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Grants Pass and Firefighters Arbitration
 
IN THE MATTER OF THE INTEREST ARBITRATION between INTERNATIONAL ASSOCIATION OF FIREFIGHTERS, LOCAL 3564, and THE CITY OF GRANTS PASS, OREGON. IA-02-00.
 
This Interest Arbitration arises between the International Association of Firefighters, Local 3564 ("Union"), and City of Grants Pass ("City"). Nancy E. Brown was selected to serve as arbitrator. At a hearing held on May 11, 2000 in Grants Pass, Oregon, the parties had an opportunity to examine and cross-examine witnesses, introduce relevant exhibits, and argue the issues in dispute. Evidence was entered into the record with any objections noted. The hearing was recorded and transcripts made. The arbitrator will retain the transcript and exhibits for no less than 180 days from the date of this award. Both parties submitted Post Hearing Briefs. There was a delay in receipt of the transcript that caused a delay in the briefing schedule. The hearing was closed upon receipt of the briefs on July 5, 2000.
 
I. RELEVANT CRITERIA
In arriving at her Decision and Award, the arbitrator weighed and considered the following criteria set forth in the Oregon Public Employees Collective Bargaining Act, ORS 243.746(4), and the Rules of the Oregon Employment Relations Board ("ERB"), OAR 115-40-015
 
(8):
 
ORS 243.746(4) Where there is no agreement between the parties, or where there is an agreement but the parties have begun negotiations or discussions looking to a new agreement or amendment of the existing agreement, unresolved mandatory subjects submitted to the arbitrator in the parties' last best offer packages shall be decided by the arbitrator. Arbitrators shall base their findings and opinions on these criteria giving first priority to paragraph (a) of this subsection and secondary priority to subsections (b) to (h) of this subsection as follows:
 
(a) The interest and welfare of the public.
 
(b) The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration and weight to the other services, provided by, and other priorities of, the unit of government as determined by the governing body. A reasonable operating reserve against future contingencies, which does not include funds in contemplation of settlement of the labor dispute, shall not be considered as available toward a settlement.
 
(c) The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided.
 
(d) The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received.
 
(e) Comparisons of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this subsection, "comparable" is limited to communities of the same or nearest population range within Oregon. Notwithstanding the provisions of the subsection, the following additional definitions of "comparable" apply in the situations described as follows:
 
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state cities of the same or similar size;
 
(B) For counties with a population of more than 400,000, "comparable" includes comparison to out-of-state counties of the same or similar size; and
 
(C) For the State of Oregon, "comparable" includes comparison to other states.
 
(f) The CPI-All Cities Index, commonly known as the cost of living.
 
(g) The stipulations of the parties.
 
(h) Such other factors, consistent with subsections (a) to (g) of this section as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in subsection (a) to (g) of this section provide sufficient evidence for an award.
 
II. THE PARTIES FINAL OFFER PROPOSALS
(Note: [] indicates strikeout; ** indicates bolded text, {} indicates italics.)
 
The *last best offer of IAFF, Local 3564* is as follows:
 
Article X - Wages
 
Article 10.1 Salary Schedule
 
Base Salary increases as follows:
 
Base salaries of Firefighter (all bargaining unit positions except Corporal) to increase: 3.5% on January 1st, 2000; 3.5% on July 1, 2000; 3% on January 1st, 2001; 3% on January 1st, 2002.
 
Corporal wage step to be changed from current six steps to the following:
 
Step 1: 10% above Step 6 Firefighter wage
 
Step 2: 15% above Step 6 Firefighter wage
 
Article 10.5 Incentive Pay
 
Effective January 1, 2000, Firefighters will be eligible for incentive pay as described below.
A. Associate of Science Degree in Fire Science: 2 percent per month of top FF step. B. Bachelors Degree: 4 percent per month of top FF step. C. EMT Intermediate: 2 percent per month of top FF step. D. Second Language: 75 % per month of top FF step. *E. DPSST
 
Fire Officer I: 2 percent per month of top FF step*
 
Rest of Section - Current language
 
Article XI - Health and Welfare
 
11.1 Health and Welfare
 
The City agrees to provide a health and welfare plan to all bargaining unit employees. The plan shall be substantially comparable to the present level of benefits. The City will pay up to [$375.00] *$400.00 for the first year, $425.00 for the second year and $450.00 for the third year* per employee per month [with the employee] *with the City covering 90% and the employee 10% of any amount over the insurance cap*.
 
Rest of Section - Current language
 
Article XIX - General Provisions
 
{The Union proposes an additional subsection (19.13), all other subsections to remain the same.}
 
*Article 19.13 Premium Pay
 
Any firefighter that performs the job duties as an Engine Company Officer shall be paid 5% above the employee's normal salary for the time assigned those duties. Assignments will be given with first priority given to Acting Fire Corporals. In the event that an Acting Corporal is not available, then assignment will be made by seniority.*
 
The *last best offer of the City of Grants Pass* is as follows:
 
Base salaries of all bargaining unit positions except Corporal to increase: January 1, 2000, $100.00 added to base plus 2.7% COLA; January 1, 2001, increase to base by CPI-U All
 
Cities (October to October); January 1, 2002, increase to base by CPI-U All Cities (October to October)
 
Base salaries of Corporals to increase: January 1, 2000, $125.00 added to base plus 2.7%
 
COLA; January 1, 2001, increase to base by CPI-U All Cities (October to October);
 
January 1, 2002, increase to base by CPI-U All Cities (October to October)
 
The City of Grants Pass proposed the following changes in contract language:
 
ARTICLE V- HOURS AND OVERTIME
{Changes to article 5.8 only, all other subsections to remain the same.}
5.8 Overtime. The City shall have the right to assign overtime work as required in the manner deemed to be the most advantageous and consistent with the requirements of municipal service and public interest.
 
Regular Shift Employees: Shift employees shall be compensated at the rate of 1½ times their respective 56 hour per week regular hourly rate as set forth in Exhibit "A" for overtime work under the following conditions:
 
1. All time worked *as a Firefighter, Fire Corporal or Fire Prevention Specialist* in excess of the regularly scheduled work shift for that employee (e.g., in excess of 24 hours in any one workday).
 
2. All time worked *as a Firefighter, Fire Corporal, or Fire Prevention Specialist* in excess of 204 hours in a 27 calendar day period duty schedule fire service non-exempt employees.
 
3. Forty-Hour Employees: Overtime for 40-hour employees shall be time worked (1) in excess of 8 hour shifts *for specific job class* in a workday for employees working five 8 hour shifts, or (2) in excess of 10 hours *for a specific job class* in a workday for employees working four 10 hour shifts, and (3) in excess of 40 hours in a work week.
 
4. Employees assigned to on-call fire prevention who are required to carry beepers shall be paid $75.00 month in addition to overtime and call-back earned.
 
*Hours worked as a CSO, RO, and PSO in excess of your regular schedule shall be overtime work. Work in other job classes will be compensated at the rate identified in this contract.*
 
ARTICLE X - COMPENSATION
10.1 Salary Schedule. Employees shall be compensated for hours worked in accordance with the salary schedule attached to the Agreement and marked Exhibit "A", which is hereby incorporated into and made a part of this Agreement.
 
*Compensation for hours worked as CSO, RO, and PSO shall be at 1.5 times the rate listed in Exhibit "A" for that particular job class and shall not be considered overtime for the purposes of this section.*
 
10.2 Pay Periods. Pay Periods shall be on a bi-weekly basis and pay checks shall be received every other Friday for the pay period ending on the preceding Saturday.
 
10.3 Conversion Formula. Conversion formula for hourly rates of pay shall be determined in accordance with Exhibit "C".
 
10.4 Form of Compensation. Compensation for authorized overtime and callback only shall be paid unless compensatory time is requested by the employee. Such time shall be credited at time and one-half. Shift employees may accrue up to a total of 120 hours of such compensatory time. Forty-hour employees may accrue up to a total of 120 hours of such compensatory time. Forty-hour employees may accrue 40 hours of such compensatory time. Compensatory time-off may be taken upon the request of the employee if the supervisor agrees based on the operating needs of the department.
 
*Hours worked as a CSO, RO, and PSO shall be paid and cannot be utilized or banked as compensatory time.*
 
An employee during the periods specified below must advise the head of the department or the employee's designee if overtime is to be credited as compensatory time. If no notification is given on the specified dates, overtime will be paid and not credited as compensatory time. Notification dates are as follows: First week in July, first week in November, and first week in March.
 
10.5 Incentive Pay. Effective January 2000, Firefighters will be eligible for incentive pay as described below: A. Associate of Arts Degree in Fire Science: $70.00 per month; B. Bachelors Degree: $140.00 per month; C. Emergency Medical Technician, Intermediate: $70.00 per month; D. Fluency in a Second Language: $10.00 per month; *E. Certified Community Service Officer (CSO): $50.00 per month; F. Certified Reserve Public Safety Officer (RO): $100.00 per month; G. Certified Public Safety Officer (PSO): $150.00 per month*
 
Incentive compensation amounts received by an existing employee shall not be decreased by this Agreement. Individual employee incentive amounts being paid as of December 31, 1999 which exceed those indicated in this contract will be continued for those individuals until the incentives earned by the employee under the terms of this contract exceed those paid on December 31, 1999, so long as the employee retains certifications and qualifications originally qualifying the employee for such incentive compensation. ([Note:] Incentive Pay for Bachelor's Degree, and Associate of Arts Degree, *CRO, RO and PSO* are not cumulative.)
 
*10.6 Qualifications for CSO, RO, PSO Incentives
 
City will provide specialized training for Community Service Officer and Reserve Public Safety Officer. City will promulgate training standards and requirements for each certification. Unit members seeking Certified Public Safety Officers shall be transferred to a 40 hour week during Academy training and the time necessary to complete the Field Training and Evaluation Program (FTEP). Certified individuals will then return to a 56 hour work week.
 
Employees receiving CRO, RO and PSO incentive compensation are required to work as such for 48 hours in each calendar quarter in the times offered by City for such employment, in addition to their assigned schedules. Compensation for hours worked as CSO, RO, and PSO shall be at 1.5 times the rate for the respective positions delineated in Exhibit "A". This compensation constitutes all required compensation for work in the job classification.
Failure to meet required work in any calendar quarter shall eliminate the incentive pay for the ensuing quarterly period, however, compensation will be made for all hours worked. Failure to meet the standard for two consecutive calendar quarters disqualifies the employee from incentive compensation, and the City may withdraw certification to work in the respective categories.*
 
ARTILCE XI- INSURANCE
11.1 Health and Welfare. The City agrees to provide a health and welfare plan to all bargaining unit employees. The plan shall be substantially comparable to the present level of benefits. The City will pay up to $375.00 per employee per month with the employee and the *City splitting any cost over the $375.00. In no event shall the City's premium contribution be less than ninety percent (90%) of the total monthly premium. The City shall provide life insurance in the amount of $30,000.00 to each employee. All employees hired after the dated of signature of the contract will be eligible for 50% City paid medical and prescription benefits for six-months only following retirement.*
 
11.2 Continuation of Hospital and Life Insurance Coverage Benefits for Permanently
 
Disabled Employees.
 
1. Any employee permanently disabled and retired from City employment before age 65 will continue to receive life insurance benefits provided by the City for those in the employee classification until the employee reached 65.
 
2. The same life insurance benefits are extended, at the option of and at the expenses of the employee, to the dependents of the permanently disabled employee until the employee reaches age 65.
 
3. The Health Insurance premium for any employee who has been continuously employed on permanent basis for twelve consecutive months or longer who becomes totally and permanently disabled shall, two months after the determination of such disability, be waived for the period of total and permanent disability commencing two months after such determination, but not to exceed [two years] *six months up to the designated cap*. During the period of waiver the employee and covered eligible dependents shall be entitled to all benefits of this contract as if premium was being paid. Upon conclusion of such disability or the [two year] *six month* period, whichever occurs first, the employee and/or covered dependents may convert to whatever plan is being offered as a conversion policy by the City's insurance carrier.
 
11.3 Public Employees Retirement System. The City will continue to participate in the Oregon Public Employees Retirement System or its successor as determined by the State of Oregon. The employee's contribution, [currently 6% to the system, will be paid by the City until December 31, 1996. Effective January 1, 1997 the bargaining employees] *will be the responsibility of the employee and will be deducted bi-weekly from their pay check*.
 
ARTICLE XII - SENORITY
{The City proposes added a subsection (12.4), all other subsections to remain the same}
*12.4 Seniority for Promoted Employees. Employees who promote to a City position out of the bargaining unit shall have the opportunity to resign and return to their previously held position within the six month trial service period. City shall not fill the promoted employees position for the six month period and shall allow the employee to return. Return to the bargaining unit shall be without loss of seniority, with the exception of time served in the promoted position.*
 
ARTICLE XXII - TERMS OF AGREEMENT
22.1 This Agreement shall be effective as of the 1st day of January [1998] *2000*, and except as amended or modified, shall remain in full force and effect until December 31, [1999] *2002*.
 
A. This Agreement shall automatically renewed from year to year thereafter unless either the Union or the City desires to amend or renegotiate this Agreement and so notifies the other party in writing by August 1, *20002*.
 
III. BACKGROUND
Grants Pass with a population of 20,395 residents is the county seat for Josephine County. The City is a full service municipality providing water, wastewater, streets, drainage, parks, planning, building, solid waste landfill, economic development, tourist promotion, and public safety services including police, fire and communications. An elected, voluntary City Council and Mayor govern the City. A City Manager employed by the City Council has administrative and operational responsibility for all bureaus of the City government.
 
Grants Pass provides its police and fire services through a public safety model and is the only city in Oregon to do so. The Public Safety Director heads the bureau that includes both law enforcement and fire rescue personnel. The supervisory personnel, Public Safety Sergeants and Lieutenants are cross-trained and certified. The two Lieutenants oversee both the fire and police bureau; the eight Sergeants supervise both police and fire personnel. There are fourteen Firefighters currently employed and three Corporals. The Corporals, who are members of the bargaining unit, have lead worker responsibilities for their shift and the two stations. The Firefighters and Corporals are trained and certified in fire suppression and prevention and medical emergencies. There are two fire stations approximately two miles apart and are manned per 24-hour shift by two Firefighters and a Corporal in one station and two Firefighters in the second station. There are also at various times interns who are assigned to the firehouse. The City provides assistance at medical emergencies but does not run an ambulance service.
 
The expired contract runs from January 1st, 1998 to December 31st, 1999. The parties' proposals have an effective date of January 1, 2000.
 
IV. DISCUSSION
The arbitrator must base his or her findings and award on the statutory criteria listed in ORS 243.746(4)(a) through (h) giving first priority to paragraph (a) -the interest and welfare of the public- and secondary priority to subsection (b) to (h). The City argues that the arbitrator's decision must be determined by looking first and only at the interest and welfare of the public. The evidence, the City argues, is clear that the Union's final offer is not in the interest and welfare of the public because it would, in essence, dismantle the public safety structure adopted and supported by the City Council. While arbitrators must give the interest and welfare of the public first priority in determining an award, there is no statutory definition of interest and welfare of the public. However it is clear from the language of the statute that the interest and welfare of the public is not the determining factor standing alone, but rather is to be given first priority in conjunction with the secondary criteria. It is also clear that among criteria (b) though (g) all should be given equal consideration by the arbitrator and (h) -such other factors traditionally taken into consideration in determining wages and conditions of employment- should not be considered if the arbitrator determines that there is sufficient evidence produced by the other criteria listed. Although my decision in this matter must ultimately turn on which of the two final offer packages better serves the "the interest and welfare" of the public, this determination cannot be made without a full consideration of the listed secondary criteria. After considering all of the secondary criteria, my final decision must still be made in terms of the impact of the final offer proposals on the interest and welfare of the public.
 
There are two basic issues in dispute: wages and health insurance. The issue of wages however has several components: the basic wage adjustment, a change in the pay for Corporals, changes to the incentive pay plan as proposed by both the Union and the City and a premium pay for those who are assigned the duties of Engine Company Officer. Both parties have proposed changes regarding health insurance. I will first discuss the wage components of (1) base wage increases and (2) proposed changes in Corporal wage and then deal separately with the issue of health insurance. I will discuss the incentive pay plan and premium pay issues last. However, for ease of discussion, I will vary the order of the statutory secondary criteria: I will discuss first but briefly the CPI criteria [ORS 243.746(4)(f)] and the overall compensation presently received by the employees [ORS 243.746(4)(d)]. I will discuss in greater detail the comparisons of overall compensation of other employees performing similar services [ORS 243.746(4)(e)], then ability to attract and retain qualified personnel [ORS 243.464(4)(c)], followed by the reasonable financial ability of the city to pay
[ORS 243.746(4)(b)]. Neither criteria (g) or (h) will be discussed; there were no stipulations of the parties and factors in subsection (a) to (g) of the criteria provided sufficient evidence for an award.
 
ORS 243.746(4)(f). The CPI-All Cities Index, commonly know as the cost of living.
In the case before the arbitrator, this criterion is of less significance. Each of the party's wage proposals represents more than a cost of living for the first year of the contract. The City provided uncontested evidence that within the last five years the Firefighters have received wage increases in excess of the cost of living. (Employer's Exhibit at Tab 7) In year two and three of the contract, the City has proposed a CPI formula be applied to the base wage. The Union on the other hand has proposed a flat 3% increase to the base wage for the subsequent contract years. Whether that will fall above or below the CPI All Cities Index is an unknown at this time.
 
ORS 243.746(4)(d). The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays ad other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received.
The Firefighters receive a total of 17.5 paid days leave at twelve years of service, one above average for its comparables. (Union's Exhibit #20) However the City does not pay the Employer paid 6% PERS pick up. (Union's Exhibit at Appendix C) Grants Pass currently pays incentive pay for Associate of Arts Degree in Fire Science, Bachelors Degree, EMT- Intermediate and a Fluency in a Second Language. The BA degree and AA degree incentive pays are not cumulative. The City provides a Health and Welfare plan to all bargaining unit members up to $375.00 per employee per month with the employees and the City splitting any increase above the cap. (Employer's Exhibit at Tab #9) In addition to the Health and Welfare package, the City provides life, AD and D, and long term disability insurance, a partial tuition and books reimbursement for work related classes, a fitness reimbursement, and a sick leave conversion after 10 years of service upon termination or death. (Employer's Exhibit at Tab 5) However not all these benefits are contractual.
 
ORS 243.746(4)(e). Comparisons of the overall compensation of other employees performing similar service with the same other employees in comparable communities. As used in this subsection, "comparable" is limited to communities of the same or nearest population range within Oregon. Notwithstanding the provisions of the subsection, the
following additional definitions of "comparable" apply in the situations described as follows:
 
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state cities of the same or similar size;
 
(B) For counties with a population of more than 400,000, "comparable" includes comparison to out of state counties of the same or similar size; and ...
 
The Union has proposed that base salaries of all bargaining unit positions except Corporal increase effective January 1, 2000 by 3.5%, then 3.5% on July 1, 2000, followed by 3% on January 1, 2001, and again by 3% on January 1, 2002. The Union argues that such catch-up is necessary if salaries for Grants Pass Firefighters are to be at all comparable with others doing similar work in similar size communities. The City has proposed base salaries for all except Corporal to increase effective January 1, 2000 by $100 added to base plus 2.7% with CPI-U (October to October) increases for years 2001 and 2002. The City maintains that the wages paid their Firefighters is comparable with other cities that provide fire service. The City argues that fire districts such as Tualatin Valley, Clackamas, and Klamath are distinctive governmental entities with greater resources and that their salaries distort comparability and should not be used. The City argues that statutorily the arbitrator is limited to comparing only cities of comparable size. The Union counters that there is ample precedent to use cities that are part of a fire district as comparables and that there is no statutory prohibition to their use.
 
ORS 243.746(4)(e) directs the arbitrator to compare "communities of the same or nearest population range within Oregon". The Legislature clearly defines "comparable". They limit the arbitrator to communities of similar size in Oregon. In addition, they provided specific parameters for cities and counties with populations above a certain number and for the State. The legislative criteria speaks to employees performing similar work. There is no reference made to cities providing similar services but rather the generic word "communities" is used. I do not find in a reading of this criteria any language that would lead me to believe that the previous arbitral precedent to include cities that provided fire services through fire districts as a comparable community had been legislatively overturned.
 
The parties are in apparent agreement that firefighters perform similar duties and functions regardless of the location. However the parties have presented different sets of comparables. The Union has included cities such as Milwaukie, Oregon City, and Klamath Falls that are of comparable size but provide fire service through a fire district. While the City has some cities in common with the Union's comparables, it has included other cities also of comparable size such as Lake Oswego, Corvallis and Albany. An analysis of the evidence regarding comparables provided at the hearing and later clarified in their briefs demonstrates that the Grants Pass firefighters are not comparably paid. If you combine the cities that provide fire service through fire districts and the comparable cities provided by the parties, 13 cities pay more for top Firefighter and 4 cities pay less than Grants Pass for similar services.(1) If, for the sake of argument, you include only cities that provide their own fire service, 6 cities pay more for top firefighter and 4 cities pay less. While one might conclude that this puts Grants Pass "about in the middle", it is important to note that those cities who rank above Grants Pass wage schedule pay considerably more each month. The difference in wages for those cities below Grant Pass is less significant. Assuming that inflation stays below 3%, the Union's proposal with its mid-year "catch-up" increase of 3.5% and 3% increases each subsequent year would obviously better close this wage gap.
 
The Union has proposed significant increases for the Corporal wage scale. They have reduced the five steps to two; step one, the starting rate is 10% higher than Step 6 Firefighter wage and step two, effective after 6 months, is 15% higher. Their rationale for this increase is the significant responsibility of the position (Corporal) under the public safety model. The Union asserts that this position is responsible for two stations rather than just one station, as would be the case under a more traditional model. The Corporal's responsibility includes duties as incident commander, but also other administrative and training duties; responsibilities and duties that are similar to a Battalion Chief in a traditional model. (Union's Exhibit #26, #28 and Testimony of Pike) The City counters that the Corporal position, while it does have station and incident responsibilities, is supervised by a Public Safety Sergeant who carries the bulk of the administrative, training and performance evaluation responsibilities. The Fire Commander and/or Public Safety Sergeants are also available for fire or emergency scenes or non-routine problems. (Testimony of Henner)
 
There are no other positions titled Corporal in other comparable cities with a more traditional fire service model so a position with somewhat similar duties must be used for comparison. The City prepared a Fire Service Job Duties Comparison which compares the job duties of Captains and Lieutenants of other comparable cities and those of the Corporal in Grants Pass. This comparison shows that all have responsibilities for daily activities, shift briefing, and ride engine to calls but half, unlike Grants Pass Corporals, complete and sign annual evaluations. None are incident commanders at major events. A major event is defined as an incident that spans multiple hours and/or days and involves multiple agencies. A logical assumption would be that they might be incident commanders at other times - a more routine call. (Employer's Exhibit at Tab 6) The City used the Captain and Lieutenant positions when making their comparisons. After a review of the testimony of Pike, Henner, Union's Exhibit #28, and the classification descriptions of Fire Corporal, the arbitrator is persuaded that comparing the Corporal position to that of a Captain or Lieutenant is reasonable. Using only the City's comparable, a review of the evidence demonstrates that the Corporal pay scale for Grants Pants is below those of comparable jurisdiction. (Employer's Exhibits at Tab 6)
ORS 243.746(4)(c). The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided.
 
The City offered persuasive evidence that there are definitely adequate numbers of qualified applicants for firefighter vacancies; in the most recent recruitment there were 269 applicants for four positions. (Employer's Exhibit at Tab 4) Yet turnover is significant; since 1993 seventeen (17) Firefighters have left Grants Pass for other fire districts. While recognized as significant by both the Union and the City, the solution to the problem of high turnover is in dispute. The Union argues that not only higher wages but also lack of promotional opportunities force Grants Pass Firefighters to look elsewhere. The public safety model adopted by the City forces Firefighters to cross train if they wish to advance beyond the position of Corporal. The Union argues that while their wage proposal will not immediately raise wages to the level of Medford or other higher paying fire departments, it will show that the City is moving to close the gap. The new structure and pay increase for Corporals will compensate and recognize the duties these employees perform for the City. Both these increases to the wage rate, argues the Union, will encourage Grants Pass firefighters to remain with the City.
 
The Union has characterized the establishment of premium pay for Firefighters performing Engine Company Officer duties as pay for additional duties not as the creation of another position or step in a career ladder. As such, I do not consider this as a promotional opportunity - a rung up in the career ladder.
 
The City, on the other hand, argues that there is no way that the City has the resources to compete with larger, more affluent entities such as Medford and the fire districts in the Portland Metro area. The City has increased the pay scale for Corporals by $125 dollars a month in contrast to the $100 a month it has proposed to the Firefighter's base wage. Furthermore its incentive proposals to provide additional pay for various police related certification is consistent with the public safety model the City has adopted and will encourage Firefighters to prepare for promotion to Sergeant.
 
A review of the evidence shows that since 1993 Grants Pass employees have left for primarily the Medford fire department and the fire districts in the Portland Metro area. Two Firefighters have taken positions with the City of Ashland and two with the City of Bend. (Union's Exhibit #13) All of these cities pay higher wages at entry level, from a low of approximately $100 dollars a month (Ashland) to over a thousand dollars (Clackamas County Fire District). Of particular note is the approximately $500 per month increase in pay when a Grants Pass Firefighter leaves for employment in Medford. (Union's Exhibit #14) This is significant, as eight of the nineteen Firefighters who left Grants Pass have taken positions with the Medford fire department. (Union's Exhibit #13)
 
This arbitrator is not persuaded that either the Union's or the City's wage proposal will "stop the flow" of Grants Pass Firefighters to higher paying fire departments, especially those in the same geographical area. For example, a Grants Pass firefighter gains annually approximately $6,000 by accepting a position in Medford. Even with the Union's proposal and at the end of three years, Medford's pay scale would still be higher, not as dramatically higher but still significantly so. This assumes that Medford Firefighters receive no pay increases during that same time period - an unlikely assumption. There will be approximately 400 vacancies anticipated with the City of Portland and Tualatin Valley Fire and Rescue in the next three years not counting vacancies in Clackamas Fire District. (Employer's Exhibit at Tab 4) It is not realistic to assume that Grants Pass Firefighters will put their careers on hold and remain even if the additional wage increase proposed by the Union promises a closing of the wage gap. While I am not faulting the reasonableness of the gradual approach to closing the wage gap. The Union's proposal will not lessen measurably the retention problem.
 
Obviously the City's wage proposal which has less of a catch-up factor will not deter Firefighters from seeking employment in higher paying jurisdictions. In fact, the City from 1995 to 1999 granted increases for Firefighters above the cost of living in an attempt to "catch-up" with comparable jurisdictions. (Employer's Exhibit at Tab 7) This did not deter 13 Firefighters from leaving the City's employment for other fire departments. (Union's Exhibit #13)
 
Both parties cite that one of the primary reasons that Firefighters have left Grants Pass is a lack of promotional opportunities. The arbitrator is not persuaded that lack of promotional opportunities is the sole reason for leaving. As discussed above, significantly higher wages are a draw. There were other compelling reasons cited in the Union's testimony and exhibits as well: more specialized programs no longer available in Grants Pass such as ambulance service and technical rescue teams which provide for individual growth opportunities; better working conditions due to new facilities and more staffing; lack of residency requirements; and greater job security. Neither of the parties' proposals addressed these reasons for leaving.
 
Experienced Firefighters leave Grants Pass because there is a lack of promotional opportunity under the public safety model. However, this arbitrator is not persuaded that either proposal will effectively address this issue. Increases in the pay to Corporals would perhaps make that position more attractive; however, there are still only three positions available. To proceed further up the career ladder in Grants Pass requires cross training. The City's proposal for additional police related certifications might encourage firefighters to prepare for promotional opportunity out side the bargaining unit. However, the testimony of the Union witnesses and general consensus of the witnesses Schwartz and Henner illustrate the unwillingness or reluctance of the Firefighters to cross train as police officers. This arbitrator is not optimistic that the City's proposed incentives would be effective in retaining experienced employees.
For the reasons discussed above, while retention of firefighters is a problem for Grants Pass, this arbitrator is not persuaded that the proposals advanced by the parties will in the foreseeable future resolve the retention problem.(2)
 
ORS 243.746(4)(b). The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration and weight to the other services, provided by and other priorities of, the unit of government as determined by the governing body. A reasonable operating reserve against future contingencies, which does not include funds in contemplation of settlement of the labor dispute, shall not be considered as available toward settlement.
 
The Union costs their first year wage proposal at $40,242 including roll-ups over current costs. The Union argues that the City's wage proposal with all employees receiving the City's proposed incentive program costs $38,496 (or more than $5,832 more than what the Union has proposed). Including roll-up, that dollar difference increases to $7,185. (Union's Exhibit #10) The Union argues that the actual general fund revenues have increased significantly and steadily over the last 7 years, from $4,980,721 in 1992 to $8,007,674 in 1999. In addition, the City has enjoyed during that same time period General Fund balances no lower than 19% and a high in 1999 of 28%. (Union's Exhibit #11) The Union argues that there should be no question that the City has the ability to pay, as the City's proposal was more costly than that proposed by the Union.
 
The City counters that while the direct costs of the Union proposal are at $52,114 for the first year; there are significant financial impacts of the Union's proposal that will result in significant costs to the City. These indirect costs are $265,000 for the first year, $300,000 for the second year and additional increases forward. One indirect cost is increases to those employees represented by the Teamster and the Employees' Association as they have a "me too" provision for wages and insurance in their contract. Parity increases will also be necessary for the non-represented employees as it has been the City's policy to provide the same increases to all employees. But a greater expenditure, $265,000, will result if the arbitrator were to award the Union's proposed new structure and pay increase for the Fire Corporal position. To preserve the comparable worth of the current classification system and its current compression, additional increases and restructuring will be needed to "correct" the classification system for all the other employees. If the arbitrator was to award the Union's final offer proposal, the additional and on-going expense of "correcting" the classification structure and bringing other employees up to parity would use General Fund resources needed for the other City programs. (Testimony of Peterson, and Stumpf)
 
The Union argues that costs to other represented and unrepresented employees should not be considered by the arbitrator because the City has the discretion to not grant these increases to other employees or entered into the "me too" provisions. The Union does not bargain for the other employees. The arbitrator does not have the authority within the statutory criteria to consider these related costs. No where in the statutory criteria is it mentioned that the arbitrator must consider the costs of adjusting upward the other employees' wages.
 
The arbitrator is persuaded that the indirect costs of implementation of the Union's proposed wage structure and increase for the Corporals should be taken into consideration when assessing the City's ability to pay. If the Union's final offer was to be awarded, the City would realistically have two options: (1) dismantle the current public safety model and the parallel organizational structure throughout the City or (2) adjust upward the classification system now in place. To dismantle the current city organizational structure would mean the loss of at least $400,000 in cost savings in public safety alone. (Employer's Exhibit at Tab 1) To adjust upward the classification system would be $265,000 the first year and this cost would be ongoing.
 
The Union's argument that the arbitrator does not have the authority to consider the impact of the Corporal's pay proposal is not persuasive. The criteria [ORS 243.746(4)(b)] mandates that the arbitrator take into consideration and weigh the other services and priorities of the City as determined by the governing body. The arbitrator reads the wording of this criteria to mean that she must consider the cost of the final offers in context and consider their impact on the other services and priorities of the Employer. In other words, she cannot turn a blind eye to the City's other legitimate needs.
 
The City has as a priority a specific organizational structure for not only public safety but for the City as a whole. This organizational structure, from the City Council's prospective, is a significant priority as it is a cost effective, efficient means of providing public services. The current classification system is designed around that specific organizational structure. An inconsistent adjustment to one particular classification impacts the compensation balance and comparable worth evaluation of all other classifications, not only to those above in range or rank but also parallel positions and lower classification ranges. (Testimony of Peterson and Stumpf) Classification systems are a norm within public sector employment, represent the comparable worth of each position, and have an internal integrity. An arbitrator must consider this priority when determining the City's ability to pay.
 
Grants Pass's public safety services are funded in three ways, a dedicated four-year serial levy and a commitment of all property taxes revenue. This currently provides 98% of the funding with the remaining percentage from the General Fund other resources. This portion from General Fund other resources is expected to increase gradually to 88% by the end of 2002 as operating costs exceed revenue from the serial levy and property taxes. This leaves only revenue sources from state shared revenues, interest payments, franchise taxes, business licenses and fees to fund other General Fund activities. These other General Fund activities include common City services such as maintenance, parks, development, administration and any capital improvements. Franchise revenues have an uncertain future due to litigation involving electrical utilities and a phase out of telephone franchise in year 2001. Fees generated by buildings, a positive revenue source, is now by legislative action a dedicated revenue and no longer available for general operating expenses. The defeat of the Josephine County's levy will impact the City's financial picture as well as services no longer provided by the County may have to be provided by the City. While some of these expenditures are unknown at this time, it is apparent that the joint communication system, or dispatch services, will need to be supported by additional City General Fund revenues. (Testimony of Stumpf and Employer's Exhibit at Tab 3) It is apparent that awarding the Union's final offer at a cost of $265,000 the first year and increasing over the life of the contract would negatively impact the General Fund resources available for other services.
 
The testimony of the City Manager demonstrates the significance of the impact. "We get total projected General Fund revenues, not counting property taxes; they go exclusively to public safety. We get $2.5 million a year from general resources. We have about $1.9 million to $2 million in operating costs in our General Fund. Those are the functions that have to be paid from that source. So, we have about a half million a year that's available for us to cover 100 percent of all the capital needs of our community. That includes the maintenance of all our roadways, the maintenance and expansion of our park system and so on. If fully half or two thirds of that were to be consumed in a single arbitration award, it leaves us unable to meet the capital needs of our community."
 
The Union argues that the City has historically had actual general fund ending balances of over 20%; the ending balance for 1999 is 28%. (Union's Exhibit #12) The Union maintains this demonstrates that the City can afford the Union proposal. The ending balance of one fiscal year becomes the beginning cash balance of the next fiscal year - a revenue source for the General Fund. The arbitrator finds, for the reasons stated above, that the cost of the Union's final offer would negatively impact other services and capital needs dependent on General Fund revenue. In addition the City's General Fund operating costs are projected to be 14.68 % higher in years 2001 and 2002, yet the ending fund balance is declining by 42.25% over that same period. (Employer's Exhibit at Tab 3) There was no evidence presented neither to dispute this decline nor to demonstrate significant increases in revenue. For the same time period as this contract, there is an indication that the historic 20% plus ending actual balances are no longer a certainty.
 
In conclusion and for the reasons stated above, the arbitrator finds that the Union's proposal, costed at $265,000 for year one, would impact negatively the City's ability to provide other services and priorities as determined by the City Council.
 
HEALTH INSURANCE
Each party has proposals for health insurance that reflect a change from the previous contract language. The 1998 contact states at Article 11.1: "the City will pay up to $375 for per employee per month with the employee and the City splitting the cost 50/50 above the cap." The Union is proposing a cap increase of $25 each year of the contract and changes the split of costs above cap to 90% paid by the City and 10% to be paid by the employee. The City, on the other hand, makes no adjustment to the current cap of $375 per year or the 50/50 split but does guarantee that the City's contribution will be equal to 90% of the premium costs. A review of the health insurance benefits demonstrates that in some comparable jurisdictions the benefit levels are higher and in some lower. However based on the arbitrator's experience, the benefit levels for Grants Pass employees are the standard; they are neither a "Cadillac" plan nor substandard level. (Employer's Exhibit at Tab 5)
 
There was not sufficient evidence in the record for the arbitrator to determine if either party's proposal for health insurance was comparable. (Union's Exhibit Appendix C) Therefore it is impossible to determine which proposed change, from a comparability standpoint, is more reasonable. The Union's proposal will enhance their wage offer as the employee's current contribution will drop considerably. However the Union's proposal is the more costly for the first year of the contract and those costs to the City will increase in subsequent years. (Union's Exhibit #24) The City's proposal reduces the first year employee contribution by $1 and depending on the percentage increase in insurance premium in this or the subsequent year would raise that contribution by an estimated $5. The City's proposal is more closely aligned to the current employee contribution and the arbitrator is not persuaded that the change proposed by the Union is warranted.
 
The City has proposed changes to the insurance provisions for those employees who are totally and permanently disabled and retiree benefits for those employed after signing. There was no evidence presented to the arbitrator regarding these proposed changes.
 
INCENTIVE AND PREMIUM PAY
The Union has proposed two changes to the current incentive plan: (1) to change the flat dollar amount paid for the various incentives to a percentage of top firefighter wage and (2) add DPSST Fire Officer 1 certification as a new incentive at 2 percent per month of top fire fighter step. It is not uncommon in firefighter contracts to fix the amount paid for incentives by percentages rather than a flat dollar amount. As the percentages are pegged at the current dollar rate, the costs for the first year are not significant. The new incentive for DPSST Fire Officer 1 appear to the arbitrator as a reasonable addition considering the City's emphasis on and support of training.
 
The City is proposing in its final offer three new incentives. There are Certified Community Service Officer (CSO), Certified Reserve Public Safety Officer (RO) and Certified Public Safety Officer (PSO). The City also proposed language changes in other articles in order to implement their incentive proposals. A comparability analysis is not possible as these certifications are related to a public safety model and Grants Pass is the only Oregon city utilizing this organizational model. As this is a City proposal, the assumption is that there is an ability to pay. The arbitrator finds the incentive proposals to be reasonable as they are in keeping with the City's policy to encourage cross training, are voluntary, are paid for holding the certificate, and provide an opportunity to prepare for promotion beyond that of Corporal. (Testimony of Henner) However as mentioned previously, this arbitrator is not optimistic that these certification incentives will solve the retention problem.
 
The Union also proposes premium pay for those Firefighters assigned the duties of Engine Company Officer for the time those duties are assigned. Grants Pass has two fire stations; the Corporal while assigned to one of the stations is responsible for both stations and the firefighters assigned to both stations. The Union argues that in reality the Corporal's responsibilities for the "second station" falls on the most senior firefighter including incident responsibilities if he/she is the first on the scene. The premium pay for Engine Company
 
Officer would recognize these added responsibilities. The City objects to this premium pay because (1) it is, in essence, creating a position, which is a management right and a permissive subject of bargaining and (2) would create "mid level management" positions inconsistent and disruptive of the City's functional consolidation model utilized throughout the City.
 
The arbitrator is less persuaded by the City's argument that this premium pay is inconsistent with the public safety model because a police officer riding in the second seat of the patrol car is not currently paid a premium. Not withstanding the City's wanting to be consistent and treat all employees in public safety equally, there are differences in job duties between fire and police employees.
 
While there may be some justification for this premium pay, the arbitrator has concerns regarding the Union's proposal. The statement made was that this premium pay would only be effective when a Firefighter was the first to arrive at the scene and was the Incident Commander. (Page 147 of the transcript) There was also testimony that there is now an informal assignment of one of the Firefighters in the "second station" to take command if he arrives first at an incident. However the Firefighter may assume this responsibility of incident commander for a few minutes or ten minutes until the Corporal or Fire Commander or Duty Sergeant arrives on scene. (Testimony of Henner) The exception obviously would be a single engine incident. On the other hand, the language of the Union proposal states "any Firefighter that performs the job duties as an Engine Company Officer". The Union's rationale for this proposal is compensation and recognition for the duties and responsibilities of the senior Firefighter in the second station. A list of duties of Company Officer is a part of Union's Exhibit #26. Many of those duties listed are currently part of the Firefighter's classification description, for example: drives and operates fire apparatus and other emergency equipment, assists in maintenance of same, cares for living space and building. When do those duties become Engine Company Officer duties? When assigned by the Corporal? But is not the Corporal the one who assigns duties and oversees the second station? Without greater clarity in the language and intent, the arbitrator is not inclined to find in the Union's favor regarding premium pay when assigned Engine Company duties.(3)
 
V. CONCLUSION
Both parties argue that their final offer is in the best interest of the public. The Union argues that the City's inability to retain experienced Firefighters is costly, lessens the quality of service provided, and creates an unsafe condition for both Firefighters and the public they serve. The Firefighter voiced their frustration. They saw no avenue for promotion and felt like second class citizens under the public safety model. They were the ones who must daily deal with the consequences of the City's inability to retain experienced Firefighter.
 
The City argues that the Union's proposals would destroy the public safety model and impact the overall City organizational structure. The City maintains that the public safety model and the elimination of middle management throughout the organization were adopted by the City
 
Council to provide cost effective, affordable services to a public very adverse to any increases in taxes. The City also voiced their frustration with the Union's continued resistance to the public safety model. The majority of the firefighters currently employed were well aware both before hiring and upon signing that Grants Pass used a public safety model to deliver fire rescue services and would continue to do so.
 
The arbitrator must make his or her decision to award one of the final offer proposals over another by giving first priority to the interest and welfare of the public. In other words, the arbitrator must answer the question: based on the consideration of the secondary criteria, which final offer best serves the public interest? Please note that the arbitrator must award the either the Union's or the City's in their entirety.
 
In reviewing and weighing the secondary criteria, the arbitrator finds that the City's final offer proposal best serves the interest and welfare of the public for the following reasons. The Union's wage proposal including the restructuring of the Corporal's wage structure would more effectively close the wage comparison gap. While the direct cost of the base wage proposal is not unreasonable, the indirect cost to the City of the increase in the Corporal's wage is substantial. The cost to readjust the classification system for the first year is $265,00 and those costs continue to increase over time. This indirect cost would negatively impact the City's other services that rely on General Fund resources and the City's ability to meet its capital needs. Both parties agree, and so does the arbitrator, that turnover is a significant problem for the City. The City has training costs associated with turnover and the Firefighters have concern about safety. However as discussed previously, the parties' proposals, in the judgment of the arbitrator, do not provide realistic solutions to the retention problem. Arguably the dismantling of the public safety model and replacing it with a more traditional one would improve the retention problem. I will discuss this further in the concluding paragraph.
 
If the arbitrator were to award the Union's final offer, the City would have in essence two options. Either option would negatively impact the City's ability to fund its other services and needs. One option would be to readjust the classification system as discussed above. The second option would be to dismantle the pubic safety model. This option would result in a loss of cost savings of $400,000. The City Council in 1984 reorganized the law enforcement and fire rescue bureaus and adopted a public safety model in response to the defeat of a public safety serial levy and a public opposed to any increases in taxes. In the early 1990's other city bureaus were reorganized and middle management positions were eliminated. Similar middle management positions in fire rescue and police were eliminated. Again this was done to provide cost effective services with limited resources. While the arbitrator is not unmindful of the concerns of the firefighters, the organizational model by which the City delivers its fire and rescue services or any changes in that model is a decision that is best left to the local governing body and its elective process.
 
VI. AWARD
Based on the evidence and for the reasons stated above, the arbitrator awards the City's final offer proposal.
Respectfully submitted this 5th of August, 2000.
Nancy E. Brown
Attorney for the Union: Michael J. Tedesco
Attorney for the Employer: Bruce Bischof
 
1. In analyzing the comparability data, the arbitrator used the current monthly top step wage for Grants Pass, adjusted for PERS, included incentives, and converted annual salaries to monthly when applicable. As there was not complete data regarding the value of paid days off; this factor was not included. While Grants Pass has above average number of paid days off; the value is less due to the lower salary rate. The omission of the number of paid days off does not unreasonable skewed the result.
 
2. There was a retention problem in a previous case decided by this arbitrator and cited by the Union. [City of Cornelius and AFSCME (1999)] In that case the Union's final offer advanced the recruitment of experienced, and therefore already certified, police officers from nearby smaller jurisdictions or what the parties called "lateral transfers". These lateral transfers addressed the retention problem; they reduced the high cost of training and certifying a new recruit and these officers were more likely to remain with the City of Cornelius. The City of
 
Cornelius's final offer proposal on health insurance would have been a deterrent to the recruitment of "lateral transfers". Each retention and recruitment problem must be judged on the circumstances of that particular situation.
 
3. The City argues that the Union's proposal regarding premium pay is in reality the creation of a new position and that is a permissive subject of bargaining. The arbitrator leaves that determination to another forum.