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IA-07-00
In the Matter of an Interest Arbitration Between City of Bend, Oregon and The Bend Police Officers Association . IA-07-00.
 
* * Indicates underlining in original.
 
This case came on for hearing in Bend, Oregon on November 3, 2000. Each party had a full opportunity to make its opening statement and to present testimonial and documentary evidence. Witnesses were sworn. A transcript was kept and prepared. All exhibits were admitted, subject to later written challenge. There were none.
 
Post-hearing briefs together with attachments were received during the first week in December. Both parties agreed that the hearing should be ruled closed as of the date of receipt of those briefs, with the 30-day period for the Arbitrator to make a decision to begin running at that time.
 
BACKGROUND
 
This matter came on under Oregon Revised Statutes (ORS) 243.746(4) which provides, in part, as follows:
 
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).
 
The criteria set forth in the statute are 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, 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 situation described as follows:
 
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state counties of the same or similar size; and
 
(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 other factors, if in the judgment of the arbitrator, the facts in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award. (See, ORS 243.746(4))
 
STATUTORY BACKGROUND
 


 
 
Since the statutory direction to arbitrators is to base their findings and opinions on the statutory criteria giving *first priority to*: "The Interest and Welfare of the Public," it is useful to look at the general principles underlying the legislation.
 
Section 243.650 (4) reads as follows: "Collective bargaining" means the performance of the mutual obligation of a public employer and the representative of its employees to meet at reasonable times and conferring in good faith with respect to employment relations for the purpose of negotiations concerning mandatory subject of bargaining as defined in this section, to meet and confer in good faith in accordance with law with respect to any dispute concerning the interpretation or application of a collective bargaining agreement, and to execute written contracts incorporating agreements that have been reached on behalf of the public employer and the employees in the bargaining unit covered by such negotiations. The obligation to meet and negotiate does not compel either party to agree to a proposal or require the making of a concession…"
 
Section 243.656 contains a policy statement of the Legislative Assembly which reads as follows:
 
(1) "The people of this state have a fundamental interest in the development of harmonious and cooperative relationships between government and its employees;
 
(2) Recognition by public employers of the right of public employees to organize and full acceptance of the principle and procedure of collective negotiations between public employers and public employee organizations can alleviate various forms of strife and unrest. Experience in the private and public sectors of our economy has proved that unresolved disputes in the public service are injurious to the public, the governmental agencies, and public employees;
 
(3) Experience in private and public employment has also proved that protection by law of the right of employees to organize and negotiate collectively safeguards employees and the public from injury, impairment and interruptions of necessary services, and removes certain recognized sources of strife and unrest, by encouraging practices fundamental to the peaceful adjustment of disputes arising out of differences as to wages, hours, terms and other working conditions, and by establishing greater equality of bargaining power between public employers and public employees;
 
* * *
 


 
 
(5) It is the purpose of ORS 243.650 to 243.782 to obligate public employers, public employees and their representatives to enter into collective negotiations with willingness to resolve grievances and disputes relating to employment relations and to enter into written and signed contracts evidencing agreements resulting from such negotiations. It is also the purpose of ORS 243.650 to 243.782 to promote the improvement of employer-employee relations within the various public employers by providing a uniform basis for recognizing the right of public employees to join organizations of their own choice, and to be represented by such organizations in their employment relations with public employers.
 
* * *
 


 
 
243.666 endorses the proposition that a labor organization certified by the Employment Relations Board or recognized by the public employer is the exclusive representative of the employees of a public employer for the purposes of collective bargaining with respect to employment relations…"
 
These general statements, particularly 243.656 (3) and (5) and 243.666, parallel language found in the preamble to the National Labor Relations Act, as amended by the Taft-Hartley and Laudrum-Griffin Acts.
 
THE PARTIES LAST BEST OFFERS
 


 
 
The statute requires each party to submit to the other its last best offer (LBO) 14 days prior to the day of the arbitration hearing. The parties did this. The arbitrator is required to choose one LBO or the other. He cannot compromise.
 
Health and Dental Insurance
 
Section 30 of the collective bargaining agreement (which in terms expired on June 30, 2000) reads in pertinent part as follows;
 
A. Health. During the life of this Agreement the City shall provide each employee with a family medical, hospital, major medical and vision insurance plan at the *current benefit level*.
 
B. Dental. During the life of this Agreement, the City shall provide each employee with a family dental and orthodontic insurance plan at the *current benefit level*.
 
Under Paragraph E the cost of the health and dental insurance shall be paid 95% by the City and 5% by the employee.
 
The City proposes to convert the percentages to a fixed dollar amount. Its current contribution of 95% equates to $654.24 per month. The increaser in the second year would be to $686.95; in the third year, $721.30.
 
Any increase in medical and dental premiums beyond this amount would be the responsibility of the employee. The City contemplates that these capped premiums would be more than enough to make it possible for the Insurance Committee to shop for and develop excellent insurance coverage.
 
Finally, the City proposes elimination of the words, "current benefit level" in both paragraphs A and B.
 
The Association proposes continuation of the language, "current benefit level," in paragraphs A & B. Secondly, the Association proposes that the City continue to pay 95% of the premium cost for health and dental insurance, with the employees paying 5%. In sum, the Union proposes that the co-pay remain as is for the three-year life of the agreement.
 
Length of the Agreement and Negotiation Time Frames
 
Section 42 is also at issue. The parties are agreed on a three-year agreement. But they disagree on the start date for negotiations. The Association wants the start date changed from January 15 to the prior November 1, and wants an "evergreen" clause which means that the contract will stay in effect until a new one has been ratified or imposed by an interest arbitrator.
 
The City proposes the status quo.
 
Discipline and Discharge
 
243.706 reads as follows:
 
Agreement may provide for grievance and other disputes to be resolved by binding arbitration or other resolution process.
 
(1) A public employer may enter into a written agreement with the exclusive representative of an appropriate bargaining unit setting forth a grievance procedure culminating in binding arbitration or any other dispute resolution process agreed to by the parties. As a condition of enforceability, any arbitration award that orders the [reinstatement of a public employee or otherwise relieves the public employee of responsibility for misconduct] shall comply with the public policy requirements as clearly defined in statutes or judicial decisions including but not limited to policies respecting sexual harassment or sexual misconduct, unjustified and egregious use of physical or deadly force and serious criminal misconduct, related to work. In addition, with respect to claims that a grievant should be reinstated or otherwise relieved of responsibility for misconduct based upon the public employer's alleged previous differential treatment of employees for the same or similar conduct, the arbitration award must conform to the following principles:
 
(a) Some misconduct is so egregious that no employee can reasonably rely on past treatment for similar offenses as a justification or defense to discharge or other discipline.
 
(b) Public managers have a right to change disciplinary policies at any time, notwithstanding prior practices, if such managers give reasonable advance notice to affected employees and the change does not otherwise violate a collective bargaining agreement.
 
(2) In addition to Subsection (1) of this section, a public employer may enter into a written agreement with the exclusive representative of its employees providing that a labor dispute over conditions and terms of a contract may be resolved through binding arbitration.
 
The Association proposes that the City must, if it intends to rely on 243.706, to notify the employee. With specificity - the sections it relies on for what acts. This would be an amendment to Section 29: A new paragraph E. If it fails to give such notice, the City waives its rights to rely on 243.706.
 
The City proposes the status quo.
 
SUMMARY OF ARGUMENTS
 


 
 
INSURANCE
 
The City
 
The City agrees that the issue of medical insurance, both health and dental, is the basic question. A crisis arose when the City's carrier, LifeWise, discontinued one of the key elements of its plan. As a result, a new insurance provider by the name of Pacific Sources was selected. The selection was made by the City Insurance Committee consisting of about 16 persons, broadly represented of interested groups. The committee and Pacific Sources undertook to craft a policy that would match as closely as possible to the old Lifewise policy. The formal switch to a new carrier occurred on October 1, 2000.
 
The next day the Association filed unfair labor practice charges (Exhibit 6 of the City's submission). The unfair labor practice charge seeks an order from the Oregon Public Relations Board requiring the City to restore insurance coverage under the Pacific Sources plan, retroactively to pre-existing levels. The level of benefits under the Pacific Source plan is similar, but it is not the same. No carrier offers identical benefits. To do what the Association wants is impossible.
 
The City has agreed to increase its contributions by over $100 a month ($110.62) per employee for the current insurance year starting last October, with contributions in place to provide for future adjustments. This increase equates to a 3% increase in wages for the average police officer.
 
The City points out that its current 95% contribution effective on October 1st equates to $654.24 a month which is a $110.62 increase from 1999. The City proposal would increase this amount by 5% each of the next 2 years resulting in the cap being increased to $686.95 and $721.30. Any increase in medical and dental premiums beyond this amount would be the employee's responsibility. Presumably the employee would either pay the additional premium for the covered benefit, or, if he had a choice, he would shop for a different kind of coverage. At the moment, however, he has no choice. The only plan is the one with Pacific Source.
 
Recent increases in medical insurance premiums have been dramatic. See attached charts A and B.
 
On the basis of recent history and projections made by the City's insurance broker, it is realistic to expect premiums to reach $1000.00 per employee per month before the agreement expires (TR at 59). If the City is obligated to pay 95% of this premium, as the Association proposes, the City's ability to meet these insurance costs would have an adverse impact on its ability to fund other services at appropriate levels.
 
On the other hand, still working with the hypothetical but realistic figure of $1000.00 per month per employee, if the employee were required to pick up the difference of $278.70 between the City's cap of $721.30 in the third year and $1000.00 he could choose between reduction of benefits or acceptance of the higher costs. Such a choice is not now available, but it is contemplated that the Insurance Committee will develop such alternatives in the market.
 
The Association
 
The Association argues that the City, by refusing in its LBO to guarantee to maintain the "current benefit level" and substituting therefore a promise to give each employee "access to" an insurance plan, seeks a "blank check" - total control over plan design with no guarantees that whatever insurance plan the Association will finally be given will contain any given level of benefits or be even the same level as that enjoyed by the rest of the City's employees.
 
Length of the Agreement and Negotiating Timelines
 
The City
 
The City is opposed to being required to commence negotiations for a successor agreement 8 months prior to its expiration. This would be the effect of accepting the Association's proposal. The 150 day period can be waived, as it was here. This is also true of mediation. There are no changed circumstances which impel this modification. The same thing is true with respect to the Association's proposal for a so-called "evergreen" clause. Paragraph 243.756 imposes a freeze.
 
The Association
 
The Association argues that even with the November start time that it proposes, it is virtually impossible to negotiate for 150 days, as required by statute, schedule mediation, and conclude with interest arbitration by the time the contract expires. The earlier start date of November 1, with negotiations 15 days thereafter, makes more sense as a practical matter. The proposal for an "evergreen" clause is designed, of course, to protect the rights of employees until a new agreement can be ratified.
 
Discipline and Discharge
 
The City
 
The City opposes incorporation of 243.706 into notices of discipline as proposed by the Association. The City makes the obvious point that it has to give advance written notice with respect to the discipline that may be contemplated. It is not necessary to do more than that. The City also opines that the Union does not have the right to propose a provision which would result in the City's "waiving" its right to rely on the statutory language of the section involved.
 
The Association
 
The Associations argument in support of its proposal is essentially that procedural due process compels this modification. The employer should be required, as a matter of essential fairness, to state specifically if it is relying on the provisions of the statute in question.
 
DISCUSSION
 


 
 
The Primary Criterion: "The Interest and Welfare of the Public"
 


 
 
The relationship between an employer and a union which is the exclusive representative of its employees for purposes of bargaining over the terms and conditions of employment is subverted by unilateral changes in mandatory subjects. A unilateral change means the implementation of a proposal without presenting it to the union. If it is presented to the union, unilateral action is permitted provided that parties have bargained to an impasse. A unilateral change not only violates the plain requirement that the parties bargain over "wages, hours, and other terms and conditions of employment" but it also injures the process of collective bargaining itself. Such action minimizes the influence of collective bargaining. It interferes with the right of self-organization by emphasizing to the employees that there is no necessity for a collective bargaining agent. (See "The Developing Labor Law - 1999 Cumulative Supplement." Section of Labor and Employment Law, American Bar Association, published by the Bureau of National Affairs, and cases cited at pages 266-267. See also Wollett, Grodin & Weisberger Collective Bargaining in Public Employment, West Publishing Co., 4th Ed. At pg. 129 - 134 (1993).)
 
The principle is clear. An employer acts improperly if he makes a change in the terms and conditions of employment without bargaining about that change. The requirement is that the employer bargain over the proposal to impasse before he carries it out. Obviously, if the proposal has not even been made to the union, at least not with specificity, the employer cannot satisfy the requirement.
 
Another way to express the point is to say that the collective bargaining process must be given an opportunity to work. That opportunity is lost if unilateral action is taken by an employer without presenting the proposal to the union.
 
The bargaining history in the case at hand is puzzling.
 
The City of Bend has an insurance committee which meets periodically (about six times per year) to deal with insurance problems affecting its employees. (TR at 65) There are representatives from the police, at least two. (TR at 71) However, it is clear that the Insurance Committee is not an agent of the union. (TR at 71) About 2 years ago, the City became aware that the indemnity policy carried by LifeWise might no longer be available (TR at 68). This was confirmed on May 30, 2000.
 
In August of 2000, the insurance policy renewal date, LifeWise made some changes in coverage so that all plans in existence at that time were either modified or dropped. As of August 1, based on the plans that LifeWise provided, the City had only two plans available and those plans were different than any of the previous plans. (TR at 77) The Association and the City were bargaining about them. (TR at 77) The City ran on a sort of "temporary" modified LifeWise plan between August and October. (TR at 78)
 
On August 30, 2000 the City proposed to the Association continuation of the "current benefit level" language and proposed that the cost of the health and dental insurance program be paid 90% by the City and 10% by the employee. (Exhibit A 17) The Union rejected that proposal. This was the last day of bargaining. No further negotiations were held. (TR at 80) This was the last offer that the City gave to the Association. (Ibid.) The City did not ask the Association to agree to the current plan. (TR at 82)
 
On October 1, 2000 the City changed to a new insurance carrier, Pacific Source. The contract with the new carrier doesn't have signatures on it but it is the policy under which the City is operating. (TR at 79) In other words, the City has an operable policy that has not been signed as a contract. The change to Pacific Source on October 1 was followed the next day by the Association's filing an unfair labor practice charging the City with failure to bargain in good faith. (TR at 56)
 
The parties certified that they were at impasse. This was necessary under the statute in order to trigger third party intervention. But, looking at the realities of the negotiating process, the parties were not at impasse. - At least until the City asked the Association to agree to the current plan. They exchanged LBO's on October 20, 2000. The City never asked the Association to sign an agreement accepting the insurance plan with Pacific Source. To put this another way, the City did not, after it offered Exhibit A17 on August 30 (which was rejected), ask the Association to agree to the benefit level of the insurance plan with Pacific Source which the City entered into on October 1. (TR at 81) The City never asked "the Association to sign off on the benefit level of the City's insurance plan…" (Ibid.) If it had, the negotiations might have acquired momentum.
 
In other words, the City put into effect on October 1, 2000 an insurance plan which it never proposed to the Association. Instead of asking the Association to sign off on the benefit level in effect on October 1, the City proposed on October 20 in its LBO a new co-pay arrangement and elimination of the "current benefits level" language.
 
The City wants provisions which put in place its proposal on a cap and a co-pay without guarantee of any level of benefits. The City argues that the caps on premium contributions by it are more than enough to allow the Insurance Committee the flexibility to shop for and develop excellent insurance coverage. But the estimate, according to the testimony of the City's insurance broker, is for an increase in premiums of at least 20 - 25% a year. The adequacy of the City's cap and the impact on the employee's co-pay await the future. (TR at 59)
 
More to the point, the City did not, prior to certifying that it was at impasse, give the collective negotiations process an opportunity to deal with the question of whether the current benefits provided by Pacific Source were close enough to "current benefit levels" to justify agreement. Significantly, the City insurance broker testified that the benefits offered by Pacific Source provided some improvement in benefits as well as some reductions. "What we tried to do is take the best of all of them and, you know, put it into one package…we were able to accomplish and provide benefits to not only those that lived here, but elsewhere…but what we tried to do is we tried to consolidate into one policy and take the best of everything that we could and put it in there." (TR at 57)
 
Were the proposals made to the Association? If not, why not? Who was the representative of the police officers? The Committee or the Association?
 
In my view, this record means that the contract with Pacific Source effective October 1, 2000 was a unilateral change in a mandatory subject and constituted a per se violation of the principles underlying collective negotiations.
 
The Federal cases that I cited above are not applicable to public sector bargaining. However, the principles set forth there underlie 643.656, the policy statement of the Oregon Legislative Assembly.
 
I am not finding that the City was guilty of bad faith bargaining. That decision is not for me. Nor am I suggesting that the unilateral change on October 1, 2000 was unlawful. I am saying only that the process pursuant to which the unilateral move was made was antithetical to the principles underlying the sections of the Assembly Statement which are quoted above. The public interest demands adherence to these principles. This being so, it follows that the City's LBO on insurance is out of phase with the primary priority under paragraph (a) of the Oregon statute which requires that I give first priority to the interest and welfare of the public. I stand on the views of the Assembly spelled out in Section 243.656 (3) and (5) of its policy statement.
 
The LBO of the City on the health and dental insurance question is seriously flawed because it did not evolve from adherence to the principles underlying the collective negotiations process.
 
The City's proposal on August 30 emphasized the maintenance of benefit levels coupled with a substantial improvement in the co-pay from the City's point of view. That was followed by an LBO which abandoned any guarantee of benefits level and made a very substantial increase in co-pay - the emphasis being on costs instead of benefits - without an effort to gain the Association's agreement to the Pacific Source plan.
 
Discharge And Discipline
 
The Association proposes that if the City claims that the discipline of an employee falls under the rules of ORS 243.706 it must specifically so notify the Association. I find little merit in the Association's proposal.
 
Procedural due process requires that the charges against a grievant must set forth allegations of misconduct with sufficient particularity so that the employee can defend himself properly. ORS 243.706 contains directions to the arbitrator as to the findings which he must make where his award orders the "reinstatement of a public employee or otherwise relieves the public employee of responsibility for misconduct. The award must comply with public policy requirements as clearly defined in statutes or judicial decisions including but not limited to policies respecting sexual harassment or sexual misconduct, unjustified and egregious use of physical or deadly force and serious criminal misconduct, related to work."
 
These are directions to the arbitrator, not to the employer. They are a manifestation of the Legislatures' lack of confidence in the judgment of arbitrators. Obviously if the employer seeks these findings by an arbitrator, it must put in evidence that supports them. Otherwise it will fail.
 
If the employer is faced with a defense of disparate treatment, the arbitrator is directed that, if his award calls for reinstatement or absolution, he must find that the misconduct was so egregious that no employee can rely on the past treatment for similar offenses as a justification or defense. The statute also tells the public employer that it may change disciplinary policies, notwithstanding prior practices, if it gives reasonable notice to affected employees. In context these are again directions to the arbitrator that his award is defective unless he makes appropriate findings.
 
In my view procedural due process does not require the employer to recite this statute or give notice of reliance therein. These are directions to the arbitrator as to what he must find if his award of reinstatement or relief from responsibility is to be enforceable. The test of due process is the adequacy of the notice to the employee of the factual allegations. That is a factual charge against which the employee must arrange his defenses. Limitations on an arbitrator's power to prescribe a particular remedy should not be confused with the necessity of giving a grievant notice of the charges against him.
 
It is not necessary to recite the significance of those facts in the charges if they are proved to the satisfaction of the arbitrator. The section of Oregon law tells the arbitrator to take heed. It has nothing to do with notice to the grievant. The Deschutes County Sheriffs Association case, upon which the Bend Police Association relies, deals with a due process point, but it has to do with the question of whether an employee can be disciplined for conduct with which he was not charged. There is nothing novel about this issue which justifies recital in the charges of statutory language.
 
Legnth of the Agreement and Negotiating Start Times
 
I prefer the City's position. The Association did not make the case for changes.
 
The Secondary Criteria
 


 
 
The City's Ability to Pay
 
The Chief Financial Officer of the City was asked the following question: If the City were required to accept the Union's proposal resulting in the City paying 95% and the Union paying 5% of a $1,000 insurance premium per employee per month [assuming that the increase rose to that level during the life of the agreement], what impact would that have on your budget?" (Tr. at 100) His answer was that it would add $68,000 to $70,000 in additional cost per year, which would impact on the general fund from which monies from the police department are derived. It would result in "basically one employee or one police officer per year not being able to be hired and would therefore reduce the number of officers per thousand over the life of the contract." (Tr. at 100). He testified further that if the cost for insurance went up to $1,000 per month per employee with the City picking up 95% of it, the City could not fund that and maintain its current level of services. (TR at 104).
 
These responses seem somewhat disingenuous. There is no evidence that the City, in order to maintain its level of services is about to hire additional police officers. Absent that evidence, the danger to the level of police services posed by the Association's proposal on insurance is a non-sequitur.
 
The City's working capital, i.e., current assets minus current liabilities at the end of this fiscal year, is projected to be $3,061,000 or 32.6% of estimated annual expenditures. This seems like a healthy working capital account (contingency fund) which could stand these payments without being in serious shape. It is a "good number" compared to other cities. (TR at 106)
 
Furthermore, the City's argument proves too much. Under its analysis the City could not afford to fund even a modest increase in labor costs for the police force.
 
The Ability of the Unit of Government to Attract and Retain Qualified Personnel at the Wage and Benefit Levels Provided
 
The City has done well in attracting and retaining qualified police officers over the past five years. It has had 1,276 applicants and zero turnover.
 
Overall Compensation and Comparisons with Comparable Jurisdictions
 
The City and the Association have agreed on a list of six comparable jurisdictions. Bend's total compensation package compares favorably. For example, Bend is No.1 in overall compensation. With regard to health insurance, Bend's proposal on a cap and a co-pay would give it a middle position vis-a-vis the six comparators.
 
In compensation, Bend police officers have slipped from 8% over the average in 1997 to 3.45% today. But it seems fair to conclude that, with the exception of health insurance premiums, Bend's overall compensation is more generous than most of its comparators.
 
Cost of Living
 
Bend has done a little better than the CPI during the past five years -- 16.9% against 15.1%.
 
In sum, Bend does well under the secondary criteria (b) through (f).*
 
* There are/were no pertinent stipulations of the parties. The arbitrator did not take into account "such other factors" because it was his judgment that the facts in paragraphs (a) to (b) to (f) provided sufficient support for his award.
 
CONCLUSION
 


 
 
The comparative data support the proposition that Bend's compensation levels are in line, indeed, at or near the top in most categories. Bend has had some difficulty in recent years with attracting competent recruits, but it is by no means near a crisis. The City appears to be in good shape in that respect. Bend has kept pace with the movement upward of the Consumer Price Index.
 
The only comparative data that are adverse to the City concern co-pay arrangements. But these data are not definitive because they do not address the serious proposition (which is not in dispute) that runaway premium costs pose a problem of the first magnitude. How is a fiscally responsible city to deal with the challenge of ever-increasing premium costs? A cap on the employer contribution is one way to control costs from the employer's point of view. However, if it is coupled with a co-pay, it may simply shift some of the costs of increases to the employees.
 
Some employers have argued that if employees are required to share in premium costs, they will seek less expensive health care or chose cheaper programs. If employees have a choice between or among plans whereby they can choose to accept reduced benefits or pay higher costs, there is some merit to the idea that a co-pay is related to the control of every increasing premium costs. If the employees have a choice, they may seek less expensive health care or chose cheaper programs, but in this case the police officers do not have a choice, at least not yet.. At the moment, there is one program and one program only and there is no evidence that sharing premium costs will have a stabilizing effect on premiums or cause the insured to shop more prudently (because they have no choice).
 
The City's Manager of Human Resources, when asked by the arbitrator if the employee has a choice of what insurance he is going to have, said, "No." (Tr. at 93) All City employees have the same plan; they have no option to chose one plan or another. But under the City's LBO "the potential for developing a choice would be there." (Tr. at 93) An employee might "gain access" to choice, if the City chooses.
 
This testimony raised again in the arbitrator's mind the question of why the collective bargaining process malfunctioned. Surely the failure of the City, after the rejection of its proposal on August 30, 2000 and before it entered into a contract with Life Source, to ask the Association to sign off on the benefit level of the City's plan with Life Source played a major role. (TR. at 81).
 
The basic issue under consideration is which package proposal, the City's or the Association's, better meets the requirements of ORS 243.746(4). I have concluded that the Association must prevail.
 
The Association's proposal for an earlier start date for negotiations and an "Evergreen" clause are not supported by a compelling need. Similarly, the Association's proposal to modify the provisions of the collective agreement dealing with discharge and discipline is not persuasive.
 
The financial data do not support the proposition that Bend cannot fund the Association's insurance premium proposals without a deleterious impact on the level of services and an invasion of operational reserves.
 
The comparative data show that Bend treats its employees pretty well, relatively, although acceptance of the City's LBO on medical insurance premiums will place it in the middle of the list from the employees' point of view. Bend also does well in terms of its ability to attract and retain qualified personnel and its overall compensation levels are within comparative norms. Bend has more than kept pace with upper movements in the cost of living as measured by the CPI.
 
However, the City's behavior at the bargaining table was antithetical to the principles of collective negotiations which are endorsed in law as consistent with the interest and welfare of the public. This is the primary criterion and the City of Bend fell short.
 
If this were a conventional interest arbitration where the arbitrator has some discretion, I would doubtless fashion a compromise or remand the matter to the parties for further consideration in light of my opinion. However, I do not have the authority to do that. The statute requires me to chose one package or the other. The statutory environment within which I must work is rigid and inflexible.
 
In my view the Association's package is more in line with the interest and welfare of the public than is the City of Bend's. An analysis of the secondary criteria does not disturb that finding.
 
If the crisis predicted by the City actually happens, that is, is real, not hypothetical, the City's assumption that the Association would not be receptive to constructive efforts to deal with this problem is contrary to my experience, particularly with law enforcement unions.
 
My choice is to direct the City to do something which it says is impossible to perform or to discount, to the point of disregarding it, the City's failure to observe the obligations of collective negotiations. Since my authority derives from a statute that says that the public interest is served by the optimal functioning of collective negotiations the second alternative is not an acceptable option. I'm compelled to choose the former and hope that the doctrine of substantial performance will carry the day in the compliance phase of this matter, if it comes to that.
 
AWARD
 


 
 
For the reasons set forth above, and after considering all the evidence offered by the parties and the statutory criteria, I have concluded that the Association's last best offer package should become a part of the next collective bargaining agreement between the parties.
 
SO ORDERED.
 
I will retain jurisdiction over this matter for sixty (60) days to deal with such problems as the parties may have in the implementation of my award.
 
Dated: December 29, 2000
 
Donald H. Wollett, Arbitrator
 
For the City of Bend : Bruce Bischof, Esq.
 
For the Association: John Hoag, Esq.

 
Attachments to this Award can be obtained by calling Sandra Elliott (503)378-6471, ext. 246 or e-mailing Sandra.Elliott@state.or.us