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IA-09-95
In the Matter of Interest Arbitration Between Bend Firefighters' Association and City of Bend. IA-09-95.
 
AWARD
 
Having carefully considered all evidence submitted by the parties concerning this matter and complying with statutory criteria, the arbitrator concludes that it is the Employer's last best offer package which shall become a part of the next collective bargaining agreement between the parties. It is so ordered and awarded.
 
Date: 4/12/96
 
Carlton J. Snow, Professor of Law
 
ANALYSIS AND AWARD
 
I. INTRODUCTION
 
This matter came for hearing pursuant to ORS 243.742-243.756 and relevant administrative rules. The arbitrator complied with the statutory requirements as well as administrative directives set forth in OAR 115-40-015 and OAR. 11 5-40-030 in hearing and deciding the case. A hearing occurred on February 29, 1996 in a conference room of the City Hall located in Bend, Oregon. Ms. Rhonda Fenrich with the law firm of Hoag, Garrettson, Goldberg, and Fenrich in Eugene, Oregon represented Bend Firefighters' Association. Mr. Bruce Bischof with the law firm of Bischof, Hungerford and Witty represented the City of Bend, Oregon.
 
The hearing proceeded in an orderly manner. 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.
 
There were no challenges to the substantive or procedural arbitrability in the matter, and the parties stipulated that the case properly had been submitted to arbitration. The parties proceeded under the interest arbitration statute implemented in August of 1995. The parties authorized the arbitrator to retain jurisdiction in the matter for 60 days from the date of the report. They submitted the matter on the basis of evidence presented at the hearing and oral closing arguments. The arbitrator initially appeared in Bend, Oregon for a hearing set for February 9, 1996, but due to inclement weather and garbled communications, was instructed to reschedule the matter because it was believed that not all parties had been able to appear for the hearing.
 
II. STATUTORY CONTEXT
 
Interest arbitration statutes routinely include a variety of statutory procedures and criteria for processing interest disputes. Some provide for a selection of the last best offer on an issue-by-issue basis. Others use a "single package" approach. Some statutes separate disputes into economic and noneconomic issues and, then, permit arbitral selection on an issue-by-issue or total package basis. A few statutes encourage negotiation between the parties by allowing a third party neutral to use a mediation-arbitration procedure.
 
Over the years, interest arbitration has been criticized because arbitrators failed to give adequate respect to statutory guidelines. Interest arbitration has also been the subject of criticism because of a deep-seated legislative commitment to negotiation and a belief that interest arbitration has a chilling effect on negotiation, especially on the part of those who repeatedly use the process for obtaining a collective bargaining agreement.
 
The Oregon interest arbitration law is no exception and sets forth clearly delineated statutory criteria to be used by arbitrators in making decisions under the law. It is the mandate of ORS 243.746(4) that:
 
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. (Emphasis added.(**))
 
The criteria set forth in the statute are as follows:
 
(a) The interest and welfare of the public.
 
(b) The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration and weight to the other services, provided by, 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. (See, ORS243.746(4)).
 
The Oregon Legislature has told interest arbitrators to give first priority to "the interest and welfare of the public." No substantive content has been poured into this abstraction by lawmakers, but it is clear that "the interest and welfare of the public" is not a "stand alone" criterion. It is to be given first priority, but other criteria may not be ignored in view of the requirement that they be given secondary priority. Giving the other criteria secondary priority clearly means that they must help inform the abstractions set forth in the first criterion.
 
It is clear from the structure of the new law that comparative data continue to be a key ingredient in making interest arbitration decisions. In view of all of the interest arbitration decisions rendered in Oregon prior to the enactment of Senate Bill 750, it is reasonable to conclude that the predominant criterion, after giving first priority to the interest and welfare of the public, will continue to be comparative benchmark jurisdictions. The comparability principle provides a rational standard for providing employers and employes an opportunity to compete fairly in an appropriate labor market while also giving a factual basis for resolving economic and noneconomic issues.
 
An interest arbitrator's job is to make a decision applying statutory criteria. Use of the "last best offer" approach is designed to enable an arbitrator to select a package close to what the parties themselves would have negotiated. In theory, "last best offer" arbitration should discourage parties from adopting extreme positions. The statute is designed to encourage decision-making by the parties within the context of a negotiated settlement. As Arbitrator Harvey Nathan stated:
 
Interest arbitration is essentially a conservative process. While, obviously, value judgments are inherent, the neutral cannot impose upon the parties contractual procedures he or she knows the parties themselves would never agree to. Nor is it the function to embark upon new ground and create some innovative procedure or benefit scheme which is unrelated to the parties' particular bargaining history. The arbitration award must be a natural extension of where the parties were at impasse. The award must flow from the particular circumstances these particular parties have developed for themselves. To do anything less would inhibit collective bargaining. (See, Will County Board and Sheriff of Will County v. AFSCME Council 31, Local 2961, Illinoise State Labor Relations Board (August 17, 1988)).
 
To justify changing an existing contractual relationship, one arbitrator has proposed that three factors be met to modify the status quo. There needs to be:
 
(1) Evidence that the existing situation is unworkable or inequitable;
 
(2) Evidence of a quid pro quo; and
 
(3) Proof of a compelling need. (See, Fort Atkinson Education Association v. District of Fort Atkinson, Decision No. 17103-A, Wisconsin Employment Relations Commission (1979)).
To justify changing the status quo, each party must shoulder a burden of proof. It is not a one-way street. The Oregon Legislature has adopted a "last best offer package" approach. Such a system imposes on both parties a burden of proof to show, using statutory criteria, that their last best offer package is the preferable one. Inherent in the legislative decision to use a "last best offer package" approach to interest arbitration is a requirement that each party either meet the "compelling need" test or show that a quid pro quo exists to justify taking away a benefit previously obtained through a negotiated settlement.
 
Dean Robert Ackerman has observed that:
 
Interest arbitration is really bear grease: it's so bad, you don't want to touch it, so you do anything to avoid it. I would suggest that if interest arbitration is the grease, final offer interest arbitration is the bear grease. With final offer arbitration, the parties do not need . . . a mediator to pound into their heads the possibility that the arbitrator will come up with something awful; it is abundantly clear to all parties that precisely that may happen. That is the beauty and the bear grease of final offer arbitration. (See, Ackerman, 43 Proceedings of the National Academy of Arbitrators 179, 187 1991)).
 
III. LAST BEST OFFER PACKAGES
 
The last best offer packages of the parties are as follows:
 
The Union
 
Article 8.2 Ambulance Pay
 
Fire Department ambulance operations have changed so that ambulances are dispatched from all stations to their respective districts, and there is no longer a designated First Run Ambulance. Effective with the implementation of this agreement, base salaries for all bargaining unit members will be increased by an additional 2.9%; and First Run Ambulance pay will be discontinued.
 
Article 26 Salary
 
Wage classifications shall be increased by the following amounts on the following dates: 7-1-95 2.8%; 1-1-96 4.0%; 7-1-96 3.5%-5.25% based on U.S. CPI-W.
 
Article 30 Retirement
 
The City agrees to provide a retirement plan for each employe, such being through the Public Employees Retirement System of the State of Oregon. Effective July 1, 1995, employes shall contribute six percent (6%) of their salary to the Public Employee Retirement System as required by Measure 8. In the event Measure 8 is determined to be unconstitutional or invalidated by the Oregon Legislature, the Oregon Supreme Court or the U.S. Supreme Court, the City will resume the pre-Measure 8 practice of "picking-up" the employes' six percent (6%) contribution and will reimburse all employes for all monies withheld since 7-1-95.
 
The Employer
 
Article 8.2 Ambulance Pay
 
Fire Department ambulance operations have changed so that ambulances are dispatched from all stations to their respective districts, and there is no longer a designated First Run Ambulance. Effective with the implementation of this agreement, base salaries for all bargaining unit members will be increased by 2.4% to reflect a distribution of the funds previously used to pay First Run Ambulance pay.
 
Article 26 Salary
 
Salaries covered by this Agreement shall be in accordance with the schedule set forth in Appendix A attached hereto and incorporated herein. For the year 1995-96, salaries will be increased on July 1, 1995 by 2.8 % and effective January 1, 1996 by 2.0% . For the year 1996-97, salaries shall be adjusted to reflect the national CPI-W from May, 1995 to May, 1996 with a minimum of 3.0% and a maximum of 5.25%, with the adjustment to be effective on July 1, 1996. The adjustment referenced in Article 8.2 is in addition to the increases specified in Article 26.
 
Article 30 Retirement
 
The City agrees to provide a retirement plan for each employe, such being through the Public Employees' Retirement System of the State of Oregon. Effective July 1, 1995 employes shall contribute six percent (6%) of their salary to the Public Employees' Retirement System as required by Measure 8. In the event Measure 8 is determined to be unconstitutional or invalidated by the Oregon Legislature, the Oregon Supreme Court or the U.S. Supreme Court, the City will resume the pre-Measure 8 process of "picking up" the employes' six percent (6%) contribution.
 
IV. ANALYSIS
 
A. First Priority: Interest and Welfare of the Public
 
Oregon law is clear that an interest arbitrator must give first priority to the interest and welfare of the public in making an interest arbitration decision covered by the statute. The Union argued that giving weight to such a factor meant its Last Best Offer package should be selected because well compensated employes are in the best interest of the public. The Employer agreed that well compensated employes serve the interest and welfare of the public, but it is the belief of the Employer that its proposal complies with the "first priority" of the legislative system and adequately compensates firefighters in the bargaining unit.
 
The Union argued that its workload has increased dramatically since 1989. According to the Union, population increases in the area have had the following impact on workload:
 
[Year]/ ENGINE RESPONSES/ EMS/ TOTAL/ SHIFT STAFFING
 
1989/ 1367/ 1887/ 3254/ 42
 
1994/ 2635/ 3038/ 5673/ 45
 
CHANGE:+1268/ +1151/ +2419/ +3
 
% / +92%/ +60%/ +74%/ +7%
 
(See Union's Exhibit No. 19).
 
In response to the Union's assertion of a 74% workload increase during the last five years, the Employer quickly responded that overall calls increased by five percent in 1995 but that fire calls decreased by five percent. The Employer generally disputed any significant workload increase for members of the bargaining unit.
 
The Union's evidence regarding increased workload is compelling. At the same time, compensation for some of the increased workload already has taken place in the form of earlier wage increases. The Union's belief that the interest and welfare of the public is best served by well paid employes and that, as work increases, so should the amount of pay are arguments more relevant to the issue of overall compensation. Such contentions will be addressed later in the report.
 
B. The Employer's Ability to Pay
 
An employer's ability to pay is a statutorily mandated criterion by which to determine the preferable Last Rest Offer package. Inability to pay, however, does not mean merely an unwillingness to pay or even an unwillingness to generate revenues to make funds available. Assessing ability to pay means something more than evaluating budgetary priorities. A fixed budget does not provide an impossible barrier to funding economic proposals. Otherwise an employer's self-imposed budget would be able to eviscerate statutorily mandated collective bargaining. Nor is the "ability to pay" criterion absolutely controlling. It is a factor listed by the legislature, but it has not been given preeminent priority and has been listed as a secondary consideration.
 
The Union argued that the Employer clearly has an ability to fund the Union's proposal as shown by the Employer's own projection of a balanced budget through 2000 A.D. (See, Union's Association's Exhibit Nos. 7, 8, and 9). There was no persuasive evidence to the contrary.
 
There was no evidence suggesting that the Employer had reached its taxing limit or that the Union's proposals would cause a reduction of public services or a layoff of other employes. The Union submitted persuasive evidence that the Employer has the ability to fund the cost of the economic proposal. It is also clear that the Employer could afford the cost of its own proposal which is 2.5% less than the Union's. The cost of the Employer's proposal is $513,158. (See, Employer's Exhibit No. 4. P. 5).
 
C. Attracting and Retaining Qualified Personnel
 
Oregon law mandates that the parties' Last Best Offer packages be tested by "the ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided." (See, ORS 243.746(4)(c)). This factor requires a labor market assessment. Is the Employer able to attract qualified workers to do the job? Are there sufficient job applicants? Are there more applicants than there are vacancies? Are there more applicants applying for jobs with this Employer than are applying for vacancies in other locales or companies? Is there internal employe movement?
 
These are all questions influenced by labor market policy. One source has defined a "labor market" is follows:
 
A concept used in labor economics to relate the supply of labor to the demand for labor. Labor markets can be distinguished from product markets because labor is embodied in human beings and cannot be freely bought and sold. Labor markets usually involve long term employment relationships which reduce the sensitivity of wages to changes in demand and supply and, thus, the ability of wages to clear the market. (See, Robert's Dictionary of Industrial Relations, 402 (1994)).
 
In theory, a labor market is characterized by a movement of workers in and out of employment in response to employer requirements, job choices, education, and general economic conditions. A labor market is not static and is in a constant state of flux. Workers move in and out of employment in response to the availability of job vacancies, personal needs, and occupational preferences. Characteristics of a job opportunity may also be important, including work hazards, physical or mental qualifications, educational requirements, and job training opportunities.
 
There are also internal labor markets. Many employers make promotions chiefly from within an organization or construct wage schedules to encourage a longer term employment relationship. In such situations, workers have little contact with an external labor market as they make progress within an organization. Some scholars suggest an employer has more incentive to retain employes it trained and that those employes have more incentive to remain with the organization that trained them. (See, Mincer, "On the Job Training," 70 Jour. of Pol. Econ. 50 (1962)). In other words, organizations that maintain an internal labor market give their workers a more stable employment experience. Workers who compete in an external labor market must face wage rates that fluctuate more widely than those found in an internal market of an organization. To the extent that an internal labor market exists, it isolates workers from the external labor market and makes comparisons more difficult. There was an internal labor market in this case.
 
The Union argued that the statutory "retention" standard favored a selection of the Union's last best offer package. According to the Union, the Employer lost two employes recently to higher paying departments. Better wages, allegedly, were an important consideration in the decision of the employes who left the area. (See, Union's Exhibit No. 31).
 
The Employer maintained that the "ability to attract and retain qualified employees" standard strongly favored the Employer's last best offer package. According to the Employer, the two employes who left the organization departed because of personal family reasons; and higher wages allegedly were not a primary consideration. The Employer also maintained that it received far more applicants for job vacancies than could be accommodated, so much so that it created a queuing problem. There was unrebutted evidence that, at the last recruitment, the Employer received 680 applications for a handful of jobs. The Union responded that it is difficult to assess the ability of management to attract employes because recent hirings by the Employer were done internally without seeking applications.
 
Internal and external labor markets are inter-connected, and internal labor markets often are used for employes who already have gained access to the organization, with external labor markets being used for entry level positions. Data submitted to the arbitrator suggested that the internal labor market had been used by the Employer even to fill entry level positions. This suggested that, despite pressures from an external labor market, working conditions and benefits made job vacancies attractive to participants within the organization and also gave management qualified personnel from whom to choose. Despite a vacancy change created by the departure of two workers, management attracted qualified employes from the internal labor market. Without using the external labor market as a port of entry, the Employer was able to insure a stable source of workers with appropriate skills and capacities. Accordingly, it is reasonable to conclude that data in support of this statutory criterion favored the Employer's last best offer package.
 
D. Overall Compensation and Comparison
 
Oregon law also instructs an interest arbitrator to consider "the overall compensation presently received by the employes . . . as well as a "comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities." (See, ORS 243.746(4)(d) and (e)). Both parties addressed the "overall compensation" standard in conjunction with comparability data, and the arbitrator has followed the parties' organization of the material by addressing both factors at once. The statute is clear that "comparable" communities refers to "communities of the same or nearest population range within Oregon." (See, ORS 243.746(4)(e)).
 
Under the new Oregon law, comparisons continue to be important. The "interest and welfare of the public" standard must be given first priority, but it is not a "stand alone"criterion and must be supplemented by data from other statutory factors. Professor Arvid Anderson, past president of the National Academy of Arbitrators, once observed that "the most significant statutory standard for arbitration in the public sector is comparability." (See, LVI Fordham L. Rev. 153, 161(1987)). While the Oregon Legislature did not adopt his position, it is clear that comparability data continued to have a significant role in measuring proposals before an interest arbitrator. The difficulty, of course; is in determining with whom a particular organization should be compared and what should be the basis of the comparison. Considerable data will always be required to distinguish different wage scales and to understand total compensation. Despite the similarity of work, there may be different conditions at the workplace or in the seniority of a workforce. Nor do similar job titles necessarily guarantee similar work assignments. Despite this problem, one arbitrator observed that:
 
Arbitrators have longed used comparisons as a way of giving wage determinations some sense of rationality. Comparisons can provide a precision and objectivity that highlight the reasonableness or lack of it in a party's wage proposal. (See, City of Havre v. IAFF, 76 LA 789, 791 (1979)).
 
There was a lack of agreement between the parties regarding specific comparable communities. The Union argued that, pursuant to Senate Bill 750, the appropriate comparable community is that of the fire district served by the Employer. The Union maintained that comparing the population of Bend, Oregon without including the entire district served by the department would be unfair and unjust. The Employer argued as vigorously that the population of the City of Bend is the correct focus of comparison and that Bend, Oregon should be compared with other cities having the same or a similar population. The parties took extremely different approaches to the issue of comparability.
 
A threshold issue involved the nature of comparable communities. According to the Union, S.B. 750 changed nothing; and traditional comparability data should be used. Based on such traditional comparability data, the Union concluded that employes in this bargaining unit lagged behind comparable communities by 13%. (See, Union's Exhibit No. 5). In the past, Bend has been rated among the top ten cities in the state. The Union also maintained that the City of Bend should be ranked in the top ten because of the increased workload faced by the bargaining unit.
 
Meaning of "Comparable" Communities: Before S.B. 750 amended it, ORS 243.746-(4)(d) stated (** indicates underlining):
 
(The arbitration panel shall base its findings, opinions and order upon a . . . ) (d) comparison of the wages, hours and conditions of employment of other employees performing similar services and with other employes generally:
 
(A) in public employment in *comparable communities*
 
(B) in private employment in *comparable communities*.
 
Senate Bill 750 changed Oregon law to state:
 
Arbitrators shall base their findings and opinions on . . . (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.* (See, ORS 243.746(4)(e)).
 
The original collective bargaining law in Oregon did not define "comparable communities" to mean "communities of the same or nearest population range within Oregon." Debate on the Senate floor did not address this topic. (See, Association's Exhibit No. 47, p. 13). It is reasonable to assume that the change had meaning beyond the special standard enacted to cover Portland and Multnomah County. Just as reenactment of legislation generally signifies satisfaction with a law, modification signals some effort to address a concern of legislators. It, however, is difficult to talk about the intentions of a collective legislature. As one scholar observed:
 
A legislature certainly has no intention whatever in connection with words which some two or three men drafted, which a considerable number rejected, and in regard to which many of the approving majority might have had, and often demonstrably did have, different ideas and beliefs. (See, Radin, 43 Harv. L. Rev. 863, 870 (1930)).
 
Questions about the existence and discoverability of legislative intent have been the subject of debate for decades. (See, e.g., Witherspoon, 40 Tex. L. Rev. 751 (1962)). Moreover, it probably is a legal fiction to use an agency model of analysis which teaches that the collective legislature has delegated to a committee or committee chairperson its intent to rely on the judgment of the committee or legislative leader to achieve what the legislature wants the law to achieve.
 
It seems more prudent to rely on guidance from the U.S. Supreme Court that "there is no need to refer to the legislative history where the statutory language is clear." (See, Ex Parte Collett, 337 U.S. 55, 61 (1949)). Words, of course, are imprecise tools, and it is sensible to resort to legislative history where it is reasonably clear. In this case, there not only is a dearth of useful legislative history; but also the words of the statute are reasonably clear. There is a deeply rooted statutory canon of interpretation in the United States that, if language is plain and unambiguous, it must be given effect. (See, e.g., Newhall v. Sanger, 92 U.S. 761 (1875)).
 
The statute states that the term "comparable" is limited to "communities of the same or nearest population range within Oregon." The past practice of the parties of relying on the top ten best cities in Oregon has been modified by the new law. It has restricted the discretion of the arbitrator in terms of comparing Bend, Oregon firefighters with the best cities in Oregon and has mandated use of communities of the same or similar size.
 
Comparability Data: Bend, Oregon has a population of 29,425. (See, Employor's Exhibit No. 8). The Union argued that 26,000 people served in the rural area surrounding the city should also be included as a part of the community. Using the Union's approach, Bend, Oregon would have the following ranking among fire districts of similar size, asdefined by the Union:
 
Jurisdiction Total Compensation
 
Beaverton, OR $ 5,766.12
 
Corvallis, OR 4,849.80
 
Hillsboro, OR 4,934.67
 
Klamath Co. OR Rural #1 4,504.90
 
Lake Oswego, OR 5,006.88
 
Medford, OR 4,997.34
 
Springfield, OR 5,205.05
 
Tualatin Valley, OR (Tigard) 6,059.80
 
Bend, OR $ 4,636.64
 
Percentage Difference -11.408%
 
The Employer argued that fire districts must not be used as a point of comparison because it is virtually impossible for the Employer to compete with fire districts. They allegedly include cities with bigger populations than the City of Bend, Oregon. The Employer argued that it was not the legislative intent for a city fire department to be compared with a fire district.
 
While the legislature was clear in its mandate that if comparable communities" are limited to "communities of the same or nearest population range within Oregon," the statute failed to provide any definition of "community." It, however, is logical to compare "apples with apples." Comparing Bend, Oregon with Tigard, Oregon would not give effect to such logic. Tigard, Oregon is serviced by the Tualatin Valley Fire District. Tualatin Fire District services 310,000 people. (See, Association's Exhibit No. 4). Even including the rural population of Bend, Oregon, the total population would equal only 55,000. When comparing the population of the City of Bend to another city, it is reasonable to assume that the other city has some reasonable number of citizens in a rural setting who are not included in the city's population.
 
Addressing the issue of whether all fire departments in the state must be considered if they fall within the same population range, one arbitrator observed:
 
While the arbitrator is not permitted to look beyond the State of Oregon, except for cities of more than 325,000 or counties of more than 400,000, I see nothing in the statutory language expressly stating or even implying that an arbitrator cannot limit his or her comparisons to departments within the same geographical area. Indeed, if sufficient comparable departments within the same population range exist in the same geographic area, I believe such departments are the most appropriate comparable. (See, George Lehleitner, In the Matter of Arbitration between Int'l Association of Firefighters, Local 2091 and Winston-Dillard Fire District No. 5, p. 22, October, 1995).
 
The Union also urged that firefighters be compared with other employes in the City of Bend. Police officers and mechanics at the top step are paid more than firefighters. (See, Association's Exhibit Nos. 40 and 41). The Union, in effect, argued that there should be parity within the internal labor market by linking the wages of one bargaining unit with wages of one or more other bargaining units who work for the same employer.
 
There was no evidence showing a tradition of parity among public sector employes in Bend, Oregon. While police and fire personnel generally are thought of as protective services workers, there was no evidence addressing the statutory requirement that a comparison be of employes performing "similar services." If parity is a fact of life for Bend, Oregon, there was no such evidence submitted to the arbitrator. There was not even evidence that the Employer considers and evaluates its economic proposals in terms of their future impact on agreements with other labor sources. While it is reasonable to believe that, as a practical fact of life, the Employer weighs the effect of granting benefits to one union on future negotiations with others, there simply was no showing that other employes for whom the Union submitted data are similarly situated to members of the bargaining unit.
 
Obeying the mandate of the statute, the Union compared the total compensation of employes. The Employer compared only salaries. The Employer argued that all the benefits offered to employes are excellent and that any comparison of total compensation would only increase the ranking of Bend, Oregon among its comparable jurisdictions. The statute is clear that an interest arbitrator must evaluate the overall compensation of employes, and the arbitrator has complied with this obligation. The Union also argued that the Employer failed to take into account a co-pay system involving a payment by employes and that the Employer's base wage comparison failed to provide an accurate analysis. The co-payment by employes has been taken into account by the arbitrator.
 
E. Consumer Price Index
 
As another factor, interest arbitrators must base any decision on "the CPI-All Cities Index, commonly known as the cost of living." (See, ORS 243.746(f)). The Consumer Price Index is designed to measure changes in the price of goods and services purchased by consumers. The Bureau of Labor Statistics publishes a CPT-U covering all urban consumers. BLS also publishes a CPI-W covering urban wage earners and clerical workers. In addition, there are indexes published for regions and urban areas using consolidated metropolitan statistical areas. The U.S. City Average CPI is frequently used in escalator clauses. As the statute makes clear, it is the CPT-All Cities Index which must be used by interest arbitrators.
 
Data submitted by the Employer had the 1995 cost-of-living rate at 2.5%. (See, Employer's Exhibit No. 7). The City maintained that its last best offer package will keep bargaining unit members well ahead of the Consumer Price Index.
 
The Union responded that bargaining unit members deserved an amount well beyond the CPI in order to be able to catch up with comparable jurisdictions. Moreover, the Union argued that the CPI-U and the CPI-W are not accurate for Bend, Oregon because housing costs in Bend are high and create a huge impact on employes. (See, Association's Exhibit No. 39). The Union also argued that annexation of rural communities has resulted in an increase in population which further distorted the accuracy of CPI data.
 
A debate has emerged during the last several years concerning the accuracy of the Consumer Price Index, and the original collective bargaining law in Oregon instructed an interest arbitrator to base a decision, in part, on "the average consumer prices for goods and services commonly known as the cost of living." (See, ORS 243.746(4)(e)). S.B. 750, however, effected a change and directed interest arbitrators to base a decision on "the CPI-All Cities Index, commonly known as the cost of living." (See, ORS 243.746(4)(f)). The statutory directive is clear and ambiguous and has been followed in this case.
 
It probably is impossible to determine precisely changes in the cost of living during a year. While the accuracy of the CPI has been debated by scholars, there were no empirical data submitted to the arbitrator showing it to be inaccurate. Moreover, while there might be questions about the ability of the CPI to measure the cost of housing in Bend, Oregon, there was no showing that an inordinate number of bargaining unit members purchased housing during the relevant time period. The CPI is not an infallible measurement, but it serves as an indicator of inflation. As an economic indicator, it is merely another statutory factor to be taken into account by an interest arbitrator.
 
The CPI-All Cities Index for 1995 was approximately 2.5%. In terms of this specific factor, the Employer's last best offer package insured that wages of bargaining unit members will not be eroded by inflation. That is the focus of this particular statutory criterion, and whether or not an equity adjustment should be made is a factor implicitly incorporated into other statutory criteria.
 
F. Other Criteria
 
The statutory mandate concerning stipulations of the parties had no particular impact in this case. Likewise, the arbitrator did not reach the "catch-all" factor. Legislators made clear that interest arbitrators were not to make use of the "catch-all" factor unless the criteria already reviewed did not provide "sufficient evidence for an award." '(See, ORS 243.746(4)(h)). It was unnecessary to reach the "catch-all"factors in this case. The initial statutory criteria provided sufficient evidence for an award.
 
AWARD
 
Having carefully considered all evidence submitted by the parties concerning this matter and complying with statutory criteria, the arbitrator concludes that it is the Employer's last best offer package which shall become a part of the next collective bargaining agreement between the parties. lt is so ordered and awarded.
 
Respectfully Submitted,
 
Carlton J. Snow, Professor of Law
 
For the Union: Ms. Rhonda Fenrich
 
For the Employer: Mr. Bruce Bischof