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IA-06-04
In the Matter of Interest Arbitration Between Linn County and Linn County Sheriffs Association. IA-06-04.
 
I. INTRODUCTION
 
A. Background
 
This matter came on for hearing pursuant to Oregon law, and the arbitrator complied with all statutory and administrative requirements in hearing and deciding the dispute. The parties participated with equal vigor in advocacy. The employer made a pre hearing motion in which they asked the arbitrator to disregard the association's second submission. After hearing a telephone and live hearing on the matter and after carefully reviewing written briefs on the matter the motion was denied.
 
The parties were expertly represented by Mr. Kenneth E. Bemis, attorney at law, for the County, and Mr. John Hoag, attorney at law, for the Association. Both of them demonstrated a high degree of knowledge and skill. The hearing occurred on October 1, 2004. The record officially closed on October 23, 2004 when the written briefs of the parties were received by the arbitrator.
 
B. Nature of the Interest Arbitration Process in Oregon
 
Oregon statutory criteria provide the basis for assessing testimony and documents submitted at the hearing. The law requires an arbitrator to select the packaged proposals of only one party as those most compatible with statutory criteria. In theory limiting the arbitrator to a single proposal of one side or the other best serves the interests and welfare of the citizens of Oregon.
 
In addition the Oregon statutory criteria. assist an arbitrator in assessing which set of the competing proposals complies with Oregon law.
 
C. The Oregon Design
 
Last Best Offer interest arbitration as codified in Oregon law is a legislative attempt to limit or restrict arbitrators discretion in selecting portions of one sides proposal and other portions of the other sides proposal. Under the Oregon statutory design, only one party prevails..
 
Traditional interest arbitration in Oregon began in 1973. That approach worked for 22 years. Oregon switched to a Last Best Offer approach in 1995. Last Best Offer arbitration is intended to force the parties to have an awareness of things as they really are and submit proposals that are fair and reasonable to the arbitrator The parties did so in this case and were only apart on three issues..
 
Unless one party is simply being defiant at the bargaining table, the two Last Best Offer packages should look similar. If parties are reasonably close the impact of either package on the parties should not be harmful to either party.
 
D. Uniqueness of a Public Safety Interest Arbitration
 
This public interest arbitration involves the role the Sheriffs office plays in a community such as Linn County. The basic function of protecting life and property has evolved into a wide variety of functions, An Sheriffs deputy is now expected to be expert in among other areas criminal investigations, human relations, serious and dangerous domestic disturbances, and accident investigation. They also must expertly testify in court.
 
Interest arbitration involving law enforcement personnel is important, in part, because the Sheriffs employees can bolster or destroy public trust instantly. Few work forces are so persistently vulnerable to public criticism due to errors in the use of individual discretion. The competent use of law enforcement discretion potentially with deadly consequences, is a quality that sets apart law enforcement personnel from public employees. The role of the Sheriffs employees is a consideration that merits weight in an interest arbitration.
 
DISCUSSION
 
As mentioned above Oregon's interest arbitration statute limits the discretion of an arbitrator. When an arbitrator decides an interest arbitration under the Oregon statute, the arbitrator must select only one of the last best offer packages submitted and must select the last best offer package in its entirety. The arbitrator may not mold an award by choosing elements from the last best offer packages submitted by each party. Thus, I must select either the last best offer submitted by the Association or the Employer. I select the Association's last best offer for the following reasons.
 
In reaching a decision, the arbitrator must follow ORS 243.746(4), the statutory provision governing interest arbitrations in Oregon.
 
"(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 paragraphs (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) 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. Notwithstanding the provisions of this paragraph, the following additional definitions of "comparable" apply in the situations described as follows:
 
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state cities of the same or similar size;
 
(B) For counties with a population of more than 400,000, "comparable" includes comparison to out-of-state counties of the same or similar size; and
 
(C) For the State of Oregon, "comparable" includes comparison to other states.
 
(f) The CPI-All Cities Index, commonly known as the cost of living.
 
(g) The stipulations of the parties.
 
(h) Such other factors, consistent with 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." ORS 243.746(4)(emphasis added).
 
THE INTEREST AND WELFARE OF THE PUBLIC
 
Although ORS 243.746(4) clearly prioritizes the criteria upon which an arbitrator bases the decision and assigns first priority to "[t]he interest and welfare of the public," the legislature did not define that term. ORS 243.746(4)(a). Since the Oregon legislature amended the interest arbitration procedure in 1995, arbitrators have used different approaches to define the public interest and welfare and apply to statutory criteria giving priority to the interest and welfare of the public. Arbitrator Snow has stated that the "'interest and welfare of the pubic' is not a stand alone criterion. It is to be given first priority, but other criteria may not be ignored in view of the requirement that they be given secondary priority." Bend Firefighters' Association and City of Bend, IA-09-95 (Snow 1996). In the absence of an express assertion of legislative intent by the Oregon Legislature interest arbitrators should use flexibility in determining the meaning of 'public interest'. Of course, that flexibility is limited by the rule of reason and arbitrators should not abuse their discretion.
 
Other arbitrators have used the secondary criteria to add context to what the legislature intended by "interest and public welfare." In State of Oregon Dept. of Corrections and Assoc. of Oregon Corrections, Arbitrator Wilkinson stated that consideration of the public interest and welfare provision outside the context of the secondary criteria lends to a subjective interpretation. IA-13-03 at 11 (Wilkinson 2004). In order to objectively analyze which last best offer package best meets the public interest and welfare; arbitrators must utilize the secondary statutory criteria. City of Cornelius and AFSCME, IA-01-99 (Brown, 1999). "It is clear that the interest and welfare of the public is not the determining factor standing alone, but rather should be given first priority in conjunction with the secondary criteria" City of Cornelius, IA-01-99 at 6 (Brown, 1999).
 
Another approach taken to define the "interest and public welfare" criterion has been to look at which offer would more likely "mirror the result which would have occurred had the parties been in an environment where there could have been a strike or lockout, and the parties in terms of economic strength were evenly matched." Oregon AFSCME Council 75 and State of Oregon Dept. of Administrative Services, IA-11-03 (Helm, 2003).
 
I agree with the Association that the approach taken by Arbitrator Helm in Oregon AFSCME Council 75, does not appear in the statutory criteria. The Oregon Legislature laid out a very clear framework for use in interest arbitrations. The criteria do not include a comparison of what bargain the parties could have reached had they been able to strike. Therefore, I will analyze the two last best offer packages in light of the statutory criteria provided by the legislature giving priority to interest and welfare of the public and use the secondary criteria as an objective guide.
 
Because arbitrators must choose a last best offer package in its entirety, I shall analyze the proffered packages as a whole against the statutory criteria. The Association and the Employer disagree on three elements of the agreements:
 
1. Compensation The Employers last best offer proposes economic increases based on a Total Employee Cost Method currently used for its largest bargaining unit of employees represented by Service Employees International Union, Local 503. It is also used for non-represented employees. The Total Employee Cost Method provides fully paid health insurance and retirement and results in a 2.34% wage increase for the first year. The subsequent year wage increases, according to the Employer's Total Cost Method, would increase based on "an annual escalator tied to the CPI-W, Portland Index * * *, [with a] minimum 2%, maximum 4%, [increase]."
 
The Associations Last Best Offer regarding compensation includes as follows:
 
A. Effective July 1, 2004 the wages shall be increased by 2.5%.
 
B. Effective January 1, 2005 wages for Dispatchers shall be increased by 2%.
 
C. Effective July 1, 2005 increase wages across the board by a percentage equal to the CPI-W, All Cities Index (January to January) minimum 2%, maximum 4.5%.
 
2. An existing residency requirement, The Employer proposes to continue a residency requirement that requires all Sheriff's Office employees to maintain Linn County residency. The Association proposes to eliminate this requirement in order to allow employees to maintain residency out of the County.
 
3, The length of the agreement. The Employer proposes a three year agreement effective from July 1, 2004 through June 30, 2007. The Association proposes a two year agreement.
 
I should make it clear that were I not constrained by the terms of Oregon Law concerning the last best offer provisions I would not select either package in its entirety. However, I do not have the right to pick and choose and therefore, must select one or the other of the last best offers.
 
Burden of Proof
 
The Employer first argues that the burden of proof in an interest arbitration is with the party proposing a change from the status quo. That party must demonstrate a compelling need or changed circumstances and must narrowly tailor the proposal to address the compelling need or changed circumstances. Departures from prior policies do merit heightened scrutiny and a 'hard look'. Snow at 37 citing Office of Comm. of the U.C. of C., 707 F.2d 1413, 1425 (D.C. Cir. 1983). In addition, the Association mentioned in its Interest Arbitration Brief, that "some Arbitrators have added the requirement that the status quo should not be altered without the need for any existing change being shown, or evidence of a quid pro quo, and evidence of a compelling need. (citations omitted).
 
Thus, I begin by determining the status quo and I will analyze the proposed departures against the statutory criteria in order to determine whether a compelling need has been met.
 
Each of the last best offer packages proposes to some extent departures from the status quo. The Association proposes to depart from the status quo by eliminating a long standing residency requirement and a two year agreement. The Employer proposes to depart from the status quo regarding the method used to calculate wage and economic increases. Thus, neither the Association's nor the Employer's last best offer package maintains the status quo.
 
Interest and Welfare of the public
 
As previously discussed, the interest and welfare of the public has not been defined by the legislature, and is generally analyzed in terms of the secondary criteria. In addition, serving the public by employing well-trained, well-equipped and motivated public safety officers as well as not overpaying for these services serves the public interest and welfare. Clackamas County Peace Officers Assn. and City of West Lynn, IA-17-03 at 2 (Johnston, 2004). The secondary criteria provide in ORS 243.746(4)(b)-(g) are to be taken into consideration, but the arbitrator may not consider subsection (h) unless he feels the enumerated factors did not provide sufficient justification for the award.
 
Financial Ability
 
ORS 243.746(4)(b) provides:
 
"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."
 
The arbitrator determines the ability to pay taking into account the other priorities of the governing body, but the inability to pay is not shown by an unwillingness to pay, unwillingness to generate revenues. Additionally, "assessing the ability to pay means something more than evaluating budgetary priorities." Bend Firefighters' Assn. IA-09-05 at 5 (Snow, 1996).
 
The Association argues that the County has the ability to pay. The Association makes note that economic times are difficult, but that alone does not satisfy the Employer's burden to show a compelling need to change the status quo.
 
The Employer argues that "[t]he County is facing significant financial hardship, and even the Association acknowledges such." The County argues that it is trying to be prepared for future contingencies that may threaten it financially and that the total financial state of Oregon has negatively affected the County's financial situation.
 
The Employer has the ability to pay the Association's proposal. As both the Employer and Association have shown, the first year cost increases between the two proposals are relatively small. The Association proposes a 2.5% increase as compared to the Employer's proposed 2.34% increase. Thus, assuming the Employer does not argue it doesn't have the ability to pay its own proposal, the County would be equally able to pay the Association's proposal for the first year.
 
Furthermore, it is significant that he Association proposes only a two year agreement. This change in the status quo makes the Associations proposal more attractive than the Countys proposal. For example, should the County suffer from a serious financial contingency in the near future; the ability to pay may be reassessed after only two years. The contract could be renegotiated during the second year.
 
In addition, the Association's proposal maintains the status quo in terms of methodology for wage increase calculations. The Employer's proposal to use the Total Cost Method was abandoned by the parties in past agreements. That is a significant fact. The Association strongly urges that the Total Cost Method is unworkable and difficult for employees to understand. On this issue it is particularly important for the County to meet its burden of proof since the clause provides an important compensation term that was previously rejected by the Association and its members. The County argues that the Total Cost Method is in the interest of the Associations members but the Association strongly disagrees and firmly maintains that the settled method of computing compensation should be maintained. Therefore, it is preferable to maintain the status quo and I therefore select the Association's proposal.
 
The Employer has not shown that is has the inability to pay for the Association's proposal. Should I agree with the Employer that it cannot pay the Association's economic proposal I would wonder if the Employer could pay its own economic proposal. The Employer has not carried its burden to show it does not have the ability to pay.
 
Attract and Retain qualified Personnel
 
ORS 243.746(4)(c) states that "[t]he ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided," is one of the criteria to be used by arbitrators in making an interest arbitration decision. Neither party argues that the current wage and benefit levels greatly affect the ability of the government to attract and retain qualified personnel. Thus, this issue compared to the other criteria needs little discussion.
 
However, in terms of which package has the greater ability to attract and retain qualified personnel, I have confidence that the Association's meets this criteria because the Association's wage and benefit proposal is easier for the employees to understand. When there is distrust between parties the terms of the contract between the parties should be clear and easily understood. The Association offers more logical agreement among contractual provisions for Association members in understanding the calculation of wage increases. The Employer's offer to use the Total Cost Method is more cause to be unclear in mind or intent for the average employee not schooled in economics. Furthermore, for the arbitrator to impose the Total Cost Method on the employees when they previously had tried the method and then rejected it would make it even more difficult for the County and/or its employees to sell the "Method" when trying to attract new employees.
 
Indeed the Total Cost Method proposed by the County is intriguing and it may be the way of the future. However, it is a significant change in the status quo. As such it adds another issue that must be explained to present and future qualified personnel. That is particularly important when the change in compensation calculation is imposed by an arbitrator as opposed to a change in compensation calculation willingly accepted by the Association and its employees. If the change had been accepted in negotiations the change would have been one that present employees wanted and would be willing to positively communicate to new hires.
 
The Association does argue that it is the County's residency policy that affects the ability of the Employer to attract and retain personnel. However, because this statutory criteria is concerned with wage and benefits, I discuss the Association's concern in another part of this opinion because I think it has an important influence on the pubic interest and welfare.
 
Overall Compensation and Compensation Comparison
 
ORS 243.746(4)(d) requires consideration of:
 
"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."
 
In addition ORS 243.746(4)(e) provides for:
 
"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. Notwithstanding the provisions of this paragraph, the following additional definitions of "comparable" apply in the situations described as follows:
 
(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;
 
The overall compensation criterion looks at more than just wages, but takes all forms of compensation into account. This criterion is often addressed in conjunction with comparability data; therefore, I will address them together.
 
The first point of dispute between the parties is regarding which counties to use as a comparison. The Employer argues that Linn County should be compared only to those counties serving populations within 25% above or below the population of Linn County. Thus, the Employer argues that there are four comparable counties, Deschutes, Douglas, Benton and Yamhill.
 
The Association agrees to the four counties listed by the Employer, but also claims that Jackson and Marion are comparable counties. However, the evidence offered by the parties must compare those employees performing similar services in comparable communities. The statute defines comparable as those "communities with the same or nearest population range within Oregon," (unless the county is larger than 400,000).
 
I do not agree with the Association that Marion County is a comparable community because the statute does not refer to geographic proximity. However, I agree that Jackson County, based on population may be a comparable community. The Employer's use of 25% above or below is not required by the statute. In addition, I believe the population range of Jackson County provides for a good comparison with Linn County.
 
The comparability analysis compares the overall compensation between the comparable communities. The Employer argues that its proposal allows employees to receive longevity pay and other premiums for DPSST certification and education, provides to employees generous leave accruals for vacation, personal time and sick leave. In addition, the Employer provides ample proof that the Employer's package can keep pace with comparable communities.
 
The Association argues that the Employer's proposed use of the Total Cost Method is not a ground for comparison because no other community uses that method. Furthermore, the Employer's package leaves employees in Linn County economically behind the comparable communities by 5% to 13%. Yet the Association did not clearly demonstrate that the Association's package was superior. However, using the overall compensation comparisons, I find that the Associations proposal should be chosen. The County was at disadvantage in the comparison analysis because of the unique characteristics of the Total Employee Cost Method..
 
Consumer Price Index
 
In addition ORS 243.746(4)(f) requires consideration of "[t]he CPI-All Cities Index, commonly known as the cost of living." The CPI represents the cost of inflation and provides the arbitrator with yet another factor to consider in determining which package to accept. Bend Firefighters' Assn., IA-09-05 at 9 (Snow 1996).
 
The Employer argues that its 2.34% increase will keep pace with the CPI-All Cities Index and the Portland Index. The Employer argues that even if the County had to freeze wages for two years, the cost of living would be outpaced by almost 5% throughout the three year agreement. The Association takes the position that it is improper to use the Portland Index because it will likely stay below the All Cities Index.
 
Because the two proposals are very similar in the first year, I do not find a difference that would allow me to conclude that one proposal over the other in the first year is more likely to keep pace with cost of living increases. However, in the second and third year of the Employer's proposal, the County may impose a wage freeze. Despite the Employer's arguments that even if a wage freeze were instituted it could still keep pace with cost of living adjustments, the onset of a wage freeze is much more likely to fail to keep pace with cost of living adjustments. Thus, even though cost of living increases may be difficult to predict, it is the Association that would be more likely to keep pace under its proposal.
 
Stipulations
 
ORS 243.746(4)(g) requires the arbitrator to consider, "[t]he stipulations of the parties." There are no stipulations.
 
Other Factors
 
Finally, ORS 243.746(4)(h) allows, but does not require the arbitrator to consider "[s]uch 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." (emphasis added).
 
In State of Oregon Dept. of Corrections and Assn. of Oregon Corrections Employees, Arbitrator Wilkinson analyzed an internal equity factor under this subjection. IA-13-03 at 9(Wilkinson, 2004). The Employer has asserted as one of its arguments in favor of its proposal that the Total Cost Method would provide internal consistency because it is used by the County for other bargaining units. However in State of Oregon Dept. of Corrections, Arbitrator Wilkinson discussed internal equity in terms of a wage freeze agreed upon by the association in that case. Arbitrator Wilkinson mentioned that consideration of "other factors" is important and should not be ignored by an arbitrator. IA-13-03 at 9 (Wilkinson, 2004). Although I do not ignore the Employer's internal consistency argument, I find that in light of the other statutory criteria and the residency requirement, which I will now discuss, the internal equity argument does not change factors or influence my decision in favor of the Employer.
 
I address the residency requirement at this point in the opinion for two reasons: (1) I find that it is an important factor to consider when determining which package to accept and (2) I believe that it is a factor that directly relates to the public interest and welfare requirement, which I am to give priority.
 
Residency
 
Although the status quo requires that all Linn County Sheriff employees reside in the County, I find that the Association has presented compelling evidence to change the status quo under the unique circumstances of this case. The residency requirement prohibits employees from maintaining residence in closer cities to Albany than some of the places employees may live within the county. Under the current requirement, employees cannot live in Salem, Jefferson, or Eugene because those cities are not in Linn County. They are very close to the geographical limits of Linn County. The Association argues that the unique geography of Linn County makes this residency requirement questionable when applied to Linn County. Linn County extends eastward for some distance into the mountains. However, the Association argues that the choice of places to live are limited for those who work outside Albany. The Association argues that desirable places to live in Linn County are much further from the areas in which the employees are required to serve than areas for example in Marion County.
 
An employee who has the freedom to live closer to his or her work and in a location that may provide better schooling options for that employee's children, or more affordable housing, should create motivated employees.
 
The Employer argues that the residency requirements are important for political and social interaction with the community. In addition the Employer argues that lack of residency requirements interfere with the Sheriff's ability to manage his organization. These arguments are not without merit. The benefits that employees receive from having their own choice in where they reside in Linn County's unique situation are compelling and justify a departure from the status quo.
 
The County's law enforcement credibility rests on the performance of its law enforcement employees, not where those employees reside. Because employees are happier when they may live where their needs are best met, this also results in increased job performance, which will result in increased performance for the County. Finally, I agree with the Association, that under the unique circumstances of this case removing the residency requirement will increase the County's ability to attract and retain outstanding employees.
 
Conclusion
 
Based on the statutory criteria viewed against the priorities given to the public interest and the welfare, the Association's proposal best meets the statutory requirements. The Association's wage proposal provides consistency and predictability without requiring the County to undergo great cost increases. The two proposals are similar in the first year regarding wage increases and the Association's proposal only requires the Employer to increase wages for one additional year. Law enforcement employees are very important to any community If in the second year the Association's proposed increases turn out to be such a financial hardship to the Employer, the Employer can again propose a wage freeze or a lower increase. However, the financial contingencies proposed by the Employer are conjectural rather than concrete assessments of the future. Although the Employer presented and vigorously argued for an appealing last best offer package, I must award one package in its entirety. The Association has offered the last best offer package most in tune with the statutory mandate. The competent use of law enforcement discretion potentially with deadly consequences, is a unique characteristic that sets apart law enforcement personnel from other public employees. It is a consideration that merits weight in an interest arbitration.
 
Award
 
Accordingly, I award the Association's last best offer. The Arbitrator orders the Association's package to be included in the Collective Bargaining Agreement.
 
Dated this 22nd day of November 2004.
 
Leroy J. Tornquist, Arbitrator
 
APPEARANCES:
 
For the Employer: Kenneth E. Bemis
 
For the Union: John Hoag