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IA-10-99
In the Matter of the Interest Arbitration Between Jackson County Sheriff's Employees Association and Jackson County, Oregon. IA-10-99
 
On October 4, 1999, Jackson County and the Jackson County Sheriff's Employees Association notified the undersigned that he had been appointed, pursuant to procedures of the Employment Relations Board of the State of Oregon, as impartial interest arbitrator for a collective bargaining negotiation impasse between the parties involving wages, health insurance premiums and drug testing. The hearing was held on January 19, 2000 in Medford, Oregon. The parties introduced into evidence over 100 exhibits collected in three-ring binders. Most of the exhibits were multi-paged including the employer's 48 page Arbitration Submission. The budget document alone contained 356 pages. In addition, the parties filed comprehensive post-hearing briefs on February 26, 2000, at which time the hearing was closed. The Association and County briefs consisted of 34 and 40 pages, respectively, with ten Interest Arbitration Awards of 20 to 30 pages, each and the text of three court decisions of a 100 pages appended. The Arbitrator relied on his notes, documentary evidence and closing arguments in the writing of this award.
 
BACKGROUND
 
Jackson County, with an area of 2801 square miles, borders California as the southernmost county in the western interior of Oregon. In 1999 its estimated population was 174,550 residents who live mostly in the incorporated areas. The city of Medford, with a population of 60,000, is the county seat and population center. The County is governed by a three-member Board of County Commissioners who appoint a County Administrator to oversee the county operations. Among the various services provided by the County are those associated with the Sheriff's Department. The department supports criminal patrol and investigation, corrections, joint drug enforcement activities, records, and search and rescue.
 
This dispute concerns the resolution of an impasse in collective bargaining negotiations between the County on behalf of its Sheriff's Department (hereinafter "employer" or "County" or "department") and the Jackson County Sheriff's Employees Association (hereinafter "JCSEA", "Association" or "union")for a successor labor agreement to the 1996-1999 agreement which expired on June 30, 1999.(1) The negotiations on a successor agreement began in December, 1998, with the final session on April 28, 1999. The parties were unable to resolve all the issues and proceeded into mediation on June 16, 1999. The Association declared an impasse on June 30 and proceeded into interest arbitration.
 
THE ISSUES
 
Pursuant to ORS 243.746(3), the County and the Association exchanged "last best offer" (LBO) packages on the unresolved issues on January 5, 2000. Both parties modified their last offers within the 24-hour grace period and neither party objects to the timeliness of the other's modified packages. Each party proposes a three-year agreement covering the period July 1, 1999 through June 30, 2002 and to retain all of the other terms of the previous agreement unless expressly modified. The LBO's are summarized below.
 
Issue Association Proposal County Proposal
 
Wages
 
7/1/1999 CPI W 2.5% to 3.5%* CPI W 2% to 4%*
 
7/1/2000 CPI W 2.5% to 3.5% CPI W 2% to 4%
 
7/1/2001 CPI W 2.5% to 3.5% CPI W 2% to 4%
 
1/1/2002 1.5% to all positions
 
* both parties propose an additional 5% for record clerks, correction cooks and search and rescue assistant effective July 1, 1999.
 
Health Insurance
 
Both parties propose the following caps on monthly premiums:
 
7/1/1999 $500/mo. $495
 
7/1/2000 $550/mo. $520
 
7/1/2001 $600/mo. $550
 
Premiums in excess of monthly caps
 
Equal split. Employee pays.
 
Drug Proposal
 
The employer proposes to establish a joint committee of four county employee-representatives from each party to jointly develop drug testing policies and procedures. The committee is to consider random testing procedures. If the committee fails to develop an acceptable drug policy within 60 days, any unresolved issues will be submitted to interest arbitration.
 
ANALYSIS
 
ORS 243. 742 et seq., the Oregon Public Sector Collective Bargaining Statute as amended by SB750, changed interest arbitration in two significant ways. First, issue-by-issue interest arbitration was changed to final-offer, total package interest arbitration. Second, interest arbitrators must now apply a revised set of selection criteria in a specific order of preference. Priority must now be given to the criteria of interest and welfare of the public. The remaining six criteria (ability to pay, recruit and retain qualified personnel, overall compensation, comparability to other public employers, cost of living and other stipulations) are secondary considerations.
 
In the case at issue both parties argue that their final offer is in the interest and welfare of the public. Although the decision must ultimately turn on which of the two final packages better serves the public, this issue cannot be decided without full consideration of the statutory secondary criteria. The Arbitrator will examine each LBO using the secondary criteria before judging whether they are in the interest and welfare of the public. Of the three issues in dispute, the most fundamental issue in the impasse is the health insurance proposals. We shall therefore evaluate this issue first.
 
A. HEALTH INSURANCE.
 
Health care insurance costs in Jackson and Josephine Counties are the highest in the State of Oregon, estimated to be 25 to 30% higher for groups of 100 to 200 persons. In the last two years three insurance companies have discontinued providing health insurance coverage. In 1996 the Association opted to withdraw from the County's health insurance group coverage to form their own insurance group in order to have more control over the level of benefits. Blue Cross/Blue Shield, the current provider of health insurance for the Association, estimates that its premiums will increase at a conservative 15-16% each of the next two years. The insurance company identified an ageing population that utilizes more services, rapidly increasing drug costs and a physician monopoly that charges higher fees as being the primary reasons that premiums are higher in this region.
 
Jackson County employees currently have two health insurance choices offered by Blue Cross/Blue Shield. The company offers a Blue Cross HMO at a cost of $517.80 per month and a Blue Cross Advantage PPO plan at a cost of $478.90. The principal difference between the plans is that the less expensive plan has a $200 deductible per person to a family maximum of $600. About one-third of the employees participate in the PPO. The County currently pays a maximum contribution of $437 per month toward health care premiums. For 1999-2000, the first year of the contract, the employer proposed increasing the premium cap 13.3% to $495 per month. The cap would pay for the PPO and require employees selecting the HMO to pay $22.80 per month. The Association's LBO would increase the premium cap by 14.4% to $500 per month which would also cover the premium cost for the PPO. The employee and County would split the HMO cost over the $500 cap in the amount of $8.90 each.
 
In the second year the premium is expected to increase 15.8% or $555.00 for the PPO and $600.00 for the HMO. In the second year under the County's proposed 5% increase of the cap to $520 per month the employee would pay $35.00 per month for the PPO and $80.00 per month for the HMO. Under the union's proposed 10% increase in the cap to $550 and cost sharing the excess, the County and the employee would pay about $25.00 per month each for the HMO.
 
In the third year, assuming a 15.9% premium increase, the cost of the PPO is estimated at $643.34 and the HMO at $695.00. The county's proposed 5.8% increase in the cap to $550 would cause the employee to pay the difference of $93.34 per month for the PPO and $145.00 per month for the HMO. Under the union's proposed cost sharing over a 9% increase in the cap to $600, the employee would pay $16.67 for the PPO and $47.50 for the HMO. These calculations are summarized by the following chart:
 
Estimated Cost Sharing County's LBO PPO & HMO Health Insurance Premiums
 
Amount.& Percent incr.
 
Proposed Est. Cost Premium Contribution As a % of
 
Year Cap PPO/HMO County Employee Salary*
 
1999 $495 PPO $478.90 $478.90 ---
 
HMO $517.80 $495.00(13.3%) $22.80 .6%
 
2000 $520 PPO $555.00 $520.00(8.5%) $35.00 1.0%
 
HMO $600.00 $520.00 $80.00 2.2%
 
2001 $550 PPO $643.34 $550.00(5.8%) $93.34 2.6%
 
HMO $695.00 $550.00 $145.00 4.0%
 
Estimated Cost Sharing Association's LBO PPO & HMO Health Insurance Premiums
 
Amount.& Percent incr.
 
Proposed Est. Cost Premium Contribution As a % of
 
Year Cap PPO/HMO County Employee Salary*
 
1999 $500 PPO $478.90 $478.90(4.6%) ---
 
HMO $517.80 $508.90(17%) $8.90 .8%
 
2000 $550 PPO $550.73 $550.36(16%) ---
 
HMO $600.00 $575.00(12.5%) $25.00 .6%
 
2001 $600 PPO $633.34 $616.67(12%) $16.67 .5%
 
HMO $695.00 $647.50(12.6%) $47.50 1.3%
 
* Deputy Sherif 5th Step $3581
 
Arguments Based on Secondary Criteria.
 
1. Reasonable Financial Ability to Meet Costs. The County argues that the open-ended premium cap proposed by the union "disregards the employer's need to plan and budget responsibly during a period of financial volatility and uncertainty." The County contends that the reduction and eventual loss of its O&C revenues and drastic change in its revenue base with the passage of Measure 50 has created an uncertain financial situation. The County estimates a $1.2 to $1.7 million deficit in its General Fund and expressed concern about maintaining a current level of county services, both in and out of the Sheriff's office. The employer asserts that the open-ended proposal is exacerbated by the County's lack of any control over cost containment because the Association alone administers the health insurance program. The employer believes that it is crucial to be able to ascertain the County's future costs to the fullest extent possible. The County argues that the union has a reasonable alternative in the PPO plan rather than throwing money into the more expensive HMO. The County also asserts that the effect of the Association's LBO is to put the major portion of the cost on the employer.
 
The Association argues that the County did not raise an ability to pay argument during negotiations and that the so-called budget shortfalls failed to take into consideration the contingency funds, an average cash carry-over of $34.3 million since 1996. In addition, the employer is committed to carrying over another $2 million each year to offset the end of the federal guarantee of O&C revenues in 2004. Moreover, the Association believes the County's cost projections are overstated because the calculations are based on a fully-staffed department of 145 employees when there were only 130 employees on July 1, 1999 and 142 now. Finally, the union contends that its costs projections of $1.2 to $1.4 million for its proposals are below the $1.7 million cost the County estimates for its own proposal.
 
The "inability to pay" argument that the County implies but does not quite directly claim is troublesome. Ordinarily, if an employer is going to assert that it lacks the means to fund a proposal, that claim should be made in fairness during the negotiations on the successor agreement in order to enable the union to either challenge the assertion or modify its proposals so as to obtain an agreement. The exception to this general rule is a last minute discovery of a severe loss of funds which drastically changes the employer's financial situation.
 
On January 14, 2000, the Acting County Administrator Sue Slack issued a memo to the members of the County's Budget Committee which became the subject of a lead story in the local newspaper on January 18 under the headline "County Faces Budget Shortfall." The timing of the memo and press release several days before the January 19 Interest Arbitration hearing is unfortunate as it could be characterized as a manipulation of the negotiation process. Without drawing that conclusion, it is sufficient to observe that report of the shortfall is not a last-minute crisis which would justify a claim of poverty. The reduction of the O&C funds have been known since 1993 when the U.S. Congress agreed to establish a safety net to slow the decline of payments to counties covered by the Northwest Forest Plan. The plan guarantees not less than a loss of three percent each year for the first five years, and in the next five the greater of its share of O&C revenue or a three percent decline in the prior year grant. The plan's purpose is to enable the County to obtain alternate revenue sources.
 
Former County Administrator Burke M. Raymond, in his Budget Message for 1999-2000, characterized the document as the "strongest document" he had ever presented and emphasized that the County is "in a relatively good financial position." This budget was predicated on the anticipated O&C revenue decline. The County's assertion that Measure 50 created an uncertain financial situation is not supported by the record. The 1999-2000 Budget Message stated that "the increases allowed by Measure 50 in property tax revenues should offset the difference in declining O&C receipts which should provide for stable funding for the County's general fund until fiscal year 2004-05." The County's non-dedicated revenues actually show a gradual increase in gross receipts of around $500,000 for each succeeding year. This increase is apparently fueled by a robust local economy and corresponding increases in property tax revenue which in fact offset declining O&C receipts.
 
In its "Arbitration Submission" the County argues that the statute mandates the arbitrator to respectful of the County's reasonable financial ability to meet the costs that are proposed by each party, and its other priorities and services that much compete with the limited revenue increases that are available. The County contends that its non-dedicated fund revenues are projected to be $477,110 to pay for all increased operating costs this year and $425,751 next year and $468,333 in the final year. The County argues that the Association's LBO would consume all of the available revenues. On the surface the argument appears convincing but it does not survive scrutiny. As we will later note the projected costs of the LBO's are only $148,003 or 1.9% apart over the three years. The total costs of the Association's LBO are shown to be below the maximum cost the County estimated for its own LBO thus suggesting its affordability. Moreover, if the County is in fact in serious revenue difficulty why would it propose to consume three-forth of its projected increased revenue. The County asserts that it must establish reasonable operating reserves and plans to set aside money for declining O&C revenues but overlooks its beginning cash balance of $34 million in its argument.
 
The County's argument that the proposed open-ended cap disregards the County's need to budget responsibly is not persuasive. Open-ended sharing of premiums are not uncommon. In City of Grants Pass (Boedecker, June, 1997), and Lincoln City (Harris July, 1997), cited as authority in the County's argument, the arbitrator awarded the employer's health insurance proposal which, like the Association's, proposed a split in premium above the cap. In City of Oregon City (Abernathy, March, 1999), the city's proposed split of the premiums were also accepted. In Marion County (Sorensen-Jolink, November, 1995), also cited by the County, the arbitrator indicated an agreement wherein all the health insurance premiums in Marion County and all of the 5 largest Oregon counties are fully paid in multi-year agreements even though these counties did not know how much the premium would cost in future years. The fact that the Association has control over the level of benefits and thereby the cost does not increase the uncertainty because the employees are sharing the cost and thus maintaining a strong interest in cost containment as evidenced by their raising the co-pay from $5.00 to $10.00.
 
The employer relies on the 1998 William Mercer National Survey of Employer Sponsored Health plans to show that $145 month employee contributions under its LBO are less than the $154 per month paid by government employees in Western United States and the $100 per month contribution paid by Oregon and southwest Washington. The Mercer Study does not take into account the particular regional factors causing the exorbitant rise in health costs. Also, the difficulty with making such comparisons is that the Group Study indicated that the total premiums for either plan averaged less than $285 per month. Surely the County is not advocating that the employees pay over 50% of the health premium cost. While these statistics are interesting, the statute requires the Arbitrator to make comparisons on comparable jurisdictions. The employer's argument that the trend is away from HMOs and toward the less expensive PPO with deductibles is not convincing when its comparable jurisdictions all provide HMO's.
 
The County believes that these employees have a reasonable option of selecting the less costly PPO insurance with the $200/$600 deductible rather than throw money at it the more expensive HMO. While it is true that the alternate less-expensive plan is available, it is not appropriate to shift two-thirds of the cost burden onto uniformed officers and force them to accept the lower level plan. The increased health premiums cost is not their burden alone. The job of correction officers and patrol deputies is very stressful and dangerous. Most jurisdictions recognize this likelihood of injury by assuming higher health insurance costs for their uniform personnel who are putting their lives on the line for the community than for other employees. As Arbitrator Howell Langford observed in City of Eugene, #985 (4/28/86) at P 28:
 
Police are a unique group who are engaged in what is perceived as dangerous work, and police work is, because of that perceived danger, and particularly because of irregular hours and the enclosed social environment, extremely stressful. Various contract articles, including incentives, vacations , holidays etc., are aimed at dealing with the peculiar job related stresses and requirements of police officers.
 
While it is true that the Association's proposal places a major portion of the premium increase on the employer, the employer's LBO is not an acceptable alternative. In the face of a 31.7% increase in health insurance premiums, the County proposes to raise its contribution 10.8%, thereby requiring the employee to assume the remaining 20% cost when in the past, the County has borne the most of its cost as does its comparable jurisdictions. Moreover, the County's Sheriff Office recruitment material claims fully-paid insurance.
 
2. Comparability With Other Jurisdictions. The County asserts that, based on an accepted plus or minus 50% population threshold Deschutes, Douglas and Linn counties should be considered "comparable communities." The Association argues that these comparables are all smaller, having at least 33% less population than Jackson County and in order to have a balanced view we should select three larger counties since there are none which are within 50% more population. The Association would add Clackamas, Lane and Marion Counties, all of which exceeds the +50% threshold. The County would agree to add Marion County whose population lies just outside the plus 50% if we include Benton, Josephine and Yamhill Counties which lie outside the minus 50%. The Arbitrator has carefully considered the arguments and is not inclined to stretch the minus/plus 50% to encompass Josephine(-42%), Benton(-44%), Yamhill(-47%), Marion(+57%), Lane (+80%)or Clackamas (+87%) Counties. The Arbitrator is not entirely comfortable with comparing Jackson to three smaller counties. The Arbitrator leans toward offsetting these smaller counties with at least one larger county, eg. Marion County, but sees problems in doing so. One of the difficulties in including Marion County on the list of comparators is that Marion travels in the same community as the five largest counties. This would act to distort the comparisons here. The Arbitrator reluctantly concludes that the three counties within the same geographic areas, each with a large population center, are sufficiently comparable for our purposes. Because Jackson County is substantially larger than its comparators, its public is entitled to expect a competent police force that is better than their average, and the highly skilled employees therefore have a right to a corresponding expectation as to economics. See: City of Eugene, #985 pp. 23,25.
 
The following chart shows the insurance contributions of each:
 
Comparators Health Insurance Year 2000
 
County Plan Type Premium County Employee Deductible
 
Deschutes HMO $536.40 $450 $20 None
 
Douglas HMO $510.38 $479.06 $31.32 None
 
Linn HMO $687.75 $687.75 None None
 
Average $578.17 $538.94 $17.11 None
 
Jackson LBO HMO $517.80 $495 $22.80 None
 
PPO $478.90 None $200/600
 
Association HMO $508.90 $8.90 None
 
LBO PPO None $200/600
 
The above summary of County-supplied data indicates that in the first year the insurance practices of the comparable counties average a higher premium participation than in Jackson's LBO and a less average employee contribution. These counties do not offer the plans that have deductibles such as the PPO in Jackson County. The Association does not agree that employees in Douglas County make contributions toward the HMO. A review of the 1999 Douglas County Agreement supports the Association's argument. The Douglas County contract only requires employees selecting the HMO Indemnity plan to pay the difference in its cost and the HMO premium, thus suggesting employees on the HMO would pay nothing toward its cost. Since we are comparing HMO's, we should deduct the amount of the employee contribution. This adjustment yields an average employee contribution of $7.33 for the three jurisdictions. More importantly, it indicates that two of the three comparable counties do not require their uniform employees to contribute to the health plan. A word of caution, however, is in order. Lynn County employs a formula that deducts health premium cost increases out of the CPI adjustments to wages. Although the Linn County experience appears to skew the average, the Arbitrator must accept this result as Linn County wages are shown to be comparable to Jackson County. In reality, the Linn County approach has a lot of merit because funds allocated to health care premiums are not taxed nor does the employer have the added expenses of pension contributions, unemployment and workman's compensation payments as well as social security taxes. In other words, it is less expensive to the County to put money into health insurance premiums than into salary.
 
The real difficulty with the County's LBO is the final year of the agreement when the large health premium increases are expected to syphon off 4% or more of salary increases proposed. The County claims that the wage increases proposed by its LBO "should allow a reasonable cushion for employees to absorb the potential increases in health insurance premiums." The union disagrees. Its calculations show that patrol deputies would net a gross increase of only 2.07% over the three years of the agreement. The County challenges the calculation on the basis that it envisioned only a 2% CPI adjustment in the second year and did not take into consideration step increases that many employees received. If that figure is adjusted for the 2.8% increase rather than 2% for the second year of the agreement, the net wage increase would be around 3% for the three years. The Arbitrator has not adjusted for step increases because the comparisons are being made at the journeyman level deputy. It would also not be appropriate to pay health insurance costs out of salary step increases which are given by the County in recognition of increased job experience from which the employer benefits. The net salary increases under the parties LBO's are set forth as follows:
 
County LBO Net Monthly Increases of Salaries - 3 years
 
Senior Patrol Deputy
 
Top Step Pay Insur. Net Wage Percent Pay
 
YR. Salary CPI% Raise less Contr. Increase increase
 
1st $3581 2% $72 - $22 $50 .01396
 
2nd $3653 2.8% $102 - $80 $22 .006
 
3rd $3755 2.5% $94 - $145 -$51 -.01358
 
Three Year Total $21 .006
 
Average Record Clerk
 
Average Step Pay Insur. Net Wage Percent Pay
 
YR. Salary CPI % Raise less Contr. Increase increase
 
1st $2160 7% $151 - $22 $129 .05972
 
2nd $2311 2.8% $65 - $80 -$15 -.00649
 
3rd $2375 2.5% $59 - $145 -$86 -.03621
 
Three Year Total $28 .017
 
Association LBO Net Monthly Increases of Salaries - 3 years
 
Senior Patrol Deputy
 
Top Step Pay Insur. Net Wage Percent Pay
 
YR. Salary CPI % Raise less Contr. Increase increase
 
1st $3581 2.5% $90 - $11 $79 .02206
 
2nd $3671 2.8% $103 - $25 $78 .02119
 
3rd $3774 2.5% $94 - $48 $46 .01219
 
$3868 1.5% $58 $58 .01500
 
Three Year Total $261 .0729
 
Average Record Clerk
 
Average Step Pay Insur. Net Wage Percent Pay
 
YR. Salary CPI % Raise less Contr. Increase increase
 
1st $2160 7.5% $162 - $11 $151 .06991
 
2nd $2322 2.8% $65 - $25 $40 .01723
 
3rd $2387 2.5% $60 - $48 $12 .00503
 
$2447 1.5% $37 .01500
 
Three Year Total $280 .10717
 
The Association contentions that the health insurance aspect of the employer's LBO would virtually eliminate the CPI increases are correct. The above charts indicate that the net monthly pay increase under the County LBO over three years of the contract for senior patrol officers is $21 or .6% and for record clerks is $28 or 1.7% even with the 5% equity adjustment. The Association's LBO proposal over the three years would give the senior patrol officers a net increase of $261 per month or 7.3% and record clerks $280 or 10.7% with the January 1,2002 pay increase. The Arbitrator concludes that a pay increase of $21 to $28 per month for the three year contract is not in the interest of the public's need for effective law enforcement.
 
3. Other Factors.
 
The County contends there is a need for parity with the Oregon Public Employees Union (OPEU) bargaining unit whose labor agreement contains caps similar to that proposed in the first two years for this bargaining unit. The comparison with the OPEU bargaining unit insurance coverage is not justified. The OPEU agreement was negotiated prior to August 1998 when the parties were not aware of the region's skyrocketing health insurance premiums. Moreover, because there are only two years remaining in the OPEU contract the OPEU will be negotiating the cap for the crucial third year of the Sheriff Department agreement when the County's LBO requires Sheriff Department employees to pay 4% of their salary toward health premiums. There is further difficulty comparing one union's "deal" with that of another union because each are different. The OPEU agreement provides for a seventh step on the salary schedule and a bilingual premium of 5%. Those differences may compensate for a lower health insurance cap. The County contends that the premium caps of the two unions have increased about the same percentage on the average over 20 years. Yet the statistical study used to illustrate this contention also demonstrates that the County negotiated the same cap with both unions in only three out of 20 years, thus belying the claimed need for parity.
 
B. WAGES ADJUSTMENTS.
 
There is very little difference in the wage increases proposed by the LBO's of the two parties. The County proposes a CPI with a lower floor(2%) and a higher ceiling(4%). This proposal anticipates the continuation of a CPI that is running below 2%. The Association is proposing a higher floor(2.5%) and lower ceiling(3.5%) for the same reasons. In addition, the Association packaged a 1.5% general across-the-board increase on January 1, 2002 of the last year of the agreement as a "catch-up." The County argues that the third year increase is not justified by the comparable salaries. The Association contends that its proposed wages are between 0 and 3% higher than the County's proposal over the three years. The Association believes that the County can budget for this increase in advance because the bulk of increase is in the last year of the agreement. The Association contends that the County's implication that it has a budget shortfall is suspicious because it contemplates hiring 10 additional employees.
 
The CPI-W, US Average Index for the year ending January, 1999 was 1.6%. The County LBO calls for a minimum 2% increase of salaries. Under the Association's LBO the increase would be 2.5%. The .5% difference translates into $17.90 per month on a salary of $3581 per month for a deputy sheriff on the fifth step of the salary schedule and $10.80 per month for the average records clerk. The second year CPI adjustment has been determined to be 2.8% which is above the minimum of either LBO. The Arbitrator would anticipate from significant increases in oil prices that the CPI index will be at least 2.5% in the third year of the agreement. The 1.5% adjustment called for under the Association proposal on January 1, 2002 calculates as .75% cost since it is occurring half way during the last year of the agreement. Therefore, the cost difference of the three-year package in wages would, with compounding, amount to slightly more than 1.25%. At any rate, even if the full 1.5% would be credited, the apparent difference in salary level is a little more than 2% over three years.
 
1. Comparability With Other Jurisdictions. The County asserts that its total compensation comparisons with the other counties would put employees in an overwhelming superior position to the average total regardless of classification or step. The County contends the one exception of the top paid records clerk whose 1% deficit is still within the arbitrator's accepted plus or minus 5%, making this an exception without significance. The Association asserts that the County is not keeping pace with its comparators and that comparative data is incorrect because it does not include $45 for longevity at five years in Deschutes County nor the additional step of 5%. The Association argues that the County did not show it takes different amounts of time in other jurisdictions to reach the 5th step of its comparison. The union also contends that the County shows a co-pay in Douglas County that is in error. Finally, the Association argues that the County does not project a wage increase for Douglas County which is still in negotiations as of January 1, 2000 but does include wage increases for itself.
 
The County salary comparison shown for Linn County is incorrect. The 5th step is $3162 rather than $3019 which is the 4th step in that county's salary schedule. The Deschutes County employees receive an additional $45 per month as a longevity increase each five years of service. This amount is included in the below comparisons. The County's and Association's 5th year wage for Douglas County also appears to be in error. On July 1, 1996 the hourly wage was $17.63 for the sixth step (five years service). If this hourly wage was adjusted for the minimum CPI of 2.5% provided in its labor agreement for July of 1997 and 1998, the wage would be $18.82 or $3211 per month. For comparison purposes, if we adjust the 1998 salary by the CPI of 1.6% as the minimum likely increase, the July 1,1999 monthly salary would be $3262. The Arbitrator has attempted to rework the exhibits in order to have a valid comparison. The results are as follows:
 
Five Years Service Patrol Deputy; Intermed. Cert/BA; BCBS HMO 1/1/2000
 
County Wages Insur. Employee DPSST/ Other Total
 
Contrib Co-pay Education premium Wage
 
Deshutes $3466 $450 -$20 $145 $84 $4125
 
Douglas $3262 $479 --- $ 82 $307 $4130
 
Linn $3162 $688 --- $ 75 $143 $4068
 
Average $3297 $539 -$20 $101 $178 $4108
 
Jackson $3208 $437 -$81 $229 $153 $3946
 
% diff. - 2.8% - 4.1%
 
County LBO $3272 $495 -$23 $234 $156 $4134
 
% Diff. -0.8% +0.6%
 
Assoc. LBO $3288 $509 -$ 9 $235 $157 $4180
 
% Diff. -0.3% +1.7%
 
The above chart indicates that if the comparison is made at five years service, which is generally considered the journeyman level the County generally lags behind its comparators. Moreover, the expected increases for the comparators is 3% for each of three years for Deschutes County and 3% and 3.8% for each of the next two years for Lynn County, whereas the CPI proposed by either party in this controversy is below 3% for each of the first two years. The figures for Douglass County, who is in interest arbitration, are not available. Using the County salary comparisons for sixth step patrol deputy that indicates a current wage deficit of 2.8% with its primary comparators, it would seem that the Association's proposed increases are not out of line. This is especially true when the comparators are smaller jurisdictions. Because Jackson County is the largest employer of the comparables, the Arbitrator would expect that the community would desire that their law enforcement personnel be paid at a higher rate.
 
2. LBO Cost Analysis. The County estimates the overall cost of its LBO, including increases in cleaning allowance ($5), bi-lingual premiums, Field Training Officer premium, and 5% equity increase for cooks and record clerks to $1,211,831 for a 2% COLA and $1,774,246 for a 4% COLA. The Association calculates a total cost for the County LBO as $817,846 to $1,146,130 and its own LBO at $1,247,647 to a maximum of $1,422,214. The Association figures are based on the actual number of 130 employees rather than 145 budgeted and 40 hour vacation buyback rather than 120 to 200 hours vacation accrual which the Association contends does not add to the base pay of the employee. The Association asserts that the County has also overstated the health insurance premium cost because 33% of the employees are on the PPO plan that costs less than either LBO's proposed cap in the first year. The Association contends that the cost difference should be limited to the increased cost of the new insurance and not the entire amount of the cap. This calculates at $41 per month for the PPO and $58 per month for the HMO or a composite average of $52. The Association does not accept the County's overtime calculations because hiring 12 additional employees should reduce the overtime needed.
 
The cost analysis has been unduly complicated because of the above-noted confusion on the number of personnel, vacation amounts and retroactive cost computation of health benefits. The Arbitrator has, therefore, taken the time to estimate the cost of each LBO based on the assumption that there were 130 personnel on July 1, 1999 and 142 personnel on board on January 1, 2000. The average specific salaries have been adjusted to reflect this change in the number of personnel. The Arbitrator has calculated increased salaries resulting from the CPI adjustments, the special 5% on July 1, 1999 and 1.5% on January 1, 2002. Based on the increased average salaries, the Arbitrator has computed the differences in hourly rates of pay for the various classifications and applied the difference in hourly rates to paid time off at the rate of 48 and 120 hours as the average of sick leave and vacation use respectively, realizing that the paid time may have been earned at a lower hourly rate. The Arbitrator has also applied the difference in hourly rates to the average hours of overtime, assuming a 10% reduction in overtime as a result of adding 12 more personnel.
 
Increased Cost of County's LBO First Year(2)
 
Average Corr. Patrol Records
 
Employee Deputy Deputy Clerk
 
Base Pay/hour $36,408/$17.50 $42,985/$20.67 $25,919/$12.46
 
Special 5% $ 111 $ 37 $ 1,296
 
2% COLA $ 728 $ 860 $ 518
 
Subtotal $37,247/$17.91 $43,882/$21.10 $27,733/$13.33
 
Insurance($52) $ 624 $ 624 $ 624
 
Paid time off $ 108 $ 114 $ 230
 
Overtime $ 90 $ 88 $ 122
 
TOTAL $38,069 $44,708 $28,709
 
+ new hires $133,259 $22,354 $57,418
 
Gross Total $2,645,813 $1,810,674 $746,434
 
County LBO Cost $257,738 ($5,202,921 - $4,945,183)
 
Increased Cost of Association's LBO First Year
 
Average Corr Patrol Records
 
Employee Deputy Deputy Clerk
 
Base Pay/hour $36,408/$17.50 $42,985/$20.67 $25,919/$12.46
 
Special 5% $ 111 $ 37 $ 1,296
 
2.5% COLA $ 910 $ 1,075 $ 648
 
Subtotal $37,429/$17.99 $44,097/$21.20 $27,863/$13.40
 
Insurance($62) $ 744 $ 744 $ 744
 
Paid time off $ 129 $ 140 $ 248
 
Overtime $ 108 $ 108 $ 132
 
TOTAL $38,410 $45,089 $28,987
 
+ new hires $ 134,435 $22,545 $57,974
 
Gross Total $2,669,495 $1,826,105 $753,662
 
Assoc. LBO Cost $304,079 ($5,249,262 - $4,945,183)
 
The difference between the two LBO's is $46,341 the first year. For the second and third years the real difference in the packages lies mostly in the health costs. Based on the realized 2.8% CPI, these total costs are calculated to be:
 
Increased Cost of County's LBO Second Year
 
Average Corr. Patrol Records
 
Employee Deputy Deputy Clerk
 
Base Pay/hour $37,247/$17.91 $43,882/$21.10 $27,733/$13.33
 
2.8% COLA $ 1,043 $ 1,229 $ 777
 
Subtotal $38,290/$18.41 $45,111/$21.69 $28,510/$13.71
 
Insurance($25) $ 300 $ 300 $ 300
 
Paid time off $ 132 $ 156 $ 100
 
Overtime $ 98 $ 107 $ 48
 
TOTAL $38,820 $45,674 $28,958
 
Gross Total $2,833,860 $1,872,634 $810,824
 
County LBO Cost $314,397 ($5,517,318 - $5,202,921)
 
Increased Cost of Association's LBO Second Year
 
Average Corr Patrol Records
 
Employee Deputy Deputy Clerk
 
Base Pay/hour $37,429/$17.99 $44,097/$21.20 $27,863/$13.33
 
2.8% COLA $ 1,048 $ 1,235 $ 780
 
Subtotal $38,477/$18.50 $45,332/$21.79 $28,643/$13.77
 
Insurance($67) $ 804 $ 804 $ 804
 
Paid time off $ 135 $ 156 $ 116
 
Overtime $ 99 $ 107 $ 55
 
TOTAL $39,515 $46,399 $29,618
 
Gross Total $2,884,595 $1,902,359 $829,304
 
Assoc. LBO Cost $366,996 ($5,616,258 - $5,249,262)
 
The difference in cost between the two LBO's is $52,599.
 
In the third year, assuming a 2.5% COLA, the results are as follows:
 
Increased Cost of County's LBO Third Year
 
Average Corr. Patrol Records
 
Employee Deputy Deputy Clerk
 
Base Pay/hour $38,290/$18.41 $45,111/$21.69 $28,510/$13.71
 
2.5% COLA $ 957 $ 1,128 $ 713
 
Subtotal $39,247/$18.87 $46,239/$22.23 $29,233/$14.05
 
Insurance($30) $ 360 $ 360 $ 360
 
Paid time off $ 121 $ 143 $ 90
 
Overtime $ 90 $ 98 $ 43
 
TOTAL $39,818 $46,840 $29,726
 
Gross Total $2,906,714 $1,920,440 $832,328
 
County LBO Cost $142,164 ($5,659,482 - $5,517,318)
 
Increased Cost of Association's LBO Third Year
 
Average Corr. Patrol Records
 
Employee Deputy Deputy Clerk
 
Base Pay/hour $38,477/$18.50 $45,332/$21.79 $28,643/$13.77
 
2.5% COLA $ 962 $ 1,133 $ 716
 
Subtotal $39,439/$18.96 $46,465/$22.34 $29,359/$14.11
 
Insurance($98) $ 1,176 $ 1,176 $ 1,176
 
Paid time off $ 121 $ 145 $ 90
 
Overtime $ 90 $ 100 $ 43
 
1.5% on 1/00 $ 296 $ 348 $ 220
 
TOTAL $41,122 $48,234 $30,888
 
Gross Total $3,001,906 $1,977,594 $864,864
 
Assoc. LBO Cost $228,106 ($5,844,364 - $5,616,258)
 
The difference in cost between the two LBO's is $85,942.
 
When the three-year totals for other incentives are added the results are as follows:
 
County Est. Assn. Est.
 
Cleaning Allowance three years $25,646 $13,500
 
Bi-Lingual 2/3% premium $18,267 $ 9,974
 
EMT 1-3% premiums $19,927 $ 3,942
 
Field Training Officer(FTO) $ 537 $ 79
 
Subtotal $ 64,377 $ 27,495
 
Above packages 1st yr. $257,738 $304,079
 
2nd yr. $314,397 $366,996
 
3rd yr. $142,164 $228,106
 
Grand Total $778,676 $926,679
 
The difference in cost between the two LBO's is $148,003 over three years or 1.9% above the County package.
 
3. Recruitment or Retention. The County contends that the County has the ability to hire and retain qualified personnel. The Association argues the County's principal witness testified that over 90% of applicants fail to qualify and that lateral transfers are few. The exhibits indicate that five out of 52 correction deputies had prior experience and only two of the six criminal deputies were hired without prior experience, three others were hired from Jackson County presumably from smaller jurisdictions and one from California. All but one records clerk had no prior experience. There is not sufficient data in the record to determine whether recruiting is a problem caused by the level of salary or benefits.
 
C. Memorandum On Drug Screening.
 
The County proposed a memorandum to establish a joint committee of eight employee representatives, four each from the union and the employer to study and develop procedures and policies for the drug screening. The proposed committee is specifically directed to consider random drug testing procedures. If the committee fails to develop an acceptable drug policy within 60 days, unresolved issues will be submitted to interest arbitration.
 
The County argues that there is a very real drug problem (especially methamphetamine) in Jackson County. According to the County, the community looks to the Sheriff's office for leadership against illegal drugs. The County believes that the credibility of the department is seriously undermined when it advocates a drug-free workplace, but it doesn't have a comprehensive policy of its own. The County maintains its current policy of testing "for cause" has been used on several occasions contrary to the Association's assertion that it has never been used. Also contrary to the Association's claim, the County's motivation is not community public relations but that they want an opportunity to evaluate the current policy and determine if changes are necessary. The County criticizes the Association's opposition as a negotiating position rather than a concern for privacy. The County claims the policy will apply to all employees of the department and random testing isn't the only issue.
 
The Association argues that burden of proof should rest with the County, proposing the change in the status quo. City of Bend, (Snow 1996). The Association contends that the County has not met this burden because it failed to show that the existing situation is unworkable, evidence of a quid pro quo or proof of a compelling need for the change. The Association asserts that the proposed committee means a continuation of bargaining and the possibility of another interest arbitration which it believes is contrary to public policy. Citing Arbitrator Gary Axon in Clark County Sheriff's Association and Clark County, the Association states that finality is an extremely important aspect of a reasonable contract proposal. The Association believes it is not in the public interest to adopt a proposal which does not finalize collective bargaining.
 
The Arbitrator agrees that law enforcement officers like others in critical positions such as bus drivers should be subjected to a drug testing program. It was clear from the testimony that the point man on this issue sits on a community drug policy committee and is embarrassed that his own department has no random testing policy. The current drug policy to test on reasonable suspicion has worked by the County's own admission. All of the County's comparables have drug screening policies based on reasonable suspicion. None of these jurisdictions provides for random testing. Lynn County in fact specifically prohibits random testing.
 
Regardless of the merits of drug screening, the Arbitrator does not believe it is in the interest of the public to burden it with additional costs by continuing to bargain collectively over another term of the contract and risk further costs of another interest arbitration. There should be finality in the negotiation process which began in December, 1998. It should not fester as a continued distraction to both the managers and employees.
 
Interest and Welfare of the Public.
 
Neither the statute nor any Oregon Court has defined the phrase "interest and welfare of the public." The employer observes that interest arbitrators in the past have considered different components in order to determine the interest and welfare of the public. The employer cites:
 
* Arbitrator Katrina Boedecker in City of Grant Pass (June, 1997) balanced what is "reasonable to the taxpayer" and "fair to the employee" test which had been previously enunciated in Multnomah County and Multnomah County Correction Officers Association (Stratton, 1988).
 
* Arbitrator Jane Wilkinson in City of Bend and Bend Police Officer's Association (July, 1998) concluded that "an award of a fair and competitive wage that allows the unit of government to spread its resources elsewhere in order to meet public needs" would serve as a standard.
 
* Arbitrator Carlton Snow in City of Bend and Bend Firefighters Association (1996)required the party proposing to change the status quo to show a compelling need and evidence of a quid pro quo.
 
The Association contends that most arbitrators agree that it is in the interest and welfare of the public to provide quality service at a reasonable price. Quoting Arbitrator Sam Keltner in City of Eugene and Eugene Police Employee's Association (February, 2000), the union argues that it is in the public interest that the employer have a good police force at a reasonable cost to the taxpayer. To get capable people highly able to protect the interests of the public, there is a cost relevant to the quality demanded.
 
Other interest arbitrators have had similar views:
 
* Arbitrator John Abernathy observed in City of Oregon City and Oregon City Firefighter's Association (March, 1999) that "quality service at the lowest cost is the community's basic interest."
 
* Arbitrator Nancy E. Brown in City of Cornelius and AFSCME (April, 1999) concluded that the ability to attract and retain experienced police officers especially lateral transfers is in the public interest and cost savings high.
 
The Arbitrator has carefully considered these various approaches and the difficulties this analysis presents, not only from the volume of material presented but also the difficulties in assessing the costs and comparabilities. Based on this analysis the Arbitrator concludes that the interest and welfare of the public is closely tied to obtaining a quality law enforcement agency that the public has confidence in at a reasonable cost.
 
The Arbitrator does not believe the County's LBO is in the interest and welfare of the public. The proposed increase in its health insurance cap of 5 to 6%, when faced with 15 to 16% premium increases, would be terribly destructive to the morale and well being of its law enforcement personnel. The County's LBO would clearly reduce the CPI increases in salary to a less than acceptable amount. The dilemma is compounded by the scheduled higher COLA adjustments to be paid to uniformed officers of the two of the three lower populated counties with whom they are being compared.
 
It is clear also that the estimated cost of the Association's LBO is within the outer parameters of the County's own estimated cost of its LBO. Based on the foregoing analysis the Arbitrator concludes that the County has the reasonable financial ability to meet the costs proposed by the Association.
 
The Arbitrator is not pleased with the Association's LBO either because in the face of a large increase in health insurance premiums it adds inappropriately a 1.5% "kicker." While there may be justification for such an increase it appears a bit much when the huge increase in health insurance premiums are expected.
 
ORDER
 
Pursuant to ORS 243.746(4), it is my considered opinion and order that the Association's last best offer is in the interest and welfare of the public and must be awarded the parties to resolve their collective bargaining impasse.
 
In accordance with ORS 243.746(6), the Arbitrator apportions his fees and expenses equally between the parties.
 
DATED at Portland, Oregon, this 24 day of March, 2000.
 
WILLIAM A. LANG, Arbitrator
 
Rhonda J. Fenrich appeared on behalf of the union.
 
Kenneth E. Bemis, appeared on behalf of the employer.

 

 
Footnotes:
 
1. The Association's bargaining unit is described as consisting of all non-supervisory and non-confidential employees in the department. The Association represents about 142 employees: 28 record clerks, 32 criminal deputies, 68 corrections deputies, 5 correction cooks, 5 investigators and 4 other employees in various capacities.
 
2. The following charts are based on the actual average salary for classification on July 1, 1999, plus an additional 12 positions in January, 2000. The total average salary for the first year of the agreement is $4,945,183. Special 5% increases are based on the weighted average for classification. Overtime average usage reduced by 10% in 2nd & 3rd years as a result of additional hires.