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IA-07-99
In The Matter of The Interest Arbitration between North Bend Professional Firefighters, Iaff, Local 2406 ("Union"), and the City of North Bend, Oregon ("CITY"). IA-07-99.
 
This is a single issue interest arbitration case under the salary reopener provision of the parties' 1997-2000 Collective Bargaining Agreement. Under the terms of that agreement, the salary rates awarded here will be effective beginning July 1, 1999. The parties stipulate that all of the preliminary statutory steps set out in ORS 243.742 et sec have been properly completed and that the dispute is now ripe for this interest arbitration proceeding. The hearing was orderly. Each party had the opportunity to present evidence, call and cross examine witnesses, and argue the case.
 
The City's final offer was a 2% increase effective July 1, 1999, and an additional 3% increase effective January 1, 2000. The Union's final offer was two increases of 4.75%, the first on July 1, 1999, and the second on January 1, 2000.
 
FACTORS
 
This proceeding is controlled by the following language of ORS 243.746:
 
(4) Where there is no agreement between the parties, or where there is an agreement but the parties have begun negotiations or discussions looking to a new agreement or amendment of the existing agreement, unresolved mandatory subjects submitted to the arbitrator in the parties' last best offer packages shall be decided by the arbitrator. Arbitrators shall base their findings and opinions on these criteria giving first priority to paragraph (a) of this subsection and secondary priority to subsections (b) to (h) of this subsection as follows:
 
(a) The interest and welfare of the public.
 
(b) The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration and weight to the other services, provided by, and other priorities of, the unit of government as determined by the governing body. A reasonable operating reserve against future contingencies, which does not include funds in contemplation of settlement of the labor dispute, shall not be considered as available toward a settlement.
 
(c) The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided.
 
(d) The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received.
 
(e) 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, * * *
 
(f) The CPI-All Cities Index, commonly known as the cost of living.(1)
 
(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.
 
GENERAL FACTS(2)
 
The population of North Bend is just less than 10,000; and the City is the smaller half of the North Bend/Coos Bay complex (Coos Bay being over half again as large).Fire protection in North Bend must generally compete for funding with all the other services provided by a small city. This distinguishes North Bend from some cities of similar size which are served by special fire protection districts. The bargaining unit consists of six Fire Engineer Is and four Fire Engineer IIs. Three features of the City's financial and administrative condition stand out.
 
First, the City still has an active volunteer fire service. The parties do not agree about the current and probable future status of that service, On the limited record before me, it appears that the volunteer part of the City's fire service has been gradually declining in activity and will continue that decline in the future.
 
Second, beginning in 1998-1999, the City agreed to take on the duty of fire protection for the Port of Coos Bay at the North Bend Airport, That decision had several consequences which are important for this case: (1) The City's firefighters are now trained in the specialized field of airport crash services. (2) The unit call volume increased very substantially because the ordinary business of the airport regularly produces a daily series of routine call outs. This apparently accounts for a substantial part of the 146% increase in run volume between 1997 and 1998. (3) The finances of the City are entangled with the finances of the Port, because the City is in possession of about $95,000 in earmarked federal grant funds which must follow the airport fire protection service and, on the other hand, the Port is the City's debtor to the tune of about $200,000 for fire services. Finally, the City has been in some administrative disarray since its last permanent City Manager's departure in January, 1998. (The City spent about $50,000 to pay off the contract of one of its prior administrators.) The lack of a permanent City Manager explains, at least in part, the peculiar condition of the City's financial relationship with the Port.
 
DISCUSSION
 
Introduction: The interest and welfare of the public. Although the statute requires that the interest and welfare of the public be given "first priority" in choosing between the final offers of the two parties, that factor usually cannot be meaningfully discussed before considering comparability, ability to pay, recruitment and retention, etc. Those are the terms in which we traditionally address issues of interest and welfare of the public when the question is one of compensation rate for public employees. In the case at hand-as in most interest arbitration cases-the most significant secondary factors are comparability and the City's ability to pay, with recruitment and retention finishing in a not very illuminating third place.
 
Comparability. The Union proposes to compare the City's salary with that paid for firefighters serving Astoria, Baker City, Hermiston, Lebanon, Redmond, Mid-Columbia, La Grande, Central Point, Clackamas, Cornelius, Wilsonville, Canby, Ontario, Cottage Grove and St. Helens. This list represents most of the cities with populations ranging from 12,795 (LaGrande) to 7,815 (Sweet Home) except Sweet Home, Monmouth (7,980), Newport (10,240), and Dallas (12,530), which are served by primarily volunteer departments (and except for The Dalles, which is omitted from the Union's data without explanation).Using top step firefighter pay as an index, the City is 26% behind this group of comparators. Corrected for different time off and vacation rates, that number increases to almost 28%.The Union also offers adjusted data for each of those proposed comparators, reflecting the total compensation as required by ORS 243.746(4)(d). Correcting for available EMT, education, hazardous materials, and advance certification premiums, the difference between the City's pay and the average comparable compensation increases to an astonishing 40.5%.(3)
 
The City proposes to compare itself with only Astoria, Newport, and Ontario. arguing that comparison should be limited to cities of similar size in which half or more of the suppression work is performed by volunteers. Correcting Astoria for PERS pickup, the City's data shows its firefighters to be only about 1% behind the average as of 7/l/99 and about 1% ahead as of 1/1/0()with the City's proposed increase, and, with the Union's offer, 2% ahead of the average as of 7/l/99 and 5% ahead as of I/l/00.With respect to volunteers, the parties agree that volunteers did most of the City's fire suppression work at one time. As far as the record shows, there were 40-50 active volunteers in 1983, and there are less than half that many now, with no more than three volunteers showing up at recent calls. On this record, I cannot conclude that volunteers do anything close to 50% of the suppression work, as the City argues. Moreover, it is hard to see exactly how the use of volunteers, or not, fits into the language of the statute. The legislature recently rewrote the comparability provision, and the new language leaves little room for adjustment. As long as the proposed comparables are appropriately similar in size, the only remaining issue is whether the employees in question perform similar services. On this record, there is no reason to suppose that there is any substantial difference in the "services" performed by paid firefighters depending on whether or not those employees work alongside volunteers. I cannot accept the proposal to limit the comparison as the City proposes.(4)
 
The City also objects to the Union's inclusion of fire protection district salaries in its list of proposed comparables. Once again, however, it is not clear that the statutory language leaves room for such a distinction. The statutory language-"'comparable' is limited to communities of the same or nearest population range within Oregon"-could mean (1) that no community shall be considered comparable if it is not of the same or nearest population range or (2)that nothing except being within the same or nearest population range shall be considered in determining comparability. Arbitrators appear to have agreed on at least the first 'of these possible senses of the term, but there is no apparent agreement on the second (i.e. that similarity of size, and nothing else, is to be the desideratum).The City argues that a fire protection district does not face the same conflicting demands for limited financial resources that a city must deal with. There is, or course, no getting around that fact. But the statute specifically reflects the legislature's instruction to consider "other services, provided by, and other priorities of, the unit of government" under the heading of ability to pay (subsection (4)(b)), but not under the heading of comparability (subsection (4)(c)). That distinction certainly makes sense on its face, because if exact congruence of services were to be a requirement for comparability, then Oregon-with its notorious proliferation of special service districts-would present an impossibly tangled skein indeed-cities of the same size could not be compared, for example, if one included fire suppression services and the other did not, or sewerage, or water, etc. Although I must generally accept the Union's proposed list of comparables, I must include Newport-which the Union's data does not-and I will limit the Comparison to communities plus or minus about 18% of the population of North Bend. The following table, therefore, shows the appropriate comparators, measured at top step of the lowest classification, both on the basis of salary alone and on the "total compensation" basic of salary adjusted only for vacation and. other time off. What the table does -not show is (1) adjustment for PERS pickup (the record shows that Astoria's figures should be deflated by such an adjustment, but it does not generally show the same for other cities); (2) adjustment for various premiums which are available to employees of other departments; (3) adjustment for the City's requirement that all these employees satisfy the driving requirement for engineer, which is a promotional class inmost comparable departments; and (4) any attempt to compare call volumes or to reflect specialized airport crash service ability.
 
JURISDICTION POPULATION FIRE DEPARTMENT TOP STEP ADJUSTED TOP
 
Hermiston 11,595 Hermiston City & FD 3,631 4,047
 
Central Point 11,255 Jackson Cnty FD #3 3,768 4,197
 
Ontario 10,680 Ontario City 2,769* 3,041
 
Newport 10,240 Newport City 3,224 3,224*
 
Baker City 10,160 Baker City 2,789 3,070
 
Astoria 10,090 Astoria City 3,242 3,560
 
Sherwood 9,600 TVFD 4,133 4,713
 
St. Helens 9,060 St. Helens FD 3,705 4,138
 
Cottage Grove 8,190 Cottage Grove City 3,303 3,641
 
Cornelius 8,170 TVFD 4,133 4,713
 
AVERAGE 9,904 3,470 3,834
 
N. Bend 9,910 2,723 3,014
 
% behind -21.52% 27.22%
 
*: These numbers use the lesser of the two figures possible from the face of the new Ontario contract. These numbers also fail to reflect the "catch-up" agreement in that contract. In short, as the Union argues, these employees are quite substantially underpaid.
 
Financial ability to meet the costs. The parties agree that the difference between their proposals, for the one year remaining in the current contract, comes to just over $16,000. The City does not dispute that it could absorb that amount once; but the City argues that there is real doubt of its ability to continue that level of support for fire services over the long term. There is no dispute at all that the City has eliminated a total of 6 FTE positions for financial reasons in the fairly recent past.
 
The problem with the City's financial argument is that it necessarily reflects some amount of administrative disarray which is not reasonably within the contemplation of the "financial ability" subsection of the statute. In particular, the City's lack of a permanent City Manager seems to be a primary cause of its failure to have bargained out a repayment schedule for the $200,000 which the Port owes it. (In fact, absent an audit, the City cannot even be comfortably secure in treating that debt as part of its unencumbered ending fund balance.) Similarly, although the City charges the Port for fire services at the airport, the City admits that it is not certain that the current charges let it break even. In light of that fiscal uncertainty, it is impossible for the City to make a convincing case of its inability to fund the fairly modest increase which the Union proposes-measuring "modest" in terms of the very substantial lag between firefighter pay here and in comparable communities.
 
Recruitment and retention. Three of the ten unit employees were hired when the City took on responsibility for the airport. The three next least senior replaced employees prompted to Chief and to Assistant Chief and filled a retirement vacancy. There is no dispute that, other than promotion and retirement, this department has had zero turnover in recent years.
 
The Union argues, in reply, that such good fortune cannot last long in the face of such a substantial salary lag. In particular, these firefighters work side by side on many calls with Coos Bay firefighters who are making over 20% more. Three of these employees are currently in the testing process at other departments. On the other hand, there are apparently North Bend volunteers who are substantially trained and who are ready to join and fill any resulting vacancy. In short, on this record, consideration of past recruitment. and retention experience does not particularly favor either of the two proposals.
 
Cost of living and other factors. Neither party argues that the CPI is a particularly driving consideration in this case. (It is worth noting, however, that the most recent August to August increase of 2.3% is a bit more than the City's initial 2% proposal.)
 
I cannot reasonably conclude that there is insufficient evidence to decide the issue here without consideration of factors other than those specifically set out in subsections (a) to (-)- and accordingly, no such other factors should be considered.(5)
 
The interest and welfare of the public. In conclusion, from the easiest perspective of all, the question comes down to whether the public is better served by the City's taking modest steps now to begin catching these employees up to the pay they would receive in other comparable Jurisdictions or should wait in hopes that even the prospect of a 27% raise will not be enough to cause substantial turnover. Twenty-seven percent more-offered by other attractive smaller cities-is quite a substantial carrot, even for employees who are well-anchored to a small coastal community. Considering the City's current financial condition, I must conclude that the Union's proposal for the last year of this contract is the better investment in the City's future.
 
AWARD
 
The City shall increase the firefighter pay as proposed in the Union's final offer.
 
Howell L. Lankford Arbitrator
 
October 25, 1999
 
Michael J. Tedesco, Esq., Representing the Union
 
Robert L. Thomas, Esq., Representing the Employer
 
1. There are two distinct CPI-All Cities Indices, the "W" index and the "U." This ambiguity in the statute is not significant in the instant case.
 
2. Additional facts are set out in the Discussion section, below.
 
3. The City points out City fire employees pay no out-of-pocket medical insurance costs and the Union does not correct for the out-of-pocket medical insurance costs paid by employees of some of the Union's's proposed comparables.
 
4. The parties agreed to leave the record open for receipt of the new Ontario contract. The language of that new contract is not entirely clear on whether the numbers used by the City are to be increased by 2% effective 7/l/99 and by another 4% 1/l/00; but the contract includes this "catchup" provision:
 
The parties recognize that further "catch-up" adjustments may be warranted, and in future ears, intend to consider the City's ability to pay, and subject to limited ability to pay, the parties intend that the City will devote its best efforts to find COLA and catch-up adjustments of a total of 6% on the base wages per year until Ontario top step firefighters are paid within 95% of the average of the top step firefighter wage (base wage comparison) in the Cities of Astoria, Coos Bay, Baker City, Hermiston, LaGrande, North Bend[,]Pendleton and The Dalles.
 
5. In particular, it would be improper to turn any part. of this decision on the fact that employees who the Union characterizes as "the most underpaid firefighters in the State" have rebuilt the airport fire station, including its-legally required-&y chemical system, built Station #3 entirely (donating $8,000 to that project), did major roof repairs to stations after last year's storms, donated $15,000 towards the purchase of a dunes rescue vehicle, renovated and rebuilt a tug into a firefighting ship. For the possible purposes of public perception, however, it is important to note that these employees, who have to work side by side with their far better paid colleagues employed by neighboring departments, have been quite generous and open-handed in their dealings with the City.