Wednesday, December 8, 2021

Union says Housing is illegally diverting federal funds

By on December 14, 2016

federacino-central-de-trabajadoresSAN JUAN – The Central Federation of Workers, the union representative of Public Housing Administration (PHA) employees, has sued the government in U.S. District Court challenging the constitutionality of portions of Act 66 of 2014, the Fiscal Sustainability Act, and to force the agency to grant more than $3 million in already budgeted salary hikes.

The lawsuit, filed Monday, includes as defendant Public Housing Administrator Gabriel López Arrieta and Luis Cruz Batista, director of the Office of Management and Budget (OMB).

According to the suit, the PHA is a recipient of federal funds and each year it must submit a “Public Housing Annual Plan” to the U.S. Department of Housing and Urban Development in which it must state the financial resources available to the agency and their planned use.

The suit contends the PHA is misusing the funds, which exposes the agency to severe administrative and/or criminal penalties, including losing the funds.

Back in 2013, the PHA and the union entered into a collective-bargaining agreement effective from Nov. 13, 2013, until June 30, 2017. Among the provisions of the deal, the PHA agreed to concede two pay raises for union members, for fiscal years 2014 and 2015.

After the pay hikes for 2013 were granted, the commonwealth enacted Act 66, which prohibited local agencies from granting increases in economic or monetary compensation to workers. Nevertheless, the act provided for an alternative process, which allowed workers to enter agreements with the state that could set aside the general rule adopted by statute.

The workers federation and other public sector unions entered into an agreement with the government of Puerto Rico, making some concessions to avoid the application of Act 66. The federation agreed to postpone the wage increase provisions in its bargaining agreement scheduled for fiscal 2015.

The federation also agreed that the agency’s economic situation would be reviewed at the end of each year to determine if the PHA could make appropriate adjustments to grant the wage raises postponed by the agreement.

This year, the PHA obtained an increase in federal funds to cover agency operating expenses, including but not limited to its human resources. Earlier this year, the PHA and the federation agreed that the former would ask the OMB to disburse funds for the wage hike.

In September, however, the OMB rejected the PHA’s application to grant a wage increase of $135 per employee. “This decision puts in jeopardy [PHA] employees and the federal funds granted to said agency,” the suit reads.

The PHA’s budget operating expenses reflect an increase of $8.1 million compared with the resources allocated for fiscal 2016. “This increase is mainly due to the increase in Federal Funds and PHA own revenues. Likewise, in the line of Operating Expenses we observed an increase in the concept of ‘Payroll and Related Costs’ from $119.2 million to $122 million. While job spaces occupied only increase from 369 to 370. In other words, PHA obtained $3,198,000.00 in additional funds for payroll, to concede the wage increases negotiated in the Collective Bargaining agreement,” the suit adds.

While the federation asked the agency to enforce its duty and grant the rates, the PHA hasn’t acted. The federation says it has sent letters to HUD informing the agency of PHA’s “illegal actions.”

The federation also says the Fiscal Sustainability Act violates the Constitution’s Supremacy Clause because it is impairing contractual rights.

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