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IA-12-03
GRANT COUNTY POLICE OFFICERS' ASSOCIATION and GRANT COUNTY. IA-12-03
 
This interest arbitration case concerns a three-year collective bargaining agreement (July 1, 2002 through June 30, 2005) between Grant County and the Grant County Police Officers' Association. During bargaining, the parties tentatively agreed on all issues except wages and overtime. The parties submitted their last best offers (LBOs) in a timely manner, and agree that wages shall be paid retroactively.
 
The Association represents a group of 12-13 officers, of whom 10 are corrections deputies and the others are patrol deputies. All deputies are paid according to the same wage schedule.
 
The Issues and Proposals
 
Both parties propose across-the-board percentage increases to the salary schedule for each year of the contract. The County offers 1.7 percent the first year, 2.1 percent the second year, and 3.0 percent the third year, while the Association proposes increases of 3 percent each year of the contract term.
 
Concerning overtime, the Association seeks two changes from current practice. First, the Association proposes that overtime credit (time and one-half) for any hours worked beyond a deputy's regular daily shift (that is, for more than eight hours where the employee works a 5-8 shift and for more than 10 hours for those on a 4-10 schedule). Second, the Association proposes that paid leave be considered "hours worked" for purposes of determining overtime. The County's position is to maintain the current practices of paying overtime on a weekly basis (that is, for more than 40 hours worked in a week) and of not calculating paid leave as hours worked when computing overtime hours.
 
Statutory Criteria
 
ORS 243.746(4) requires an arbitrator to examine and analyze certain criteria is making an interest arbitration award. The first criterion to which "first priority" is to be given is the "interest and welfare of the public." It is generally recognized that this criterion can best be considered in light of an analysis of the other statutory criteria.
 
1. Employer's ability to pay
 
ORS 243.746(4)(b) instructs an arbitrator to consider:
 
"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."
 
It is clear from the wording of this criterion that the County's "reasonable financial ability" to pay the costs of any proposed settlement must be judged in relation to other planned expenditures, and thus involves more of an analysis than simply finding whether the employer will have sufficient gross income to pay for a settlement.
 
The County does not claim an absolute inability to pay for the Association's LBO, but contends that other important expenditures would have to be curtailed to do so. In addition, the County established through exhibits and testimony by County Judge Dennis Reynolds that the economy of the County is depressed. Grant's unemployment rate (10.3 percent) is the second highest among the state's 36 counties (Exhibit E-8), and its overall ability to raise revenue is the lowest among the counties in the region (Exhibit E-5), including having the lowest assessed property value per person (Exhibit E-18). According to Reynolds, the County has had to forgo doing needed maintenance on the courthouse, has been unable to replace and update computer equipment, and has deferred other desired projects because of a lack of funds. The County also contends that in both 2002 and 2003, it had to make mid-budget reductions because of revenue shortfalls. The County's opinion about the state of the economy in Grant is graphically acknowledged in an Oregonian article published last fall which stated: "This place is enduring the hardest of Oregon's hard times. Even in the context of the state's tired, recession-wracked economy, Grant County stands out."
 
At the time of hearing, the budget for the Sheriff's Department had a projected deficit of $93,000 for the 2003-2004 fiscal year. (Exhibit E-29) According to Sheriff Glenn Palmer, part of the deficit can be attributed to "out of control" overtime, but most is due to "materials and services" expenditures for inmate food and medical care. The County garners a substantial amount of revenue from housing prisoners from the U.S. Marshall's office and from the INS. According to County Treasurer Kathy Smith, the County gets $55 per day for an inmate, of which $5 is supposed to offset medical expenses. (There have been higher-than-anticipated medical expenses.) Through January of this year, the County had received about $260,000, but Sheriff Palmer stated that considerably more has been billed and that his jail officer projects there will be total revenue for the year of $686,000. Treasurer Smith, however, testified that the projection for billings would be "more than $400,000," but noted that there is no guarantee that the INS will continue sending prisoners (unlike the Marshall's office, which guarantees a certain number), and that if the INS "pulled out" the County would be "stuck with a $200,000 deficit" below projected revenues. Sheriff Palmer, on the other hand, believes that such revenues are going to continue to increase, although he "can't guarantee it."
 
Treasurer Smith stated the County has a contingency budget of $271,000, of which about $100,000 will be needed for the Sheriff Department budget. She said such a transfer will affect the budget carry-over for the next fiscal year. The County contends it needs a carry-over to pay expenses until property tax revenues become available in November. The alternative would be to borrow money for operations, with resulting additional expenses for interest payments.
 
Dana Bennett, a research analyst for the Association's law firm, estimates that the difference between the County's and the Association's wage proposal would be a cost of $5,864 for 2002-03, $10,802 for 2003-2004, and "about $12,000" for the third year, for a total of "about $28,000." (Bennett testimony; Exhibit A-37) County Judge Reynolds estimates the total three-year difference to be about $36,000, which includes some other wage-related costs. (Exhibit E-4) Both parties' estimates are based on wages for the current work force.
 
2. Recruitment and Retention of Employees
 
Another statutory criterion is "[t]he ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided." ORS 243.746(4)(c).
 
In recent years, the Sheriff's Department has had six employees who resigned. Of these, two left for discipline-related reasons and another because he lost his driver's license due to a medical condition. The other three left specifically for other employment, only one of whom moved to another law enforcement position. Sheriff Palmer testified that "corrections positions seem harder to fill," although he sometimes gets a dozen applications for an opening. He said he does not tend to get applicants from other jurisdictions, and believes that he will have a hard time recruiting "with either the county or union proposal."
 
Several current deputies testified that they have "looked into" or applied for positions in other jurisdictions. Despite the possible interest of some employees in seeking other jobs, it does not appear-based on the County's recent recruitment and turnover experience-that it has not been able to attract and retain qualified personnel.(1)
 
3. Overall Compensation and Comparisons with Other Employees
 
ORS 243.746(4)(d) and (e) call for an examination of the overall compensation received by the subject employees and a comparison with like employees in other jurisdictions.
 
"Overall compensation" is defined in (4)(d) as including all direct or indirect monetary benefits. Paid leave is a benefit, but one that is not at issue here, and the differences between those available to Grant County deputies and officers in comparable counties are not substantial. (See, e.g., Exhibit E-19) For purposes of this particular arbitration, the more pertinent comparisons concern wages and the effect on them of direct benefits such as retirement and insurance; and, concerning the second issue in the case, practices relating to overtime pay.
 
The parties agree that Lake, Harney and Wallowa counties are appropriate "comparators" to Grant. The Association argues that Morrow County also should be included, although-as the parties agree-the general practice is to include within the statute's "comparable communities" those whose population is within 50 percent (over or under) that of the subject jurisdiction, and Morrow's larger population puts it slightly out of that range. The Association notes that Morrow is the next most populace county to Grant in the state and that the two counties border each other; and that excluding it leaves only three counties, all smaller than Grant in population, as comparators.
 
The County contends that Morrow should not be included because its tax revenue "dwarfs" that of the other four counties; and that its assessed value is more than three times that of Grant, resulting in an assessed value per person of $97.77 (fifth highest in Oregon) versus $46.81 for Harney, $53.15 for Lake, $65.11 for Wallowa, and $43.58 for Grant (third lowest in the state).
 
The County's argument is persuasive, particularly considering the contrast between Morrow's resources and consequent probable ability to pay and those of the other four counties. I find it is appropriate, in this case, to use as comparators those three counties that the parties agree are comparable.
 
Although Grant and the three comparator counties are at least comparable in population and geographic location within Oregon, there are significant differences among them. Wallowa County, for example, does not include corrections officers in the comparator bargaining unit. In Lake and Harney counties, corrections and patrol deputies are paid on different salary schedules, while in Grant all bargaining unit employees-corrections and patrol-work for the same wages and benefits. This "parity" in pay for all unit employees was proposed by the Association and agreed to by the parties during negotiations in 1997. One result of parity in compensation is that corrections officers in Grant compare more favorably to their colleagues in the comparator counties than do the Grant patrol officers, as seen in these charts (Exhibits E-21 and E-22):
 
Annual Compensation for 2003


 
Patrol Deputy




 
County Base Rate PERS Insurance Total
 
(Annual) (Employee) (Employee Paid)
 
Harney $36,492 -$2,190 -$2,220 $32,082
 
Lake $32,496 $0 -$1,500 $30,996
 
Wallowa $37,920 -$2,275 -$780 $34,865
 
Average $35,636 -$1,488 -$1,500 $32,648
 
County LBO $32,123 $0 -$3,195 $28,928
 
% Difference -9.9 -11.4
 
Assn. LBO $32,820 $0 -$3,195 $29,625
 
% Difference -7.9 -9.3
 
Corrections Deputy


 
Harney $34,471 -$2,068 -$2,220 $30,182
 
Lake $26,809 $0 -$1.500 $25,309
 
Average $30,640 -$1,034 -$1,860 $27,746
 
County LBO $32,124 $0 -$3,195 $28,929
 
% Difference 4.8 4.3

Assn. LBO $32,820 $0 -$3,195 $29,629
 
% Difference 7.1 6.8
 
NOTE: Base is the maximum; five-step schedules except for Lake. Lake and Grant pay the 6 percent employee PERS "pick-up."
 
It is clear that the net income for corrections officers will be above average under either LBO, while that for patrol officers will be significantly lower than the average. The Association points out that the difference for patrol officers may be even greater in some cases because Lake ($30 or $45) and Harney ($25 or $50) pay an additional monthly stipend to those officers who have intermediate or advanced DPSST certifications, although it is not clear how many of those officers receive the benefit or how many Grant County officers would be eligible if such payments were available. (See Exhibit A-35)
 
Concerning wages for other employees of Grant County, the County is making adjustments to the pay of non-represented employees that are larger in percentage than that offered to the Association. The County bases this decision on an LGPI study that determined that the non-represented employees were being paid more than 10 percent below "the market" for comparable positions. The County is implementing a plan under which, over a five-year period, it will pay a combination of cost-of-living and "market adjustment" percentage increases for such employees. This plan resulted in increases of more than 4 percent for 2002-03 and 2003-04. According to Treasurer Smith, the County projects an increase for 2004-05 for unrepresented employees equal to a cost-of-living raise plus 2.09 percent. Thus, the percentage increase for non-represented employees for each of three years at issue here is greater than that offered the Association unit by the County or that sought by the Association.
 
The County argues that, with implementation of its LBO, the wage scale for officers in the current year will be above that recommended in the LGPI study: by $168 per month for patrol and $330 a month for corrections. (Exhibit E-28) According to County testimony, the Association unit was granted a 6 percent pay boost in 1997 (not granted other County employees) to compensate for the effects of Ballot Measure 8 (which provided that employers could not pay the PERS "pick-up") and that the County resumed paying the employee PERS contribution when BM 8 was overturned, thus effecting a 6 percent increase in the wage rates.
 
As a result of negotiations with the only other unit of represented County employees, the County and Operating Engineers Local 701 agreed that wages for Road Department workers would increase 1.7 percent July 1, 2002, 2.1 percent July 1, 2003, and 2.3 percent July 1, 2003.
 
The Association's overtime proposal for daily-rather than weekly-computation is comparable to that provided for patrol officers in Lake and Harney, while Wallowa uses the 40-hour per week standard that is current practice in Grant. Concerning the proposal to count all paid time off as hours worked, only Harney among the comparators does so.
 
4. Cost of Living
 
The Consumer Price Index shows increases of 1.4 percent for 2002 and 2.2 percent for 2003. The County's offer, therefore, is .3 percent above the CPI for the first year of the contract and .1 percent less the second year; while the Association proposal exceeds the CPI 1.6 percent the first year and .8 percent the second.
 
The County contends its proposal, overall, thus exceeds the increase in the cost of living. It also argues that, under its proposal, the maximum wage would increase, since 1992, 48.4 percent for corrections officers and 44.5 percent for patrol officers, while the CPI increase for the same period (July 1, 1992 to July 1, 2003) was 30.1 percent. (Exhibit E-14)
 
Discussion
 
The Association proposal regarding overtime pay is consistent with the general practices in this state. (See, e.g., Exhibit A-46) In addition, the Association established through testimony that, in some cases, officers are reluctant to "post" all overtime hours because of a general feeling that the Sheriff will be subject to "heat" from County administration as overtime liabilities accrue. But I am uncertain how the Association proposal for daily overtime-or perhaps any proposal that may increase overtime pay-addresses that circumstance. Also, neither party was able to develop a credible estimate of what additional costs to the County might be caused by the proposed changes in the overtime provision.
 
The Association produced testimony showing that some officers on the early steps of the wage schedule qualify, due to their wage levels, for such assistance programs as WIC and food stamps, and that some are discouraged from making a contribution to medical insurance because of the effect such an expenditure would have on their take-home pay. It is indeed unfortunate that a full-time law-enforcement employee would be eligible for such programs or would feel compelled to forgo medical insurance coverage for his family because of personal budget constraints. As the Association notes at p. 17 of its brief, the "County is obligated to pay the fair market rate for law enforcement personnel."
 
The "fair market rate" cited by the Association essentially is what the statute requires an arbitrator to examine, based on comparable jurisdictions. In this case, patrol officers would be paid less (11.4 percent) for this year under the County's offer than the average for those officers in the comparator counties, while the corrections officers would be paid somewhat more (4.3 percent) than the average. Consequently, a majority of the bargaining unit members arguably will earn the "fair market rate," but a few members (patrol officers) will lag behind their colleagues in other jurisdictions. (The same observation could be made regarding the Association's LBO, although of course both categories would earn more money.)
 
The difference between the parties' wage proposals is not great in absolute dollars ($36,000 or $28,000, depending on what is included in the computations), but Grant County is a relatively "poor" county in terms of its ability to raise revenue. The County has experienced budget shortfalls, and had to make mid-year reductions, in recent years; and there seems little prospect, at least in the short term, for substantial improvements in revenues.
 
This case presents the too-common situation of competing public interests. Certainly, it promotes the interest and welfare of the public to have competent, stable law enforcement protection. At the same time, other county services also serve the public interest and welfare, and need to be provided for.
 
The County's LBO on wages exceeds the increase in the cost-of-living for the term of the contract, and the County proved that its ability to pay more is constrained by limited revenue and the need to pay for other services and projects. Also, the Association did not convince me that a compelling reason exists, that would be ameliorated by its proposal, for changing the practice for overtime calculations.
 
Under these circumstances, and because I must order one LBO to be implemented in its entirety, I find that it will better serve the interests of Grant County citizens if I select the County LBO.
 
ORDER


 
The last best offer of the County is selected and ordered to be implemented, pursuant to ORS 243.746(5).
 
Submitted April 2, 2003,
 
Allen M. Hein, Arbitrator
 
For the Association: Steven Schubak, Attorney; Garrettson Goldberg Fenrich & Makler
 
For the County: Kenneth Bemis, Attorney; Bullard Smith Jernstedt Wilson
 
1. Of course, the relatively high unemployment rates in this geographic area may be a contributing factor to this situation.