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IA-06-01
 
 
In the Matter of the Interest Arbitration Between CLACKAMAS COUNTY FIRE DISTRICT NO. 1 and INTERNATIONAL ASSOCIATION OF FIREFIGHTERS LOCAL 1159. IA-06-01.
 
This matter came for hearing on April 30, 2001, at Milwaukie, Oregon. The Union was represented by Michael J. Tedesco and the District by Donna Cameron. Testimony and documentary evidence were received. The parties stipulated that the hearing would not be recorded. Post-hearing briefs were received on May 30, 2001.
 
This case concerns a successor collective bargaining agreement to the parties' June 1, 1998 through June 30, 2001 agreement. Bargaining reached impasse, the parties waived mediation, and their dispute was submitted to interest arbitration in accordance with ORS Chapter 243.
 
THE STATUTORY CRITERIA.
 
This proceeding is controlled by the following statutory criteria:
 
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-AII 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.
 
BACKGROUND.
 
The District, one of only two accredited fire agencies in Oregon, serves approximately 145,000 people within a predominately rural area of 170 square miles abutting southeast Portland. The largest city in its jurisdiction is Milwaukie. The District's other incorporated communities are the small cities of Happy Valley and Johnson City. Otherwise, its jurisdiction is comprised of unincorporated areas. The Clackamas County cities of Oregon City, West Linn and Lake Oswego are not part of the District. In 1998, the District expanded: the Oak Lodge Fire District merged into the District; and the City of Milwaukie contracted with the District to provide its fire services, and that city's employees transferred into the District.
 
The District has about 119 bargaining unit employees in the job categories of firefighter, apparatus operator, lieutenant, and captain. Those categories break down as: suppression line employees (8 captains, 29 lieutenants, 41 apparatus operators, and 34 firefighters); training divisions employees (one captain and one firefighter); and fire prevention employees (two captains, one TDY--a firefighter rank at captain's pay--and one captain). The District also has a swift water rescue team and a confined space rescue team. Approximately 75% of bargaining unit members are EMT-P (paramedic) certified. The terms "employees" and "firefighters" used herein refer to bargaining unit members in general. Outside the bargaining unit, the line structure is battalion chief, assistant and deputy chiefs, and the fire chief.
 
THE 1998 BARGAINING.
 
The 1998 bargaining that led to the 1998-2001 collective bargaining agreement involved the thorny problem of combining the three separate bargaining agreements covering the District, Milwaukie and Oak Lodge departments into one agreement. Oak Lodge presented the greatest challenge because its pay scale was much higher than the other two, and also contained wage-related provision that the other two did not have, including longevity pay and six paid shifts a year off in lieu of FLSA ( "FLSA Shifts Off" or "Kelly Days"). Also, the District felt the need to reduce excessive overtime expense that was caused because the bargaining agreement essentially allowed employees to unilaterally adjust their work shifts to transform a straight time shift into an overtime shift, e.g., by taking a day off in one work cycle and working a call shift as a replacement in another cycle. Ultimately, the parties were able to reach agreement by adopting a compromise plan proposed by the Union which: (1) moved all District bargaining unit members to the higher Oak Lodge wage program, and (2) offset the costs of that program by creating a pay computation system that minimized or avoided FLSA time and one-half pay when extra shifts were worked.
 
The 1998-2001 bargaining agreement plan had several components. First, over the three years of the agreement, all wage scales were merged together, with non-Oak Lodge personnel receiving a 17% increase during the agreement's first two years, and Oak Lodge personnel grandfathered for certain special premiums. Second, while the typical fire district utilizes a 27-day FLSA system under which three hours of the regular 56-hour weekly schedule is paid at overtime rates, the parties agreed that the District would continue to use an FLSA system of 27-day work cycles that requires overtime to be paid after 204 hours in the cycle, and would not have the three hours of overtime built in. Third, the length of each shift was increased from 24 hours to 24 hours and ten minutes, which allowed 8 hours of each shift to be considered unpaid sleep time and deducted from the number of hours in each shift (the "sleep time exemption"). Essentially, the sleep exemption had the effect of voiding the FLSA overtime that results from employees who work a 56-hour weekly schedule when the FLSA permits a 53-hour schedule. As a result, of each 24 hour 10-minute period, only 16 hours 10 minutes counted against the available 204 straight-time hours in the 27-day cycle. Fourth, the six Kelly Days that formerly only existed at Oak Lodge were applied to all District employees, which further reduced the number of "hours worked" in each cycle--the Kelly Days reduced the normal average workweek from 56 to 53 hours and the normal work year from 121.67 to 115.67 shifts, which also had the effect of increasing the shift rate significantly. (Note: the six Kelly Days are inserted into the work year every 19th shift simply to change the overtime calculation. Kelly Days come on the cusp of pay periods, reducing both the old and the new pay period by 12 hours. Six shifts is 144 hours. The employee who is off on a Kelly Day is paid as if he or she were working; then when the employee works to replace another employee's Kelly Day, he or she is paid for working an extra shift. Because employees virtually always work Kelly Days back, an employee in effect gets paid double-time for those shifts. And since employees can trade shifts, a firefighter can even work his or her own Kelly Day, using trade time, and be paid double.) Fifth, because the sleep time exemption also had the effect of increasing the hourly rate of pay because it changed the number of hours during a shift which are considered to be "hours worked" The hourly rate is the shift rate divided by the "hours worked" in the shift. Deleting sleep time changes the denominator of that fraction from 24 hours to 16.17 hours. Given the increase in the hourly rate resulting from the six Kelly Days, deleting sleep time from the "hours worked" resulted in too much of an increase in the hourly rate, so the parties agreed to lessen the impact by determining that the 16 hours 10 minutes of "hours worked" would be considered 8 hours 10 minutes at straight time and 8 hours at double time, and thereby arrived at the hourly rate calculation by dividing the shift rate by 24.17.
 
All of those changes resulted in the District having a higher rate of pay than any other fire agency in the State of Oregon, including Portland and Tualatin Valley Fire & Rescue ("Tualatin Valley"). On the other side of the coin, the changes resulted in firefighters having to work extra (relief) shifts at straight-time rates because even with extra shifts it was rare that an employee's "hours worked" exceeded 204 hours in 27 days. Thus, even though the District straight-time rate was higher than Portland's or Tualatin Valley's, because the District did not have to pay time-and-one half pay when a firefighter worked extra shifts, it benefitted from the deal. The effect of the changes was specifically announced in the 1998 bargaining agreement, and the parties also entered into a letter of agreement ("LOA") which memorialized the fact that had they not agreed upon the components of their novel FLSA system, they would have utilized a traditional FLSA system, "but with a lower salary schedule."
 
THE CURRENT DISPUTE.
 
In mid-2000, the Union notified the District that it wished to commence early bargaining for a successor agreement because one of its members had threatened to file a legal challenge to the FLSA system adopted by the parties in 1998, specifically to the sleep exemption. In that member's view--a view ultimately adopted by the Union--while the sleep exemption required five continuous hours of sleep within a 24-hour plus shift, as a practical matter, particularly at some busy stations, employees were not getting the required five continuous hours of sleep. Therefore, the Union proposed to move back to a traditional FLSA system. While the District believed that the new system was valid, it agreed to the Union's proposal to eliminate the sleep exemption and go back to a traditional system. At the risk of oversimplification, the parties' impasse concerns their disagreement over how to return to a traditional FLSA system. In general, the District's entire last best offer ("LBO") is grounded in the premise that if the parties revert to a traditional FLSA system, all of the components of the 1998 plan must be discarded as purportedly contemplated by their LOA, including the higher wage scale and the Kelly Days. On the other side of the coin, the Union's LBO, in general, proposes that even though the parties will be reverting to a traditional FLSA system that will result in time and one-half being paid for extra shifts, a higher wage scale and Kelly Days be retained.
 
The specific bargaining agreement provisions at issue in this case are:
 
1. Article 16.1, Trade time.
 
2. Article 19.1, Wage increases
 
3. Article 19.10, Paramedic pay
 
4. Article 20.3, Hours/Overtime
 
5. Article 20.5, Pay for Non-bargaining unit work
 
6. Article 20.7, Non-emergency coverage--The call board
 
7. Article 21.4, Sick leave
 
8. Article 22.6, 22.7 & 22.10, Vacations & Holidays
 
9. Article 23.1, Health & Welfare--Vacation buy back
 
10. Article 27.1, Retirement and Appendix A--PERS pickup
 
11. Article 28.1-28.6, FLSA Shifts off ("Kelly Days")
 
ARTICLE 16, TRADE TIME.
 
Article 16.1 currently provides:
 
16.1 Trade time will be allowed as long as it does not interfere with normal company business. Trade time will not result in overtime pay or other extra compensation from the District. Trade time should be submitted one shift in advance except in emergencies to the appropriate Battalion Chief or the Assistant Chief of Operations by the supervisor approving the trade. The District has the right to deny trade time if the request has a negative impact on the District.
 
The Union proposes to retain the current language.
 
The District proposes to amend Article 16.1 to read:
 
16.1 Trade time will be allowed as long as it does not interfere with normal company business. Trade time worked for another person is not "time worked" for purposes of the FLSA or Oregon law. Except in emergencies, time trades will he submitted by shift personnel no later than the start of the employee's normally scheduled work shift immediately preceding the trade shift and by nonshift personnel twenty four hours in advance. Time trades will be handled per policy with notification and acceptance by the immediate supervisor and approval of the roster by the Battalion Chief. In the event that a trade is taken under the emergency provision, resulting paperwork should be submitted to the Duty Battalion Chief upon returning to work, explaining the cause of the emergency.
 
The District has the right to deny trade time if the request has a negative impact on the District. Generally, trade time will not be allowed in the following circumstances:
 
a. The person working the trade time is not qualified to perform the duties of the position;
 
b. The trade would affect an employee's training requirements or ability to do the work assigned to his/her position;
 
c. The purpose of the trade time is to acquire a call shift, to work at another job, or to regularly avoid working the employee's regularly assigned shift;
 
d. The employee has traded an unusually high number of shifts.
 
e. The trade time would result in overtime pay or other compensation cost to the District.
 
ARTICLE 19 - COMPENSATION and APPENDIX A, SALARY SCALE..
 
Article 19.1 currently references the Appendix A, B and C salary schedules for 1998-2001. Appendix C, The Salary Scale for 2000-2001 currently provides:
 
SUPPRESSION
 
BASE EMT 1 EMT P
 
CAPTAIN
 
F/O 2 Step A 5,592 308 435
 
Step B 5,424 308 435
 
LIEUTENANT
 
F/O 1 Step A 5,094 308 435
 
Step B 4,941 308 435
 
APP OPERATOR
 
A/O 3 Step A 4,869 308 435
 
Step B 4,723 308 435
 
FIREFIGHTER
 
6th Year Top F/F 3 4,713 308 435
 
5th Year F/F 3 4,404 308 435
 
4th Year F/F 3 4,117 308 435
 
3rd Year F/F 2 3,847 308 435
 
2nd Year F/F 1 3,595 308 435
 
1st Year Probationary 3,361 N/A 217
 
PREVENTION
 
BASE EMT I EMT P
 
DFM CAPTAIN
 
FPO 3** 5,592 N/A N/A
 
FPO 2** 5,424 N/A N/A
 
DFM LIEUTENANT
 
Add F/O 1 or PEO 1 5,094 N/A N/A
 
UFC Inspector/FPO1 4,941 N/A N/A
 
The Union proposes to modify the Salary Scale language to read:
 
Appendix A will reflect current monthly salaries, as the July 1, 2001 increases as stated in Article 19.
 
Consistent with that proposal, the Union further proposes that Article 19.1 read:
 
Effective July 1, 2001, Appendix A will be modified to reflect a pay increase of 3% for all classifications. Effective January 1, 2002, wages will be further modified to reflect a pay increase of 2% for all classifications. Effective July 1, 2002, wages will be modified by 2% for firefighters, 2.7% for apparatus operators, 4.5% for Lieutenants, and 4.75% for Captains. Also for July 1, 2002, fire prevention officers, training officers and deputy fire marshals will receive increases based upon their rank in their current assignment. Effective January 1, 2003, wages will be modified to reflect a pay increase of 2% for all classifications.
 
The District proposes to modify the Salary Scale language to read:
 
The 2001-2002 salary scale at Appendix A will reflect June 30, 2001 monthly salaries, as the July 1, 2001 increase is via implementation of the PERS pickup. The 2002-2003 salary schedule will reflect the increases in Article 19.
 
Consistent with that proposal, the District proposes that Article 19.1 read:
 
19.1 Effective July 1, 2001, the District will begin paying the 6% employee PERS contribution (the "pickup") and will stop deducting the employee PERS contribution from employee paychecks. The PERS pickup is in lieu of a July I, 2001, salary increase and results in an increase of 6% in the employees' effective salary rate.
 
Effective July 1, 2002, the monthly rates of pay in Appendix A will he increased by 2% .
 
Effective January 1, 2003, the salary scales will be increased by 2%. At the same time, the salary scale for apparatus operators will be increased by an additional .5% and the salary scales for lieutenants and captains will be increased by an additional 1%.
 
ARTICLE 19, PARAMEDIC PAY.
 
Article 19.10 currently provides:
 
Fire suppression employees who have been placed on the applicable pay scale will receive EMT premium pay at the following rates based on the highest certification they hold:
 
EMT I (Intermediate) = $290 per month
 
EMT P (Paramedic) = $410 per month
 
These rates will be increased by three percent effective July 1, 1999, and three percent effective July 1, 2000.
 
The premium pay will be paid as long as the employee is either assigned to a line position or is in a temporary duty assignment and will return to a line position.
 
The Union proposes that Article 19.10 read:
 
Fire suppression employees who have been placed on the applicable pay scale will receive EMT premium pay at the following rates based on the highest certification they hold:
 
EMT I (Intermediate) = 6.5% of top firefighter pay per month
 
EMT P (Paramedic) = 10% of top firefighter pay per month
 
The premium pay will be paid as long as the employee is either assigned to a line position or is in a temporary duty assignment and will return to a line position.
 
The District proposes that Article 19.10 read:
 
Fire suppression employees who have been placed on the applicable pay scale will receive EMT premium pay at the following rates based on the highest certification they hold:
 


 
 
EMT I (Intermediate) = $308 per month
 
EMT P (Paramedic) = $450 per month
 
The EMT P rate will increase to $465 per month on July 1, 2002.
 
The premium pay will be paid as long as the employee is either assigned to a line position or is in a temporary duty assignment and will return to a line position.
 
ARTICLE 20.3, HOURS/OVERTIME.
 
Article 20.3 currently provides:
 
For payroll purposes, each shift worked will be paid at the per shift rate, and any hours less than a full shift will be paid at the regular hourly rate. The shift rate is calculated by dividing the total annual compensation (base salary and EMT incentive pay) by the number of scheduled shifts per year, which is 115.67. Each shift includes eight (8) hours sleep time, eight (8) hours ten (10) minutes at the regular rate of pay and eight (8) hours paid at double time. The regular rate of pay for overtime purposes is calculated by dividing the shift rate by 24.17. Overtime will be calculated by using the regular hourly rate, including EMT incentive pay (if applicable), multiplied by 1.5.
 
The Union proposes to modify Article 20.3 to read:
 
For payroll purposes, each shift worked will be paid at the per shift rate, and any hours less than a full shift will be paid at the regular hourly rate. The shift rate is calculated by dividing the total annual compensation (base salary and EMT incentive pay) by the number of scheduled shifts per year, which is 115.67. Overtime will be paid as required by the FLSA based on actual hours worked. The regular rate of pay for overtime purposes is calculated by dividing the shift rate by 24. Overtime will be calculated by using the regular hourly rate, including EMT incentive pay (if applicable), multiplied by 1.5.
 
The District proposes to modify Article 20.3 to read:
 
For payroll purposes, each shift worked will be paid at the per shift rate, and any hours less than a full shift will be paid at the regular hourly rate. The shift rate is calculated by dividing the total annual compensation (base salary and EMT incentive pay) by the number of scheduled shifts per year, which is 121.67. Overtime will be paid as required by the FLSA based on actual hours worked. The regular rate of pay for overtime purposes is calculated by dividing the shift rate by 24. Overtime will be calculated by using the regular hourly rate, including EMT incentive pay (if applicable), multiplied by 1.5.
 
ARTICLE 20.5, PAY FOR NON-BARGAINING UNIT WORK.
 
Article 20.5 currently provides:
 
20.5 When extra work is available which is not part of the normal job of bargaining unit personnel and which will be performed outside an employee's scheduled work hours, the District has the option of offering the work to an employee. No employee is required to agree to perform the work. If the employee agrees to perform the work, the rates of pay in Appendix D will apply.
 
The Union proposes that Article 20.5 read:
 
Time worked outside an employee's usual assignment will be paid at the employee's applicable normal rate of pay.
 
The District proposes that Article 20.5 read:
 


 
 
Time worked as an instructor will be paid at the employee's normal rate of pay. If an employee and the District agree that the employee will perform extra work which is not part of the normal job of bargaining unit personnel and which will be performed outside the employee's scheduled work hours, the district and employee will agree on an appropriate rate of pay before that work is performed.
 
ARTICLE 20.7, NON-EMERGENCY COVERAGE--THE CALL BOARD.
 
Article 20.7 currently provides:
 
20.7 The employer reserves the right to determine when additional hours are to be worked and in what classifications. When "non-emergency" coverage is required for suppression, it shall be offered to permanent employees by a single call-shift roster, except when special skills are required to perform the work, as determined by the District.
 
The Union proposes that Article 20.7 remain the same.
 
The District proposes that Article 20.7 read:
 
The employer reserves the right to determine when additional hours are to be worked and in what classifications. When "non-emergency" coverage is required for suppression, it shall be offered to permanent employees through the Telestaff system, using by a single call-shift roster, except when special skills are required to perform the work, as determined by the District. The following guidelines normally will apply:
 
a. Floaters will be assigned first, provided that overtime will not result.
 
b. Every reasonable effort will be made to equalize opportunities for call shifts;
 
c. Call shifts will not result in overtime pay unless no employees are available to work the shift without overtime;
 
d. Call shifts will be offered first to shift personnel assigned to the same station;
 
e. Call shifts will not result in an employee working more than 72 consecutive hours, including the regular schedule, trade time and call shifts;
 
f. Employees are not eligible to work a call shift during periods that they are on leave from their normal work schedule for personal medical reasons.
 
g. Employees who are on other types of family and medical leave are assumed to be unable to work a call shift during periods that they are unavailable for their regular shift. However, the employee is eligible for a call shift if documentation is submitted of legitimate reasons for the intermittent availability for work.
 
ARTICLE 21.4, SICK LEAVE.
 
Article 21.4 currently provides:
 
Sick leave can be used for the illness of the employee and for medical appointments which cannot be scheduled during off duty time. An employee may use up to three shifts (9 days) per year of his/her accumulated sick leave in the event of illness (as defined in state or federal family medical leave laws), injury, or hospitalization of an immediate family member. An employee's immediate family shall be considered to include spouse or spousal equivalent, parent, child or sibling. The Fire Chief can approve additional use of sick leave in extreme cases such as a spouse with a life-threatening illness. Additional necessary time off related to illness of a family member will be trade time, vacation, or unpaid time.
 
The Union proposes that Article 21.4 read:
 
Sick leave can be used for the illness of the employee and for medical appointments which cannot be scheduled during off duty time. In the event of an approved leave for illness, injury, or hospitalization of an immediate family member which qualifies under state or federal family and medical leave laws, the employee may use six (6) shifts (18 days) of sick leave in a twelve month period. Additional family leave time will be credited against accrued vacation. If all accrued vacation is exhausted accrued sick leave may be used. For parental leave or as otherwise required by state or federal law, the employee may use additional sick leave after all accrued vacation time is exhausted. An employee's immediate family shall be as defined in state and federal leave laws, and in addition, a spousal equivalent. The Fire Chief can approve additional use of sick leave in extreme cases such as a spouse with a life-threatening illness. Additional necessary time off related to illness of a family member will be trade time, vacation, or unpaid time.
 
The District proposes that Article 21.4 read:
 
Sick leave can be used for the illness of the employee and for medical appointments which cannot be scheduled during off duty time. In the event of an approved leave for illness, injury, or hospitalization of an immediate family member for other than personal illness, which qualifies under state or federal family and medical leave laws, the employee may use up to three shifts (9 days) of sick leave in a twelve month period. Additional family leave time will be trade time, vacation or unpaid time. For parental leave, or as otherwise required by state or federal law, the employee may use additional sick leave after all accrued vacation time is exhausted. An employee's immediate family shall be as defined in state and federal leave laws, and in addition, a spousal equivalent. The Fire Chief can approve additional use of sick leave in extreme cases such as a spouse with a life-threatening illness.
 
ARTICLE 22.6, 22.7 & 22.10, VACATIONS & HOLIDAYS.
 
Article 22.6 currently provides:
 
22.6 Vacation time off shall be submitted to the Battalion Chief. Vacation of one day or less will be requested at least twenty-four (24) hours in advance except in emergencies. Beginning January 1, 1999, two (2) days of vacation will be scheduled in advance in each six (6) month period pursuant to a process developed by the bargaining unit and approved by the Fire Chief. (This scheduling requirement is intended to allow maximum utilization of floaters. If the District discovers after experience with floaters that this requirement is not necessary, the District will waive the requirement.) That process will determine the consideration given to seniority in scheduling vacation. The employee's arrangements for coverage of his/her scheduled shifts shall be through the call-board with notification to the Battalion Chief. The District has the right to deny vacation request if the request has a negative impact on the District.
 
The Union proposes to retain the language of Article 22.6. The District proposes to modify that article to read as follows, and also proposes the addition of a new preceding Article 22.x:
 
22.x In conjunction with input from the union, the district will establish a vacation scheduling procedure to ensure that sufficient employees are scheduled for vacation in advance to ensure full utilization of up to twelve (12) floater personnel. The procedure will reflect consideration for seniority, a date after which earlier requests have preference, and provisions to protect crew continuity. That procedure will include that (1) at least three employees are scheduled to be off work each day for vacation and (2) no more than one third of the employees will be off work on any day for vacation.
 
22.6 A request for vacation time off other than prescheduled vacation under Section 22.x shall be submitted to the Battalion Chief. Except in emergencies, vacation must be requested by shift personnel no later than one week before the requested time off and by nonshift personnel at least twenty-four (24) hours in advance. The District has the right to deny vacation request if the request has a negative impact on the District.
 
Article 22.7 currently provides:
 
In the event of termination or retirement, the employee may have the option of taking accrued vacation time off or receive pay for same.
 
The Union proposes to retain that language. The District proposes to modify Article 22.7 to read:
 
In the event of termination or retirement, the employee may have the option of taking accrued vacation time off or receive pay for same. At the end of each year, employees may elect to return to the District up to 48 hours of accrued vacation in return for pay at straight time rates into the employee's cafeteria plan account.
 
Article 22.10 currently provides:
 
An employee who transfers during the vacation accrual year between a fifty-six (56) hour position and a forty (40) hour position will earn pro rata vacation under the schedules in paragraphs 22.1 and 22.9 according to the portion of the year spent on each job. In making that computation, the vacation schedule for fifty-six (56) hour employees is understood to include extra vacation time in lieu of three (3) holiday shifts.
 
The Union proposes to modify Article 22.10 to read:
 
An employee who transfers during the vacation accrual year between a fifty-three (53) hour position and a forty (40) hour position will earn pro rata vacation under the schedules in paragraphs 22.1 and 22.9 according to the portion of the year spent on each job. In making that computation, the vacation schedule for fifty-three (53) hour employees is understood to include extra vacation time in lieu of three (3) holiday shifts. If the employee moves to a forty (40) hour position, the accrued vacation hours are divided by 1.4. If the employee moves to a fifty-three (53) hour position, the accrued vacation hours are multiplied by 1.4.
 
The District proposes to modify Article 22.10 to read:
 
An employee who transfers during the vacation accrual year between a fifty-six (56) hour position and a forty (40) hour position will earn pro rata vacation under the schedules in paragraphs 22.1 and 22.9 according to the portion of the year spent on each job. In making that computation, the vacation schedule for fifty-six (56) hour employees is understood to include extra vacation time in lieu of three (3) holiday shifts. If the employee moves to a forty (40) hour position, the accrued vacation hours are divided by 1.4. If the employee moves to a fifty-six (56) hour position, the accrued vacation hours are multiplied by 1.4.
 
ARTICLE 23.1, HEALTH & WELFARE--VACATION BUY BACK.
 
Article 23.1 currently provides:
 
The District will pay the average monthly premium payment to a maximum of $470 per employee per month for medical and dental policies and 50 percent of any increase(s) over this amount during the life of the contract. The remaining 50 percent of any increase(s) shall be paid by the employee. The District will consult with the Union prior to any change in the carrier or coverage.
 
The Union proposes to modify Article 23.1 to read:
 
The District will provide a cafeteria plan which includes employee health insurance coverage, including Kaiser, and which allows employees to select dependent health insurance coverage, disability insurance, post employment health insurance, child care, deferred compensation, and a cash option. The plan will provide for optional employee contributions as well as the District's contribution.
 
The District proposes to modify Article 23.1 to read:
 
The District will provide a cafeteria plan which includes employee health insurance coverage, including Kaiser, and which allows employees to select dependent health insurance coverage, disability insurance, post employment health insurance, child care, deferred compensation, buy back of vacation and a cash option. The plan will provide for optional employee contributions as well as the District's contribution.
 
ARTICLE 27.1, RETIREMENT AND APPENDIX A--PERS PICKUP.
 
Article 27.1 currently provides:
 
Fire District No. 1 shall continue to participate in the Oregon Public Employee's Retirement System. Employee contributions to the Public Employee's Retirement Fund will be accomplished through payroll deduction.
 
The Union proposes to retain the language of that article. The District proposes to modify Article 27.1 to read:
 
Fire District No. 1 shall continue to participate in the Oregon Public Employee's Retirement System. Effective July 1, 2001, the District shall begin paying the 6% employee PERS contribution (the "pickup").
 
ARTICLE 28.1-28.6, FLSA SHIFTS OFF ("KELLY DAYS").
 
Article 28 currently provides:
 
28.1 All suppression personnel working on a shift basis will receive six (6) shifts off per year in lieu of FLSA compensation. The shifts will occur every 19th consecutive assigned platoon shift, thereby reducing the workweek to fifty-three (53) hours.
 
28.2 FLSA shifts off may be traded consistent with the District trade time agreement.
 
28.3 FLSA relief personnel may be assigned to work the following shift rotation: the employee will work six (6) consecutive platoon shifts ("A" Shift) and then receive three (3) calendar days off. The employee will then work six (6) consecutive platoon shifts ("B" Shift) and then received three (3) calendar days off. The employee will then work six (6) consecutive platoon shifts ("C" Shift) and then receive three (3) calendar days off. This schedule creates a Fifty-three (53) hour workweek for FLSA relief Personnel.
 
28.4 The scheduling requirements in Sections 28.1 and 28.3 can by (sic) waived by the bargaining unit and the Fire Chief if the bargaining unit develops and the Fire Chief approves an alternative for scheduling FLSA shifts off which provide equivalent protection to the Fire District.
 
28.5 Employees assigned to FLSA relief are entitled to the same wages and benefits as regularly assigned shift personnel but it is understood that their normal work schedule may vary from the normal work schedule of regularly assigned shift personnel.
 
28.6 Employees assigned to FLSA relief shall not be probationary Firefighters.
 
The District proposes to delete all of Article 28. The Union proposes to retain Sections 28.1, 28.3, 28.5 and 28.6, but to delete Sections 28.2 and 28.4.
 
UNION CONTENTIONS.
 
1. The Statutory Factors. First of all, in general, the Union would note that this is an unusual case because while, frequently, comparables are significant, here, for two reasons, other statutory factors are far more critical. First, absent exigent circumstances, a reduction in compensation is contrary to the interest and welfare of the public; and the District's LBO, despite its wage proposal, is inferior to the totality of the economic terms of the current bargaining agreement because it proposes the elimination of Kelly Days, proposes restricting trade time, proposes an ambiguous vacation scheduling plan that seeks to reduce overtime costs through the use of floaters, and demands economic take-backs despite its sound financial condition. Second, the District already has trouble attracting employees, and its offer will reduce its ability to attract and retain even more.
 
a. Interest and Welfare of the Public. First, the District seeks to schedule bargaining unit vacations to somehow reduce overtime costs through the use of floaters--firefighters without a permanent station. While the Union believes that it is unwise to reduce staffing levels to create extra floaters, and not in the public interest, it recognizes that the decision to do so rests with the District. What the Union objects to, however, is the District claim that to effectively schedule floaters, it must have the right to schedule vacations after merely consulting with the Union, a proposal which effectively eliminates the Union's role in vacation scheduling, a mandatory subject, and a subject upon which the Union has the right to bargain details. Portland Firefighters Ass'n, Local 43 v. City of Portland, 305 OR 275 (1988); Salem Police Employee's Union v. City of Salem, 308 OR 383 (1989). What the District is demanding is a waiver of that right to bargain, a waiver the Union refuses to grant. Because any waiver must be clear and unmistakeable--see, e.g., AFSCME Council 75 v. Umatilla County Board of Commissioners 8 PECBA 6767 (1982)-- an award in favor of the District would be contrary to the public interest. Further, the District's proposal is impermissibly vague and therefore not worthy of consideration. See, the Arbitrator's interest arbitration award in City of Gresham and IAFF Local 1062, 6/13/94. Second, the District's proposal to eliminate Kelly Days, and thereby require employees to work an additional six days with no return compensation or benefit, amounts to both a cut in pay and decrease in overall compensation--cuts, when one considers the District's strong financial condition, are contrary to the public interest. Third, it is well-established that an interest arbitrator should consider the influence of statutory factors (b) through (g) in determining the interest and welfare of the public. See, City of Cornelius and AFSCME, Brown; City of North Bena and IAFF Local 2406, Lankford. Accordingly, the Arbitrator should do so, and should find that those factors favor the Union.
 
b. Ability to Pay. First, the Arbitrator should reject the District's improper attempt to cost overtime against the Union for many more call shifts caused by the return to an FLSA system, and the end to the sleep exemption. It is the District's responsibility to make managerial determinations on how to reduce projected overtime costs. As the Arbitrator held in Happy Valley Rurual Fire District #65 and IAFF Local 1159, FLSA considerations and overtime costs are not to be considered under the statutory factor of overall compensation. Second, excluding FLSA considerations and overtime as a factor, the Union's proposed cost for the first year is slightly under $313,000, and in the second year is just over $434,000 (3.2% and 4.3%), a total cost of about $750,000, an amount easily within the District's ability to fund, especially considering its 36% reserve carryover. The District's proposal would amount to a first year decrease of over $57,000 and an increase in the second of $320,362 (-.6% and 3.3%), a total cost of less than $350,000. The Arbitrator should further take into consideration the District's terribly flawed costing presentation at the hearing, and the fact that its Finance Director was forced to admit that its proposed cost for the second year had to be adjusted downward by over 3%--with each per cent worth $120,000, a mistake of $360,000. Again, ability to pay simply is not a factor. Consider: (1) since the passage of SB 350 no firefighter interest arbitrator has found an inability to pay; (2) compared to comparators, the Clackamas County area is certainly not depressed; (3) and the District has not suffered financially from recent tax limitation efforts. Moreover, it would be inappropriate for the Arbitrator to find merit in the District's argument that PERS costs should be considered as part of its cost of overall compensation, although the cost may be reviewed with regard to ability to pay. See, IAFF 2091 v. Winston Dillard Fire District, Lehleitner, (1995). And while the Union concedes that the District will have an increased PERS cost in the second year of the new contract, an unfunded liability to PERS by Oak Lodge just shy of $1,826,062 will not come into play until after the expiration of the new contract.
 
c. Ability to Attract and Maintain Qualified Personnel. As noted by Arbitrator Nancy Brown in City of Cornelius, the ability to retain qualified employees can be the overriding factor in determining the interest and welfare of the public. The District competes with the other three metropolitan departments--Gresham, Tualatin Valley and Portland--as well as Lake Oswego and Hillsboro, in recruiting state-wide, so it is critical for the District to remain competitive with those departments. Tualatin Valley recently adjusted their contract upward with increases of 3% and 1% in the first and successive two years, and also agreed to a Kelly Day system. Portland already has a Kelly Day system, and Gresham is bargaining for one. The problem with the District's proposal is that it fundamentally changes the compensation system by deleting Kelly Days, a change which will hurt the competitive position of the District vis a vis other Portland Metro Area departments. The deletion of Kelly Days equates to a reduction in wages of one dollar per hour; and each Kelly Day lost equals one percent of compensation. The take-away of Kelly Days and the implementation of the PERS pickup amounts to a mere "wash," certainly no way for the District to remain competitive with surrounding departments, particularly in light of the fact that the state-wide increase for 2000 was 4.9%. Furthermore, implementation of the District proposal could not help but adversely affect morale, which may in turn affect the District's ability to retain firefighters. The Union concedes that even under the District's offer, it would be able to attract applicants, but there seems no question but that those applicants would be less qualified and experienced, which, again, would affect the public interest.
 
d. The Overall Compensation Presently Received by Employees. District firefighters currently receive overall compensation that is different, but in line with, other Metro area departments. All Metro departments, the District included, are uniformly higher paid than other departments in the state. Moreover, most departments pay a premium for particular qualifications and skills.
 
e. Comparison of the Overall Compensation Presently Received by Employees Comparability is not a critical factor. The District's proposal would actually result in a greater two-year increase than the Union's: 10% vis a vis 9%.
 
f. Cost of Living. This factor is not an issue. The March to March CPI-All Cities Index shows an inflation rate of 2.9%, while firefighter increases in 2000 were about 5%.
 
2. Specific Provision Disputes.
 
a. The PERS Pick-up. While the Union initially proposed the pick-up, further study revealed that the pick-up, assuming 3% annual increases, would cost each firefighter almost $76,000 over 20 years. The Union's conclusion therefore must be that the tax advantages to the pick-up do not overcome the decrease in base wage.
 
b. Vacation Scheduling. The Union has no interest in vacation scheduling beyond what the current bargaining agreement provides for. This issue is critical to the bargaining unit. Consider that within the Metro area competitor departments, Portland and Gresham do scheduling to a significant extent; Tualatin Valley does not schedule at all, although it will have limited scheduling when Kelly Days are implemented; Hillsboro schedules only on a voluntary basis; and Lake Oswego does not schedule in the sense that the District seeks.
 
c. Trade Time. The District's proposal would drastically limit trade time in an imprecise and ambiguous manner, with far too much discretion in management's hands. Consider that only four departments in the state have a specific limit on trades. Moreover, the District's contention that a significant problem exists with having a particular crew all off at the same time is overstated. Of 4,745 assignments during 2000, all three crew members were off only 108 times; and in those 108 times, 14 were partial days, and 21 were due to District reassignments, which means that the situation occurred only 2% of the time.
 
d. EMT Pay. The percentage rate sought by the Union is much more beneficial than the flat rate proposed by the District, given the fact that under a percentage rate the parties are not forced to open the subject for negotiations every time a contract expires. Consider too that the percentage rate is the generally accepted way of paying this critical premium within Metro area departments, and that the percentages sought are themselves consistent with Metro area percentages.
 
e. Pay Compression Between Positions. The current gaps between bargaining unit classifications are smaller than in any other Metro area departments, and because those gaps effect promotions, make the District a less desirable place to work. The Union proposal would increase the spread from firefighter to apparatus operator from 3.3% to 4%--still behind Portland and Tualatin Valley--and from apparatus operator to lieutenant from 4.5% to 6%--still behind Metro area departments--and from lieutenant to captain from 9% to 10%--even with Tualatin Valley, but still well behind Portland. Management's proposal would not even take effect until the last six months of the new contract and would increase splits only slightly.
 
f. FMLA Leave. Under the current contract, sick leave use is unlimited. The current rate of use is about 15 shifts per year. Both sides have agreed to limit that use, even though most departments in the state have no restrictions on use. The Union would limit sick leave to 6 shifts, while the District seeks 3. The Union has already made a strong concession. The District asks for too much.
 
DISTRICT CONTENTIONS.
 
1. Specific Provision Disputes.
 
a. The Kelly Days. The primary issues aside from wages relate to Kelly Days, vacation scheduling, and parameters for trade time and call shifts. The compensation issues are largely driven by these same disputes. First, the 1998 changes resulted in the District having a higher hourly rate of pay than any other Oregon fire agency, including Portland and Tualatin Valley. If the Kelly Days are removed from the hourly rate calculation, the District's hourly rate is more like one would expect--competitive (third in the Metro area)--but not higher than that at larger communities. During the 1998-2001 contract, this inflated hourly rate was not often important because overtime rates have not often been paid. The District's straight-time rate was higher than that at other fire districts, but the District generally paid straight time when an employee worked additional shifts while other fire agencies generally paid time and one-half for extra shifts. The Union's last best offer keeps and increases the inflated straight-time rates, while it also restores the requirement to pay overtime frequently at time and one-half. The District has agreed to revert to a traditional FLSA overtime system, but believes that this change entails eliminating the Kelly Days which were granted in lieu of that FLSA overtime. The move to a traditional FLSA overtime system will make relief shifts more expensive unless the District can cover the shift with floaters at straight time, rather than paying time and one-half to regular personnel. The District's ability to use floaters depends on having enough time off scheduled in advance to allow the District to schedule and fully utilize the floaters. This requires some vacation time to be scheduled sufficiently in advance that a floater can be scheduled as vacation relief. The contract currently has no effective requirement of advance scheduling of any vacation, and the Union has refused to agree to any contract language to address vacation scheduling. Fourth, scheduling and coverage of other time off is also at issue. The current contract has only vague language limiting trade time and call shifts, and historically, the Union has operated both the trade time system and the call board. Problems exist with the current system, namely: crew continuity suffers because too often the entire regularly assigned crew is absent from their normal work station, and some personnel have been able to use trade time and the call board inappropriately. Another problem will develop when the new overtime system is adopted, namely: without appropriate parameters, the District will pay overtime for call shifts even though someone is available to work at straight-time rates. The District's last best offer addresses these problems without eliminating or severely restricting trade time or call shifts. The Union has been unwilling to agree to any contract language to address the trade time and call shift problems.
 
b. Time Off.
 
b.1. Vacation Scheduling. The District proposal will allow it, with Union input and considerations for seniority, to preschedule sufficient vacation for the use of up to 12 floaters, with at least three employees being off each day and no more than one third of the bargaining unit off at any time, a proposal critical to cost control and work continuity, given the move back to a traditional FLSA system, when relief shifts will be paid more often at time and one-half. Floaters are not cost effective, however, unless they can be fully utilized, which means scheduling them on a full-time basis. But floaters cannot be scheduled unless the District knows when people are going to be off work. The lack of parameters has meant scheduling many additional mandatory training programs because employees were absent when the training was originally scheduled. It also has resulted in many days when an entire crew at a station are absent from work at the same time, on vacation, sick leave, trade time, or training. From January 1 through April 24, 2001, (86 days), there were 22 shifts, or 25.6 percent of the shifts that a station was missing its entire crew. By the Union's own 11-month analysis, on 32 percent of the shifts, none of the regularly scheduled shift personnel were working at a station. The public should be able to expect that the crew responding to an emergency has at least one person who is working his or her regular job. District-initiated reassignments cited by the Union are the result of permanent promotions and other job changes, not one-day absences. Relying on arbitration awards that pre-date Senate Bill 750, and therefore, have little persuasive effect, the Union argues that the District's vacation scheduling language is too vague to be awarded. But the District's proposal is not too vague to be awarded; rather, it builds in a collaborative process to allow for Union participation, and sets parameters that will give the District the necessary predictability of time off, but without requiring that all vacation time be scheduled in advance. During the 1998 bargaining, the Union asked for the opportunity during the 1998-2001 contract to work out a vacation scheduling system themselves. The District agreed but made it clear that if the bargaining unit did not achieve that objective, the District would insist in the next bargaining on putting vacation scheduling language in the contract. The 1998-2001 contract states that the Union would develop a procedure for vacation scheduling, and would submit it to the Chief for approval. That did not occur over the entire three years of the current contract. Since the fall of 2000, the District made several specific proposals about vacation scheduling, but the Union was unwilling to accept any of the proposals and made no written proposals of its own. The Union's contention that other jurisdictions do not require vacation scheduling is not true. Portland and Tualatin Valley both have more restrictive provisions.
 
b. 2. Trade Time. The FLSA allows firefighters to trade work shifts without impacting payroll. The District's last best offer places reasonable limits on firefighters' ability to trade time. The bargaining unit has traditionally handled both trade time and call shifts. During 1999-2000, one employee traded 592 hours and four traded more than 200 hours. During November, 1999, by trading, another employee worked 24 out of 30 days in a single month. On Thanksgiving Day, 2000, no employees at Engine 13 were willing to work, and a medics crew had to cover the fire engine. The system needs to be fixed, and the District's proposal for trade time are reasonable. It is not vague, much of it is contained in the Tualatin Valley contract; much of it tracks Oregon law; it utilizes language from and incorporates a memorandum of understanding in the current contract, a memorandum the Union proposal deletes without explanation; it clarifies the intended requirement that the request for a trade be submitted the employee's normal work day before the trade; and it recognizes that moonlighting is secondary to working for the District. Tualatin Valley has more restrictive provisions, as do many of the comparables.
 
b. 3. Call Shift Guidelines. The call board is used to fill full shifts when an employee is absent. The bargaining unit controls the call board but has declined any responsibility to monitor holiday coverage or coverage for less than a full shift. Call shifts are now processed by the District's new Telestaff system. The District's proposed parameters for call shifts are reasonable using the current call board rules. On the other hand, the Union's proposal would restore the incentive and ability for employees to manipulate their work hours in order to maximize their overtime pay. With no limits on call shifts, and with the call board run by the Union, there is no limit on how many shifts an employee can manipulate. Tualatin Valley both has more restrictive provisions, as do many of the comparables.
 
b. 4. FMLA Sick Pay. The District's proposal for three shifts is more in line with comparable departments, and with Tualatin Valley. Indeed, two shifts appear to be the norm, and the District found no contracts that allowed six shifts of sick pay to be taken before vacation is used.
 
c. Wages. The Union's LBO is a 12% increase in wages over the two year contract, a proposal the Union concedes is not justified by any need for "catch up" pay. In an attempt to find a way to achieve wage increases close to the size demanded by the Union on a basis that is not cost prohibitive, the District proposed to add the PERS pickup, a proposal first made by the Union. The Union's current argument against the pick-up apparently is that money in the wage scale provides a higher base from which future wage increases would be calculated. That argument carries little, if any, weight when the parties are both proposing a two-year contract, and when the Union originally proposed the pickup. Further, it ignores the value to the employee of the ability to invest the additional money in the paycheck . Moreover, most comparables pay the pickup, as did the District before the ballot measure passed that temporarily invalidated it.
 
d. Paramedic Pay. During the 1998 bargaining, the parties agreed to change from a percentage to a flat dollar figure for EMT premium pay rather than using a percentage based on the firefighter salary scale, which was in the prior District contract. This was done so that the EMT premium pay would not increase automatically but would be addressed specifically in bargaining. There is no good reason to change that 1998 agreement. Moreover, since 1998 so many employees have gained paramedic status that the District's physician advisor has expressed concern about whether the large number of paramedics (75% of the bargaining unit) are each getting enough practice of medical procedures. This is one of the reasons why the new contract deletes the requirement that the District have only paramedics. Also, if the District can hire EMT-Bs, it will have a more diverse applicant pool and will be in a better position to increase the racial, ethnic, and sexual diversity of its work force. Also, hiring an EMT-B costs over $5000 less per year than hiring an EMT-P, because the EMT-B does not receive premium pay. In addition, the District's EMT premiums are competitive with the comparable departments. Finally, Portland, Gresham and Tualatin Valley have no premium pay for EMT-I.
 
e. Salary Scale Spread. The District proposes a lesser decrease in the spread because, while the existing spread is somewhat less than that at the comparable departments, the District's top salary for firefighters is much higher: $4,713 compared to $3,794. Moreover, Tualatin Valley's top is $4,445.
 
f. Voluntary Non-Bargaining Unit Work. The contract currently contains an Appendix D pay scale for work that employees perform on a voluntary basis in activities outside normal work hours and normal job duties. There was no evidence of any abuse of this system, or any problem with it, other than some of the rates are outdated. The Union's proposal would eliminate the appendix entirely resulting in a voluntary extra work rate of pay ranging from $32.47 to $40.40 per hour. If a paramedic did the voluntary work, the Union proposal would increase the cost to the District by 50% in each of the first two years of the new contract. Under such requirements, the District would have to contract voluntary work out, work that employees want to perform. The District's proposed language would equitably allow the District and employees to agree on the rate.
 
g. Salary Placement of New Hires. Diversity in recruitment is an on-going problem in the District, which are predominantly white and male. The District proposal to change the requirement that all new hires start at the base step would make it more feasible to hire experienced personnel and to diversify the work force by bringing in more female and minority firefighters.
 
h. The Cafeteria Plan. The District proposal to allow employees to sell back to the District up to 48 hours of accrued vacation annually benefits both sides, in that it gives employees a way to purchase additional benefits, and it reduces the number of shifts that must be covered for vacation. The only conceivable reason the Union has for rejecting this proposal is that under the new FLSA system, vacation relief will often, if not usually, have to be paid at overtime rates.
 
i. The Relative Costs of the LBO's. The Union contention that there is little cost difference between the LBO's is incorrect. Considering only wages, the Union's proposal would cost 4.5% the first year and an additional 4.5% the second, while the District's would cost just under 5% the first year and 3% the second. But the Union's LBO would actually cost much more because of FLSA changes and the imminent increase in PERS rates.
 
j. The Cost of Changing the Overtime System. The Union's LBO adds 4% to the District's cost of going to the traditional FLSA system without any offsetting savings from eliminating Kelly Days. The Union argument that the cost of anticipated overtime should not be considered, citing the Arbitrator's 1987 Happy Valley interest arbitration, is misplaced because one of the issues here is how to compute when overtime will be paid and what changes should be part of moving to a different overtime calculation.
 
k. The Cost of the PERS Increase. The District's current PERS rate is 10.12%, which is already higher than the rates at most departments. On July 1, 2002, that PERS rate will increase to 14.71%, revised after the interest arbitration hearing. The rate increase anticipated at that time of the hearing of 13.49% rate had a cost equivalent to a 3.37% wage increase. That cost will now be higher.
 
l. Union Cost Estimates. The Union's submitted cost analyses have several deficiencies. They ignore the July 1, 2002 increase in the PERS rate (approximately 4.6%), as well as the impact of the FLSA change when Kelly Days are retained (approximately 4%) and they deduct the value of time off benefits to employees from the cost of wages and benefits to the District. That mixture of cost and benefit is an invalid apples-to-oranges analysis.
 
2. The Statutory Factors.
 
a. Interest and Welfare of the Public. The Arbitrator can decide this case simply by reference to the primary statutory factor: the interest and welfare of the public. That factor is met by the District's last best offer, which contains wage and benefit increases that outpace cost of living increases, gets the most "bang for the buck," allows predictability in scheduling of time off, encourages crew continuity, slows the trend of eating away at the District's ending fund balance, and keeps faith with the agreements made by the parties in their 1998 bargaining. The District's last best offer furthers the interest and welfare of the public in the following ways: First, it includes significant wage and benefit increases, well ahead of the increase in the cost of living, to fairly compensate employees that it believes are among the best fire service employees in the state. Second, it will not exacerbate, and hopefully, will stop the trend of using up the District's ending fund balance for operating expenses, and will ensure that sufficient funds are available for the large increase in PERS expense which will take effect on July 1, 2002. Third, it provides the most benefit to employees for the dollars spent on wages and benefits The importance of this factor is clear when one reflects on the fact that the average per capita income of the taxpayer of Clackamas County is about one-third of the 2000 gross wages of the average District firefighter. With the economy slowing down, and unemployment increasing, all tax funds spent for personnel need to be used as wisely as possible. Fourth, it establishes fair procedures related to scheduling time off and working extra shifts which contain overtime expense, ensure crew continuity, and provide consistent service to the public by avoiding excessive and unnecessary personnel changes between stations. Fifth, it will allow the District to pursue greater diversity in the workforce, which is highly desirable because the District serves a diverse population. The only public interest the Union advances for its last best offer is that the District will remain ahead of other jurisdictions in virtually all categories of wages and benefits and will not begin to experience recruiting problems. Interestingly, at comparable departments the Union takes the position that they must "catch up" to the District. What the Union actually argues for is an inflationary spiral not justified by any facts other than the wage competition the Union encourages among fire agencies. This cost escalation is not in the public interest. The District unwittingly participated in 1998 by agreeing to a compensation package and overtime system that made it the "one to match." It is time to put a stop to that argument.
 
b. Ability to Pay. The District does not argue that it "cannot" fund the Union's last best offer; it is not on the verge of bankruptcy. It is, however, experiencing a shortfall of revenue to meet expenses, and is confronted with significantly increased expenses related to PERS contributions beginning July 1, 2002. The Board has adopted sound policies related to expenditures. The Union's last best offer would force the District to continue to spend more than it receives in revenues and would have a devastating effect during the second year of the contract. Other things to consider are: The District is funded by property taxes, does not expect tax revenue increases, has no expectation of being able to increase tax revenues through voter support, lost $1,632.816 in tax revenue in FY 2000, and adjusting for inflation, expects its property tax revenues to decline in "constant dollars" by 2.59% from 1999-2000 to 2000-2001. Further, while the District successfully passed a bond levy recently to build new stations and buy new equipment, the revenue from that bond cannot be used for other expenses. Similarly, the Board's recently adopted catastrophic contingency fund is not available for general expenses since there are no actual special funds set aside; it is simply a line item. Moreover, the District has properly utilized the more conservative of two acceptable methods to budget: Instead of borrowing, it follows the policy that its ending fund balance have sufficient funds to operate until it receives its tax revenues on November 15. Had the District borrowed, it would have experienced a loss of $236,086 from not earning interest on retained money. Even though following the more conservative path, over the last several years the District has been eating into its ending fund balance. In FY 2000, the ending fund balance declined by $608,864, actually exhausting the ending fund balance, forcing the District to borrow for operating expenses. For FY 2001 a shortfall of $589,699 is projected, which will again force the District to borrow. The Union's argument that the District's ending fund balance is excessive and is available to pay higher salaries ignores the fact that, if this is done, the ending fund balance can cover those expenses for only one year, and that the following year, the ending fund balance is no longer there to cover the increased expenses, but those expenses continue and grow. Clearly, the budget trend is negative. The Fire Chief has taken a number of steps to reduce current operating expenses, including reorganizing administrative functions, not replacing two assistant chiefs as they retire, reallocating floaters and using floater battalion chiefs. The Union's argument that other public agencies do not carry such a healthy ending fund balance lacks merit for two reasons: First, it has no desire to be fiscally shaky because another public institution is. Second, the Union's comparisons are either to one special district and several school districts which have completely different funding cycles and which are funded largely by the state general fund, not by property taxes, or are to cities, which typically have a different funding structure than an independent fire district. The Union's argument that the Arbitrator should not consider the PERS cost increase because it is not the employee's fault misses the point. The statutorily-required consideration of "reasonable ability to meet the costs of the proposed contract" does not turn on whose "fault" the expense is. Finally, the statute specifically states: "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." ORS 243.752(4)(b).
 
c. Ability to Attract and Maintain Qualified Personnel. The District has had no difficulty attracting and retaining qualified personnel. Therefore, this factor supports the District's last best offer. The District's wage and benefit package is among the best in the state, and the District is considered a desirable place to work. During the current contract, only five employees have left the District: one died, three retired, and one left the District after less than one year to go to the City of Portland. The District has hired 12 firefighters during the current contract, including from other fire service agencies. It typically hires two or three firefighters per year. It always has more than enough applicants. For the February 2001 hiring cycle, it had 75 applicants, 60 successfully completed the application process, and 26 or 27 will be placed on the civil service list to be considered for hire. It has been successful in attracting experienced employees from other jurisdictions. The District will also be more successful attracting experienced personnel if its last best offer is adopted. The parties have agreed that the prohibition on hiring EMT-Bs will be deleted; and the District's last best offer allows experienced personnel to be hired above the bottom step of the salary scale. Both will make the District more attractive to a larger (and more diverse) pool of experienced applicants. The Union's contention that if its LBO is not awarded, the District will begin having trouble attracting qualified applicants. That argument is pure speculation unsupported by either facts or logic. The Union argues that the District's LBO will result in it comparing unfavorably to Tualatin Valley. Aside from the fact that it is inappropriate (as the Union agreed at the hearing) to conduct compensation comparisons to a single other jurisdiction, the Union's own exhibits show that under the District's last best offer, the District would still have a higher hourly rate for firefighters, and would be within cents per hour of Tualatin Valley for apparatus operator and lieutenant.
 
d. The Overall Compensation Presently Received by Employees. The current compensation package is comprehensive and generous.
 
e. Comparison of the Overall Compensation Presently Received by Employees. This factor supports the District's last best offer and significantly undercuts any conceivable rationale for the Union's last best offer. Although the Union argues that this is not a comparability case, it concedes that the comparators listed by the District are the statutorily required ones. Those comparators include McMinnville, Oregon City, West Linn, Tualatin, Grants Pass, Roseburg, Ashland, Klamath Falls, Newberg, Pendleton, Forest Grove, Hood River and Winston. In all job classifications, the District's pay rates are higher than those in comparable communities. A six-year top step firefighter under the District's proposal would have a monthly salary of $4,713, and a PERS pickup of 6%, 12.8% ahead of the average of the comparators, and $160 a month ahead of the cities served by Tualatin Valley. When total compensation is looked at with the adjustment for PERS and the premium for EMT-P pay, the District remains 14% above the average of comparators under the District's proposal. The average gross pay actually received by Clackamas bargaining unit personnel is considerably higher than the average pay for personnel in similar positions at other comparable communities, including Tualatin Valley cities. Many bargaining unit personnel make more money by W-2 gross wages than the District's battalion chiefs (who are out of the bargaining unit) and even the fire chief. Moreover, the District firefighters averaged $8,000 more in annual gross income, and $4,000 more in taxable income, than the personnel at Tualatin Valley. Even with the deletion of Kelly Days at the District, and in the face of the recent Tualatin Valley settlement, the rate of pay at the District will continue to be higher than at Tualatin Valley. Finally, there is no reason to think that the District should have a higher salary scale, a higher hourly rate or higher gross annual wages than Tualatin Valley, which is three times the size of the District and serves Beaverton.
 
f. Cost of Living. Both LBO's have wage increases considerably higher than the recent increases in the CPI.
 
ANALYSIS.
 
The statute requires that an interest arbitrator shall base his or her findings and opinions on the statutory factors, giving first priority to the interest and welfare of the public, and secondary priority to the following factors. It is now well settled that the legislature cannot have intended to tell interest arbitrators to decide claims of the interest and welfare of the public without giving at least some due consideration to other relevant statutory factors. Accordingly, the Arbitrator will consider all factors, giving priority to the first.
 
This case, if not unique among the interest arbitration decisions that have preceded it, is certainly most unusual. Most, if not all, of the reported cases decided since the passage of SB 750 primarily have involved narrow wage/benefit disputes and the application of the attraction/retention, overall compensation, and comparability factors to those disputes. Obviously, the parties to those disputes realized very early on that the decisions of arbitrators, forced by the statute to award one entire LBO or the other, would be wage/fringe-benefit driven, and that other bargaining issues would receive little, if any, consideration. Thus, the general strategy of both labor and management has been to settle or withdraw most demands and to focus on presenting a wage/benefit package in arbitration that an arbitrator would find to be the most palpable; that is, the closest to actual comparable wage/benefit schedules and the closest to the CPI. In cases where there has been little difference in the proposals, arbitrators have sometimes sided with the employer on the basis that the public interest and welfare entitles the employer to receive some judgmental deference. The result has been that in most cases, unless a major comparability dispute has existed, there has been little difference in the levels of wages and benefits proposed. This is not one of those cases. This case involves a number of complex interrelated bargaining issues, issues that are not secondary to a dispute over wage/benefit levels. And in the last analysis, this is a case that truly does revolve around the issue of which LBO is, in fact, in the best interest and welfare of the public. After due consideration, the Arbitrator can only find that, all relevant secondary factors considered, the District's offer best serves that interest and welfare. Examining those secondary factors first, the Arbitrator finds as follows.
 
Ability to Pay. The District persuasively established that, for several reasons, its LBO best meets the reasonable financial ability of the District to meet the costs of the new bargaining agreement. First, the District has experienced shortfall in revenues and a decline and exhaustion of the ending fund balance, and now faces projected continuing shortfall, projected PERS cost increases, and the real need to reduce administrative functions. Second, faced with those conditions, the District's decision to continue to follow a conservative ending fund balance strategy must be given deference. Third, the return to a traditional FLSA overtime system will unreasonably affect operating costs, and maintain a system that has been shown to have been manipulated by employees, unless judicious provisions governing crew assignments, floaters, vacation time, trade-time and call-shift provisions containing reasonable parameters are incorporated into the new bargaining agreement. The provisions advanced by the District's LBO are fair on their face, if not perfect. And given the fact that the Union has been unwilling to agree to any feasible contract language that would address those matters, the Union's "vagueness" argument must be rejected since the language of the District's LBO contains the only realistic option. Similarly, while the District's voluntary non-bargaining unit work proposal, is somewhat open-ended, the lack of any reasonable alternative proposal necessarily results in a finding that this factor supports the District. The District's cafeteria plan proposal is also supported by this factor.
 
Ability to Attract and Maintain Qualified Personnel. The District persuasively established that it has had no difficulty attracting and retaining qualified personnel, and that it will have no such difficulties under the terms of its LBO. Therefore, this factor supports the District's last best offer. The District always has a large number of applicants; during the term of the 1998 bargaining agreement, only one firefighter left the District to go to work for another department; and under the District's LBO, its wage/benefit package will continue to be among the best in the state. Furthermore, under the District's LBO, it is likely to be more successful in attracting experienced personnel because those applicants will not have to start at the bottom of the salary scale. Finally, and very importantly, the District's LBO is more likely to allow it to attract a more diverse pool of applicants. The Union's arguments concerning attraction/retention are grounded in speculation and are unsupported by the facts.
 
The Overall Compensation Presently Received by Employees. There is no dispute but that the current compensation package is comprehensive and generous.
 
Comparison of the Overall Compensation Presently Received by Employees. The District persuasively established that this factor fully supports its LBO. In all job classifications, District pay rates are higher than those in comparable communities; and with the adjustment for PERS and the EMT-P premium, under its LBO, the District will remain 14% above the average of comparators. The District's PERS pick-up proposal is totally supported by comparability, as are its FMLA sick pay and paramedic pay proposals. The District's lesser salary spread proposal is justified by the higher top salary paid by the District in comparison to other departments. Even assuming arguendo that some comparison should be made to Tualatin Valley, even with the deletion of Kelly Days at the District, and in the face of the recent Tualatin Valley settlement, the rate of pay at the District will continue to be higher than at Tualatin Valley. The Arbitrator cannot agree with the Union that this factor should not be given all due consideration. Clearly, the comparability evidence is highly relevant.
 
Cost of Living. The District's LBO contains wage increases that are considerably higher than the recent increases in the CPI.
 
Interest and Welfare of the Public. Returning then to the primary statutory factor, the Arbitrator finds himself in virtual agreement with all of the District's arguments. As already noted, the return to a traditional FLSA overtime system will unreasonably affect operating costs, and maintain a system that has been shown to have been manipulated by employees, unless judicious provisions governing crew assignments, floaters, vacation time, trade-time and call-shift provisions containing reasonable parameters are incorporated into the new bargaining agreement. The provisions advanced by the District's LBO are fair on their face, if not perfect. They establish fair time off and extra shift procedures, procedures that contain overtime expense, ensure crew continuity, and provide consistent service to the public. And given the fact that the Union has been unwilling to agree to any feasible contract language that would address those matters, the Union's "vagueness" argument must be rejected since the language of the District's LBO contains the only realistic option. Further, the District's LBO includes significant wage and benefit increases, well ahead of the increase in the cost of living; it is consistent with the goal of insuring that sufficient funds will be available for the large increase in PERS expense in 2002; and it is much more likely than the present system to result in a workforce of greater diversity.
 
AWARD.
 
The District's Last Best Offer is awarded.
 
Dated this 21st day of June, 2001,
 
Thomas F. Levak, Arbitrator, Portland, Oregon