Civil Service Laws Do Not Prohibit Demotions For Lack Of Funds

Richard Deem held the position of police captain in the classified service of the City of Fairview Park, Ohio, from 1997 until the City abolished the position as a cost-cutting measure on April 17, 2006. At the time, the City’s projected revenues were approximately $1.2 million below its projected expenses. In an effort to balance the City’s budget, Mayor Eileen Patton asked each department to cut its budget by 11% through non-personnel related cuts. Patton testified that she did not want any employees to lose their jobs because layoffs not only affect personnel, but they affect the quality of the City’s services.

Patton testified that she met with the three unions representing the police, fire, and service departments, and asked for the unions to eliminate longevity and the uniform allowance, and to move to a less expensive health care plan. Believing that the Mayor was blaming them for the shortfall, the unions rejected these proposals and asked the Mayor to present another plan that would apply equally to both union and non-union employees. Accordingly, Patton proposed an across-the-board 5% pay cut, including her own salary, and a less expensive health care plan. The unions also rejected the 5% across-the-board pay cut.

Eventually, Patton advised Deem that because of decreases in revenues and increases in expenditures, the Police Department was being restructured by eliminating the captain position, and he would be demoted to lieutenant. When the City’s Civil Service Commission upheld the demotion, Deem appealed through the court system.

Deem’s main argument was that under a state civil service statute known as R.C. 124.34, demotions could only occur for particular disciplinary reasons. The Court disagreed, pointing to another provision in the statute that stated: “When it becomes necessary in a police or fire department, through a lack of work or funds, or for causes other than those outlined in Section 124.34 of the Revised Code, to reduce the force in such department, the youngest employee in point of service shall be laid off first.” Yet another state statute allows municipalities to lay off employees or abolish positions for a variety of reasons including a “lack of funds.”

The Court commented that “evidence introduced at the hearing, through both testimony and exhibits, established that when the City eliminated the captain position, it was confronting a substantial decrease in revenues as a result of the demolition of a shopping mall, layoffs at the NASA Glenn facility, and layoffs of employees of the Fairview Park Board of Education, the three largest employers in the City. The Mayor explained that state taxes and personal property taxes were also diminished, and interest income the City was receiving from banks had decreased. As a result, the City had projected a $1.2 million shortfall in revenue.

“Furthermore, concurrent with Deem’s demotion, the least senior lieutenant was demoted to the position of sergeant, and the least senior sergeant was demoted to patrolman. Although no member of the Police Department was laid off, one patrolman was cut from the payroll when he was called to active duty in the Army Reserves in September 2006, and one lieutenant retired in August 2006. The fact that no patrolman was laid off does not invalidate the City’s actions with regard to Deem. The City also abolished the assistant chief position in the Fire Department, laid off two employees in the service department, laid off part-time employees, and reduced other employees’ hours as part of the overall restructuring of all City departments.

“Deem argues that R.C. 124.34 should control the Commission’s decision and that, because none of the reasons enumerated in that statute justify his demotion and reduction in pay, his demotion was illegal. However, to accept this argument would render the balance of the civil service statutes meaningless. If a municipality could not legally demote a police officer without disciplinary action of the type contemplated in R.C. 124.34, the City would be powerless to cope with problems posed by insufficient funds or lack of work that warrant a reduction in force in its police and fire departments.”

Deem v. Fairview Park, 2011 WL 5507393 (Ohio App. 8 Dist. 2011).

This article appears in the February 2012 issue.