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April 4, 2011

Court of Appeals hold that wage freeze by Buffalo Fiscal Stability Authority applies to wages lost during the freeze and to longevity and promotional steps

Court of Appeals hold that wage freeze by Buffalo Fiscal Stability Authority applies to wages lost during the freeze and to longevity and promotional steps
Matter of Meegan v Brown, 2011 NY Slip Op 02436, Court of Appeals

The State Legislature created the Buffalo Fiscal Stability Authority (BFSA), a public benefit corporation, to assist in achieving fiscal stability in the City by the 2006-2007 fiscal year.

Among other powers, the BFSA was authorized to impose a wage freeze upon finding that such a freeze was essential to the adoption or maintenance of a City budget or financial plan – which it did in April 2004, determining "that a wage freeze, with respect to the City and all Covered Organizations, is essential to the maintenance of the Revised Financial Plan and to the adoption and maintenance of future budgets and financial plans that are in compliance with the Act."

The freeze, effective April 2004, prevented any increase in wages, including increased payments for salary adjustments according to "plan and step-ups or increments".

The freeze was lifted in July 2007, whereupon the BFSA and the City indicated that City employees would immediately be entitled to a one-step increase in salary and wages. The Unions objected, however, contending that the employees were entitled to advance the four salary steps that they would have received had the freeze not been imposed.

The Union sued and Supreme Court held that Public Authorities Law Section §3858 (2)(c)(iii) applies only to wages lost during the freeze and not to longevity and promotional steps provided in the various contracts between the City and its unions and therefore the teachers were "entitled to their previously negotiated wage increase benefits going forward immediately."

Although the Appellate Division affirmed the Supreme Court ruling for essentially the same reasons, (see 63 AD3d 1673 [4th Dept 2009]), the Court of Appeals reversed, holding: “Public Authorities Law § 3850-a sets forth the Legislature's intent. In that provision, the Legislature declared that the "maintenance of a balanced budget by the city of Buffalo is a matter of overriding state concern." This remedial legislation was enacted to provide the city of Buffalo with "long-term fiscal stability," ensuring confidence of investors in the City's bonds and notes and to protect the economy of the region (id.). The Act further provides that "[t]he provisions of this title shall be liberally construed to assist the effectuation of the public purposes furthered hereby" (id. § 3873). Thus, the entire purpose of the statute was to place the city of Buffalo on sound financial ground over the long term. In order to accomplish such purpose, BFSA was empowered to freeze wages and salary increments until the City's growth and stability were renewed. The intent of the statute supports the City's position.”

The Court of Appeal’s decision is posted on the Internet at:

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