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IA-07-01
In the Matter of Interest Arbitration between The State of Oregon Department of Administrative Services on behalf of Department of Corrections Security Employees and American Federation of State, County and Municipal Employees. IA-07-01.
 
I. INTRODUCTION
 
This matter came for hearing pursuant to ORS 243.720-756 and relevant administrative rules. The arbitrator followed statutory requirements and administrative directives set forth in OAR 115-40-051 and OAR 115-50-030 in hearing and deciding the dispute between the parties. Hearings took place on September 28 and October 2, 2001 in a conference room of AFSCME Council 75 located at 3831 Fairview Industrial Drive S.E. in Salem, Oregon. Mr. Mark Hunt, Labor Relations Manager, represented the State of Oregon. Ms. Allison Hassler, Council Representative, represented the American Federation of State, County and Municipal Employees.
 
The hearings proceeded in an orderly manner without objection from either party with regard to relevant administrative rules for conducting such hearings. There was a full opportunity for the parties to submit evidence, to examine and cross-examine witnesses, and to argue the matter. All witnesses testified under oath as administered by the arbitrator. The arbitrator tape-recorded the proceeding as an extension of his personal notes. The advocates fully and fairly represented their respective parties.
 
Neither party issued any challenge to the procedural or substantive arbitrability of the dispute, and they stipulated with regard to issues before the arbitrator. The parties submitted the matter to the arbitrator on the basis of evidence presented at the hearing as well as post-hearing briefs. The arbitrator officially closed the hearing on November 2, 2001 after receipt of the final brief in the matter. Influenza delayed preparation of a report, and the parties approved an extension of the due date.
 
II. STATUTORY CONTEXT OF THE DECISION
 
Interest arbitration, in contrast with "rights" arbitration, sets new contract terms for parties and generally is more closely controlled by statutes than other forms of arbitration. Interest arbitration generally is used as an alternative to granting certain classifications of public employees the right to strike. It is a method of resolving public sector collective bargaining impasses that is more consistent with the public interest than work stoppages.
 
One form of interest arbitration is final offer or "last best offer--total package" arbitration. Last best offer arbitration is to be contrasted with procedures covering an employer's final offer set forth in the Taft-Hartley Act. "Last best offer arbitration" is a further refinement of using a less coercive method of conflict resolution than a strike. The hope of last best offer arbitration is that it will help motivate disputing parties to negotiate in good faith and to find a compromise of their own. This approach to conflict resolution is premised on the theory that the parties' efforts to craft the most reasonable offer for an arbitrator's selection will bring them so close together arbitration will become unnecessary. If, however, the matter should proceed to arbitration, the design of "last best offer arbitration by total package" substantially limits the discretionary authority of an arbitrator. The arbitrator is not permitted to mix and match the offers of the parties. But the underlying theory of last best offer arbitration (that good faith bargaining and avoiding the risk of loss in arbitration will produce a settlement) does not always work, and disputes of the sort before the arbitrator are the result.
 
Last best offer arbitration is not particularly unusual nor unique to Oregon. Many states, such as Connecticut, Iowa, Maine, Minnesota, Oklahoma, Pennsylvania, Washington, and Wisconsin, use last best offer arbitration as a means of resolving contract-based disagreements with public employees. Some scholars even refer to this method of dispute resolution as "baseball arbitration" because it is used as a means of setting salaries for veteran baseball players. It will be recalled that even the U.S. Internal Revenue Service used last best offer arbitration to resolve a major tax dispute with Apple Computer in 1994. These various entities have found that the availability of last best offer arbitration increases the willingness of parties to engage in serious negotiation. When Professor Carl Stevens of Reed College first proposed last best offer arbitration, he fully recognized that, because last best offer by total package prohibits any arbitral compromise between final offers, it is much riskier for the parties than conventional interest arbitration. Designers of final offer arbitration predicted that the very terror of last best offer arbitration by total package would assure its nonuse, but the practical reality is that the "winner take all" design of final offer arbitration by total package does not necessarily facilitate settlement.
 
The Oregon Legislature has directed that arbitrators base any findings and decision on a list of statutory criteria. Senate Bill 750 rearranged the criteria to be used by Oregon interest arbitrators. Prior to enactment of SB 750, comparability criteria probably constituted the single most important criterion according to which arbitrators compared wages, hours, and working conditions of employees involved in the arbitration proceeding with wages, hours, and working conditions of employees who perform comparable duties in jurisdictions similar to those involved in the dispute. Such an approach, of course, limited an arbitrator's discretion but also may have played a part in causing a spiral of wage increases. SB 750 removed comparability data as the most important criterion and made clear that arbitrators "shall base their findings and opinions" on traditional statutory criteria while giving "first priority" to the "interest and welfare of the public" and "second priority" to standard interest arbitration factors, such as comparability data.
 
The legislature not surprisingly gave arbitrators no definition to "the interest and welfare of the public." Recognizing that the term "the interest and welfare of the public" is widely used to describe what is thought to be beneficial to the community at large, it is reasonable to believe that the "interest and welfare of the public" is rooted in achieving a reasonable balance between the needs of the parties while also addressing societal needs with integrity. In terms of wages, it is reasonable to conclude that the "interest and welfare of the public" is achieved when a wage settlement remains within prescribed limits based on comparability data. Neither a settlement based on greed nor economic inequity is in the public interest. It is in the public interest for an interest arbitrator to foster conditions of relative bargaining equilibrium.
 
Applicable statutory criteria to be followed by an interest arbitrator in Oregon 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, and other priorities of, the unit of government as determined by the governing body. A reasonable operating reserve against future contingencies, which does not include funds in contemplation of settlement of the labor dispute, shall not be considered as available toward a settlement.
 
(c) The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided.
 
(d) The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received.
 
(e) Comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this paragraph, "comparable" is limited to communities of the same or nearest population range within Oregon. Notwithstanding the provisions of this paragraph, the following additional definitions of "comparable" apply in the situations described as follows:
 
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state cities of the same or similar size;
 
(B) For counties with a population of more than 400,000, "comparable" includes comparison to out-of-state counties of the same or similar size; and
 
(C) For the State of Oregon, "comparable" includes comparison to other states.
 
(f) The CPI-All Cities Index, commonly known as the cost of living.
 
(g) The stipulations of the parties.
 
(h) Such other factors, consistent with paragraphs (a) to (g) of this subsection as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award.
 
These criteria provide the context for analyzing issues submitted by the parties to the interest arbitrator.
 
III. THE ISSUE OF SENIORITY
 
A. The Employer's Position
 
The Employer is the moving party with regard to the issue of seniority. It is the position of the Employer that existing seniority language in the parties' 1999-2001 collective bargaining agreement must be changed. The Employer seeks to change the definition of "seniority" for purposes of shift and days-off bidding. The purpose of the Employer's proposal is to change from bargaining unit seniority to departmental seniority.
 
It is the belief of the Employer that it has a unique situation due to the fact that two different labor organizations represent its correctional officers, and this fact, in the opinion of the Employer, compels a conclusion that a department-wide seniority system is necessary. It is the belief of the Employer that its proposed change would eliminate a disincentive for employees in the class of Corrections Officers, Corporals, and Sergeants represented by the Association of Oregon Correction Employees to be able to transfer within the department.
 
As the Employer sees it, its proposal would provide a common seniority definition for all but a few staff members at an institution. Witnesses called by the Employer maintained that there would be little change overall in the seniority status of many employees. The Employer also contends that current contractual language causes some employees to be treated differently. Because there is a provision in the 1999-2001 agreement that effectively "grandfathers" in certain employees, the Employer reasons that there already are certain exceptions to the general rule. Additionally, the Employer maintains that its proposed change "creates a level playing field" for virtually all institutions.
 
The Employer believes that, because there are two unions representing Correctional Officers under two different contracts with different seniority language, its proposed change will foster more uniformity between employees of the different unions. Moreover, the Employer argues that its proposed change would increase diversity in the work force which, in turn, would increase the safety of the institution. To the extent that the existing language discourages officers from transferring to other facilities to gain broader skills and experience, it is the conclusion of the Employer that the existing language undermines safety. Current contract language allegedly has a "chilling effect" on the interest of employees in pursuing new employment opportunities and undermines management's ability to maintain a diverse and capable work force. As the Employer attempts to bring another institution on line, the problem will be worsened, in the opinion of the Employer, if the language is not changed to provide for department-wide seniority.
 
B. The Union's Position
 
It is the position of the Union that current contract language should be maintained. The Union believes that the interest and welfare of the public are better served by maintaining the current language, especially in view of the fact that the Employer allegedly failed to offer a strong justification for its proposal. It is the contention of the Union that the Employer offered no evidence of the unworkability or inequitability of the existing system as well as no proof of a compelling need for the proposed change.
 
On the contrary, the Union maintains that the existing system has worked well for almost eight years. According to the Union, the proposed change is not only not neutral in terms of its impact but would have a significant deleterious influence on working conditions. The change would severely impact the ability of bargaining unit members to bid for a shift and days off, according to the Union.
 
In response to the Employer's contention that experienced officers would be able to transfer easily to other institutions, the Union responds that it is not contractual seniority language preventing such transfers but rather the personal preference of employees for working and living in their current setting that prevents their leaving their present community. According to the Union, the Employer has conducted no careful study of the problem and merely presented anecdotal evidence of several individuals as a justification for seriously disrupting the seniority status of an entire bargaining unit. The Union contends that, while seniority retention is a crucial issue for bargaining unit members, it rarely is a dispositive reason for failing to seek a transfer to another institution. The Union believes the Employer failed to deal with life style choices in family situations that cause employees to choose not to transfer to a different institution.
 
Moreover, the Union contends that the current seniority system works well and serves the interest of the public by advancing goals of the respective institutions. It is the position of the Union that preserving the disputed language in the parties' 1999-2001 agreement is crucial to maintaining stability for members of the bargaining unit. Current contract language enables officers to know precisely their standing on the seniority list and gives them more stability in terms of structuring their personal schedules. The Union contends that the current system is a key determinant in establishing the amount of time an employee can spend with family and friends. It is the belief of the Union that changing the existing system will create substantial disruption that will produce a long chain reaction across functional units. In the view of the Union, the Employer proved no significant economic advantage to changing the existing language and showed no public interest that will be advanced by doing so.
 
C. Analysis of the Seniority Proposal
 
Article 25, Section 9 of the 1999-2001 agreement between the parties states:
 
Seniority
 
For purposes of bidding under Article 25, Working Conditions, seniority is defined as time in class in the security bargaining unit, except that employees in the bargaining unit on July 1, 1994, shall retain the seniority date they have in their current position until such time as the employee leaves that position.
 
The intent is that an employee in the AFSCME security series on July 1, 1994, keeps the seniority date negotiated in the 1992-94 Agreement for as long as the employee remains in the classification and functional unit the employee was in on that date. Once the employee leaves that position by promoting to a higher classification in the security series, transferring to a position in the same classification in another AFSCME-represented functional unit, or leaves the bargaining unit security series for any reason and then returns, the employee's seniority date will be recomputed to meet the definition of "time in class in the security bargaining unit." Seniority not sanctioned by this Agreement will not be recognized. (See Employer's Exhibit No. 1, p. 23.)
 
The Employer proposed the following new Article 25, Section 9 in the next agreement between the parties:
 
Seniority:
 
For purposes of bidding under Article 25, Working Conditions, seniority is defined as time in class within the department.
 
The Employer was the moving party on the issue of seniority and needed to carry its burden of proving the need for a change in the status quo. Unquestionably, maintaining a stable and diverse work force in order to insure the safety and well-being of the public is an important goal. It also is useful to the Employer for employees to gain experience at various institutions and to acquire a variety of job skills. What the Employer failed to show, however, is that language in Article 25, Section 9 of the 1999-2001 agreement is a primary factor in deterring such cross-training. Witnesses called by the Employer made clear that the Department of Corrections has not experienced significant recruitment problems. Nor has the Department failed to staff facilities adequately. To the contrary, witnesses, such as Ms. Nancy Hewton, testified that she had sufficient qualified staff to open the new facility at Coffee Creek. No documentary evidence or statistics presented a persuasive case for concluding that the Employer has faced recruitment problems or that a significant problem equivalent to the significant change in contract language justifies such a crucal change.
 
The Union submitted persuasive evidence that seniority is not a predominant factor determining whether employees will transfer to other facilities. What the evidence established was that geographic preferences, family considerations, and choices of personal lifestyle are the predominant factors that determine transfer decisions. Additionally, the arbitrator received persuasive evidence that working conditions in the various institutions themselves constitute a significant concern of employees who are considering a voluntary transfer. It is clear that each facility tends to develop its own culture, and some, but not all, may be attracted to it. For example, given a choice, some officers prefer to avoid working with death row inmates. Some, on the other hand, prefer maximum security facilities.
 
The evidence failed to be persuasive that a change in the seniority language would override such personal preferences. The point is that evidence submitted to the arbitrator failed to show the Employer's proposal would solve the problem of a lack of training and a diversity of job skills at various institutions. Of utmost importance is the fact that, while the Employer failed adequately to justify its proposed change, the Union submitted compelling arguments with regard to why the change should not occur. It is clear that the proposed change would cause considerable disruption and significant harm to a number of bargaining unit members, and the Employer offered no rebuttal to this fact. Evidence submitted to the arbitrator made clear that seniority is of utmost importance to members of the bargaining unit. There was unrebutted testimony that many employees plan their entire professional lives around their work schedules and depend on scheduled shifts and days-off in order to be able to maintain a chosen way of life. An unbargained-for-change of the magnitude proposed by the Employer would create enormous disruption in the professional lives of numerous bargaining unit members and, it is reasonable to conclude, would jeopardize the stability of this particular work force. The Employer failed to establish that such significant dangers are outweighed by the benefits it believes are to be achieved from implementing its proposal.
 
The interest and welfare of the public are defined not only by the objective outcome of a term in a contract but also by the process of collective bargaining itself. Concern for the public interest may arise from analyzing not only the content of bargaining proposals but also from studying the negotiations of the parties. The public has an interest in encouraging the parties to negotiate effectively and expeditiously so that major concerns of the parties are addressed in face-to-face meetings. The seniority proposal which in arbitration represents a major concern of the Employer did not surface until the parties engaged in mediation. Evidence submitted to the arbitrator established that the parties bargained in face-to-face meetings for 12 days followed by three mediation sessions.
 
According to unrebutted evidence, the Employer at no time during face-to-face negotiations stated that the seniority issue was one of utmost concern to management or that it needed the proposed change in order to maintain a diverse work force. The Employer explained in arbitration that its proposals were incomplete when the parties engaged in face-to-face negotiations. Hence, the topic surfaced only when the parties bargained through the auspices of a state mediator. The point is that the sort of significant, fundamental change proposed by the Employer is one best addressed in face-to-face sessions at the bargaining table and not in interest arbitration. Last best offer arbitration by total package is intended to avoid such novel changes at this stage of the process. The parties agreed that it advances the interest and welfare of the public to maintain a stable and experienced work force, and evidence submitted to the arbitrator failed to establish that the proposed change in seniority language would advance that goal.
 
IV. THE ISSUE OF A WAGE INCREASE
 
A. The Union's Position
 
The Union proposes an increase in wages of 2.5% (effective July, 2001) and 3% (effective July, 2002). The Union contends that its proposed increase is fair, will help maintain a stable work force, and will enable the Employer to attract qualified officers to staff its facilities.
 
The Union believes that the Employer has the ability to fund its proposed wage increase. According to the Union, the difference between the proposals of the parties is $2,343,929 over the term of the contract. The Employer fell far short of proving an inability to pay, according to the Union.
 
According to the Union, its proposed increase is consistent with comparability data. The Union uses jurisdictions such as California, Idaho, Nevada, Washington, and Alaska. While not a traditional source of comparability data, Alaska, according to the Union, is an appropriate jurisdiction to consider because it is a relatively small, unionized state. It is the belief of the Union that the Employer's proposal will not enable members of the bargaining unit to maintain an appropriate place in the labor market nor to keep up with the cost of living.
 
B. The Employer's Position
 
The Employer proposes that bargaining unit members receive a 2% wage increase (effective January, 2002) and 3% (effective February, 2003). It is the belief of the Employer that the Union's proposed wage is not justified and that the proposal of management is in the best interest of the public.
 
According to the Employer, the 2001-2003 Department of Corrections budget is "in trouble" and cannot stand the wage proposal sought by the Union. As the Employer sees it, the Department of Corrections cannot absorb any additional costs or expenditures. The Employer maintains that its ability to pay is limited to resources expected to be available in the current budget of the Department of Corrections.
 
According to the Employer, suggested sources proposed by the Union to fund the Union's proposal are not feasible. For example, the Employer contends that additional funds cannot be found in the Emergency Fund because such funds cannot be diverted to anything other than specified purposes. Funding a Department of Corrections deficit to accommodate a proposal of the Union is not such a purpose, according to management. Additionally, funds cannot come from the General Fund because, according to the Employer, it already is facing a shortfall.
 
The Employer also contends that the difference between the parties' proposals is not 2.3 but actually 2.7 million. According to the Employer, the Department of Corrections already is facing a 40 million dollar budget deficit, and the Union's wage proposal will magnify the deficit. Accordingly, the Employer reasons that it does not have the ability to fund the Union's proposal. The Employer also maintains that adopting the Employer's wage proposal will not undermine recruitment. Most applicants, according to the Employer, already come from Oregon, and the Employer is experiencing no difficulty fulfilling its recruitment needs. In other words, the Employer responds to the Union's assertion of the need for a wage increase as a recruitment device by stating that there is no need for further incentives to attract applicants.
 
Moreover, the Employer contends that it does compensate employees fairly and competitively. Management believes that comparability data support its proposal. The Employer vigorously objects to using Alaska as a source of comparability and argues that only the traditional four states should be the source of comparability information in this dispute. It is the belief of the Employer that the four traditional state comparators provide a reliable measure of public sector wages and benefits in that the use of all four states balances the larger states of California and Washington with the smaller states of Idaho and Nevada.
 
The Employer also argues that the Union wrongly computed comparability figures. According to the Employer, the most rational approach to a comparability analysis would be to use averages. Second, the Employer suggests that relative standings with the comparability data provide a useful source of guidance. Whatever method of analysis is used, the Employer concludes that its total compensation package is favorable and, in fact, exceeds most of the comparable jurisdictions.
 
Finally, the Employer believes that the Union miscalculated its "cost of living" measurements by considering only wages and failing to include insurance payments. In view of the fact that there was an increase in medical insurance costs, the Union's measurements allegedly included only half the appropriate calculation. When the calculation is done correctly, it is the Employer's belief that its proposal is the correct one.
 
C. The Matter of a Wage Increase
 
Conventional arbitration generally permits a selection of bargaining proposals by an arbitrator on an issue by issue basis. Last best offer by total package combats the so-called "narcotic" effect of conventional arbitration by denying an arbitrator any flexibility to create a compromise between the parties' positions. The theory is that such a Draconian procedure will increase the parties' incentive to bargain seriously and will draw them so close together that they will negotiate their own settlement without using arbitration.. Moreover, even if negotiations should fail and the matter should proceed to arbitration, differences between the parties should have become so slight that, no matter which position the arbitrator chooses, the result will be reasonable. Oregon legislators designed the system to move the parties so close together that arbitral discretion would become inconsequential.
 
What the legislature, of course, failed to account for is human intransigence. SB 750 offered no guidance to arbitrators if both offers included elements of unreasonableness. It is not for an arbitrator to compromise the two offers but to select the entire package of one party or the other. Some scholars describe the Oregon system as "either-or arbitration." If parties choose to engage in brinkmanship, an arbitrator is left to select the least unreasonable offer.
 
In doing so, an interest arbitrator's touchstone in Oregon is the interest and welfare of the public. In this particular dispute, various methods of calculating wage settlements were hotly disputed. The parties did not agree on the content of the wage settlement, the impact of the various wage proposals on the interest and welfare of the public, and the general components of fairness in a wage policy for members of the bargaining unit. There was no discussion in arbitration of the moral aspect of any wage settlement in terms of any call for self-abrogation or imposing personal limitations for the greater good of a larger socio-economic arrangement.
 
The parties were never able to reach agreement with regard to the proper calculation of the Employer's financial status. It is clear, however, that the Employer never submitted evidence of an inability to fund the Union's proposal. While the Employer's financial condition carefully has been taken into account, what the Employer proved was that the Union's proposal might cause budget priorities to be shifted; but that is not proof of an inability to pay. In SB 750, the legislature did not deal with the complex question of a public sector employer's ability to pay, beyond requiring an interest arbitrator to consider "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." Inability to pay is generally computed by considering either revenues presently available or a community's capacity to tax in conjunction with its use of fiscal resources in comparison with other communities. An assessment of a community's ability to pay, in part, must be based on a jurisdiction's potential ability to increase its revenue. No evidence submitted to the arbitrator supported a conclusion that the Union's proposals would necessitate employee lay-off or reduced services or increased taxes.
 
The Department of Corrections is merely one governmental unit among many, and the Employer must consider all financial needs of its various departments when determining a statewide budget. An infinite number of factors determine the budget for various state agencies and departments, and needs of one department must be weighed against financial needs of the state as a whole. Ability to pay, however, cannot be determined abstractly or analyzed in terms of hypothetical concerns. In analyzing the financial ability of the Employer to meet the costs of the Union's proposal while giving due consideration and weight to other services provided by DOC and other priorities of the department, the totality of the evidence failed to establish an inability to pay.
 
An interest arbitrator is also required to consider "the ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided." The Employer argued that it has no trouble recruiting qualified applicants. The Union did not rebut the Employer's evidence in this regard, and it must be concluded that the Employer prevails with regard to this factor. Like all factors, except the interest and welfare of the public, attracting and retaining qualified personnel is but one of many secondary factors. An absence of recruitment problems at the moment, however, does not resolve them in the future. The Union's proposal will insure the maintenance of a competitive edge in the labor market during later stages of the parties' collective bargaining agreement.
 
The law also requires an interest arbitrator to evaluate overall compensation and comparative data involving compensation. The parties were in dispute with regard to appropriate comparable jurisdictions. Some arbitrators simply have assumed the traditional model of comparison to be that of determining the average wages paid to employees in the surrounding states of California, Nevada, Idaho, and Washington. A fundamental problem with this approach, however, is that it is conclusory and finds no express basis in the statutory criteria set forth in ORS 243.746(4)(d). Nothing in ORS 243.746(4)(d), which directs an arbitrator to compare overall compensation with comparable communities, states that the comparable communities must be contiguous to Oregon. The statute makes clear that "comparable" for the State of Oregon "includes comparison to other states." What is required is some common, organized principle sufficient to allow differentiation from the rest of the world. The law does not require that a mathematical formula be applied to the comparability data. The fact that there is no precedent for the use of other states as comparable jurisdictions does not conclusively preclude their use. In the absence of agreement by the parties, the definition of "comparable" must be taken from the statute, which refers to "other states."
 
The parties debated vigorously whether or not it is appropriate to use Alaska as a comparable jurisdiction. While it is not contiguous to Oregon, the statue does not mandate contiguity. It is a small, unionized state. What is required is a comparison with other employees performing similar services in comparable communities, and "comparable" refers to other states. Even if another state is somewhat dissimilar, it does not mean that a comparison cannot be made. Just as Idaho is a relatively small nonunion state, it does not preclude the possibility of a comparison.
 
The statute also sets forth as a secondary priority "the CPI-All City Index, commonly known as the cost-of-living." The "cost-of-living" factor was another subject of considerable debate in this proceeding. The parties vigorously disputed the validity of measurements calculated by each other. A key problem in the approaches taken by the parties was the differentiation in time between the Union and the Employer's proposed increases. While on their face, there is only a .5% differential, the difference in which the increases will become effective is dispositive of the issue with regard to keeping up with the cost of living.
 
The Union was persuasive that allowing the Employer's proposal to be adopted severely would undermine the ability of DOC employees to keep up with the current growth of the cost of living. The fact that the Union's proposal does not produce an increase in spending power, but actually will cause a decrease, is significant. Such evidence established practical reality to the Union's proposal. The point is that neither proposal actually will keep up with the current estimated cost of living increase. Since the statutory requirement is that one proposal must prevail, it should be the one with the least negative impact on the greatest number of people.
 
A wage proposal is a means of allocating employment risks while also serving as an incentive mechanism. Finding the appropriate reward formula in a collective bargaining contract is not a precise science and is best accomplished at the bargaining table. It is there that the parties can most exactly find the proper balance between their preferences and their needs. An interest arbitrator, on the other hand, as a foremost priority, must analyze contending pay packages in terms of the interest and welfare of the public. In view of the fact that an interest arbitrator is without authority to craft a package arguably superior to that of either party, it must be concluded that the public interest is better advanced by the compensation arrangement set forth in the Union's proposal.
 
AWARD
 


 
 
Having carefully considered all evidence submitted by the parties concerning this matter as well as all relevant statutory criteria, the arbitrator adopts the last best offer total package of the Union as the one to succeed the 1999-2001 agreement between the parties. It is so ordered and awarded.
 
Respectfully submitted, Carlton J. Snow, Professor of Law
 
Date: December 17, 2001