public review immediately after the budget officer releases it to the Budget Committee. Your budget officer must publish notice of the Budget Committee meeting, as well as a notice of the budget hearing held by your governing body.

Both the notice of your first Budget Committee meeting and the notice of your budget hearing can be published in one of four ways. The most common method of publication is to publish the notice in a newspaper of general circulation, at least 5 and not more than 30 days prior to the budget meeting or hearing. If you choose to publish in the paper, the notice of the Budget Committee meeting must be published twice. Notice of the budget hearing only needs to be published once. If your entity is located within Washington County, you must also send budget information to the County.

The notice of your budget hearing must include a summary of the budget approved by the Budget Committee. The Oregon Department of Revenue provides forms you can use to develop and publish your budget. You can find these forms by clicking on the following link and scrolling down to “Local budget”:

http://www.oregon.gov/DOR/forms/Pages/default.aspx.

The fourth step is to adopt the budget. Remember, your governing body has the ability to make changes to the Budget Committee’s recommended budget. New information introduced at the budget hearing should be carefully considered by the governing body prior to budget adoption. If a proposed change to the budget includes an increase in taxes, or more than a 10% increase in a fund, additional notice is required. Changes to the budget after adoption also generally require action by the governing body and sometimes require additional publications and public hearings. For this reason, all available information should be collected and considered during the budget process.

Your budget must be adopted on or before June 30.

Two Final Thoughts

First, it is very important that the Budget Committee approve any proposed taxes as part of its approval of the budget. If a tax election is scheduled for March or May (especially May), the Budget Committee should include the revenue from any anticipated additional tax authority in its approved budget. Act like the proposed tax election will pass and budget for it. If it fails, the governing body may reduce the budget. But if a Budget Committee fails to plan on the tax passing, you can run into timing issues as the governing body must publish a revised budget summary and hold a second hearing on the budget, which might prevent the tax from being certified prior to June 30.

Second, when thinking about your budget, consider which projects and purchases are planned for this upcoming year. Not only will this process assist you in projecting your entity’s expenditures and revenues, this level of planning will also allow you to provide the required notice to the Bureau of Labor and Industries (BOLI). State law requires that at least 30 days prior to budget adoption, your entity must submit to BOLI a “WH-118 form,” listing each public improvement your entity plans to fund in the upcoming budget period. For example, if you are planning to budget and use public funds to build a new fire station in the next year, you must file a form WH-118 with BOLI at least 30 days before your budget is adopted. Form WH-118 is available on BOLI’s website at:

http://www.oregon.gov/boli/WHD/PWR/docs/wh118.pdf.

As always, if you encounter any legal issues during your budget adoption cycle (or if you learn of information or receive additional revenue requiring a change in your adopted budget) please contact your legal counsel as early as possible. An ounce of prevention is worth a pound of cure. It is much more cost effective and efficient to consult with your legal counsel before a problem develops.

Public Contracting Tips and Traps

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by Carrie Connelly

As we’ve previously advised, the 2024 legislative session did not mandate any particular public contracting rule updates. Given this “lull,” we wanted to share a few emerging trends with you, provide some public contracting basic reminders, and let you know of one change to our standard engineer and architect contract terms required by legislation that took effect on January 1, 2025.

  1. First and foremost, an ounce of prevention is worth a pound of cure. Our office can provide your entity with the best legal advice if you call before a project is advertised (and long before contracts are awarded and signed.) It is possible – even likely – that the minor repair or installation project you have planned for early 2025 is actually a public work, requiring a written procurement, particular contract provisions, Bureau of Labor and Industries (BOLI) oversight, and the payment of prevailing wages. Speaking of . . .
  2. BOLI, BOLI, BOLI!
    a. Be sure to prepare and submit to BOLI a list of the public improvements planned for the upcoming budget period. Pursuant to ORS 279C.305, you must submit this list at least 30 days before adopting your budget, and revise the list if your plans change. For further information on this planned project requirement, see Mark Wolf’s article, “The Budget Process in Four Simple Steps.”
    b. Once a public works contract is awarded, you must notify BOLI of the award and pay a fee within 30 days following award. The fee is 0.1% of the contract price, but in no event less than $250 nor more than $7,500. Use BOLI’s form WH-81 found at http://www.oregon.gov/boli/WHD/PWR/docs/wh81.pdf). In most cases, a copy of the Disclosure of First-Tier Subcontractors must also be submitted with this notice.
  3. For engineer or architect contracts entered into or renewed after January 1, 2025, standard defense and indemnification provisions must be modified. The engineering lobby (and insurance industry) are incredibly effective, and managed to slip in a legislative amendment that precludes engineers from having any duty to defend a public body against a claim for their professional negligence, unless and until adjudicated responsible.Do not, however, believe that this legislative change requires your entity to accept liability limits in the amount of the contract or otherwise. While regularly requested by architects and engineers these days, we find that most firms will back down when such requests are denied.
  4. In this charged political climate, remember that personal opinions play no role in public contracting evaluation or award procedures. In other words, an entity cannot refuse to award to the lowest responsible bidder because of a contractor’s objectionable bumper stickers. As long as all applicable laws are met, award is based on responsibility and cost.
  5. You may have heard of the Governor’s executive order (EO 24-31) requiring the use of project labor agreements (PLAs) for state and state-funded construction projects? Well, breathe a sigh of relief – Governor Kotek’s office has clarified that local construction projects are not covered or impacted by EO 24-31, even if state funding pays for the work in whole or in part. Instead, the EO is primarily intended to apply to state-owned facility improvements, such as state highways.
  6. And finally, we are seeing far too many incidents of “vendor impersonator” cybercrimes. Clients receive emailed requests “from” their contractor to send amounts owed electronically via an identified Automated Clearing House (ACH.) However, many such requests are not sent by your legitimate contractor, but by a fraudulent impersonator. In such cases, instead of reaching the intended contractor, payment is sent to the impersonator. These scams have become so sophisticated, they are tricking even the most seasoned skeptics. Impersonators can now hack vendor email systems, so requests are sent on prior email strings between staff and the contractor. Be careful. Electronic transfers should never be instituted without multiple methods of verification, pursuant to duly adopted local policies – and potentially amended contract terms.

Who knows what the 2025 legislature will approve. Stay tuned for our Fall update, when we’ll let you know whether new rules will be required to address any changes. Until then, the above tips and traps to avoid should help to keep you out of trouble.

EEOC Updates Workplace Harassment Guidelines

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EEOC Updates Workplace Harassment Guidelines

Vanessa Crakes

In April 2024 the United States Equal Employment Opportunity Commission (EEOC) published its updated guidance on workplace harassment,  Enforcement Guidance on Harassment in the Workplace.  The EEOC said this guidance will “help people feel safe on the job and assist employers in creating respectful workplaces.”

The guidance does not create new laws or regulations, but instead consolidates and updates previous EEOC guidance. The updates reflect legal developments such as the Supreme Court’s decision in Bostock v. Clayton County (2020), which extended Title VII protections to include sexual orientation and gender identity. The guidance also addresses emerging issues such as online harassment in virtual work settings.

The guidance is intended to serve as a resource on legal standards and employer liability for harassment claims under EEOC-enforced federal discrimination laws.

Federal Discrimination Laws

Federal discrimination laws prohibit harassment based on race, color, religion, sex (including pregnancy, childbirth or related medical conditions; sexual orientation; and gender identity), national origin, disability, age (40 or older) or genetic information. The guidance reinforces that for harassment to violate the laws enforced by EEOC, it must be based on one of these legally protected characteristics.

Further, to violate the law, harassment based on a protected characteristic must either:

  • involve a change to the terms, conditions, or privileges of employment (e.g., an employee is fired because the employee rejected a supervisor’s sexual advances); or
  • create a “hostile work environment.” A “hostile work environment” exists when harassment is so severe or pervasive that a reasonable person in the employee’s position would find the situation to be abusive.

Liability for Employers

The guidance also outlines various forms of employer liability for workplace harassment. If the harassment includes or culminates in a change to employment, then the employer is liable for the harassment. One example given is that if an employee is denied a promotion because he rejected a sexual advance from his supervisor, then the employer is liable.  For hostile workplace harassment, employer liability depends on the harasser’s role.  Employers are automatically liable for harassment by a “proxy or alter ego of the employer,” which is an individual of such high rank that their actions can be said to speak for the employer.  Employers are also automatically liable for actions of a supervisor where the supervisor took a tangible employment action as part of a hostile work environment. However, an employer will be held liable for harassment by non-supervisory employees only if the employer was negligent by failing to take reasonable steps to prevent the harassment or failing to take reasonable corrective action once it knew or should have known of the harassment.

Key Takeaways for Employers

The EEOC noted that harassment remains a serious problem in the workplace, representing more than one-third of the charges received by the EEOC.

The EEOC strongly encourages employers to:

  • have a clear, easy-to-understand anti-harassment policy;
  • have a safe and effective procedure that employees can use to report harassment, including more than one option for reporting;
  • provide recurring training to all employees, including supervisors and managers, about the company’s anti-harassment policy and complaint process; and
  • take steps to make sure the anti-harassment policy is being followed and the complaint process is working.

The EEOC issued a “Summary of Key Provisions” for the guidance document.  The EEOC has also published Promising Practices for Preventing Harassment, a resource to assist employers in preventing and addressing harassment.

Union Bargaining Preparation for 2025

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by Diana Moffat

What???? Our Collective Bargaining Agreement (CBA) doesn’t even expire until June 30, 2025!

Trust me. I hear you. But labor negotiations, just like so many other things continue to evolve. One of those evolutions has been the preparation, and associated time, needed by the employer prior to that first negotiation session with the union.

And then once you actually meet with the union to begin bargaining, the Collective Bargaining process can, unfortunately, take many, many months to complete. At best, you are looking at two to five months of getting things settled. At worst, much longer! There is a distinct advantage to completing the process, if at all possible, prior to the expiration of the current CBA.

The following are recommended:

Early preparation:

  • Have your management team, your supervisors and your labor lawyer review the CBA for needed changes such as needed adjustments to language for ambiguity, past grievances, updates to the law, etc.
  • If possible, begin a compensation overview. That might be as simple as assessing if you have some indicators that you are behind the “market” or engaging someone to do a full compensation review, in consultation with your labor lawyer.
  • Try to encourage the union to come to the table early – perhaps November, December, or at the latest early January. It helps to get those dates on the calendar early before folks start leaving for holiday time off.

Advantages to early resolution:

  • If you can resolve your negotiations prior to expiration, you are not faced with any type of retroactive pay issues. This can go a long way with employee morale for both your regular and payroll employees.
  • If you have anything less than fully funded insurance premiums, you are not faced with the danger-zone of figuring out what your “status quo” obligations are under the Public Employee’s Collective Bargaining Act.
  • You can use “early resolution” to your advantage in getting a settlement.
  • If faced with a situation of non-settlement, you can get to mediation and/or arbitration/impasse shortly after expiration. By July and August, the waiting time increases. There are only three mediators for the entire State of Oregon.

Timelines:

  • Does your CBA require notice to “open” bargaining? If so, you need to meet that deadline with a notice to the union that you want to bargain for a successor CBA.
  • The required 150-day bargaining period, under the Public Employee Collective Bargaining Act (PECBA), does not even begin until the initial proposals have been exchanged. Because of that, early scheduling can be a real advantage.
  • Development of your proposals should begin early on. Precise contract language is of utmost importance. The development of your proposals should be done in a very thought-out fashion, with input from supervisors to Council/Board members. This process takes time.

Developing your plan:

  • Now is the time to review your contract to identify what is working and what needs to be changed. Are there any needed legal updates? Has your labor counsel reviewed your CBA for ambiguous language? Are there any MOUs that need to be incorporated into the main CBA?
  • Now is the time to decide if you want to do a comparable analysis, in conformity with the PECBA, to assess your financial place within the market.
  • Now is the time to look at your budget projections for your limitations or wiggle room.
  • Now is the time to decide who will be your representative at the bargaining table and who will be on your bargaining team.
  • Do your City Council, County Commissioners, or Executive Board need to be advised on the process, the rules and laws that regulate Public Employee Collective Bargaining? Now is the time to schedule that training.

Current “hot” issues to consider:

  • Paid Leave Oregon (PLO) is the 10,000-pound elephant! PLO proposals have already appeared in dozens of unions’ bargaining proposals during 2024. You can be sure that the unions will continue to pursue them. There has been a lot of litigation at the ERB level. It is important for you to understand what you do and do not need to bargain with the union.
  • For your strike-permitted groups, don’t overlook HB 2930 needed modifications to your CBA language on discipline and grievance.
  • Insurance language is the still a concern for some employers. Have you reviewed the insurance language in your CBA to see how your contract stands up to potential future litigation if there are mid-term plan changes?
  • Have you reviewed your CPI index language? Many public sector employers have ambiguous CPI index language. Bargaining is the ideal time to clarify the index with specificity.

 

So, when you find yourself planning for the approach of Fall, let that remind you to begin preparing for upcoming bargaining. Preparation comes before success, even in the dictionary!