|In the Matter of the Interest Arbitration between MULTNOMAH COUNTY CORRECTIONS OFFICERS ASSOCIATION AND MULTNOMAH COUNTY, OREGON. IA-06-98.
I. Preliminary Matters
This is an interest arbitration proceeding conducted pursuant to ORS 243.746, The Arbitrator was selected from a list provided by the Employment Relations Board, State of Oregon. A hearing was conducted on May 10 and 11, 1999, in Portland, Oregon. The Multnomah County Corrections Officers Association ("MCCOA") was represented by Henry J. Kaplan, attorney at law of Portland, Oregon. Kathy Peck, attorney at law of Lake Oswego, Oregon, represented Multnomah County, State of Oregon ("County").
Prior to the hearing, the parties timely exchanged last best offer ("LBOP")packages. At the hearing, the testimony of witnesses was taken under oath and the parties presented documentary evidence. No court reporter was present. The Arbitrator tape-recorded the proceedings to supplement personal notes. The parties initially agreed to simultaneously submit written briefs postmarked Friday, June 11, 1999. This date was mutually extended to Friday, June 18, 1999. On June 16, 1999, the Arbitrator was advised that the parties had extended the simultaneous submission date to Wednesday, July 7, 1999. Briefs were timely received and thereafter, the matter was deemed submitted and the record closed.
The parties are agreed as to every basic element of their successor collective bargaining agreement except for the subject of health insurance. Although several areas of disagreement exist within this category, the basic dispute concerns the question of health insurance premium sharing.
The County proposes that when the successor agreement becomes operative, it will add to its current contribution for health insurance premiums/premium equivalents an additional amount not to exceed 3%. In return, the County proposes that the bargaining unit employees be required to share in paying the increases that exceed the initial augmented County contribution to a maximum of three quarters of one percent (.75%) of base wage rates for fiscal years 1999-2000 and 2000-2001.
MCCOA counters with the proposal that the County pay all premiums, as it has done in the past, through July 1, 2001. For the period subsequent to that date, MCCOA proposes a form of premium sharing which generally tracks the County's proposal, with the following differences: Because methodology may affect the resulting percentage of change, MCCOA
proposes that no variations be made by the County in the current definition of the term "premium equivalent" for the duration of the contract.
MCCOA proposes that the amount shared be calculated by reference to the most expensive plan, which would serve as a "hard cap," to be increased annually by the Portland CPI-W, after July 1, 2001.
The County also proposes that beginning in fiscal year 2OOO-2001, the amount shared be collected through payroll deduction. MCCOA agrees to the payroll deduction unless alternative provisions can be negotiated.
MCCOA proposes that excess savings in premiums, if any, be paid into a health fund to be administered by the Multnomah County Employee Benefits Board ("MCEBB"). The MCEBB is a recently established forum consisting of the County and all bargaining units that exists for the purpose of discussing and resolving various health benefit issues by unanimous vote. The County also proposes that the excess savings, if any, be translated into a unit-wide wage increase.
There is also an area of disagreement on an issue that is not directly related to premium sharing. MCCOA proposes that the level of benefits, provided for in the County's Kaiser coverage remain intact for the duration of the agreement unless the MCCOA specifically agrees to a modification.
III. Statutory Considerations
The Oregon Public Employees Collective Bargaining Act, ORS 243.746(4) and the Rules of the Oregon Employment Relations Board ("ERB"), OAR 115-40-105(8),require that the following criteria govern the resolution of this dispute:
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 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 the subsection, the following additional definition of "comparable" apply in the situations described as follows:
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state cities of the same or similar size;
(B) For counties with a population of more than 400,000, "comparable" includes comparison to out-of-state counties of the same or similar size; and
(C) For the State of Oregon, "comparable' includes comparison to other states.
(f) The CPI-All Cities Index, commonly known as the cost of living.
(g) The stipulations of the parties.
(h) Such other factors, consistent with subsections (a) to (g) of this section as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgement of the arbitrator, the factors in subsection (a) to (g) of this section provide sufficient evidence of an award.
IV. Factual Background
The MCCOA bargaining unit consists of approximately 506 employees. The County operates the second largest county correctional facility in the Pacific Northwest. Besides County inmates, the several facilities house federal prisoners, immigration detainees and in inmates transferred from other counties. The inmate population also includes persons waiting for extradition or the execution of out-of-state arrest warrants. Since the passage of the Prison Litigation Reform Act, federal restrictions on jail overcrowding have eased and the County has begun to "double-bunk" prisoners, effectively increasing their number.
The County maintains high standards for its correctional officers, who play an especially active role in the incarceration process. Employees staff stations that are physically integrated with space occupied by the inmates. Therefore, employees are required to maintain order through interpersonal communication, as well as more traditional methods.
The MCCOA was formed as an independent association in 1983. Since that time, arbitrators have issued interest-based awards on three separate occasions. The most recent was a multi-issue award rendered by Arbitrator Jane Wilkinson. See, Multnomah County Corrections Division and Multnomah County Corrections Officers Association, [Officers and Sergeants] (Wilkinson, May 7, 1993). This award provides, among other things, for a significant increase in wages for the bargaining unit (5% percent across the board), as well as cost of living increases for the duration of the agreement.
For a number of years the parties have agreed to provide the employees a choice of either ODS or Kaiser. In the past, the County has bargained health insurance issues on a unit-by unit basis with each negotiation resulting in separate health insurance provisions for each agreement.
Since September of 1997, the County has been successful in obtaining agreement on certain specific common joint governance and premium sharing provisions in almost all of its bargaining units. There are two exceptions - the Prosecuting Attorneys unit, currently working under a collective bargaining agreement that does not expire until June 30, 2000, and the instant bargaining unit, represented by the MCCOA. Each of these agreements, with the exceptions noted above, now contain the following common elements:
The creation of a Health Fund, into which the County and employee contributions are made and from which premiums/premium equivalents and other approved costs are paid;
The right to join the Multnomah County Employee Benefits Board (MCEBB) and vote (one unit - one vote) on the matters that come before it;
A requirement that the County pay an initial percentage of any increase in premiums/premium equivalents for fiscal years 1999-2000 and 2000-2001, in various amounts depending on the bargaining unit;
As proposed to MCCOA, a requirement that employees share in paying premium/premium equivalent increases to a maximum of three-fourth of one percent (.75%) of base rates for fiscal years 1999-2000 and 2000-2001, if preliminary costs are more than the County's initial contribution;
A requirement that the County contribute to an excess stabilization reserve fund on June 30, 200 1, if a long-term cooperation agreement is reached;
A requirement that the County return a percentage (varying from .40% to .50%) of any premium costs increased paid by the employees during the life of the agreement on June 30, 2001, if a long-term cooperation agreement is reached.
With the exception of the items previously stated, MCCOA has agreed to these common elements.
V. Positions of the Parties
A) Interest and Welfare of the Public
The County provides two basic arguments in support of the general contention that its LBOP best serves the interest and welfare of the public. It first argues that there is only one "public interest" attendant to the proceeding - that being the intrest Multnomah County taxpayers have in minimizing the increasing costs of health insurance provided to County employees through the effective management of health care costs. Second, the County takes the position that its offer meets that interest by controlling and minimizing the escalating costs of health insurance by providing for the effective joint management of expenditures.
In support of these propositions, the County declares that its LBOP is superior to that of the MCCOA because it requires the MCCOA bargaining unit to have incentives to control health care costs that are "equal or comparable to the incentives shared by the County's other union and non-union employees." These incentives, argues the County, is in the clear public interest. Under the County's offer, the MCCOA bargaining unit would share the same premium sharing obligations as other County employees. Under the MCCOA proposal, however, the County would be required to continue to pay 100% of the premium equivalent increases through June 30, 2001, irrespective of the amount of those increases. In this regard, the County states that the MCCOA bargaining unit would be the only County employees to be excused form this obligation, with the exception of the Prosecuting Attorneys unit, whose labor agreement has not yet been opened. "Right or wrong," argues the County, "there is no substitute for the motivating effect created when failure to act . . . responsibly . . . produces an adverse economic consequence." To the County, it is appropriate that all employees share in the same beneficial consequences of their joint efforts, but also that they should share in the same adverse consequences of their joint efforts." The provisions proposed by the MCCOA are deficient, according to the County, because they permit bargaining unit employees to share in the benefits, but excludes them from any adverse consequences.
The County further objects to the MCCOA's LBOP because it, at least in theory, grants the unit the right to veto cost containment measures agreed to by the MCEBB, without being subject to any economic consequences. The County points out that the parties have already agreed that all benefit changes, including the negative as well as the positive, must be approved by a unanimous vote of the MCEBB. Rather than face the immediate consequences of a veto, as other bargaining unit workers must do under the County's agreements, the MCCOA would face only the. prospect of sharing future negative obligations - obligations which could potentially be "negotiated away" in future bargaining. Thus, argues the County, a single cost containment veto could render it unable to implement cost reducing measures that are "favored" by the overwhelming majority of the employees due to a single veto by the MCCOA, whose employees would suffer no consequences.(1)
The County further maintains that MCCOA's LBOP is deficient in that it adversely affects the County's ability "to continue to use its county-wide marketing clout to purchase benefits for members of the MCCOA unit." In support of this position, the County points to its current practice - to implement on a system-wide basis, a combination of benefit improvements and reductions to keep costs at a reasonable level. Because MCCOA's proposal provides that "C" coverage benefits (under the Kaiser plan) remain at the level in effect when this contract is signed, this practice would be prohibited. Thus, the County claims that it would be necessary to purchase or self-insure any benefit differences between "C" covered benefit adjustments made in subsequent contract years, "It is not an efficient utilization of taxpayer funds," argues the County, "to carve out a small group of employees from a county-wide insurance group and pay for special, though not necessarily better, benefits to that group."
Finally, the County takes the position that the evidence submitted by the MCCOA is insufficient to support the view that its offer is in the public interest. The County characterizes the MCCOA's case in this regard as subject to divisibility on the basis of two "basic themes."
The first position taken by the MCCOA, according to the County, is that the City of Portland joint management system is effective even without a premium-sharing component. The County responds to this characterization by pointing to testimony indicating that family coverage under a similar plan is $778.00, which "dramatically" exceeds the amount paid by the County and other County comparators except Clackamas County.
MCCOA's second argument, argues the County, is that the County's offer "may cause employees to move from the Kaiser Plan to the more expensive ODS Plan. The County contends that no evidence in support of this Position was introduced by MCCOA. Rather, the County refers to its own evidence, which it states establishes such movement has been minimal for many years. The County also points to the smaller out-of-pocket costs to employees under the Kaiser plan, as well a what it describes as a group of employees with "Positive Kaiser experiences." In any event, argues the County, its offer "will not alter either of these factors." Those motivated to choose the Kaiser Plan will w continue to do so.
B. Secondary Criterion
1) Financial Ability
The County does not argue that it lacks the ability to meet the costs of MCCOA's proposal.
2) Attract and Retain Qualified Personnel
The County states that the MCCOA seniority roster reflects a high percentage of long term employees. Nearly 5% of the County's corrections officers have been employed for over 20 years and nearly 10% have been employed 10 years or more, This compares to what the County characterizes as "dramatically" lower retention rates in other counties, Clackamas and Washington in particular.
The County claims to have had similar success with regard to the ability to attract corrections officers. It claims that since July 1, 1998, the County was successful in hiring 51 corrections officers to replace 27 officers who had resigned or were terminated. The County points out that its "double-bunking" practices have created "greater-than-usual needs." Yet, argues the County, it has had no difficulty in attracting candidates.
3) Overall Compensation
The County takes the position that the comparative data offered in support of the varying positions is a neutral factor. The County argues that the counties of Washington, Marion and Clackamas are the most meaningful jurisdictions for this issue, as opposed to what it states are MCCOA's choices, which include Clark County and King County, State of Washington, as well as the Multnomah County Sheriff Deputies. The County contends that the inclusion of compensation data from these jurisdictions "artificially inflates" the data from individuals who "do not share the same careers or do not share the same geographical proximity [including cost of living] with members of the MCCOA bargaining unit. The County specifically refers to the following data:
Entry level, 6 year and 10 year corrections officers exceed the average of the County comparators by 17.79%, 12.46% and 8.13% respectively and further exceed the average correction officers employed by Clackamas, Washington, and Marion counties by 14.33%, 2./43 and "-19%" respectively.
MCCOA's data shows total compensation for 10 and 20-year corrections officers as less than the average of their comparators. However, MCCOA did not introduce comparisons of the entry-level category, which represented in excess of 60% of the employees in Washington, Marion and Clackamas counties.
MCCOA's data does not consider that the County has agreed to pay 14-year officers a 2.4% increase beginning July 1, 1999. Nor do the MCCOA cxl-iibits include swing and graveyard differentials. Additionally, the data for Clark County assumes a 2080-hour per year schedule when in reality these employees work 2190 hours per year.
Acknowledging that the parties used different methodologies for computing health benefit costs, the County argues that its computations are more accurate for Multnomah County and its comparators. The County's data reflects a comparison of amounts paid for the "most commonly used" health plans, rather than the maximum contribution for the most expensive plan without regard to participation levels, as used by MCCOA. When the focus is on benefit levels and not amounts expended, the County's benefit levels match favorably with those of comparable jurisdictions, notwithstanding the difference is premiums.
The issue in this case does not lend itself to comparative data. The issue here is which offer will better promote efficient utilization of health benefit expenditures, not which jurisdiction can simple spend more money.
14 3. All-Cities COL
The County makes the following points:
In the 7 years preceding the hearing, members of the MCCOA-bargaining unit received wage increase totaling 24.3%. During the same period, the CPI-W Portland rose 21.8% and the CPI-W-All Cities rose 17.7%. These increases were received during a time that the County was "absorbing" one hundred percent of the health insurance premium increases.
The County's LBOP will not result in MCCOA employees "falling behind" the COL because the premium sharing offer would generate a net wage increase after offsets.
Because the employee exposure to increased health costs is limited to .75% of annualized base wages, the County will absorb the amount of initial increases up to the CPI-W Portland index as well as the amount of increases in excess of the cap.
4. Stipulations of the Parties
The County declares no stipulations were reached between the County and MCCOA.
5. Other Factors
The County takes the position that the testimony and exhibits introduced at the hearing provide sufficient evidence to provide a basis for an award without considering other "factors traditionally considered" by interest arbitrators. In any event, this evidence, introduced by MCCOA, is of "little value" given the relative nominal weight that it must be accorded under the statutory criterion. It also of "marginal value" given the issue presented here.
The County responds to MCCOA's double bunking evidence (heavier workloads, increased stress, higher exposure to occupational injuries) by making reference to the claim that the ratio of inmates to CD posts actually decreased from July of 1996 to January of 1999 at two facilities. The County specifically argues that the ratio remained the same at two facilities and increased at two facilities. The MCCOA fails to point out, the County maintains, that the number of bookings dramatically decreased and a number of officer positions and escorts, as well as extra posts, were added. "More importantly," argues the County, "MCCOA's double bunking argument rests on the false assumption that ... employees should be credited with extra benefits when government resources are fully utilized."
According to the County, the MCCOA failed in its attempts to introduce evidence in support of "the notion that MCCOA employees have generated income or saved money that, in turn, justified acceptance of the MCCOA's offer." This data is substantially inaccurate, according to the County, and is "further flawed because of the costs *omitted* from the analysis" (emphasis original), such as the cost of step and wage increases, as well as increases in medical and dental premiums.
Finally, the County responds to MCCOA's contention that the Corrections Officers have experienced an increased exposure to occupational illness and injury by declaring that such a contention is not pertinent. The County claims that the relevance of this testimony "rests with the speculative implication that MCCOA employees will be forced to utilize their ODS or Kaiser medical insurance benefits to receive care for illnesses and injuries that may be work-related. "Under the County and MCCOA offers," the County states, "the members of the MCOA bargaining unit will face identical co-pay and out-of-pocket expenditures."
A) Interest and Welfare of the Public
MCCOA presents four basic concepts in support of its position that its LBOP should be selected as more consistent with the public interest. First, it contends that the County's evidence is insufficient to establish that rising health benefit costs are a current compelling problem. Second, it argues that the MCCOA proposal provides more than adequate incentive to contain health costs. Third, MCCOA maintains that the level of worker's compensation coverage previously available to the bargaining unit has been decreased and that this loss should be counter-balanced with increases in private health benefits. Finally, MCCOA claims that health benefits are extremely important to corrections officers due to the conditions of their employment.
Preliminarily, MCCOA declares that the responsibility of determining what is in the best interest of the public rests with the "Arbitrator, not the Employer." In this regard, MCCOA argues that Arbitrators have unanimously relied upon "prior jurisprudence to give substantive content" to the public interest mandate, further suggesting that this "primary factor" must be discussed with reference to the secondary criteria. MCCOA cites to Klamath County Peace Officers Association and Klamath County (Torosian, June 18, 1998), and quotes the Arbitrator as stating that, to establish a basis for "significant changes in existing language," the appropriate burden of proof is threefold - 1) establish a compelling need, 2) demonstrate that the proposed changes reasonably address the need and 3) that a sufficient quid pro quo be exchanged between the bargaining parties.
With respect to "compelling need," MCCOA points out that medical costs are only an "indirect measure of employee health benefits received." A comparison is invited to the Portland CPI-W index. MCCOA contends that Kaiser's premium increased in an amount commensurate with the CPI increase over the past seven-year period, assuming that the increase for this year will be flat. With regard to the ODS premium rates, the MCCOA points out that the amount has increased over that same seven year period from $478 to $566. If the rate had matched the Portland CPI-W, states the MCCOA, it would still have reached $552.
The MCCOA also argues that the trend data for the ODS indemnity plan is "very encouraging." Figures compiled by the plan consultant, argues MCCOA, shows a decrease in the 24-month moving averages for both medical and dental. Recent structural changes "should" cause costs to drop by .62%. The County's "per member per month" costs "continue to track at or below northwest trends."
According to MCCOA, a comparison to other jurisdictions provides similarly encouraging news. MCCOA states that the "most expensive family medical plan offered by Multnomah County is *less expensive* that that available to the Clackamas County Corrections Officers, the Clark County Corrections Officers, the King County Corrections Officers, the Marion County Corrections Officers, and the Multnomah County Sheriff s Deputies." (emphasis original). From the standpoint of claims costs, MCCOA contends that the ODS average has actually decreased since 1993.
To summarize this aspect of the MCCOA's position, this evidence relating to health costs does not indicate the existence of a "dire, immediate, and compelling problem." To the contrary, costs and premiums have not "outstripped" the CPI increases and total compensation has not "outstripped" the cost of living. Significantly, according to MCCOA, none of the comparator county corrections operations required any contributions from employees toward medical plan premiums.
In response to the County's incentive arguments, MCCOA first points out that under its proposal, the unit members will ultimately pay if the premium rates exceed the cost of the County's contribution (unless other provisions are negotiated). The MCCOA also points out that another incentive, the contribution by the County of $133,550 to an excess stabilization reserve fund for the unit's use if a long-term agreement is achieved by January 1, 2001, will exist under both proposals. According to the MCCOA, the County has not "articulated why it believes the incentives built into the Association's offer are less adequate that the incentives built into the County's offer. The primary difference between MCCOA's proposal and the County's (other than the size of the escalator), according to the MCCOA, is that the County would penalize the bargaining unit before the new system can begin to prove itself.
With respect worker's compensation, the MCCOA's points out that the bargaining unit currently pays approximately 15-18% of their medical costs through such items as deductibles and co-pays. Under the worker's compensation plan, however, all medical costs are covered and the employee pays nothing. It therefore stands to reason, contends the MCCOA, that any system that tends to switch medical costs out of worker's compensation to private medical insurance will have an adverse effect on the unit.
MCCOA refers to testimony establishing that a recent change in the law has made it more difficult to prove that an injury or disease is work-related. The MCCOA maintains that "the gradual evisceration of that worker's compensation coverage should be counterbalanced by an increase in the private provider health care coverage, rather than the decrease which the County seeks."
As to the importance of health benefits, MCCOA refers to what it terms increased exposure to communicable diseases. Nevertheless, MCCOA claims, it has made frequent concessions on the issue in an attempt to meet the County's demands.
B) Secondary Criterion
1) Financial Ability
MCCOA notes that the County submitted no evidence indicating an inability to Pay. This is not "surprising," argues the MCCOA, since the parties are only about $56,000 apart in fiscal year 1999-2000. Although the figure for the following fiscal year will depend on adjustment to premium rates that are not yet known, a County witness estimates the amount to be about $130,000 for the duration of the contract - an asserted difference of about one-half of one percent of the total payroll. Thus, argues the MCCOA, although the County makes it proposal to save money, it in fact will not save very much.
MCCOA also maintains that the County is well able to pay, given the current economic climate. In this regard, MCCOA points to a prediction of the County's budget director indicating that the "level of property tax growth should be sufficient to provide for ongoing expenditure requirements so long as inflation remains at bay." To further establish that the County is "in a remarkable period of economic health," MCCOA makes several other points including:
The County is generating increased revenue by leasing bed space to other facilities;
The budget indicates that more than ample funds have already been allocated to cover contractual COLA raises;
The County Is financial report shows that revenues from all sources have "grown dramatically" over the past ten years;
Employee benefits as a percent of wage and salary costs have leveled off and begun to decrease.
According to MCCOA, the "Arbitrator must consider whether competing needs have greater priority on available funds." MCCOA argues that the County must be required to pay the corrections employee benefits at a level and in a form that meet or exceed those of corrections officers in other jurisdictions.
2) Attract and Retain Qualified Personnel
MCCOA contests the County's assertion that it has no difficulty in attracting and retaining "qualified" corrections officers. The County's evidence, states MCCOA, establishes that out of 51 hires, only 6 have any prior experience. The County's inability to attract personnel away from other agencies is indicative of a problem in this category.
MCCOA refers to a "huge growth" in available corrections officer positions combined with an unusually high number of retirements. In support of this contention, MCCOA points to testimony establishing that the State Police anticipates a 45% attrition rate next year, while at the same time 100-150 new officers will be needed. Other state police agencies report similar statistics. For decades, according to the MCCOA, the County recruited only from within the state of Oregon. Now it must seek potential candidates from as far away as Indiana and Arizona. There is also evidence to show that recruitment announcements that only a few years ago would draw hundreds of responses now only attract 20-40. According to MCCOA, the problem of attracting qualified candidates is exacerbated by the high standards required of the newly hired corrections officer by the County.
3) Overall Compensation - CPI Factors
MCCOA contends that although the parties do not disagree about what the acceptable level of wages is for the bargaining unit, a total compensation analysis is required to "establish that the County's dramatic departure from the status quo is not justified by the need to keep overall compensation (including benefits) in line with comparator jurisdictions."
MCCOA contends that, based primarily on statutory considerations, the two most relevant comparators for this case are the counties of Washington and Clackamas. Using Clark County, Washington is improper, according to MCCOA, because of the population disparity and the lack of evidence on the question of "comparable work." However, if Clark County, Washington is considered, declares MCCOA, it is "only fair" to include the Multnomah County Sheriff s Deputies and King County, Washington, because, at the very least, one of these jurisdictions performs similar work and the other is more comparable in terms of population.
As it benchmark classification, MCCOA chooses the "top step." This choice is defended on the grounds that the step is reached within six years and that the overwhelming majority of the corrections officers and corrections sergeants are at the top steps of their classifications. MCCOA also notes that this classification was used by Arbitrator Wilkinson in her 1993 interest decision.
With regard to methodology, the MCCOA argues it has provided "two source books full of documents to justify every number that has gone into the Association's analysis." This compares to the data provided by the County, which MCCOA describes as "very sparse." MCCOA takes that position that the County's lack of data should "bear on the credibility of its data, as well as the impartiality of its quantitative analysis.
MCCOA lists a variety of reasons why the members of the bargaining unit should be better paid than other Jurisdictions in Oregon. Included are:
Arbitrator Wilkinson found in her 1993 interest arbitration decision that the County requires a higher of level of skill than do other employers;
The population is greater;
The cost of living is higher;
The prisoners are more violent and dangerous;
The open-module jails require a higher degree of training, professionalism and communication skills;
The work is more demanding and causes a higher level of stress;
More versatility is demanded of the employees;
Inmate concentration has increased since 1993 due to double-bunking and the opening of additional modules.
Despite a "clear pattern" establishing that large cities pay higher wages for similar work than Outlying suburban or rural areas, claims MCCOA, this does not apply to the County's corrections officers. The MCCOA declares that its data shows that among the five Oregon jurisdictions, MCCOA has fallen from third to fourth since 1993. In the context of the tri-county comparators, MCCOA "remains dead last." Thus, there can be no merit to the argument that a cutback 'n medical benefits is somehow justified by the current wage levels.
MCCOA further argues that an analysis of the level employee benefits, including education certification pay, longevity pay, vacation-holiday-sick leave pay and insurance coverage, disclose a similar picture.
"In summary," contends MMCOA, the members of the bargaining unit are underpaid and "a total compensation analysis simply does not support the contention that the County must save on medical insurance costs to somehow counterbalance an excess in total compensation compared with other counties in the labor market." Instead, declares MCCOA, the analysis "strongly supports" the concept that medical benefits as currently constituted should be kept "intact."
In addition to supporting its own case, the MCCOA criticizes the County's analysis on several grounds, including:
There is no statutory justification for the County's "overwhelming" emphasis on internal comparators, regardless of its desire to impose a uniform health benefit system;
It makes no sense to impose a uniform system of health benefits on all the different classifications of employees since, if the interest of these employees were similar, they would have been placed in the same bargaining unit initially;
The County submitted data on comparative jurisdictions that has been previously rejected in the prior interest arbitration and has failed to justify the continued use of this data with new evidence;
In addition to statutory prohibitions, the attempt of the County to utilize the corrections officers at the Oregon State Penitentiary is without merit since working conditions are drastically different;
The County's choice of benchmark classifications are result oriented and not persuasive because they are not representative of the bargaining unit and do not make "true comparisons of similar classes of employees;
The County's comparisons are further skewed by its failure to use comparisons that apply to the entire bargaining unit. For example, the County submits shift differential pay which does not apply to those employees who work days and does not consider other similar forms of pay such as hazardous material pay, K-9 pay, coach pay, range qualification pay, bilingual pay and the allowance for uniform cleaning;
The County "weighted" compensation and benefit amounts inconsistently, further undermining the results;
The County incorrectly used paid time off benefits to increase gross compensation, rather than merely increasing the hourly rate;
The County's tables for benchmarks at 6 and 10 years incorrectly assumes that the employees receive employee benefits which, in fact, they do not receive;
The County distorted the cost-of-living analysis by using a base year to which a "catch-up" increase had not been applied;
The County's analysis ignores the dramatic increase in employee workload and a number of other hardships.
Finally, MCCOA maintains that many of the figures used by the County to arrive at its total compensation analysis are simply inaccurate including entry level compensation (mixing with trainee wages), certification premiums (uses assumptions in Clark County), Washington County educational benefits (assumes all officers have a Bachelor's degree). For health benefits comparisons, contends MCCOA, the County:
Did not include retiree insurance or employee assistance in the premium for Clackamas County;
Used 2080 hours in the analysis of Clark County employees, when in fact these employees work 2190 hours per year;
Used an incorrect composite rate for Marion County ($264.80 vs. 378.59);
Did not include a SEBB subsidy in the calculation of the AFSCME premium;
Used composite rates for all comparators except Clark County and Multnomah County, which are easily calculated.
In conclusion, MCCOA argues, "a very reasonable approach" has been taken by the bargaining team that has resulted in a great many concessions. "The agreed-to concessions are enough, at least for now," argues MCCOA.
The findings of fact and conclusions required to resolve this issue must be based upon the statutory criteria listed in ORS 243.746 (a) through (h). The law generally requires that "first priority" be given to subsection (a) - the interest and welfare of the public. Under the statute, subsections (b) through (h) are accorded "secondary priority." Consistent with what has emerged as the prevailing view, both LBOP's have been analyzed first on the basis of what the parties contend is in the public's best interest. To the extent subsections (b) through (h) assisted in defining and determining the statutory goal, these secondary factors were also considered.
Both parties offered evidence and argument on several factors that are not specifically included under ORS 243,746(4)(a - g), but which have "traditionally" been considered by interest arbitrators. These considerations included such subjects as workload, workers' compensation coverage, the specific effect of double-bunking and the special problems that bargaining unit employees must successfully confront on a regular basis. ORS 243.746(4)(h) specifically prohibits an interest arbitrator from considering these factors when "in the judgment of the arbitrator, the factors in subsection (a) to (g) of this section provide sufficient evidence for an award." That is the case here.
Having fully reviewed the record, the Arbitrator determines that there is sufficient evidence to provide a basis for an award without considering these additional factors.
In accordance with ORS 243.746(h), the award is based only on the factors listed in subsections (a) through (g).
In the context of these two health insurance proposals, what is in the best interests and welfare of the public as that phrase is used in ORS 243.746(4)? The County suggests that the taxpayer's only interest is in minimizing the increasing costs of health insurance through effective management - in this case joint management - of all the bargaining units including the Corrections Officers. MCCOA maintains that the interest and welfare of the public is best served when the total compensation paid to the bargaining unit compares favorably to employees performing similar work under similar conditions. Both of these concepts are extremely helpful in setting the necessary parameters, The public interest is best served when a governmental entity incurs just enough expense to provide for compensation that is both competitive and sufficient to attract and retain capable and qualified employees. See generally Deschutes County Sheriff's Association and Deschutes County, (Lankford, 1996); American Federation of State, County and Municipal Employees and the City of Cornelius (Brown, 1999); Klamath County Peace Officers Association and Klamath County (Torosian, 1998).
The priorities and factors contained in ORS 243.746(4) provide the framework for discussing the ultimate facts and conclusions necessary to resolve this dispute. What follows is a summary of the facts and concepts, as developed by the testimony and the exhibits, which were most useful in rendering this decision.
Costs of Premium Sharing Prior to and After July 1, 2001
In deciding which proposal best serves the public interest, cost is a central factor. The extent to which the two proposals differ in terms of actual cost is critical to the process of determining when premium sharing should begin and how the amount shared should be calculated.
The proposals differ significantly as to when the members of the MCCOA bargaining unit are to begin paying a share of the health insurance premium increases. The County proposes that, assuming the premium levels exceed the initial augmented contribution, the employees begin contributing toward the premium costs in the first year of the contract. MCCOA proposes that premium sharing not begin until after July 1, 2001.
With respect to calculation, the County proposes that shared amount equal the increase over an initial augmented contribution to a maximum of .75% of base wage. MCCOA proposes (after July 1, 2001) that the shared amount be calculated using the most expensive plan as a "hard cap" and applying the Portland CPI-W.
The testimony reflects that in terms of actual costs, only $56594 separates the two proposals for fiscal year 1999-2000 - a year in which the MCCOA would not share premiums according to its LBOP. The record further indicates that for the duration of the contract, including fiscal year 2000-2001 and assuming that no significant changes occur, the difference in costs between the two LBOP's will be approximately $130,000.
The amount of this difference is not di minimus. Neither is the amount uncontrollably large, over the duration of the contract. In raw figures, the actual cost difference in the two proposals is approximately $30 per employee per month over the life of the agreement.
It is important to be aware of the approximate costs. But unless placed in the context of all other factors, merely knowing the approximate cost does not resolve the question. The additional expense may or not be warranted, depending in part on what is the minimum amount necessary to achieve the central statutory goal - the attainment of a wage and benefit package that is at once competitive and sufficient to enable the County to attract and retain qualified personnel.
The evidence relating to the historical changes in health premiums must also be viewed within this framework. The County established that, in the past seven years, increases occurred in health insurance premiums. Specifically, their evidence indicates that the ODS medical and dental premium costs have increased 30.7% over the period and that the Kaiser plan is up 23.5%.
The evidence sponsored by the MCCOA demonstrates that the increase in Kaiser premiums have "almost exactly" matched the increase in the CPI during a relevant period and that the cost of ODS coverage has exceeded the CPI rate of growth for the period by a mere fourteen dollars. MCCOA also evaluates increases in costs to other "comparable" jurisdictions. The MCCOA presented evidence showing that the bargaining unit increases have not exceeded the increases in rates paid by these other jurisdictions.
Taken together, this evidence provides a basis for the conclusion that, while the costs of insurance premiums are rising in the bargaining unit, the increases approximately match the cost of living. The cost of living affects all governmental units and their respective employees equally. These employees of these same governmental units form an important pool of experienced workers, a pool from which the County will want to draw in order to obtain additional qualified personnel.
Incentives and Joint Governance
The County demonstrated that under its proposal, the MCCOA bargaining unit has a direct economic incentive to keep health premium costs low. If the costs increase, the bargaining unit employees will be required to share in paying for that increase. This is a concept that is effective because it is simple and well-targeted.
The County does not deny, however, that the MCCOA's proposal also contains incentives to encourage a low cost. It recognizes that MCCOA's offer does ultimately call for a cost sharing provision based on the CPI-W Portland cost of living increase. Both parties agree and recognize that the proposal relating to returns on excess savings are potential incentives, as is the County's offer to pay into an excess stabilization reserve fund, assuming a long-term agreement can be reached. MCCOA specifically refers to the possibility of payroll deductions, as well as the need to keep its proposed "hard cap" baseline as low as possible in order to minimize potential future contributions.
Similarly, MCCOA does not contend that the concept of incentives has no place in determining what the best interests and welfare of the public is. Rather, MCCOA contends that the County has not properly articulated why it believes the incentives built into the MCCOA proposal are not adequate.
The County does argue that the "incentives" relied on by MCCOA are not sufficient because they are '' too remote in time" and are subject to renegotiation. The County also argues that the most efficient, equitable and "best" incentive is one that is "equal or comparable to the incentive shared by the County's other union and non-union employees." To the County, the best incentive is the one that most directly promotes the efficient use of public funds on a system wide basis and through joint management of all bargaining units.
Clearly, the providing of reasonable incentives is one very effective method of encouraging desirable behavior. In the context of health insurance, however, incentives are not a guarantee of results. While incentives will certainly influence utilization, employees will still become ill, necessitating the use of available health services regardless of what incentives exist. More often than not, the use of the health benefit is a necessity and not an option.
In this case, the parties presented no evidence showing that the members of the bargaining unit have over-used or abused in any way the program of health insurance currently in effect. In point of fact, there is some evidence to the contrary. Both proposals contain sufficient incentives to encourage lower premium costs.
The County also contends that the public interest is best served if all the bargaining units are governed by the same common elements and that the same rules should apply to all. Several very sound arguments are offered in support of this aspect of their proposal. Joint governance, argues the County, is in the public interest because it encourages responsible management, enhances union knowledge, eliminates distrust of employer-driven decisions, simplifies contract negotiations by limiting the issues primarily to money, fosters cooperation and makes long term planning more possible.
The County's presentation on this point is persuasive. However, under the MCCOA proposal, the vast majority of these joint management provisions will be a part of the successor agreement within a short period of time.
a) Financial Ability
The County does not contend that it lacks the ability to "meet the costs of the MCCOA's proposal." However, MCCOA contends that not only can the County pay, but that it is in a "remarkable period of economic health." Specifically, MCCOA contends that current overall resources and continuing increases in population are creating a "sustained economic boom" and a "large and healthy" general fund. Thus, MCCOA maintains not only that the County is able to pay for the current offer, but can in fact pay "well beyond" that which has been proposed.
This position, even if it is perfectly true, is of limited assistance because it misses the point. Regardless of whether the general financial picture of a governmental entity is strong or weak, financial resources are never unlimited. It is a constant of governmental management that choices must continually be made as to the appropriate application of financial resources. The statute requires that such choices be considered. The ability to pay is but one factor among others. Regardless of the relative financial condition of the County, this award must be based on what best serves the interest of the public. Ability to pay cannot be considered apart from the other statutory factors of secondary priority - comparability, the ability to employ and retain employees, the cost of living and other applicable considerations.
b) Attract and Retain Qualified Personnel
With respect to the ability of the County to retain corrections officers, the County's evidence reflects that almost 5% of the bargaining unit members have worked for the County for in excess of 20 years, almost 10% have been employed for 15 years and that almost 30% have been employed for over 10 years. This combined figure accounts for almost one-half of the work force and clearly demonstrates that efforts to retain employees have been successful.
The County's exhibits indicate that these retention rates are superior to those achieved by comparable jurisdictions, including Clackamas and Washington Counties. MCCOA does not dispute the County as to the retention evidence.
The County also established that during the period beginning July 1, 1998, 51 officers were hired to replace 27 officers who had resigned or were terminated. An increase in the need for officers was experienced due to the previously referred to and recently implemented practice of double-bunking. Still, the County's evidence shows, as testified to by its Human Resources Officer Fernando Conill, that no difficulty was experienced in attracting qualified candidates.
MCCOA challenges the County's evidence on the issue of "qualified personnel." MCCOA points out that of the 51 new-hires, only 6 had any prior experience as corrections officers, indicating a shortage of applicants from other corrections agencies.
Additionally, MCCOA raises an important issue as to the immediate future. MCCOA produced Sergeant Hawkins, a County employee who regularly recruits new correction officer applicants. Based on her knowledge of the job market, Ms. Hawkins testified that law enforcement is experiencing significant growth in available positions while at the same time, retirements are increasing. According to data Ms. Hawkins has collected, the Oregon State Police (OSP) projects a 45% attrition rate within the next twelve to eighteen months and is currently seeking 100-150 new officers. Ms. Hawkins further testified that Pierce County, Washington, expects to hire 200 corrections officers within the next 6-8 months. Similar data was obtained from the Portland Police and the Washington State Patrol. For years, according to Ms. Hawkins, the County could satisfy its hiring needs within the State of Oregon. Recently, Ms. Hawkins was sent as far east as Indianapolis and as far south as Arizona in an attempt to recruit new officers. Ms. Hawkins testified that the distribution by the County of a recruitment announcement that formerly drew hundreds of applicants now attracts only 20-40. The record further shows that a significant percentage of new applicants do not qualify for employment and that the expense of training new personnel depends on their prior experience.
MCCOA finally established that if the County's proposal were to be selected, it would be the only comparable jurisdiction to require corrections officers to contribute towards medical plan premiums.
c) Overall Compensation - Comparability - All-Cities CPI
Although both parties have presented and argued a number of other combinations, they agree that the two of the most meaningful comparators for purposes of this issue are the counties of Washington and Clackamas. Some disagreement exists as to the comparability of Marion County, although both parties used it as a comparator. The parties differ more sharply as to methodology utilized in the compiling of their respective comparison exhibits, in ways that are well summarized in their position statements.
The most significant difference in the two presentations is the respective choices of benchmarks. The County has selected three benchmarks - entry level, 6 year and 10 year employees. The rationale for the County's selection is that it produces a representative sampling of the employees. Based on the resulting data, compensation in the bargaining unit exceeds each comparable county with the exception of Marion (Clackamas 14.33% - Washington 2.34% and Marion -. 19%). The County also compares corrections officers internally, resulting in figures that exceed the Multnomah County internal average by 17.79%,12.446% and 8.13% respectively.
MCCOA selected a different benchmark, utilizing the top step, as contrasted to the County's use of entry level and intermediate steps. MCCOA's reasoning is similar to the County's, arguing that the top step is the proper benchmark because it represents the overwhelming majority of the employees, MCCOA also points out that this was the benchmark used by Arbitrator Wilkinson in the prior interest arbitration award. MCCOA's data establishes that as compared with base year 1993, gross wages for bargaining unit members has increase 18.89%, as compared to 18.93% in Clackamas county and 27.69% in Washington County.
As to cost of living, the data submitted by the County establishes that
the across-the-board increases received by bargaining unit employees total 24.3% as compared to an increase in the CPI-W of only 21.8%. The County points out that this result occurred at a time when "the County was absorbing one hundred percent of the significant health insurance premium/premium equivalent increases.
MCCOA criticizes this result on the basis that it uses the year 1992 - the year in which Arbitrator Wilkinson awarded a sizeable "catch-up" wage increase, phased in over the two subsequent fiscal years. Since this effectively means that bargaining unit employees received in these two years wages that they should have received in prior period, the figures amount to a "distortion" in the view of the MCCOA. MCCOA makes an adjustment to its data that establishes that "the wages of the Association have not outstripped the cost of living if the correct base year is shown."
Some perspective is required to determine the materiality of the wage and cost of living data to the issue presented. The parties are already agreed as to the wage component of their successor agreement. No dispute exists as those amounts. The County argues quite properly, that the issue presented in this case is not resolvable solely on "neutral considerations," such as what elements should be included in the term "gross wage" or the amounts paid by other governmental entities. Regardless of which comparative data is determined to be the most convincing, appropriate weight must be accorded to all of the statutory factors to arrive at a proper determination of what the public interest requires.. MCCOA does not specifically disagree with this position, but argues that the "wage analysis is instructive to counter the argument that a cutback in medical benefits is somehow justified by the Association's high wage levels."
What the data does show is that the wage growth experienced by this bargaining unit, when compared to the cost of living and to comparable governmental entities, does not significantly favor the selection of either proposal. For purposes of this health insurance issue, the wage levels of the bargaining unit do not diverge sufficiently from their comparators to justify such a determination.
d) Stipulations of the Parties
The parties offered no stipulations.
In the context of the primary issue, the facts that are most material are those relating to the ability of the County to attract future qualified personnel and the relative costs of the two proposals. The evidence provides a sound basis for the conclusion that the hiring of capable personnel, as well as the attracting of qualified candidates, is a necessity for the County. Additionally, the County's need for experienced and skilled employees is increasing, In the ten-month period beginning July 1, 1998, the County hired 51 new officers. During that same period of time, only 27resignations or terminations occurred, indicating that 24 new positions were created.
The County may not have experienced difficulties attracting qualified Personnel in the past year, but, as the record demonstrates, the future will be more problematic. The evidence shows that qualified corrections officer candidates are in great demand all over the Pacific Northwest. Sergeant Hawkins testified that the number of available positions for corrections officers are increasing significantly, as are retirements. She also indicated that the number of applicants responding to recent recruitment announcement is decreasing and that the County is now no longer able to fill its hiring needs within the State of Oregon.
Two other facts are important. First, if the County's proposal is selected and the premium costs exceed the initial augmented contribution, the MCCOA bargaining unit employees will be the only comparable group of corrections officers required to contribute toward this benefit. Second, the two proposals are within $30 per employee per month in terms of actual cost.
These facts require the selection of the proposal submitted by the MCCOA. Both parties recognize the importance of preserving the ability to attract and retain qualified employees. Certainly, $30 per employee per month is a significant cost. However, training less experienced new-hires also triggers additional costs. Assuming the bargaining unit employees reached the point that a contribution to their own health insurance program became necessary, such an employment term would undermine the County's ability to offer potential applicants a competitive overall wage and benefit package, thereby reducing the County's ability to attract qualified personnel.
Based on these findings and conclusions, the Arbitrator determines that the public interest is best served by the proposal sponsored by the MCCOA, The incentives proposed by the County are praiseworthy but are not sufficiently distinguishable than the incentives contained in MCCOA's proposal, given the hiring/cost evidence. The reasons given by the County for the joint governance provisions have merit. However, the selection of the MCCOA proposal will delay the implementation of most of these provisions for only a short time. The amount of delay is not significant, given the current hiring climate. Finally, a review of the overall picture of compensation, including consideration of comparable jurisdictions and the All-Cities CPI, discloses no reason to favor one proposal over the other in the context of the health insurance issue.
For the foregoing reasons, the collective bargaining agreement shall contain the LBOP as proposed by the MCCOA.
Dated: August 16, 1999
David S. Paull, Arbitrator
1. In this regard, the county was careful to state that it had no reason to believe that the MCCOA leadership would exercise its veto power in any way other than reasonably. However, It argues that reasonable intent does not guarantee that the MCCOA rank-and-file would accept a necessary benefit reduction, especially since they have no immediate motivation to do so. The County refers to a prior LBOP dated September 29, 1998, which contained a premium sharing provision that was soundly rejected by the MCCOA membership, although agreed to by the MCCOA bargaining team.