The following is a reprint of an article that originally appeared in the February 2003 issue of Senza Sordino under the title “Another Opening, Another Blow.” Although some of the facts may no longer be current, the advice is.
In my experience, this is the worst of times. During the last thirty years I have witnessed “troubled orchestras,” and even an occasional “lost orchestra,” but never to the extent and seriousness we have experienced since just before the turn of the century. Over these last few years we have suffered through fiscal crises in the orchestras of Saint Louis, Houston, Toronto, Phoenix, Milwaukee, Baltimore, Buffalo, Louisville, Colorado Springs, and others. We have heard rumblings of impending difficulties in Pittsburgh, Cleveland, and even the mighty Chicago Symphony. It appears that we may have lost the orchestras of San Jose and Tulsa.
Typically, the first sign of trouble is an inquiry I receive from the musicians’ committee chair: “Our board (and/or management) has asked us to reopen the contract in order to deal with the accumulated (or projected) budget deficit. If we don’t agree, they say they will be forced to file for bankruptcy. What should we do?”
Typically, my answer is: do not agree to reopen—yet. That is, you may (and should) agree to meet with them, listen to their concerns, and ask a lot of questions. “How did this happen?” “What steps have you taken to remedy the situation before coming to us?” “Will you open the books to our accountant?” “What do you want us to do?” And, perhaps most important, “If we agree to some concessions, do you have a plan to prevent this from happening again in the foreseeable future?”
If you agree to make concessions based upon your collective analysis of the situation, you should be willing to reopen the contract in order to implement the agreed-upon changes only after you have been given satisfactory answers to the following questions:
- Is the situation truly as bad as they describe it?
- Are your own accountants satisfied that they have received all the data they need, and are they convinced that the books reveal that which management alleges?
- Have you gotten an analysis of the books which explains how and why the crisis has occurred?
- Are there steps other than (or at least in addition to) musician concessions which can be taken to rectify the problem? If so, are they willing to take those steps?
- What is the state of the endowment fund? What is the current value? How much of it is restricted? Are the restrictions donor imposed or board imposed? Who controls the fund—the board, or a separate entity created to hold and administer it? What happens to the money in the event the institution dissolves?
- If there is no agreement to reopen, and they choose to file for bankruptcy protection, will it be pursuant to Chapter 7 or Chapter 11?
- And, finally, what is the plan for the future and does it appear to you and your accountants to be viable?
If you have agreed, albeit reluctantly, to make concessions, you will have to decide the form that those concessions should take. Some thoughts:
Cut weeks rather than wages. It may be that there is not sufficient demand in your town for as many weeks of work as you would like. Or perhaps your management has been unable to fully exploit the potential demand that really does exist. Not all orchestras have a year-round contract. But whether or not you have achieved a 52-week contract, the more important consideration, in my opinion, is to maintain reasonable and proper compensation for the weeks that you are working.
Most of the arguments we make at the bargaining table—cost of living increases, comparisons with similarly situated orchestras, the stress and practice time involved in doing the job properly—are made to persuade our employers of the value of our services and to seek appropriate financial (and other) recognition of that value. Thus it appears to me that agreeing to work for a lower salary is the very last concession that should be made, if ever.
And, of course, cutting weeks allows musicians to find other work during those dark weeks, or to receive unemployment insurance, or perhaps just to take some much-needed rest.
Moreover, if you cut salary but not weeks, the board and the community have lost nothing as a result of the crisis for which they are responsible! That is, they get the same amount of music from you, but you get paid less for it.
Think loans. Before you agree to make concessions which will involve complete loss of income which you will never recover, consider proposing that any financial concessions you make are to be treated as loans from individual musicians, to be paid back at some agreed-upon date or time in the future.
In 1985, the dancers of American Ballet Theatre (ABT) were asked to make concessions due to a fiscal crisis. At the time, their collective bargaining agreement guaranteed them 36 weeks of work. In response to the crisis, the dancers agreed to reduce the guarantee for the upcoming year to 26 weeks, as a loan to the company. That is, the amount of earnings, including pension contributions, that each dancer lost by the cut of ten weeks was carried on the books of the company as an outstanding debt to each dancer. Since dancers’ careers are relatively short, each of those dancers was paid back the full amount of the loan, with interest, as they retired, quit, or otherwise left the employ of ABT. Although the time of repayment may have to be shorter for symphony musicians, the concept is still viable.
Be creative. There are many other possible areas of concession, including those which relate to the easing of certain work rule limitations, which might save management money without actually cutting salary or weeks.
The agreement to make concessions should include a plan of rehabilitation and restoration. Indeed, depending on when restoration is made, the plan may also include increases and/or improvements toward the end of the concession period. That is, if the concessions are to occur immediately, you should insist on extending the current collective bargaining agreement by some period of time within which you are returned to the level of compensation you were enjoying before the concessions, and that level of compensation should be improved in accordance with your best estimate of the level at which you would be had there been no concessions. If you fail to provide for such rehabilitation at the time of making the concessions, you will have given up your best opportunity to achieve restoration and improvements.
Having said that, there is, of course, no guarantee that your management will fulfill the terms of the added contract period, but it’s better to have a plan in writing than nothing but another negotiation in the future.
Equality of Sacrifice
With the possible exception of some shamefully low-paid staff, everyone else in the organization should suffer losses at least equal to those suffered by the musicians. The reasons for insisting on this condition before making concessions appear to me to be self-evident.
There is no better time to achieve improvement in working conditions, job security, and other areas which have little or no economic impact to the board than when you are making the kind of sacrifices mentioned above. With the exception of job security issues, many of these items were probably proposed by the union in earlier negotiations but were dropped along the way when economics became paramount. Review your contract and your bargaining notes from the recent past and insist that some of those items be part of the deal.
If, after all of this, you and your management nevertheless reach impasse and you refuse to reopen the contract, they may file for protection under the Bankruptcy Act. In that case you may need legal assistance, but you ought to be somewhat familiar with some basics.
Under Chapter 11 the institution remains in business under the aegis of a bankruptcy judge, during which time a trustee in bankruptcy, appointed by the judge, attempts to work with the board, management, and a group of creditors (“Creditors’ Committee”) to agree on a plan of reorganization which will include paying off the creditors (usually in some substantially reduced amount) and continuing in business pursuant to the plan, but without the ongoing oversight of the judge or trustee.
Section 1113 of the Bankruptcy Act describes a procedure for a debtor in Chapter 11 to seek to have the judge set aside the collective bargaining agreement if he or she believes it is onerous and will prevent the debtor from ever achieving solvency. It is a very complicated procedure, but for our purposes it requires that the debtor first attempt to negotiate changes in the contract with the union which are “fair and equitable” to all before applying to the court for rejection of the contract. In the event the collective bargaining agreement is set aside, the union has a right to strike, appeal the decision, or both.
Under Chapter 7 the debtor is seeking to dissolve the enterprise. It calls for the gathering of all assets of the organization, liquidating them, paying off the creditors with the proceeds, and going out of business.
My fervent prayer is that for those of you who have not already faced any of this, that all of the above remains irrelevant to you.