Text Size:   A+ A- A   •   Text Only
Find     
Site Image

IA-04-96
 
In the Matter of the Arbitration between Teamsters Local No. 670 ("Union") and Yamhill County, Oregon ("County"). IA-04-96
 
This is an interest arbitration dispute under the last-best-offer-package provisions of the Public Employees Collective Bargaining Act (PECBA) as amended in the 1995 legislature by SB 750. Except for a dispute about shift bidding language, the differences between the parties are all economic: the size and frequency of salary increases, the shape of the salary schedule, incentive pay for education and certification, the maximum insurance contribution, and whether there will be contributions toward retiree medical coverage.
 
The parties agree that they have substantially complied with the provisions of the PECBA leading up to interest arbitration and that all jurisdictional requirements of the statute have been met. The hearing was orderly. Both parties had the opportunity to present evidence, to call and cross examine witnesses, and to argue the case. Both parties filed timely post-hearing briefs; and the Parties agreed to an extension of the date of the Award.
 
FACTORS
Under the terms of ORS 243.746(4), an interest arbitrator's findings and opinion must be based on the following factors, "giving first priority to paragraph (a) and secondary priority to subsections (b) to (h)":
 
(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) Comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this paragraph, "comparable" is limited to communities of the same or nearest population range within Oregon. * * *(1)
 
(f) The CPI-All Cities Index, commonly known as the cost of living.(2)
 
(g) The stipulations of the parties,
 
(h) Such other factors, consistent with paragraphs (a) to (g) of this subsection 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 paragraphs (a) to (g) of this subsection provide sufficient evidence for an award.
 
THE COUNTY AND THE BARGAINING UNIT
This bargaining unit provides police services for most of Yamhill County. It is headed by a new Chief (six weeks on the job at the time of hearing) who was part of the McMinnville police department for the past 28 years. The road deputies are divided into four squads which work on a rotating schedule of four, twelve-hour shifts, four shifts on and four shifts off. A full strength squad consists of five officers, although squads are seldom at full strength due to court time, comp time, and leaves. The County also provides police service by contract to the cities of Dayton, Willamina, Sheridan and Lafayette. Those contracts support at least nine deputies assigned to those cities and pass any cost increases for those deputies along to the cities.(3) Similarly, the dog control function is financed entirely from fees, fines and license sales.
 
This unit also includes the corrections staff of the County which staffs a 154-bed jail (with a maximum capacity up to 170). These employees are divided into 15 sworn, BPSST certified Corrections Officers (CO) and six non-sworn Control Room Technicians (CRT). Two of the 15 Corrections Officer positions are financed by the State under the terms of SB 1145. Employees originally hired as CRTs frequently hope to move into sworn CO positions. A new Restitution Center facility will be in operation by September, 1997; and the County has proposed to increase its capacity up to 104 by the time it actually opens. The staff of the new Restitution Center will be financed entirely from state funds which will automatically increase to reflect any salary increases for the two additional Corrections Officers comprising its staff. There is no dispute in the record that it would be legally impossible for the County to decrease its current level of jail staffing in the face of a consent decree which extensively regulates prisoner rights.
 
This unit last used the interest arbitration process in 1987. Arbitrator Tom Levak (NAA) found that the County was unable at that time to pay the 6% first year wage increase proposed by the Union, He explained that conclusion this way:
 
First, the County does not have a modern tax base, and operating levies sufficient to fund a general increase have failed. Second, the loss of federal revenue sharing and decreases in O&C funds severely limit the County's ability to pay. Third, long-term declining revenue trends support the County's position. Fourth, one budgeted Road Deputy position has not been filled, pending this Award, and one Animal Control Officer was laid off on October 15, 1986. Further layoffs are not in the best interest and welfare of the public.
 
Arbitrator Levak found that no inability to pay had been established for the second year of the contract term then at issue, and he awarded a 2.5% increase for that year.(4)
 
THE PROPOSALS
Salary and Incentives. The Union proposes a series of 3% across-the- board salary increases, effective every six months from July 1, 1996, through January 1, 1998. The County proposes what it characterizes as a "cost of living" increase of 2.9% on July 1, 1996 and another such increase on July 1, 1997, based on the January, 1997, Portland CPI-U, but not less than 2% or more than 3.5%. Both parties propose to delete the probationary salary step from the schedule and to add an additional step at the top of the schedule, effective July 1, 1996; but the County would make the new step 5% above the existing top, while the Union would make it only 3% above. (The steps in the current schedule are separated by about 5%.) Both parties agree that each employee at the top of the schedule will advance to the new step on that employee's anniversary date.
 
Finally, both parties propose new incentive language for the contract, although the Union's language has substantially fewer requirements and greater financial rewards than that proposed by the County. The County first began to pay any sort of incentive in 1993 and now pays $20 per month for an Intermediate BPSST certificate and $50 per month for an Advanced certificate. The County agrees that those premiums are not now supportable by comparison to other police employers. Leaving aside the detailed requirements (which are set out in the Appendix), the Union proposes to pay 3% for Intermediate and 4% for Advanced BPSST certification, but, in addition, to pay 3% for an AA degree and 4% for a Bachelor's degree, with a maximum total incentive cap of 6%. The Union also proposes a 1.5% premium for English/Spanish bilingual ability. The County proposes to pay a bilingual premium of 1.5% for all employees, proposes to pay 3% for Intermediate BPSST certification, or for equivalent education for non-swom employees, and proposes to pay 4% for Advanced certification or for equivalent education for non-sworn employees, with the intermediate and advanced premium not being cumulative.(5)
 
Insurance. The parties agree on the continuation of the current insurance coverage, except that the Union proposes to reduce the premium cap from its prior $400 per month to $390 and to add a contribution of $25.88 per month per active employee for retiree health insurance for that employee (effective on the first day of the month following the date of this Award). The County proposes to increase the current cap to $410, without retiree health insurance. The total actual cost for the current coverage for the prior year was $329 per employee per month. The limited evidence in the record suggests that no premium increase is likely in the second year of this contract.
 
Shift Bidding. The Union would continue the parties' existing Letter of Agreement, which is set out in the Appendix, subject to a reopener provision on that issue on July 1, 1997.(6)
 
THE STATUTORY FACTORS
Comparability
 
The County's other bargaining units have generally moved to the County's current offer to this unit.(7) The FOPPO unit is in the final year of a three year agreement under which those employees will receive about 2.5% increase. The Yamhill County Employees Association will receive a 2.9% increase (with merit-based steps). and the unrepresented employees were given that same increase effective July 1, 1996.
 
Arbitrator Levak's 1987 Interest Arbitration Award found the comparable counties to be the "non-metropolitan counties of 15-75,000 population. The City of McMinnville is a secondary unit of comparison." Award at 10. The statute does not define the term "population range." The parties both assume that "communities" for purposes of this case refers to counties. (Although the Union argues that the City of McMinnville and the City Of Newberg, too, should be considered as "secondary" comparables.) Table 1 sets out the Oregon counties of similar population sizes as of July 1, 1996, based on data published in 1997 by Portland State
University's Center for Population Research and Census.
 
Table 1
 
County Population
 
Tillamook 22,880
 
Lincoln 42,200
 
Polk 56,300
 
Klamath 61,600
 
Coos 61,700
 
Umatilla 65,500
 
Josephine 72,000
 
Benton 76,000
 
Yamhill 77,500
 
Deschutes 98,000
 
Douglas 98,600
 
Linn 100,000
 
Jackson 168,000
 
Marion 262,800
 
Lane 305,800
 
Clackamas 313,200
 
Washington 376,500
 
The County's original comparability proposal at hearing was a group of the four larger and four smaller counties according to the 1995-1996 Oregon Blue Book. The County agreed, however, that the 1997 PSU data was clearly superior; and that data moved Benton County from the "larger than" group to the "smaller than" group. Comparing Yamhill with the four larger and four smaller counties would then require comparison with Jackson County, which, the County argues, is too dissimilar in population; and the County therefore proposes comparison with the three next larger and three next
smaller counties.(8)
 
The Union argues that its proposal is supported by considerations of comparability no matter what supportable group of comparators might be chosen; but the Union also points out that the counties most similar in population are not generally proximate to Yamhill County and do not reflect any reasonable labor market for the County. Beginning with the extended group of counties of arguably similar size, and selecting for proximity and similarity in population trends, the Union produces this proposed group of comparables: Tillamook, Washington, Polk, Marion, Benton and Linn Counties and the Cities of McMinnville and Newberg.
 
The current version of the interest arbitration statute requires that comparables are "limited to communities of the same or nearest population range within Oregon." The Union offers an affidavit of one of the primary draftsmen of SB 750-and several prior interest arbitration decisions-arguing that
 
In limiting the comparability standards to communities of similar population, the veto negotiators did not intend that an interest arbitrator exclude considerations of factors other than population; in particular, there was never any intent to exclude consideration of geographic proximity, per capita income, or other traditional factors in assessing comparability. Indeed, it was assumed and understood by the veto negotiators that geographic proximity could be taken into account in assessing comparability...
 
What Professor Drummonds's explanation does not include, unfortunately, is any honest work for the statutory mandate that "'comparable' is limited to communities of the same or nearest population range." On the face of that expression, "limited to ... the same or nearest population range" (1) might mean that similarity of population, and only similarity of population, is to be considered in determining comparability, or (2) it might allow the consideration of other factors to eliminate some communities as long as the remaining communities are within "the same or nearest population range"-which may be what Professor Drummonds's affidavit means to suggest. What the plain language does not allow, on its face, is expanding "population range" as necessary to make sense of the resulting comparables when analyzed in terms of geographic proximity, economic and population trends, and the like. Such an interpretation, it seems to me, would read "limited to ... the nearest population range" out of the statute entirely.
 
That is, essentially, what interest arbitrators had always done in Oregon before SB 750: i.e. give equal importance to geographic proximity and similarity of population. So far as ambiguity in the statutory language allows consideration of its legislative history, it is possible, of course, that the Legislature did not intend the change in this part of the statute to make a difference to what arbitrators were already doing.(9) But when the revisers of a writing add a specific reference to one factor, which has always been considered along with other factors, the intent of that addition is usually to increase the importance attached to that factor. And when the new language requires that the determination in question is to be "limited to" that one factor, it seems overwhelmingly likely that the intent was to make that factor the main consideration.(10)
 
Turning to the case at hand, I cannot find enough elasticity in the statutory language to conclude that Tillamook, Washington, Polk, or Marion Counties are within "the nearest population range" without torturing that expression to accommodate considerations of geographic proximity and labor market. Faced with a choice between common sense and a clear expression of the will of the legislature, an interest arbitrator, like any other public official or quasi public official, is obliged to bow to the language of the statute as written. I will therefore use the County's proposed list of comparables, i.e. the next three smaller and next three larger Oregon counties.
 
Overall Compensation
 
The statute requires an interest arbitrator to consider 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.
 
Moreover, the statute explicitly requires that comparability analysis be carried
out in terms of "the overall compensation" of the employees being compared. The only overall compensation data in the record is that offered by the Union.(11) That analysis begins with the salary (plus medical insurance and less PERS pickup) for a standard work year of 2080 hours, backs out the leave and vacation time earned at the seniority level in question, and divides the adjusted salary by the resulting number of hours to produce a "net hourly wage." The record shows a substantial difference in net hours worked over a year after leaves and holidays are taken into account. Table 2, on the following page, sets out the result of that analysis, as of the initial date of the new contract, for four benchmark Deputies: at the end of one year with a basic certificate, at the end of five years with a basic certificate, at the end of ten years with an Intermediate Certificate and AA degree, and at the end of 20 years with an
Advanced Certificate and a bachelors degree.(12)
 
Table 2: Comparable Net Hourly Wages
 
County NHW after 1 NHW after 5 NHW after 10 NHW after 20
 
Benton 19.63 23.19 24.00 24.99
 
Deschutes 22.38 25.75 27.39 29.62
 
Douglas 18.01 21.37 22.15 23.21
 
Josephine 15.03 18.35 19.85 20.56
 
Linn 20.30 23.67 24.16 25.60
 
Umatilla 15.25 17.33 18.13 19.50
 
Average 18.43 21.61 22.61 23.91
 
Yamhill 15.76 18.57 20.55 20.93
 
% to reach av. 16.9% 16.4% 10.0% 14.2%
 
County LBO 16.16 19.07 22.51 22.9
 
% to reach av. 14.0% 13.3% 0.4% 4.4%
 
Union LBO 16.17 19.09 22.72 22.92
 
% to reach av. 14.0% 13.2% -0.5% 4.3%
 
The second 3% increase in the Union proposal-on Jan. 1, 1997-would obviously bring the rates closer to the average but, except for the eleventh year- Intermediate BPSST-AA Deputy, would leave the County behind that average.(13) The average of the comparables will change, of course, in the second year of this contract. The Benton County contract reopens for 1997-1998 salaries; Deschutes County and Douglas County contracts include a COLA of 2.5 to 4.5% for 1997-1998; and Josephine County includes a yearly COLA of 90% of the prior October to October increase in the CPI.(14)
 
Recruitment & Retention
 
Before SB 750 amended the interest arbitration statute, arbitrators often addressed recruitment and retention data as an "other factor.," but the revised statute now specifically requires an interest arbitrator to consider the "ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided." The two issues-recruitment and retention-are important in a police unit for slightly different reasons. With respect to recruitment, it a commonplace in this industry that many of the people who most want to become police officers are those who have the least business with a badge and a gun. Modern police administration has come a long way in its ability to pick satisfactory raw material for this very demanding profession; but it often takes a pretty large applicant pool to present the rare raw material that can be turned into a professional police officer.
 
With that in mind, the County's three most recent recruitments for Deputy are disturbing. Although the County had over 125 applicants for advertised noncertified-i.e. entry-Deputy positions in April, 1995-from whom the County hired six new Deputies-its advertisements for certified deputies in July, 1995 produced only eight applicants-of whom the County hired two-and its advertisements for certified deputies for lateral transfer positions in April, 1996, produced only 13 applicants-of whom the County again hired two. As far as the record shows-without substantial dispute-the quality of applicants has left the interview board dissatisfied with the necessity of recommending anyone for hire on at least two recent occasions. As far as the record shows-again without dispute-the volume of these responses is remarkably low for law enforcement openings in the geographic area.
 
With respect to retention, the Sheriff agreed at hearing that a Deputy becomes more valuable and productive with longer experience in a particular area. A good deal of police work inevitably involves local knowledge; so a police department that is forced to start over with new employees again and again is likely to get far less return for its payroll dollar than a department that manages to retain employees throughout their professional careers.(15)
 
Turning to the recent history of this unit, again the record is not comforting. Of the 46 employees on the unit seniority list as of July, 1990, one died, one retired, one became a County Commissioner, no less than six were terminated or left the County's payroll under circumstances involving disciplinary charges, and eight others had left by January, 1994.(16) Adjusting that initial 46 employee count for death, retirement and election, that leaves a turnover rate of over 8% per year for that period, mostly in sworn personnel.
 
In the most recent three year period, 21 employees have left this unit out of a current total of 73.(17) That is an average annual turnover rate of almost 10%, not counting deaths and retirements.(18) Half of the Deputies (including detectives) in this unit-and well over half of the sworn staff (Deputy, Detective and Corrections Officer)-have been here five years or less past probation.
 
Cost of Living
 
There is no serious dispute in this case that consideration of current changes in the local cost of living do not do not argue strongly in favor of either proposal over the other. The County's second year COLA proposal depends on the January, 1997 Portland CPI, which was 4.0%.
And the increase would therefore be 3.5%.
 
Ability to Pay(19)
 
General Financial Health of the County. The County does not dispute the Union's claim that the County is currently in an "economic boom;" and, by any reasonable test, its population and assessment growth are vigorous. The County is now the third fastest-growing county in the State-after Deschutes and Washington Counties-by percentage of population, with a growth rate of over 18% since 1990 (and over 40% since 1980). The assessed value of County property has grown from about $1,700M in 1988-the year after Arbitrator Levak's Award-to about $3,750M in 1997 and the Director of the State's Department of Planning & Economic Development found that the assessed value of the County seat nearly doubled over the period 1991-1995. In terms of assessed value per capita, the County continued to decline for two years after Arbitrator Levak's award and hit bottom around 1990 at about $23,000 per capita. Despite the remarkable population growth, the assessed value per capita has grown, since then, to almost $38,000 in 1996, for an average increase of 11 % per year. According to the County's own Comprehensive Annual Financial Reports, its total revenues (including both property tax and non-property tax sources) have grown by 235% ($6,386,000 to $21,394,000) in the ten year period leading up to 1996, while the public safety expenditures over that same period have grown by only 168% ($2,398,000 to $6,434,000). Over about that same period (from 1987 to 1996) the County has reduced its bonded indebtedness (mostly from an old road levy) from about $10M down to $2.4M.(20)
Measure 47. The primary basis of the overall dispute in this case is, in all probability, Measure 47 and the financial chaos which that initiative has caused for local governments throughout the State. The necessary beginning point of any analysis of an employer's ability to pay a proposed increase is How much money will be available all told? As of May, 1997, there is simply no way to answer that question with any reasonable degree of certainty. The outer limits of the range of uncertainty are set by the four primary factors: (1) Measure 47 itself, interpreted most pessimistically, (2) Measure 47 interpreted according to the two formal Opinions of the Attorney General-No. 8243, Oct. 17, 1996, and No. 8246, Feb. 24, 1997-which take a less drastic approach to expressions such as "new construction," and "bonded indebtedness" in the initiative language, (3) the frontal attacks on various provisions of Measure 47, now working their way toward the Oregon Supreme Court, and (4) Measure 50, a wholesale revision of Measure 47, which is now under referral to the electorate in an attempt to avoid item (3) above and chart a middle course between items (1) and (2).
The County's total budget for FY 1996-1997-the year before Measure 47's first impact-was about $45M. The property tax base totaled just over $9.5M, including law enforcement at about $2.5M, juvenile at about $1.4M,senior and handicap services transportation at about $0.2M and jail bond debt service at about $0.36M.(21) The County has taken the maximum allowable (6%)tax base increase every year for at least the last 12 years, In FY 1996-1997 the Sheriffs office accounted for about 29% ($1.5M of the about $5M total) of the general tax base income of the county.
 
In September, 1996, the State Legislative Revenue Office estimated the property tax revenue loss to the County caused by Measure 47 to be about $I.8M, which is almost 20% of what would otherwise have been about $9.2M in total property tax revenue.
 
Faced with that projection, and with Measure 47's express priority for public safety, the County's Budget Officer presented the Commissioners with three alternative budgets: one holding public safety harmless from any cuts caused by Measure 47, one giving public safety no priority at all, and one holding the public safety reductions to about 4%, compared with about 13% for other County functions. The Board choose the third of these packages, although a 4% cut might require layoffs in the Department. Because property tax made up over half of the revenue of Sheriffs Department revenue for FY 1996-1997 (about $3.5M of $5.5M total), the County Budget Officer's estimate of Measure 47 consequences for the Department was about $215K. That estimate is based on interpretations of Measure 47 which are substantially more pessimistic than those issued by the Attorney General.
 
CONCLUSION: THE INTEREST AND WELFARE OF THE PUBLIC
The parties stipulated to a cost comparison sheet based on the composition of the workforce as of late 1996, and based on the employees now known to have college degrees and BPSST certification past basic. The County's second year proposed increase would be 3.5%, and the best evidence in the record shows that no insurance premium increases are likely for the second year of the new contract. Here are the costs, on those assumptions:
 
Table 3
 
Party 1996-97 1997-98 Cumulative
 
Teamsters 2,826,093 3,088,588
 
County 2,775,588 2,950,180
 
Difference 50,505 138,408 188,913
 
Not all of the $189,000 cumulative cost actually impacts the County, however. There are
currently 75 employees in the unit. Of those, at least 20 are financed by outside sources that will or can absorb any awarded salary increases.(22) The 20 include: 9 Deputies contracted to the Cities of Sheridan, Willamina, Lafayette and Dayton, 90% of eight clerical and LET positions (equivalent to a net 7.2 FIE) financed by a Cops More grant, two Animal Control Officers (financed from fees, fines and license sales, at rates within the County's control), and two Corrections Officers financed by the State. The actual impact on the County of the increased personnel costs at issue here, therefore, amounts to a bit less than 55/75 of the the total cost, which makes that impact on the County about $138,000. The "ability to pay" issue comes down to that amount of separation between the two proposals.
 
The next question is what the County's property tax income prospects for 1997-1998, considering the current confused state of the law.(23) It seems to me that only the most simple and straightforward approach to that question makes sense here. First, as of the date of this Award, for better or worse, the state of the law in Oregon is Measure 47. Questions of the fiscal outlook under Measure 50, or supposing that the Supreme Court eventually strikes down substantial parts of Measure 47, are moot at this point. Second, the best currently available indication of the proper interpretation of Measure 47 is to be found in the two formal Opinions of the Attorney General.(24)24 The County's Budget Officer took a generally pessimistic interpretation of Measure 47 overall in estimating the funds available to the County in 1997-98; and the Attorney General's interpretation is more optimistic in at least three important respects.
 
First, the Opinion asks the question:
 
Does Section 11g(4)(a) permit ad valorem property taxes for tax year 1997-98 to be increased by reason of improvements to the property made during tax years 1994-95, 1995-96 or 1996-97, notwithstanding the limitation imposed by section 11g(l)?
 
The Opinion answers:
 
Ad valorem property taxes for 1997-98 may be increased by reason of improvements made during 1994-95,1995-96 or 1996-97. As we conclude above, this is a specific exception to the limitation imposed by section 11g(l).
 
Second, the Opinion concludes that "bond taxes are to be included in the comparison years'
property tax" and sets out this example:
 
Assume the property taxes on Property Z are:
 
Year Bond Taxes Non-Bond Taxes Total Taxes
 
1994-95 $150 $1,850 $2,000
 
1995-96 $150 $1,950 $2,100
 
1997-98 $150
 
Bond Taxes included: If bond taxes are included in the comparison years' taxes, then the maximum amount of Property Z's non-bond taxes for 1997-98 would be $1,890, i.e., the lesser of $1,890 (90% of the total taxes for 1995-96) or $2,000 (the total taxes for 1994-95). The maximum amount of Property Z's total property tax would be $2040 ($1890 non-bond taxes plus $150 bond taxes).
 
Bond Taxes excluded: If bond taxes are excluded from the comparison years' taxes, then the maximum amount of Property Z's non-bond taxes for 1997-98 would be $1,755, i.e., the lesser of $1,755 (90% of the non-bond taxes for 1995-96) or $1,850 (the non-bond taxes for 1994-95). The maximum amount of Property Z's total property tax would be $1,905 ($1,755 non-bond taxes plus $150 bond taxes).
* * * * *
 
We...conclude that the text and content of section 11g(l) do not suggest a "plausible alternative reading," [citation omitted]. The plain meaning of the text is expressed in words of unquestioned grammatical clarity; it is grounded in numerous, well-settled rules of construction and universally accepted principles of syntax.


 
Finally, addressing the limitations applicable to taxation of improvements in the comparison years, the Opinion concludes:
 
Subsection (4)(a) does not specifically state when the special limitation for improved property applies for purposes of calculating the 1997-98 property tax. As discussed above, property improvements made during the relevant comparison year (1994-95 or 1995-96) or 1996-97 would affect the limitation on 1997-98 property taxes under section 11g(l), rather than the three percent growth limitation under section 11 g(2). We therefore conclude that if the subject property is improved during the relevant comparison year 1994-95, 1995-96 or 1996-97, the 1997-98 property tax is subject to the special limitation for improved property under subsection (4)(a), rather than the general limitation under section 11g(j). [Footnote omitted.)
 
With respect to the second of these issues, it is clear in the record here that the County's income estimates have been based on the assumption that debt service could not be included in- the reference year base for purposes of calculating tax limits under Measure 47.(25) Taking these three interpretations together, and considering the generally conservative interpretation of Measure 47 on which the County based its budget, I must conclude that, more likely than not, the County has the reasonable financial ability to meet the cost of the contract proposed by the Union.(26)
 
The final question in any interest arbitration case under ORS 243.746(4) is which of the two proposals best serves the interest and welfare of the public.
 
The Union's brief proposes an approach that directly confronts the conflict between tax reduction fever and staffing levels:
 
It may be wholly appropriate to deal with short-term revenue losses or recessions by underpaying employees, in the hope that the loss of quality personnel will not be too severe before the Employer recovers its ability to pay. However, a wholly different approach is warranted where the revenue impairment is long-term and permanent. In those cases, the reduction of wages, as opposed to programs or personnel, represents a foolish economy. Post-Hearing Brief at 20.
 
This is a traditional-if somewhat extreme-private sector response to an employer's claim that wages can be kept competitive only at the cost of layoffs.
 
In the present case, however, it is not necessary to decide whether comparability alone would justify the acceptance of inevitable layoffs, because considerations of recruitment and retention strongly demonstrate that the public interest here would not be well served by the continuation of the underpayment of these employees.(27) From the basic salary documents in the record, it is quite clear that the Union is correct in arguing that quite senior County Deputies can currently transfer into comparable or neighboring departments at the receiving department's base salary and come out financially ahead. After five years with the County, a Deputy could transfer to Deschutes County at the base for an additional $31 per month, to Benton County at the base for an additional $44 per month, to Marion County at the base for an additional $64 per month, to Clackamas county at the base for an additional $214 per month, and to Washington County at the base for an additional $335 per month. (Of these, Deschutes, Benton, and Douglas Counties are three of the four counties most similar to Yamhill in population and are among the County's own proposed comparators.) Under either party's last best offer for the pay rates for July 1,1996, a deputy could still leave after four years and gain salary at the base of any of these other schedules. Even under the Union's proposal after the second 3% increase, a four year deputy would still be able to gain by transferring to the base salary in Benton, Clackamas, Marion or Washington Counties.(28) Considering the length of time it takes for a new officer to become fully productive, it is not in the interest of the residents of the County to pay the on-job-training costs for substantial numbers of officers who fail probation or leave County employment after a relatively few years.
 
AWARD
 
The new contract shall include the language proposed by the Union,
 
Respectfully submitted,
 
Howell L. Lankford
 
Arbitrator
 
Date of this award: May 19, 1997
 
Representing the Union: John S. Bishop, Esq.
 
Representing the County: John M. Junkin, Esq.
 
Appendix A - Text of the Final Offers(29)
 
YAMHILL COUNTY
 
MATERIAL TERMS OF FINAL OFFER: As a result of resolution of many issues by the Stipulated Agreement attached as Exhibit "A," there are only 3 remaining issues: compensation, health and welfare and shift bidding. Yamhill County hereby proposes to resolve the outstanding issues as set forth below. Unless specifically noted to the contrary, Yamhill County proposes that the following provisions under "A," "B" and "C" become operative upon implementation of the arbitrator's award:
 
A. Compensation. The County proposes to replace the existing Section 12.1 in its entirety with the following language:
 
12.1 (a) WAGE INCREASES AND STEP INCREASES.
 
(i) 1996-97.
 
WAGE INCREASE; STEP ADVANCEMENT ON SALARY SCHEDULE. Employees shall receive a cost of living increase of 2.9% on July 1, 1996. A new employee shall be advanced one step at the conclusion of probation. Thereafter employees shall be advanced one step at intervals of 12 months of continuous service following any salary adjustment until the employee reaches the top of the range to which assigned.
 
(ii) 1997-98.
 
WAGE INCREASE, STEP ADVANCEMENT ON SALARY SCHEDULE. Employees shall receive a cost of living increase on July 1, 1997 equal to the Portland CPI-U of January, 1997, but not less than 2.0% or more than 3.5%. A new employee shall be advanced one step at the conclusion of probation. Thereafter employees shall be advanced one step at intervals of 12 months of continuous service following any salary adjustment until the employee reaches the top of the range to which assigned.
 
(b) NEW SALARY STEP 8. Effective July 1, 1996 a new salary Step 8 shall be created and added to the salary schedule at 5% above existing Step 7. An employee at Step 7 shall advance to the new Step 8 on the employee's anniversary date. Effective July 1, 1997, the probationary salary step shall be deleted from the salary schedule. Deletion of the probationary salary step shall not affect an employee's probationary status as otherwise determined by Section 16.2.
 
(c) PROFESSIONAL CERTIFICATION PAY, EDUCATION INCENTIVE PAY AND BILINGUAL INCENTIVE PAY. Employees certified by BPSST are eligible for professional certification pay but not education incentive pay. Employees not certified by BPSST are eligible for education incentive pay but not professional certification pay. Certified and non-certified employees are eligible for bilingual incentive pay. Each employee who qualifies for payment under this subsection shall be paid as follows:
 
(1) The county agrees to pay a monthly premium of 3 % of the monthly salary as stated on
the salary schedule to those certified officers who qualify by meeting all of the following ten-
ns:
 
(A) Must possess an intermediate BPSST certification.
 
(B) Must have received a rating of satisfactory or better in all performance categories on the most recent periodic evaluation. Certification pay will be discontinued upon issuance of a rating of less than satisfactory in any performance category. If discontinued, employee will be eligible for reinstatement of certification pay upon receipt of a completed and approved evaluation during next regular rating period which reflects rating of at least satisfactory in each performance category.
 
(C) Obtain 2 educational points and 2 training points during preceding 12 months.
 
(2) The county agrees to pay a monthly premium of 4% of the monthly salary as stated on the salary schedule to those certified officers who qualify by meeting all of the following terms:
 
(A) Must possess an advanced BPSST certification.
 
(B) Must have received a rating of satisfactory or better in all performance categories on the most recent periodic evaluation. Certification pay will be discontinued upon issuance of a rating of less than satisfactory in any performance category. If discontinued, employee will be eligible for reinstatement of certification pay upon receipt of a completed and approved evaluation during next regular rating period which reflects rating of at least satisfactory in each performance category.
 
(C) Obtain 4 educational points and 4 training points during preceding 12 months.
 
(3) The county agrees to pay a monthly premium of 3%of the monthly salary as stated on the salary schedule to those non-certified employees who qualify by meeting all of the following terms:
 
(A) Must have received an AA degree or equivalent credit hours from an accredited institution of higher learning, or obtained 45 educational points.
 
(B) Must have received a rating of satisfactory or better in all performance categories on the most recent periodic evaluation. Education incentive pay will be discontinued upon issuance of a rating of less than satisfactory in any performance category. If discontinued, employee will be eligible for reinstatement of certification pay upon receipt of completed and approved evaluation during next regular rating period which reflects rating of at least satisfactory in each performance category.
 
(C) Obtain 2 educational points and 2 training point's during preceding 12 months.
 
(4)The county agrees to pay a monthly premium of 4% of the monthly salary as stated on the salary schedule to those non-certified employees who qualify by meeting all of the following terms:
 
(A) Must have received an BA or BS degree or equivalent credit hours from an accredited institution of higher learning, or obtained 90 educational points.
 
(B) Must have received a rating of satisfactory or better in all performance categories on the most recent periodic evaluation. Education incentive pay will be discontinued upon issuance of a rating of less than satisfactory in any performance category. If discontinued, employee will be eligible for reinstatement of certification pay upon receipt of completed and approved evaluation during next regular rating period which reflects rating of at least satisfactory in each performance category,
 
(C) Obtain 4 educational points and 4 training points during preceding 12 months.
 
(5) Educational points and training points are obtained as follows:
 
(A) One point for every credit hour of a satisfactorily completed course (grade "C" or better)at an accredited institution of higher learning.
 
(B) One point for every 20 hours of in-service training approved by a supervisor.
 
(6) Unless specifically authorized in advance in writing by a supervisor, the county shall not compensate time spent by an employee in earning educational points or training points. Unless specifically authorized in advance in writing by a supervisor, the county shall not pay tuition or other costs incurred by an employee in earning educational points or training points.
 
(7) Professional certification pay and educational pay are not cumulative. Premiums for certified officers will be paid under only under subsections (1) or (2), but not both. Premiums for non-certified officers will be paid only under subsections (3) or (4), but not both,
 
(8) The county agrees to pay a monthly premium of 1.5% of the monthly salary as stated on the salary schedule to those certified or non-certified employees who are bilingual in English and Spanish and demonstrate a street-level fluency in Spanish.
 
(d) EXTRA COMPENSATION. At the sole discretion of the sheriff, employees may receive extra compensation in the form of lump sum bonuses in amounts determined by the sheriff. The bonus may be paid for achievement of outstanding merit for the following reasons:
 
(1) Ideas that save the count significant amounts of money, material or time.
 
(2) Ideas for programs to significantly improve services to the public or user groups.
 
(3) Outstanding performance in carrying out job duties.
Extra compensation shall not be granted to recognize longevity, working overtime or personal friendship.
 
B. Health & Welfare. The County proposes to modify the existing Sections 13.1, 13.2 and
 
13.3 as follows:
 
13.1 MEDICAL/LEGAL INSURANCE.
 
(a) (Retain same Teamsters Trust plans as stated in Section 13.1 of 1993-96 agreement. Increase county's maximum monthly contribution to $410 for duration of agreement.)
 
(b) (Delete as no longer applicable.)
 
(c) (No change.)
 
(d) (No change.)
 
13.2 LIFE INSURANCE.
 
(a) (No change.)
 
(b) (Increase county's contribution from 2 cents to 4 cents.)
 
13.3 PENSION BENEFITS. (Existing Section 13.3 deleted and replaced with following language:)
 
(a) CERTIFIED OFFICERS AND NON-CERTIFIED EMPLOYEES "GRANDFATHERED" INTO PERS. The county shall pay all employer and employee contributions required to maintain its existing pension plan with the Oregon Public Employees Retirement System as such plan may be modified by requirements under Oregon statutes.
 
(b) NON-CERTIFIED EMPLOYEES NOT "GRANDFATHERED" INTO PERS. The County shall increase its current 8%, contribution to the defined contribution retirement program on the following schedule:
 
(i) July 1, 1996: County's contribution will be 8.66 % Of gross wages.
 
(ii) July 1, 1997: County's contribution will be 9.32% Of gross wages.
 
C. Memorandum on Shift Bidding. The County proposes to delete Procedures "B" and "C" from the Memorandum of Agreement entitled "Shift Bidding/Bid Request/Four-Ten Schedule." The County proposes to continue all provisions of Memorandum of Agreement entitled "Shift Bidding/Bid Request/Four-Ten Schedule" except for Procedures "B" and "C."
 
Teamsters Union',s Final Offer
 
1. The expired 1993-1996 Labor Agreement, as amended by the parties stipulations.
 
2. The following issues remain open as of the date of impasse. The Union proposes the following amendments for:
 
(A) Wages:
 
Article 12.1 Salary and Wage Schedule
 
Increase all applicable wages on the indicated dates:
 
7-1-96 3%; 1-1-97 3%; 7-1-97 3%; 1-1-98 3%
 
7-1-96 a new salary Step 8 shall be created and added to the salary schedule at 3.0% above Step 7. Employees at Step 7 shall advance on their anniversary date.
 
7-1-97 Probationary Step shall be deleted from the salary schedule. Deletion of Probationary Step shall not affect employees probationary status as otherwise determined by Section 16.P of the Labor Agreement.
 
Certification/Education Pay
 
7-1-96 3% premium of the employees monthly salary for BPSST intermediate Certification,
 
7-1-96 3% premium of the employees monthly salary for A.A. degree or equivalent or 45 educational points.
 
7-1-96 4% premium of the employees monthly salary for E3PSST Advanced Certification.
 
7-1-96 4% premium of the employees monthly salary for B.A. or B.S. degree or equivalent or 90 educational points.
 
However, maximum premium for any combination of Certification/Education Qualification shall be 6%.
 
7-1-96 1.5% premium of employees monthly salary for English/Spanish bilingual ability.
 
(B) Health & Welfare:
 
Article 13.1 Medical Insurance
 
Current Medical, Vision, Dental, Prescription Plans - RM5, RD2, RV2, RRX
 
ADD: Retiree Insurance RR-1 - on the first day of the month following the arbitrators award.
 
Reduce current Maintenance of Benefits Cap to $390-00 per month.
 
13.1 (b) Delete as no longer applicable.
 
(C) Article 13.2 Life Insurance:
 
(b) increase $.02 to $.04 per hour to be paid to O.P.E.T.
 
(D) Article 13.3 Pension Benefits
 
a. CERTIFIED OFFICERS AND NON-CERTIFIED EMPLOYEES
 
"GRANDFATHERED" INTO PERS. The County shall pay all employer and employee contributions required to maintain its existing pension plan with the Oregon Public Employees Retirement System as such plan may be modified by requirements under Oregon statues.
 
b. NON-CERTIFIED EMPLOYEES NOT "GRANDFATHERED" INTO PERS. The
 
County shall increase its current 8% contribution to the defined contribution retirement program on the following schedule:
 
(i) July 1, 1996: County's contribution will be 8.66%of gross wages.
 
(ii) July 1, 1997: County's contribution will be 9.32%of gross wages.
 
(E) Memorandum on Shift Bidding in Correctional Facility.
 
7-1-96 The Union proposes to maintain the current language.
 
7-1-97 By notice of the Union or County, negotiations for modification of shift bidding may proceed.
 
Footnotes:
 
1. Neither party claims that the special provisions aimed at large cities and counties-and at the state itself-apply in this case.
 
2. As the Association points out, there are two distinct CPI-All Cities Indices, the "W" index and the "U." This ambiguity in the statute is not significant in the instant case.
 
3. It is not clear whether the employee identified in the County's exhibit as "Sergeant, Contract Cities" is also financed by those contracts.
 
4. The Union argues that the current financial condition of these employees dates back to the year for which Arbitrator Levak froze all wages, including step increases.
 
5. The County's incentive pay plan is severely limited due to its substantial "maintenance requirements." For example, the Advanced premium requires-in addition to Advanced BPSST-four "education points" and four "education points" each year. A "point" requires 20 hours, so the maintenance requirement amounts to 160 hours per year. The net workyear of a sixth year employee is 1872 hours; so this maintenance requirement for 4% of salary amounts to an additional almost 9% of a workyear. Some of these hours, apparently, are earned automatically at required staff meetings; but the County presumably had something in mind by the proposed maintenance requirements other than attending staff meetings which are required anyway, and the record does not allow me to conclude that the maintenance requirements are not clearly excessive.
 
6. This is the only "language" issue in this case; and I will not discuss it separately because its importance is completely overshadowed by the economic issues. It is easy to imagine interest arbitration cases in which language issues may predominate; but the shift bidding issue here is only the stub of a tail on the economic dog.
 
7. Under the SB 750 version of the interest arbitration statute, such "internal comparability" data are not directly relevant to the issue before an arbitrator except, perhaps, as general background. Before SB 750, internal comparability was far the most important of the statutory "other factors" considered by interest arbitrators. In the real world of collective bargaining-whether in the public, private or Federal sector-internal comparability is, of course, an extremely important factor, and many disputes are driven by one unit's desire to "get up with" or "stay ahead of" another unit. Under the SB 750 version of the statute, however, such an "other factor" may be considered only if the arbitrator cannot otherwise reach a decision, which will virtually never be the case.
 
8. The County provided data showing that the other counties most similar in size are substantially less dependent on property tax revenue than Yamhill County. While that data is not relevant to comparability issues, it does speak to the "reasonable financial ability of the unit of government to meet the costs of the proposed contract." Of the nine Counties for which there is data in the record, only Umatilla is more dependent on property tax income than Yamhill.
 
9. For instance, SB 750 added the public policy exception to the statutory framework for enforcement of grievance arbitration awards despite the fact that that exception had been clearly recognized in the case for some years.
 
10. Considering the substantial majority of interest arbitrators and factfinders who based their comparability conclusions on considerations of "labor market," the legislature might have been expected to specify proximity along with "nearest population range" if it intended us to carry on as usual; but it did not do so.
 
11. The beginning point of the Union's overall analysis is the base salary and contract benefits of the employees in question. The Union included the base wage documents for all the counties discussed; and both the Union's data and the County's "low step" data are consistent with the numbers set out in those documents. At that level, the parties apparently do not dispute the "total compensation" received by similar employees in the relevant jurisdictions.
 
12. The County has not raised any objection to the Union's calculations of "net hours worked per year"-either at hearing or in the briefs-and I have therefore not independently recalculated those numbers from the contracts in the record. I have added the "after one year" comparison, based on the contracts in the record, in response to the County's reasonable objection that the Union's benchmarks were too heavily weighted to senior employees. I have rejected the County's proposal to adjust benefits received by the PERS rate paid by the respective employers. Because the statute requires a total compensation approach to comparabiliy-"direct and indirect monetary benefits"-and because PERS retirement benefits do not reflect an employer's PERS costs, I must agree with the Union that the difference in PERS costs of the different employers is irrelevant to benefit comparisons (although it is, of course, relevant to an analysis of an employer's costs). PERS pickup, or its absence, on the other hand, is indisputably part of overall compensation; and salaries have been adjusted by a 6% reduction for counties without PERS pickup. Differences in levels of insurance benefits have been approximated by including maximum insurance contributions for each employer. It is certainly true that this confuses premiums with benefits. Insurance premiums commonly reflect the overall size, age and health costs of the group, as well as the quality of the benefit program. Unlike PERS, however, the quality of health insurance benefits do tend to be reflected by difference in premium amount at least to some extent; and the record offers no other method of taking this difference of benefit levels into account.
 
13. The county, like most of these comparables, pays Deputies and Corrections Officers at the same rate. (The rate for the five Detectives is slightly higher here, as in the comparable jurisdictions.) I have not included similar tabulations for the non-sworn unit employees because (1) similarity of duties between employers is less certain, (2) their pay rates are generally less, and percent increases therefore have smaller consequences, (3) 50 of the 75 employees in the unit are sworn, and (4) a similar analysis of compensation for non-sworn employees would not affect the overall result here.
 
14. This sort of averaging-add the amount paid by each comparable employer and divide the total by the number of employers-is far the most common process of "comparison" used in interest arbitration in Oregon. It is, however, not exactly what the literal language of the statute seems to say; and the Union also provides comparability data for that literal language. ORS 243.746(4)(e) requires consideration of "[c]omparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities." The statute, on its face, does not suggest that one should average the salary schedules for comparable employers. It says that one must compare with "compensation of other employees," which seems to suggest examining the average compensation received by the similar employees of comparable employers. Such a comparison would require finding the average salary paid, rather than averaging the salary schedules; and, from an employer's point of view, that would turn larger employers into the proverbial 800 pound gorillas of comparability. (This distortion of the usual comparison process would not be cured by insisting on a strict interpretation of "nearest population range." Within any given population range, the larger employers will tend to have more employees of any given type and the average benefits received by the group overall will therefore tend toward the benefits received by that larger employee group.) Of the five counties for which the Union offers data, for example, Deschutes, Douglas and Linn take on overweening importance-because they each employ around 1,500 officers-while Umatilla, with 274 officers, becomes much less significant. On that basis, the County ranges from 21% behind the comparable average salary-after five years with basic BPSST certification-to around19% behind after 20 years with a BA/BS and Advanced certification.
 
15. The Union argues that it is extremely rare for a police unit to have a substantial number of employees with less than seven years service. The record includes some data in support of that claim and no data to the contrary; and the claim is consistent with my own experience with police units.
 
16. The Deputies left at steps 4 and 6, the COs at steps 1 and 4, the Cook and clerk at step 3, and the nurse at step 6. (Departure steps are approximate, because the record does not show the exact date of departure for each employee.)
 
17. Both these numbers are reduced for one retirement and one death. Because the unit has apparently grown somewhat in the three year period-seven employees financed through the Cops Fast and Cops More programs are in probation or at Step 1-a comparison with its current size substantially understates the extent of the turnover rate.
 
18. Thirteen of the 21 turnovers were CRT employees, which is astonishing in light of the current scattergram of the unit which shows a total of six on the payroll.
 
19. I will use the expression "ability to pay" as common shorthand for the statutory provision "The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration [etc.]."
 
20. The bonded indebtedness per capita has been reduced from about $171down to less than $31 over that same period. One of the stranger features of Measure 47-out of many strange features-is that in effect it penalizes local governments for having taken steps to reduce their own bonded debt load.
 
21. The law enforcement levy runs three years beginning in 1996; 90% of that levy supports patrol services, and 10% supports the district attorney's office.
 
22. The number is a minimum because it is not clear whether the Sergeant position which supervises the city-contracted Deputy positions is also paid under those contracts, I have assumed the Sergeant position is not paid by the cities. Four Deputy positions financed by a Cops Fast grant do not fall into this category because that grant has a cap of $25,000 annually per position, The Cops More grant, on the other hand, apparently has no such cap and would support 9.75 FTE at entry level, compared to the 8 FTE now on the payroll (1 at entry and 7 at Step 1). More likely than not, on this record, the Cops More grant will cover 90% of the difference in the cost of the parties' proposals. See Exhibit U-19.
 
23. The Union argued for two additional sources of funds to meet its proposed larger increase. First, on the basis of this record, I cannot conclude that the County has a practice or pattern of substantially overbudgeting expenditures and underbudgeting revenues. Second, there is no room for substantial dispute that the County's contingency fund is more than reasonable; and the ending fund balance is actually quite low.
 
24. The February 24 Opinion is the crucial one here; but its authority seems to me to be increased by the fact that it builds on the October, 1996, Opinion, which was issued before the electorate approved Measure 47 (and the Court may therefore eventually find that it was part of the published, pre-election explanation of the initiative's language).
 
25. That assumption may be quite prudent from the Budget Officer's point of view; but I am faced with a choice between the general opinion of several county budget officers on the one hand and a well-reasoned formal Opinion of the Attorney General on the other. With all due respect to the budget officers, given that choice I must follow the formal Opinion of the Attorney General, especially when that opinion rests on such an apparently firm foundation as the clear language of the Measure itself.
 
26. I do not mean to suggest that the County's interpretation has been unreasonably conservative. For example, the County assumed an adverse overall impact of $1.2M, as compared to the Legislative Revenue Office's estimate of $1.9M, because the County considered the Legislative Revenue Office to have understated new construction mitigation under Measure 47.
 
27. It is also far from clear that any actual staff reductions will result from the implementation of the Union's proposed language.
 
28. Substantially larger neighboring jurisdictions are inappropriate for purposes of total compensation comparison under ORE 243.746; but the significance of larger neighboring departments cannot be avoided when it comes to issues of retention. Consideration of retention inevitably invites consideration of a local labor market: an employee is more likely to change employers when the employee can get more money for the same work without relocating his or her family.
 
29. The text here reflects the final offers which the parties served on one- another before hearing and does not reflect the fact that several issues that were resolved at hearing and removed from the consideration of the arbitrator