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IA-08-02
In the Matter of the Interest Arbitration Between CITY OF TIGARD and TIGARD POLICE OFFICERS ASSOCIATION. Health Insurance Reopener. IA-08-02.
 
This matter came for hearing before the Arbitrator on November 6, 2002, at Tigard, Oregon. The City was represented by Kenneth Bemis of Bullard Smith Jernstedt Wilson, and the Association by Daryl Garrettson of Garrettson Goldberg Fenrich Makler. The parties waived the recording of the hearing. Post-hearing briefs were received on December 7, 2002. Based upon the evidence, the arguments of the parties, and an application of the statutory criteria thereto, the Arbitrator decides and awards as follows.
 
I. THE DISPUTE.
 
This is a single issue interest arbitration involving the second year health insurance reopener in Article 17, Section 17.1, Subsection (a) of the parties' July 1, 2001 - June 30, 2004 collective bargaining agreement (the "Agreement").
 
II. BACKGROUND.
 
The City is located approximately ten miles south of downtown Portland and has a population of approximately 43,000. It is bordered by the larger cities of Portland and Beaverton and the smaller cities of Lake Oswego, Durham and King City. It employs 250 employees. The bargaining unit is composed of 42 sworn officers and 13 non-sworn persons, all of whom are covered by the terms of a the Agreement. Approximately119 employees are covered by a July 1, 2001 - June 30, 2004collective bargaining agreement with Service Employees International Union, Local 503.
 
III. THE AGREEMENT.
 
Agreement Article 17, Section 17.1, Subsection (a) Article 17, Insurance Benefits, currently provides:
 
17.1 Health, Dental and Vision Insurance
 
Retroactive from the effective date of this Agreement through the date of ratification, the City agrees to provide and maintain LOC Trust Plan II ($100 individual, $300 family deductible effective 1/1/95) at no cost to the employee. LOC Trust Plan IV or LOC Kaiser Plan will be available at employee option upon employment with the employee paying the difference between the current monthly cost of LOC Plan II and the monthly cost of LOC Plan IV or LOC Kaiser Plan, as the case may be.
 
Effective upon the first available enrollment opportunity following ratification, the City agrees to provide League of Oregon Cities' Blue Cross Plan V-A-PPP medical insurance including the preventative care option, dental insurance and vision insurance or substantially equivalent coverage for each employee and all enrolled dependents including domestic partners, subject to the following:
 
(a) The City will make up to the following maximum insurance contributions:
 
Class of Coverage Maximum City Contribution
 
Employee Only $ 242.35
 
Employee +one $ 496.40
 
Employee + two or more $ 689.90
 
Employees will have an option of electing Blue Cross Plan V-C (Traditional) or Kaiser medical, vision and prescription coverage in lieu of coverage under Blue Cross Plan V-A-PPP and Blue Cross Vision, as long as the City qualifies for such additional coverage. However, employees electing either of these plans will be responsible for any additional cost above the City's maximum insurance contribution for Blue Cross Plan V-A-PPP coverage.
 
Effective July 1, 2002, the City will make up to the following maximum insurance contributions:
 
Class of Coverage Maximum City Contribution
 
Employee Only $ 266.59
 
Employee + one $ 546.04
 
Employee + two or more $ 758.89
 
Effective July 1, 2003, the City will make up to the following maximum insurance contributions:
 
Class of Coverage Maximum City Contribution
 
Employee Only $ 293.24
 
Employee + one $ 600.64
 
Employee + two or more $ 834.78
 
Should combined health, dental and vision premiums for employee + two or more coverage effective August 1, 2002 or August 1, 2003 increase by 15 percent or more, the parties shall at the request of either party reopen discussion concerning the restructuring of contribution rates and/or a restructuring of benefits. Modifications will be made by mutual agreement. The parties agree to a ninety (90) day mid-term bargaining period under the statute in the event a reopener is exercised.
 
During the status quo period after expiration of this Agreement, the city shall, pending the ratification of a successor agreement, pay the following maximum insurance contributions:
 
Class of Coverage Maximum City Contribution
 
Employee Only $ 322.56
 
Employee + one $ 660.70
 
Employee + two or more $ 918.26
 
IV. THE LAST BEST OFFERS.
 
The Association's Last Best Offer ("LBO").
 
The Association proposes to add the following language to the Subsection 17.1(a) July 1, 2002 maximum contribution provision:
 
In addition to the amount provided for herein, for July 1, 2002 insurance contributions, the City shall pay retroactively any premium costs for the 2002-2003 insurance year which are more than five percent (5%) above the amount provided for in this Article. The employee shall be responsible for the first five percent (5%) in premium increases above the cap set forth above. The additional premium cost, if any, resulting from a premium increase in excess of five percent (5%) of the cap amount set forth above shall be added to the insurance cap amounts set forth in this article.
 
The City's LBO.
 
The City proposes to modify the Subsection 17.1(a) July 1, 2002 maximum contribution provision to read as follows:

 
Effective July 1, 2002 (for August 2002 premiums), the City shall make up to the following maximum insurance contributions:
 
Class of Coverage Maximum City Contribution
 
Employee Only $ 277.56
 
Employee + one $ 569.39
 
Employee + two or more $ 789.45
 
V. THE STATUTORY CRITERIA.
 
The following statutory criteria apply to the LBOs:
 
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) Comparisons of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this subsection, "comparable" is limited to communities of the same or nearest population range within Oregon. Notwithstanding the provisions of the subsection, 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-AII Cities Index, commonly known as the cost of living.
 
(g) The stipulations of the parties.
 
(h) Such other factors, consistent with subsections (a) to (g) of this section as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in subsection (a) to (g) of this section provide sufficient evidence for an award.
 
VI. THE ASSOCIATION'S POSITION AND CONTENTIONS.
 
The effect of the Association's LBO is that employees would pay an amount equal to 5% of the stated contribution amount in the Agreement for 2001-02, and the City would pick up the balance. The total additional cost of the Association's LBO for 2001-02 would be $21,312.96; the total cost of the City LBO would be $11,344.80. The Association's LBO also provides that the additional cost to the City resulting from it would be added to the contribution amounts for July 1, 2003 (the "status quo amount"), thus eliminating the need to negotiate in subsequent years for the increased contribution in 2002-03, and avoiding any unreasonable results. The City's LBO, which is stated in hard numbers, would have the effect of splitting between the City and the employee the premium increase over and above 15%, so the City would pay the first 10%, the employee would pay the next 5%, and the City and the employee would each pay 4.5% of the remaining increase. The City's LBO would not add the 2002-03 increase to the 2003 status quo contribution; it would simply disappear on July 1, 2003, and the Association would have to negotiate all over again for the same monies. Under the Association's LBO, an employee with full-time Blue Cross coverage would pay 4.4% of the total 2002-03 premium, $37.94; under the City's LBO such an employee would pay 7.6%, $65.05; and the employee's situation would become much worse under the City's LBO in 2003. Assuming a worst case scenario with a 2003 premium increase of 14.99%, the employee would have to pay almost the entire premium increase, $147.81.
 
Turning to the statutory criteria, the Arbitrator is reminded that the first criterion of Interest and Welfare of the Public is never determined in a vacuum but must be considered in conjunction with the secondary criteria. Newport Police Association and City of Newport, Calhoun, 2002. The exception is when one party has proposed a change in the "status quo, in which case that party must demonstrate: (1) evidence that the status quo has proved to be unworkable or inequitable, (2) a quid pro quo to justify taking away the benefit that was gained through negotiations, and (3) proof of a compelling need. Troutdale Police Officers' Association and City of Troutdale, Calhoun, 2002, citing, Bend Firefighters Association and City of Bend, Snow, 1996; City of McMinnville and McMinnville Police Officers' Association STET, Wollett, 2000. The City argues that the current contribution rate represents the status quo, but that argument ignores the parties' bargaining history, an element relevant to determining what the status quo is. City of Milwaukee and Milwaukee Police Employees' Association, Skratek, 2002. Relevant provisions of the parties'collective bargaining agreements since 1989 to the present demonstrate that during that time while the Association has agreed to plan changes for its Benchmark Plan, it has always maintained full maintenance of benefits. Further, the unrebutted testimony of Association President Glen Scruggs established: (1) that the basis for settlement of the Agreement was the quid pro quo for the Association agreeing to pay up to a 5% premium was the City's agreement to pick up the employees' PERS contribution on January 1, 2002 current provision providing for a reopener; and (2) the City's agreement to a reopener. The City's argument that the current language somehow memorializes an Association agreement to be responsible for all premium increases over the first 10% covered by the City does not take into account the quid pro quo. The balance of the Agreement -- including wage increase provisions that provide for cost of living only -- are insufficient to lead one to believe that the Association knowingly agreed to pick up all increases above 10% for the life of the Agreement. What the parties agreed to was to change the status quo from 100% paid to a 10/5 split of increases up to 15%; there was no agreement how increases over 15% would be paid. The Association's LBO proposal continues the status quo demonstrated by the bargaining history, and therefore should be adopted. Polk County and Polk County Deputy Sheriff's Association, Krebs, 2001. The City's LBO also would produce an unreasonable result since a 14.99% increase in 2003 would wipe out the employee's entire third year wage increase and reduce the second year increase, a result clearly not contemplated by either party.
 
Moving to the secondary criterion of Reasonable Financial Ability of the Unit of Government to Meet Costs of the Proposed Contract, the City's argument that the Association proposal would cause it to suffer future financial consequences constitutes mere speculation. The difference in cost for 2002-03 of the two LBOs is only $9,968.16, a minuscule amount given the City's total budget of $104,761,191.00, or even its General Fund Budget of $26,940,143.00. In addition, the City's argument that costs would result to other employee units is irrelevant, since the City is under no obligation to extend the Association's LBO to other employees. Furthermore, the City's overall cost argument fails because Kaiser premiums are unlikely to increase in a lesser amount. But even assuming that the City's third year cost estimate is fair, the total cost of the Association's LBO over the life of the Agreement would be only approximately $60,000.00, an amount that the City's own budget documentation could easily provide for. The City has in the bank right now $800,000.00 that has not been appropriated and is not part of any contingency fund; and in any event, the contingency fund itself is a heft 8% of total appropriations. The financial condition of the City is, as the 2002-03 budget states, "good." The General Fund has increased 19.32% from 1999-00 to 2002-03, and the Association's LBO is well within the City's financial ability to meet.
 
The criterion of Recruitment and Retention also supports the Association's LBO, as the evidence demonstrated that the City currently has a serious retention problem. For the period of 1996-01, 74.4% of the workforce left, a staggering 12.4% per year; and an even higher turnover rate for 1999 to 2002 of 14% per year. As Scruggs noted, it takes five years to make a journeyman officer, and 90% of City officers are below that mark. Even if the three-year standard proposed by Chief Ron Goodpaster is utilized, over 50% of City officers are below that mark. Moreover, contrary to Goodpaster's testimony, the documentary evidence established that 8 of 24 officers left to join higher paying departments. Goodpaster's own testimony contradicts his contention that no recruitment problem exists, as he admitted that one third of new hires fail to make probation. As two interest arbitrators have recently noted, department proposals to deviate from the status quo by increasing employee contributions to health insurance, cannot help but have a detrimental effect on the recruitment and retention criterion. AFSCME and City of Cornelius, Brown, 1999;Polk County Deputy Sheriff's Association, Krebs, 2001.
 
The Comparability criterion further supports the Association. The Association proposes six comparables, all of which are closest in population to the City in the Portland Metropolitan Area, three larger than the City and three smaller: Beaverton, Hillsboro, Gresham, Lake Oswego, West Linn and Oregon City. The City proposes twelve cities from around the state, nine of which are smaller than the City, chosen solely on the basis of a population range of 50% smaller to 150% larger: Albany, Bend, Corvallis, Grants Pass, Keizer, Lake Oswego, McMinnville, Oregon City, Springfield, Tualatin and West Linn. A majority of arbitrators have supported the Association's position that geographical proximity is an important factor, and that population size without regard to proximity should not be the overriding consideration. IAFF Local 2091 and Winston-Dillard Fire District #5, Lehleitner 1995; City of Lincoln City and Lincoln City Police Employees Association, Harris, 1997; City of Woodburn and Woodburn Police Association, Hein 1998; and other cited cases. See also, Elkouri & Elkouri, How Arbitration Works (Volz & Goggin, Eds.), BNA, 5th Ed., p. 223. In the instant case, the evidence demonstrated that officers who have left City employment have gone to nearby departments, not to departments around the state. Moreover, the evidence showed that wage income levels in the Portland Metro Area are 32% higher than the rest of the state. Clearly, a number of City comparables do not have a similar labor market, do not have similar economies, and do not have similar problems. They are simply not comparable. The City comparables have a second deficiency: too many smaller jurisdictions. The two arbitrators who have squarely considered the matter have held that an appropriate comparables list contains an equal number of jurisdictions both above and below the target jurisdiction. Coos Bay Police Officer's Association and City of Coos Bay, Brand, 2001; Newport Police Association and City of Newport, Calhoun 2002. A third deficiency exists in the City's argument: it argues internal comparability, a consideration not within the scope of the statute. City of McMinnville and McMinnville Police Officers' Association, Wollett, 2000. Finally, the City's proposal is unfair: It would require its employees to pay 199% more than the average in comparable jurisdictions.
 
The Consumer Price Index criterion also supports the Association. As noted earlier, any increase in the insurance contribution by employees will result in a decrease in the third-year cost of living wage increase.
 
The last item to be considered is the potential argument by the City concerning "restructuring of benefits." The reopener says nothing about restructuring contribution rates in the year in which the increase occurred. Frankly, the Association could have requested as part of its LBO that the City pick up the entire cost of health insurance and that it return to full maintenance of benefits language. Nothing in the language of the reopener would restrict such action.
 
VII. THE CITY'S POSITION AND CONTENTIONS.
 
First, the Association is proposing the greatest divergence from the status quo and therefore carries the burden of proof. The Association not only seeks to fundamentally shift the benefit of a bargain that already has been negotiated for a second and third year of the Agreement, it also seeks to effectively alter the structure of premium responsibility under the Agreement from a City cap on contributions to an employee cap, an alteration that would necessarily involve changes to language already negotiated. The burden to justify such a fundamental change necessarily falls on the Association. State of Oregon and IAFF Local 1660, Levak, 2000. That the status quo of the Agreement consists of fixed caps on the City's contribution is supported both by the common definition of the term and by arbitral precedent. Black's Law Dictionary, 5th Ed, 1979, p. 1264;Benton County and Benton County Deputy Sheriff's Association, Collins, 2002. The status quo of employee caps is also supported by the reopener language which provides an opportunity to discuss the restructuring of contribution rates and/or a restructuring of benefits; the language which the parties negotiated provides no guarantees about shifting premium responsibility or a maximum level of exposure for employees. Further the language does not contemplate discussion of rate or benefit restructuring beyond the year in which the reopener is exercised. The Association's arguments that the status quo has been to pay 100% of the premiums, and that the Association agreed in the Agreement to pay 5%, contradict the plain language of the Agreement. While the status quo may have been 100% at one time, it undeniably is not the current status quo under the current Agreement, and nothing in the Agreement restricts the Association's share of premiums to 5%. Indeed, Scruggs' admission that the Association reopened the Agreement, and that had it not done so employees would have had to continue to pay everything over the first 10% paid by the City, leave no room for argument that the status quo is anything other than the current language establishing fixed City caps, with employees responsible for all contributions above those caps. The City's LBO preserves the existing negotiated framework of the insurance provisions: it proposes only to adjust the negotiated caps upward in the second year, resulting in an employee payment up to $65.05 per month for full family coverage, roughly 8% of the total premium, a savings of more than $30.00 per month from the $95.61 per month they presently pay, roughly 13% of the total premium. In contrast, the Association's LBO would fundamentally alter the cap language by effectively capping the employee's contribution, would fundamentally shift employee premium responsibility from the current negotiated levels to much lower levels -- from 13% of the second year premium to just 5%. -- and would fundamentally upset the negotiated balance for the third year by adding all "additional premium contributions" that it proposes the City pay in the second year to the originally negotiated caps in the third year -- a year where no reopener clause has yet been triggered. Admittedly, the City's LBO also modifies the status quo by adjusting the City's contribution cap upward, but that modification does not, as the Association's LBO does, modify the fundamental structure of the Agreement.
 
Turning to the secondary criteria, the City's LBO best meets its reasonable financial ability to meet costs and maintain balance with other competing demands on the projected decline of City revenues. The City's evidence, presented through Finance Director Craig Prosser, demonstrated that its financial health is rapidly declining in conjunction with a weakened economy, projected reductions in available revenues and projected increases in costs. The actual cost difference between the two proposals for the bargaining unit for the second year is $11,344.80; but that cost difference fails to account for the total costs the City will assume if it complies with the recommendation of the Insurance Committee to create internal equity, and also fails to account for the third year costs proposed by the Association, which have the potential of costing the City an additional $299,824.00 during the life of the Agreement, with escalating and compounding costs in the future. Those costs must be factored into the fact that the City has a hiring freeze of six positions, four of which come from the Police Department, and the fact the City has had to delay filling 18 FTEs his year. The Association's argument that the City's projected third-year costs for Kaiser are unrealistic ignores the fact that only a year ago the Kaiser 2001 rate was more expensive than Blue Cross coverage and has the potential to leap from Blue Cross rates. In sum, the Arbitrator should apply the rationale he applied in Clackamas County Fire District No. 1 and IAFF Local 1159, Levak, 2001, and recognize that the City's LBO best meets it reasonable financial ability to meet the proposed costs in light of actual and projected revenue shortfalls, projected PERS cost increases, the need to reduce administrative functions, the need for a conservative ending fund balance strategy, and overall fairness of the proposal.
 
The Recruitment and Retention criterion further supports the City. First of all, while the evidence presented by the City, which focused on 1999 to date, is more pertinent than the Association's evidence, which went back to 1996, it is inappropriate to characterize the data as a retention problem since most of the departures involved retirements, career changes, promotional opportunities, moves out of state, and discharges. Interest arbitrators generally conclude that gross percentages of departures unlinked to specific evidence that they resulted for pay or benefit dissatisfaction, are insufficient to demonstrate a recruitment/retention problem. Benton County and Benton County Deputy Sheriff's Association, Collins, 2002; State Corrections and AOCE, 2002. Awards which rely on speculation, such as Arbitrator Brown's in AFSCME and City of Cornelius, 1999, should not control. More importantly, of the number of employees who have left the City: none have left to work for comparable agencies; some have reapplied to return; and none have left during the term of the current Agreement, despite the fact that employees have been paying the full increase in excess of the cap since August 1, 2002.
 
The criterion of Overall Compensation also favors the City. There should be no dispute that the overall compensation package is comprehensive and generous. Moreover, the City now picks up the entire PERS contribution and has provided an extra step in the longevity package.
 
Comparability further favors the City. Interestingly, in Benton County and Benton County Deputy Sheriff's Association, 2002, the Association prevailed upon Arbitrator Collins to find appropriate comparables that served a population within 50% plus or minus the population served by the county, the same standard now urged by the City. Now the Association seeks to include jurisdictions that are well above the City in population -- Beaverton, 79% above; Hillsboro, 70% above; and Gresham, 112% above. While several arbitrators have accepted the logic of looking at jurisdictions which are adjacent in size to the target agency, such should not be done at the sake of the requirement which calls for communities "of the same or nearest population range." City of Newport and Newport Police Association, Calhoun, 2002 (accepting the city's proposal to examine the three next largest and three next smallest cities). Clearly, the Association ignores the fact that three cities which fall within the 50% plus or minus standard -- Corvallis, Springfield and Medford -- are "nearer" to the City than Gresham, Beaverton or Hillsboro. Beyond the Association's basic fallacy for identifying comparables, it also failed to provide evidence of overall compensation, inappropriately relying on limited wage and insurance data. Moreover, the Association's data, being from 2001, is inaccurate and outdated. For example: it uses the old longevity 5th step, instead of the new 6th step; it fails to give the City credit for the 6% PERS pick-up.
 
The Cost of Living also favors the City. The 3.5% adjustment just implemented July 1, 2002 far outpaces the CPI and more than adequately compensates employees for the increased costs of insurance premiums they must absorb.
 
Finally, the primary criterion -- that of the Interest and Welfare of the Public -- favors the City. First of all, the City's LBO merely asks bargaining unit employees to assume an insurance obligation that everyone else in the City has agreed to. It would hardly serve the public interest for the Arbitrator to award a proposal that would thwart the strides that the City has made to get a grip on the insurance problems that it and every City employee face. In the second place, this is not a case where the City has proposed, for the first time, to establish or increase employee cost-sharing responsibilities. Those have already been negotiated. This case is now before the Arbitrator because the Association does not like what it negotiated. On the other hand, the City, while it had the right to insist on benefit redesign and a reduction in premium costs, did not do so, and instead offered to split responsibility for the amount of the premium increase in excess of 15%.
 
VIII. ARBITRATOR'S FINDINGS OF FACT, CONCLUSION AND AWARD.
 
The starting point in this case is, as in every Oregon interest arbitration, the statutory criteria. It is the Arbitrator's obligation to apply the facts to those criteria. And because the parties' dispute concerns an attempt to modify or change existing language -- to modify or change the "status quo" -- the Arbitrator is also obliged to assign the burden of persuasion to the party that is seeking the modification or change. State of Oregon and IAFF Local 1660, Levak, 2000. Hereafter, the Arbitrator will refer to that principle as the "status quo principle." As Arbitrator Doug Collins stated simply and cogently in Benton County and Benton County Deputy Sheriff's Association, 2002, the status quo consists of "the existing terms and conditions of the Agreement" and "absent persuasive evidence to justify some significant change, the proposal that most nearly continues the existing terms and conditions of the agreement is preferred." In applying the status quo principle, most Oregon arbitrators have preferred to utilize a three-test standard, stating that the party that seeks to modify or change the status quo bears the burden of persuading the arbitrator that three factors exist: (1) that the status quo has proved to be unworkable or inequitable, (2) that a quid pro quo has been given that would justify taking away a benefit that was gained by the other party in negotiations, and (3) that proof of a compelling need exists for the proposed modification or change in the status quo. See, e.g., Bend Firefighters Union and City of Bend, Snow, 1996; McMinnville and McMinnville Police Officers' Association, Wollett, 2000;Troutdale Police Officers Association and City of Troutdale, Calhoun, 2002.
 
The status quo principle is not disputed by either side; in fact, both embrace it. However, each side vigorously argues that the other should be assigned by the Arbitrator to shoulder the burden of persuasion. And their respective arguments directly pertain to their complete disagreement over what the status quo is in this case. In general, the City argues that the status quo consists of current Agreement language, while the Association's argument utilizes a somewhat historical approach. The Arbitrator finds that the City's argument must be adopted.
 
It is true, as the Association asserts, that for many years, and through the terms of successive collective bargaining agreements, the health insurance status quo was that the City agreed to assume the full cost of health insurance premiums. However, that status quo clearly changed with the 2001 negotiations. Hence, status quo cases relied upon by the Association that involved employer attempts to change from a contractually mandated fully paid premium status quo have no application to this case. The current status quo, as memorialized by the Agreement Section 17.1, is one of a maximum City contribution -- "a City cap." That 2001 change was not insignificant: It constituted both a significant and substantial change in the framework and structure of the insurance provisions. And it must therefore be conclusively presumed that the City bargained for and "paid for the change," that is, that it gave something significant and substantial for it -- a quid pro quo.(1) The Association now seeks to modify and change the agreed upon status quo but has offered no quid pro quo for that proposed modification and change. Neither has it established that the status quo is unworkable or inequitable, nor has it shown the existence of a compelling need for the modification and change.
 
The Arbitrator would further remark that, as he reads Section 17.1, the reopener is expressly limited in two ways, both of which apply to the Association's burden of persuasion. First, the reopener is restricted to proposals grounded in "discussion concerning the restructuring of contribution rates and/or a restructuring of benefits." Second, each reopener is discrete and can involve and affect only the Agreement year reopened. The Association offers various arguments against the Arbitrator's reading of the Agreement, but none of those arguments can prevail in the face of the fact that Section 17.1 is clear and unambiguous on its face and therefore must be enforced as written.
 
The answer to the question, then, "Which of the two LBOs most nearly continues the status quo -- that is, the existing terms and conditions of the Agreement?" seems apparent. The City's LBO continues and preserves the existing framework that the parties bargained for and incorporated into the Agreement. Its only proposed modification to that framework is an upward adjustment of the negotiated caps in the second year to reflect a shared responsibility for the premium increase that triggered the reopener. On the other side of the coin, the Association's LBO dismantles the agreed upon framework and fundamentally alters it (1) by nullifying the maximum City contribution, and (2) by replacing that contribution cap with language capping the employee contribution. Thus, while the City LBO would retain the current status quo framework, the Association LBO would discard it in favor of the former status quo, a status quo which the parties agreed to in bargaining in 2001.
 
In addition, the Arbitrator finds that, burden of persuasion aside, the City's LBO best satisfies the statutory criteria. As many arbitrators have noted, while the legislature mandated that "the interest and welfare of the public" criterion must be given first priority over the remaining criteria, interest and welfare normally can only be determined by reference to the secondary criteria. Bend Firefighters Union and City of Bend, supra; Deschutes County Sheriff Association and Deschutes County, Lankford, 1996.(2) Indeed, the parties have no general disagreement concerning that guiding principle.
 
Turning first, then, to the comparability criterion, as Arbitrator Calhoun noted, in Newport Police Association and City of Newport, 2002, an apparent disagreement exists between Oregon arbitrators over the use of geography in interest arbitrations under the current statute. Under the prior statute, there certainly was no disagreement: The geographical labor market was of prime importance. See, The Handbook of Oregon Interest Arbitration and Factfinding, Levak, 1989. Since the advent of SB 750, some arbitrators, like George Lehleitner, in IAFF and Winston-Dillard Fire District #5, 1995, have used geography in arriving at appropriate comparables. Others, like Arbitrator Eric Lindauer, in IAFF and City of Astoria, 2000, have stated in no uncertain terms that the statute limits comparability to communities of the same or nearest population range. In his Newport Police Association and City of Newport decision in 2002, Arbitrator Calhoun stated that while it was not necessary for him to endorse either view, Arbitrator Lindauer's view appeared to be the sounder of the two. The Arbitrator's view of matter is that Arbitrator Lindauer is absolutely correct. Not only is the statute clear and unambiguous on its face, it is clear from the very change made by the legislature that it intended a switch from the labor market standard to a population standard. Only jurisdictions within a labor market that are in the same or nearest population range can be given consideration under the statute. Given that determination, the Arbitrator can only find that the City's comparability evidence must be applied since it utilized population, together with an appropriate 50% below/150% above standard, while the Association's LBO was geographically driven and utilized inappropriately high comparables.
 
Regarding the recruitment and retention criterion, the Arbitrator deems the City's evidence to be the more persuasive. The primary fact is that while there is no question but that a retention problem existed for a number of years, in recent history that problem has dissipated and no longer exists. For whatever reasons -- most likely a combination of general economic insecurity and the perceived security of public employment -- in the past two years recruitment and retention have ceased to be a problem.
 
The Arbitrator would comment on three other criteria only in passing, since none of those criteria played a major role in the Arbitrator's determination. In general, the cost of living criterion favors the City. The criterion of overall compensation also seems to somewhat favor the City. The ability to pay criterion appears to be somewhat neutral, although the Arbitrator certainly can find no fault with the City's approach of taking a conservative approach, given the evidence and advice it had received.
 
For all the above reasons, the City's LBO will be awarded.
 
AWARD
 
The last best offer of the City shall be adopted.
 
Dated this 19th day of December, 2002,
 
Thomas F. Levak, Arbitrator, Portland, Oregon.
 
1. In fact, it appears that the City's PERS pick-up concession played the major role in the Association's agreement to the change in Section 17.1.
 
2. As Arbitrator Lankford stated:
[T]he "interest and welfare of the public" can hardly be discussed at all except in terms of the factors listed in (b) through (f). It is hard to imagine what an argument about the interest and welfare of the public would look like--in the context of a dispute over employee compensation--without any reference to the factors which the legislature specifies are to be given "secondary priority.