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IA-11-00
IN THE MATTER OF POLK COUNTY and POLK COUNTY DEPUTY SHERIFFS' ASSOCIATION. IA-11-00.
OPINION OF THE ARBITRATOR
 
PROCEDURAL MATTERS
 
In accordance with ORS 243.746, an interest arbitration hearing involving certain employees of the Polk County Sheriffs' Office was held in Dallas, Oregon on January 22, 2001. The County was represented by David Doyle, County Counsel. The Association was represented by Daryl S. Garrettson, of Garrettson, Goldberg, Fenrich & Makler.
 
At the hearing, the testimony of witnesses was taken under oath and the parties presented documentary evidence. There was no court reporter, and therefore, the Arbitrator tape recorded the proceedings. At the hearing, the parties agreed that the Arbitrator's Opinion and Award would be mailed to the parties by March 26, 2001. The parties agreed upon the submission of post-hearing briefs. The Arbitrator received the briefs on February 15 and 16, 2001.
 
ISSUES
 
The Association represents certain classifications in the Polk County Sheriffs' Office, including deputy sheriff, corrections technician, custody officer, and others. The Association and the County were parties to a Collective Bargaining Agreement with a duration from July 1, 1998 through June 30, 2000. They were unable to reach an agreement on a new contract despite their efforts in negotiations. Remaining in dispute were wages, education incentive, and insurance. The statutory interest arbitration procedures were invoked.
 
APPLICABLE STATUTORY PROVISIONS
 
ORS 243.746 sets forth certain criteria which must be considered by an arbitrator in deciding the controversy:
 
* * *



(4) Where there is no agreement between the parties, or where there is an agreement but the parties have begun negotiations or discussions looking to a new agreement or amendment of the existing agreement, unresolved mandatory subjects submitted to the arbitrator in the parties' last best offer packages shall be decided by the arbitrator. Arbitrators shall base their findings and opinions on these criteria giving first priority to paragraph (a) of this subsection and secondary priority to subsections (b) to (h) of this subsection as follows:
 
(a) The interest and welfare of the public.
 
(b) The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration and weight to the other services, provided by, and other priorities of, the unit of government as determined by the governing body. A reasonable operating reserve against future contingencies, which does not include funds in contemplation of settlement of the labor dispute, shall not be considered as available toward a settlement.
 
(c) The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided.
 
(d) The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received.
 
(e) Comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this paragraph, "comparable" is limited to communities of the same or nearest population range within Oregon....
 
* * *



(f) The CPI-All Cities Index, commonly known as the cost of living.
 
(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.
 
(5) Not more than 30 days after the conclusion of the hearings or such further additional periods to which the parties may agree, the arbitrator shall select only one of the last best offer packages submitted by the parties and shall promulgate written findings along with an opinion and order....
 
Thus, the Arbitrator's ultimate award is limited to selecting one of the last best offer packages submitted by the parties.
 
NATURE OF THE EMPLOYER
 
Polk County is located in the Willamette Valley of western Oregon. It has a population of about 61,200. Polk County's economy is based largely on agriculture and timber. There are about 52 employees in the bargaining unit. They provide police services within the County and also operate a new jail which the County opened in August 1999. The staffing of the new jail includes nine corrections technicians, a new classification for the bargaining unit. Corrections technicians open and close the doors in the new jail and perform clerical functions.
 
THE LAST BEST OFFERS
 
1. Wages
County ProposalAssociation Proposal
Effective 7/1/20003.7%3.5%
Effective 7/1/2001100% Portland CPI-W,100% Portland CPI-W,
Minimum of 3%,Minimum of 3%,
Maximum of 4.5%,Maximum of 4.5%
Effective 7/1/2001100% Portland CPI-W,100% Portland CPI-W,
Minimum of 3%,Minimum of 3%,
Maximum of 4.5%Maximum of 4.5%
 
In addition, the parties each proposed several other language changes to the wage article. Neither party presented any evidence in support of these other changes. Those changes are not significant to the decision here.
 
2. Education Incentive
 
The Association proposes to expand the applicability of the Agreement's education incentive from all sworn non-probationary employees to include all non-probationary employees, whether sworn or not. The County opposes this change.
 
3. Insurance
 
The Association's proposal is that effective August 1, 2000, the County would contribute up to $525.00 toward the monthly premium for each full-time employee and family members' dental and health insurance. The Association further proposes that effective August 1, 2001, the County would pay up to 50% of the premium increase from the previous contract year. Effective August 1, 2002, the County would pay 100% of the premium increase from the previous contract year.
 
The County's proposal is that effective August 1, 2000, it would contribute 85% of the monthly Blue Cross/Blue Shield premium for each full-time employee and family members' dental and health insurance. If the employee was enrolled in the Kaiser Permanente Plan, the County would contribute 92.5% toward the monthly premium. Effective August 1, 2001, the County would continue to contribute 85% of the monthly Blue Cross/Blue Shield premium, but would contribute 90% toward the Kaiser Permanente premium. Effective August 1, 2002, the County would continue to contribute 85% of the monthly Blue Cross/Blue Shield premium, but would contribute 87.5% of the Kaiser Permanente premium.
 
(a) INTEREST AND WELFARE OF THE PUBLIC
 
ORS 243.746(4) sets forth the criteria by which the Arbitrator must evaluate the parties' last best offer packages. "First priority" must be given to the criteria of "[t]he interest and welfare of the public," with "secondary priority" given to the remaining listed priority. The statute does not define or otherwise explain what is meant by "interest and welfare of the public." Other arbitrators have recognized the vagueness of this criteria, but have nevertheless attempted to define it. There are many circumstances where the interest and welfare of the public will be obvious and a significant factor in evaluating a particular proposal or set of proposals. I do not believe that such is the case here. The differences between the positions are financial in nature, and are more appropriately evaluated according to the secondary criteria set forth in the statute. Appropriate application of such criteria would support the interest and welfare of the public.
 
The Association contends that there are two aspects of the County's offer which are adverse to the collective bargaining process and which require a determination that its offer is not in the interest and welfare of the public. First, the Association argues that the County acted inappropriately by presenting an entirely new list of comparable jurisdictions at the arbitration hearing. Since this list differed from the one utilized by the County during collective bargaining negotiations, the Association argues, the County failed in its obligation to bargain in good faith. The proper forum for such an unfair labor practice allegation is the Oregon Employee Relations Board, and not an interest arbitration proceeding. Absent a finding by the appropriate agency, the interest and welfare of the public would not be adversely effected by permitting the County to adjust its list of comparable jurisdictions at the interest arbitration hearing.
 
The Association argues that the interest and welfare of the public would be adversely effected by selecting the County's last best offer because that would ensure uncertainty and further litigation. The Association points out that the County's last best offer made no reference to tentative agreements or to current language. The Association further points out that the County submitted a modified last best offer which only referenced the wage article. The Association maintains that the County has not presented a complete contract. The County responds that its last best offer properly covered those articles that were still unresolved, and there was no need to reference earlier tentative agreements. The County asserts that its modified last best offer addressed only those items where it changed its position. I conclude that the public would not be benefited by disregarding the County's modified last best offer, as suggested by the Association. There is no evidence that the County has backed away from any of the tentative agreements. The suggestion of the possibility of further litigation is speculative at best, given the evidence presented.
 
The Association further argues that the County's insurance proposal is not in the interest and welfare of the public. In this regard, the Association asserts that the County's proposal would deviate from the parties' bargaining history by instituting an employee obligation to pay a percentage of the premiums. The Association contends that its own proposal is consistent with the bargaining history between the parties. According to the Association, in the last few contracts, the parties have negotiated an increase in the hard cap sufficient to cover the entire first year cost of the Kaiser plan, which is one of the two health plans offered by the County. The Association claims that in the last contract, the negotiated hard cap required that the employees who chose the alternative plan, the Blue Cross option, pick up $12 per month of the cost of that plan. That Contract provided that in the second year of the Agreement, the County would pay 50 percent of the premium increase for health and dental insurance over the previous year. The Association argues that there has been no showing of a change in circumstances sufficient to justify a departure from the manner in which the parties have dealt with insurance premiums in the past, and no quid pro quo offered by the County to buy such a change. The Association further asserts that the County's proposal would unfairly penalize one portion of the bargaining unit and create unequal benefits by encouraging employees to enroll in one medical plan rather than the other. Finally, the Association contends that the County's proposal of a significant decrease in health insurance would be destructive to morale and well-being of law enforcement personnel, and thereby would have an adverse effect on the interest and welfare of the public. The County counters that its proposal simply maintains the status quo which dates to 1996.
 
Reflected in the chart below are the costs to employees of health and dental insurance under the past two Contracts and under the parties' proposals. These figures, in terms of dollars and percentage of total premium, were derived from exhibits placed into evidence by the County, as supplemented by the Arbitrator to include the Association's proposal.


 




Contract Period






Contract Period




County's Proposed


Association's Proposed
1996-971997-981998-991999-2000ContractContract
Blue Cross/ Blue Shield


$24.35


$35.20


$74.40


$74.40


$78.65


0
5.6%7.72%14.90%14.90%15%
Kaiser Permanente


0


$6.07


$20.22


$24.03


$38.41


0
0%1.44%4.54%5.31%7.50% 2nd yr-10%
3rd yr-12.5%
50% sharing of 2nd yr increase only
 
Interest arbitrators generally require that a party justify its proposals to change existing contract language. Here, both parties have proposed significant changes to the Agreement with regard to employee contributions towards the cost of health and dental insurance. The County would for the first time establish a fixed percentage of such insurance costs which would be borne by employees. The Association would eliminate any employee contribution during the first year of the Contract, have the Association share in the cost of the second year increase, and have the County absorb the entire third year increase. This would result in an elimination of any employee contribution for health and dental insurance during the first year. Adoption of either position would not likely have an adverse effect on the interest and welfare of the public. It is unlikely that there would be a destructive effect on employee morale sufficient to damage the public interest. The interest and welfare of the public does not depend on whether or not employees' contributions for insurance increase as suggested by the County or are reduced as suggested by the Association. Neither is the interest and welfare of the public effected by having employees contribute differing amounts towards the cost of health insurance depending on the plan selected. In any event, such differing employee contributions has been the past practice of the parties.
 
(b) ABILITY TO PAY
 
Implementing the Association's last best offer would cost the County about $40,000 during the first year. Greg Hansen, the County's administrative officer, testified that the County can afford to pay the additional cost of the Association's last best offer, though it may have to reprioritize its expenditures. In this regard, it should be noted that after the County budget was prepared, the County learned that it would annually receive about $600,000 in timber revenue from the federal government for a six-year period. The County can afford to pay for a reasonable and fair compensation package.
 
(c) TURNOVER AND RECRUITMENT
 
Effective recruitment and retention of employees is particularly important in this bargaining unit. Mr. Hansen testified that newly hired deputies generally do not patrol alone during their first six months of employment. This is because they must first be scheduled for and complete ten weeks of academy training. Then they must complete another month of field training. Deputies assigned to the jail must complete eight weeks of training at the academy. Sheriff Bob Wolfe testified that it may cost the County $50,000 to $100,000 to train a new patrol deputy. He further testified that it takes a new deputy about 18 to 24 months to learn to perform the patrol function fairly independently. During the past three years, the County has had to replace 11 deputies out of a total of about 36 deputies in the bargaining unit. None involved retirements. Three left to take positions with nearby city police departments, which generally provide a higher level of compensation than Polk County. In addition, since the jail opened in August, 1999, seven correction technicians have been replaced out of a total of nine in the bargaining unit. Sheriff Wolfe testified that this high turnover occurs because many applicants have no idea what the job is like. The County had 15 to 19 applicants for each opening as a correction technician. During the past three years, it had between 5 and 59 applicants for each deputy opening. The significant turnover among its staff should be a concern to the County, given its effect on costs and efficiency.
 
(d) and (e) COMPARISON OF OVERALL COMPENSATION
 
The next two listed criteria are related. They are "overall compensation presently received" and "[c]omparison of the overall compensation of other employees performing similar services ... in comparable communities." The governing statute defines comparable communities as those "of the same or nearest population range within Oregon."
 
The County proposed eight counties as comparable jurisdictions. These are Yamhill, Benton, Lincoln, Josephine, Umatilla, Klamath, Coos, and Columbia. These represent all counties within Oregon which have a population between 43,200 and 83,800, as compared with Polk County's 61,200. The County proposes six counties as comparable jurisdictions. These are Yamhill, Benton, Lincoln, Linn, Marion, and Tillamook. The latter three counties have populations of 103,000, 284,000, and 24,200, respectively. The Association urges that the comparison be limited to counties situated in the Willamette Valley, where Polk County lies. The Association asserts that the Willamette Valley's economy has been much more robust than the rest of the state. The Association contends that by inserting eastern and southern Oregon jurisdictions into the mix, the County is trying to compare apples to oranges.
 
The Arbitrator has selected the following counties as comparable jurisdictions:
CountyPopulation
Columbia43,200
Lincoln43,850
Coos61,700
Josephine74,850
Benton77,950
Yamhill83,800
 
These represent all counties in western Oregon which may be considered to be within the "same or nearest population range" as that of Polk County. While the statute requires a comparison with communities with "the same or nearest population range," it does not preclude the Arbitrator from further narrowing the list of comparable jurisdictions by considering other factors in order to determine the most appropriate comparables. See Winston-Dillard Fire District #5 and I.A.F.F., Local 2091 (Lehleitner, 1995); Lincoln City and Lincoln City Police Employees Association (Harris, 1997). I have considered geographic proximity and the natural division of the state between east and west in order to exclude from consideration those jurisdictions which lie east of the mountains. I have included western Oregon counties situated outside the Willamette Valley such as Coos, Josephine, and Columbia. I am unconvinced by the Association's argument that Polk County can only be compared with other counties in the Willamette Valley because of that region's fast growing economy. First of all, there are too few counties in the Willamette Valley with a similar population to that of Polk County, so as to make an adequate comparison. Moreover, the evidence presented establishes that Polk County's economy has been limited in its growth and has remained primarily rural. Unlike the situation in other parts of the Willamette Valley, rapid growth in high tech and manufacturing jobs has not occurred in Polk County. In fact, according to County Commissioner Mike Propes, only one high tech company is located in Polk County, and its largest employer is a gambling casino owned by a native tribe. It would not be inappropriate to compare Polk County with other rural counties in western Oregon to the north and to the south. According to statistics submitted into evidence, the average per capita income among the six selected comparable counties is actually slightly higher ($22,664) than the per capita income in Polk County ($22,334). Thus, the selected comparable jurisdictions are not economically out of line with Polk County. Linn, Marion, and Tillamook Counties have not been included because their populations are either too small or too large to be included with the other selected comparables as within the same or nearest population range.
 
The statute requires a comparison of overall compensation, including wages, vacations, holidays, pensions, insurance benefits, and other monetary benefits. I have done so to the extent possible given the information provided by the parties. The benchmark position utilized for comparison is a five-year patrol deputy with an A.A. degree and/or an intermediate DPSST certification. If a comparable jurisdiction picked up the employee's share of the PERS retirement contribution, that amount was added to wages.






County
Wages w/PERS Retirement PickupA.A. and/or Intermed. IncentiveEmployee Contribution for Insurance(1)





Total


Columbia


3486


+


85


-


0


=


3571
Lincoln3469+65-0=3534
Coos2894+87-0=2981
Josephine3011+90(2)-0=3101
Benton3647+87-88=3646
Yamhill3226+239-77=3388
Average


3370
Polk3395+96-59=3432
(w/County offer)

Polk3389+96-0=3485
(w/Association Offer)

 
The County provided the following list of annual vacation/holiday hours provided to five-year deputies by the comparable jurisdictions and Polk County:


County
Vacation and Holiday Hours Earned
Columbia216
Lincoln216
Coos208
Josephine240
Benton224
Yamhill208
Average218.7
Polk216


The difference of 2.7 hours between the annual vacation and holiday hours earned in Polk County and the average of the comparable jurisdictions would have an insignificant effect on the total compensation comparison. That total compensation comparison reflects that in the first year of the new Agreement, the County's last best offer would result in a five-year deputy with an A.A. degree and/or an intermediate certificate receiving about 1.8% more in total compensation received than the average similarly situated deputy in the comparable jurisdictions. Utilizing the Association's last best offer, the Polk County deputy's advantage would be about 3.4% during the first year of the new Contract. Comparing total compensation in the second and third year of the Agreement is not possible based on the evidence presented, and is made more problematic given the uncertain effect of the County's proposal to substantially increase employee contributions for health and dental insurance during the second and third year of the new Agreement.
 
(f) COST OF LIVING
 
The County provided evidence that its 3.7% wage increase offer matched the Portland CPI-W cost of living increase. Additionally, it provided evidence that wage increases in the bargaining unit during the past 10 years have exceeded the change in the cost of living.
 
(g) STIPULATIONS OF THE PARTIES
 
There were no such stipulations in this proceeding.
 
(h) OTHER FACTORS
 
The statute permits consideration of other factors "traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment," but only where the specifically listed statutory criteria do not provide sufficient evidence for an award. Since the statutory criteria do provide sufficient evidence to justify an award, other factors will not be considered.
 
CONCLUSION
 
For the reasons discussed below, I conclude that application of the statutory criteria favors adoption of the Association's last best offer.
 
The parties' wage offers are very close, even factoring in the modest additional cost of the Association's expanded education incentive. The significant difference between the parties' last best offers involves insurance. The County's proposal increases employees' contribution towards health and dental insurance, while the Association's proposal decreases those contributions. Had the Arbitrator been allowed more discretion in fashioning an award, a result somewhere between the parties' proposals would have been fashioned. However, that is not possible. Rather, by selecting one last best offer as required by the statute, the Arbitrator must, in effect, pick the insurance proposal which is best supported by the statutory criteria.
 
There is inadequate support for the County's proposed increases in the employees' insurance contribution, particularly during the second and third years of the new Contract. Mr. Hansen testified that about two thirds of the employees are in the Kaiser Permanente plan. Thus, it is appropriate to focus on those employees. During the past four years, employees in that plan have contributed between 0% and 5.31% of the insurance costs, with an average of less than 3% per year during that period. During the first year of the new Contract, the County's proposal would result in a modest increase to 7.5%. Given the small advantage that bargaining unit employees have in a total compensation comparison with the comparable jurisdictions, a reasonable argument could be made for such an increase. However, by the third year of the Contract, the County's proposal would require that employees contribute 12.5% of the cost of the Kaiser plan. This would result in an increase in the employees' contribution of about 150% over the amount contributed during the final year of the last contract. The employee contribution would be four times greater than the average percentage employee contribution over the past four years. If the cost of health insurance continues to rise faster than the cost of living, the percentage increase to employees would be even greater. The result of the County's proposal would be that the employees' actual total compensation increase by the third year of the Contract would likely fall below the percentage increase in the cost of living. The County justifies its offer to increase the employee contribution to the Kaiser plan by asserting that it is needed to establish a yearly reality check to insure that only that level of health plan that is needed is purchased. There is no evidence in the record which would establish whether or not the County's proposal would effect the level of health plan that is purchased. The County claims that its proposal maintains the status quo. Actually, the County's proposal deviates from the status quo by greatly increasing the employee contribution to the cost of the Kaiser plan. Such a substantial diminution of that insurance benefit would have an adverse effect on the County's retention and recruitment of employees. The modest advantage which the employees hold in relation to the average total compensation provided by the comparable jurisdictions does not justify the County's proposal for such a large increase in the employee contribution for health insurance. It is noteworthy that in four of the six comparable jurisdictions, the employer pays the entire cost of health insurance. The Association's insurance proposal is generous to employees, particularly with regard to the alternative Blue Cross plan. However, over the course of the new Contract, and focusing on the more frequently utilized Kaiser plan, it deviates significantly less from the status quo than does the County's proposal. There is just insufficient justification based on the statutory criteria for the County's proposal to increase the employee's payout for health insurance to the extent that it has. For that reason, the Association's last best offer is adopted.
 
AWARD OF THE ARBITRATOR
 
It is the determination of your Arbitrator that the last best offer of the Association shall be adopted.
 
Sammamish, Washington
 
Dated: March 26, 2001
 
Alan R. Krebs, Arbitrator
 
County was represented by David Doyle, County Counsel.
 
The Association was represented by Daryl S. Garrettson, of Garrettson, Goldberg, Fenrich & Makler.
 
1. These figures represent an average where two figures have been offered into evidence
 
2. This figure is an estimate as the information provided does not reveal the actual amount.