Debate is growing over the legality and potential consequences of implementing a "living wage" as a result of differing interpretations of the Virginia Public Procurement Act.
The University has indicated it cannot enact a "living wage," citing an advisory letter from the Attorney General's Office to the University. Living Wage Campaign supporters, however, claim this interpretation of the law is too narrow.
The Virginia Public Procurement Act
The Virginia Public Procurement Act outlines the requirements a public body must adhere to in order to contract with other companies, explained Meredith Richards, former Charlottesville City Council member, at Wednesday's teach-in sponsored by the Living Wage Campaign.
A public body must conduct bidding for a contract in a fair and impartial manner by creating a list of "best value" provisions which contractors must offer in order to be considered.
According to the Act, best value means "the overall combination of quality, price and various elements of required services that in total are optimal relative to a public body's needs."
The letter from the Attorney General's office states that implementing a "living wage" would not fall under this "best value" provision.
"The living wage issue clearly is a matter of social, political or economic policy," the letter states. "It is not related to the goods or services sought to be procured and, therefore, may not be a factor considered pursuant to 'best value' provisions."
The letter is only an advisory notice, not an official opinion, said David E. Clementson, spokesperson for Attorney General Robert McDonnell.
According to President John T. Casteen, III's April 12 letter posted on the University Web site, the University has requested an official opinion from the attorney general.
University spokesperson Carol Wood said yesterday the University has not yet received an official opinion. University officials do not know when it will arrive.
According to Clementson, neither a letter nor an official opinion is binding.
An opinion "would not be legally binding, just as the letter is not," Clementson said. "It's the best legal advice possible; it's the most followed legal advice."
Casteen told protesters during negotiations that the Board of Visitors would follow the recommendation of the Attorney General's Office.
"I can tell you that, very clearly, the Board of Visitors is not going to disobey the attorney general's advice," Casteen said. "It's not a matter of binding or not binding, that's simply the Board's position."
Clementson explained that the University is a client of the Attorney General's Office and therefore could not be taken to court by the attorney general if the University chose not to follow the advice of his office.
A potential lawsuit against such an ordinance should instead be initiated by a contractor, Clementson said.
Clementson added that the University has the right to reject the advice of his office.
Existing "living wage" ordinances
Despite receiving comparable advice from the attorney general, several Virginia localities have already implemented "living wage" ordinances.
According to Richards, Charlottesville passed its first "living wage budget" in 1999, requiring the city to pay all of its regular full-time employees a minimum of $8 per hour. A year later, the "living wage" was guaranteed for all city employees, including seasonal and part-time workers.
In November 2001, the Charlottesville City Council passed an ordinance requiring all contractors to maintain the same minimum wage standards as the city.
Richards said she and other City Council members at the time believe payment of a "living wage" constitutes a "best value" because it leads to a higher quality of service, including better workmanship, higher productivity and lower turnover rates.
University Law Prof. J.H. Verkerke said in an e-mail it is "well recognized" in the field of labor economics that paying higher wages can increase worker productivity.
"It is difficult to say whether higher wages would improve the quality of specific services at the University," Verkerke stated. "There can be no doubt at all that the University administration would be justified in acting on the assumption that such an effect would be likely to occur."
Richards further justified the city's decision to adopt a "living wage" because of ambiguities within the law.
"At the very, very least, the intent of the [Virginia Public Procurement Act] is not clearly established," Richards said. "The City of Charlottesville saw this law as an opportunity to pass a 'living wage.'"
State Sen. Creigh Deeds, D-Charlottesville,a supporter of the Living Wage Campaign, said he has not yet researched the legality of a "living wage" in relation to the VPPA but noted that the City of Alexandria and Arlington County have also passed "living wage" legislation which has yet to be challenged in court.
"I think the best test of whether or not an organization, a local government or state entity has authority to enact 'living wage' legislation is the test of three localities that have had it in place for years," Deeds noted. "I find that really persuasive."
Casteen claimed in a written letter yesterday that these arguments are not applicable to the University because it is a state agency, citing the attorney general's letter.
Wood further explained that the situation of the University differs from that of an independent locality.
"A public university is part of the state system and dependent on not only the governor to appoint our boards and the General Assembly to approve them, but we are also dependent on the General Assembly and the governor for the budget every year," Wood said.
Other potential avenues
In addition to regulations for bidding, the Public Procurement Act lists a number of exemptions to its requirement. The University of Virginia endowment has some exemptions regarding how its contracts are managed.
Student protesters have proposed using private funds to supplement the salaries of contracted workers. According to Clementson, the Public Procurement Act also applies to private donations to the University Foundation; therefore, using these funds to support a "living wage" would not be in support of the statement from the attorney general's office.
The University would have difficulty following this route, Casteen told protesting students last Saturday, because the private funds donated to the University are usually earmarked for specific purposes.
"Private funds almost always carry donor restrictions as to how they're used," he said. "I've never seen a private gift that was designated to subsidize compensation for contract employees."
Donors also often expect to receive a tax deduction for their gifts to the University, Casteen said, noting that the donations for wages might eliminate their ability to apply for tax breaks.
The Higher Education Restructuring Act, a law passed last year by the General Assembly, aims to provide greater autonomy to state universities in relation to decisions regarding their budgets. However, Clementson said the act was not discussed in the letter because the management agreements for this year had not been finalized at the time it was written. He added that the implementation of the restructuring act would not change the view of the Attorney General's Office.
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