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IA-16-99
In the Matter of the Interest Arbitration Between State of Oregon (Oregon Military Department) and International Association of Firefighters, Local 1660 (Portland Air National Guard Firefighters).
 
I. Introduction.
 
This is an interest arbitration proceeding conducted pursuant to ORS 243.746. The hearing was held on January 13, 2000, at Portland, Oregon. The Employer was represented by Mark Hunt and the Association by Michael Tedesco. Testimony(1)
 
and evidence were received. Post hearing briefs were received on February 12, 2000. Based upon the evidence, the arguments of the parties, and an application of the statutory criteria thereto, the Arbitrator decides and awards as follows.
 
II. The Bargaining Unit.
 
This proceeding concerns a 12-member bargaining unit composed of firefighters, lieutenants and captains (herein jointly referred to as "firefighters") employed by the State's Military Department (the "Department") at the Portland Air National Guard Air Base (the "Base"), located in Portland, Oregon adjacent to Portland International Airport, operated by the Port of Portland ("PDX"). The bargaining unit was organized in 1994, and the parties' first collective bargaining agreement was executed that year. Their current bargaining agreement has a term of January 1, 1997 through June 30, 1999.
 
The Base is an "E" rated airport, the highest Federal Aviation Administration ("FAA") airport rating. Base firefighters perform crash rescue, EMT services, traditional firefighting and related functions, and are trained to deal with all types of military and civilian aircraft, military explosives and aviation fuels. When engaged in firefighting activity they accordingly must wear gear that protects them from higher temperature fires than those experienced by ordinary firefighters, and must be able to handle special equipment, such as the "jaws of life" utilized on aircraft. Base firefighters are dispatched to assist PDX firefighters with situations at that airport.
 
The twelve bargaining unit members fill two captain positions, two lieutenant positions and six firefighter positions. They work ten shifts a month, one on--two off, on a 24-hour rotation. While Base firefighters are considered State employees, the funding for their wages is received from the federal government through a Master Cooperative Agreement (the "MCA"), and the funding is allocated in accordance with ORS 291.232 -- 260.
 
III. The Issue.
 
The parties have agreed upon all the provisions of a new 1999 - 2000 collective bargaining agreement, except for wages. Wages in effect on June 1, 1999 were:
 
Classification Monthly Base Pay
 
Firefighter 2,263 2,475 2,681 2,887 3,100 3,247
 
Lieutenant 3,302 3,379 3,540
 
Captain 3,452 3,532 3,648 3,821
 
The Association's last best offer ("LBO") was:



3% July 1, 1999
 
3% January 1, 2000
 
3% July 1, 2000
 
3% January 1, 2000
 
The State's LBO was:
 
2% October 1, 1999
 
2% January 1, 2001
 
An additional $38 on each pay step June 1, 2001
 
IV. Association Contentions.
 
First of all, the statute requires an arbitrator to give first priority to the interest and welfare of the public. Arbitrators have determined, however, that the interest and welfare criterion ordinarily is not to be viewed alone, but rather is to be viewed in conjunction with the secondary criteria. See, City of Cornelius and AFSCME, Brown, 1999; City of North Bend and IAFF 2604, Lankford, 1999. Only where one party proposes a clearly unreasonable proposal should an arbitrator reject that proposal as not being in the public interest without regard to the secondary criteria. Oregon State Police Officers' Association and State of Oregon, Bethke, 1996. But where both proposals are reasonable, both are deemed to be within the public interest, and the secondary criteria should be considered. Here, both parties' proposals are reasonable, so it is appropriate to view this case in conjunction with the secondary criteria.
 
Regarding the ability to pay criterion, it was never argued at the bargaining table, nor seriously argued at the hearing, that the State lacked the ability to pay. Clearly, since any raise will be funded by the federal government, this criterion is not relevant to this proceeding. Furthermore, the difference in cost between the parties' proposals is insignificant: in 1999, the Association's proposal will cost the State only $17,257 more than its proposal; and in 2000, only $7,787 more. That insignificant difference is in part the result of the 3%-3% proposed split year increase, which will ultimately increase wages by 6%, but at only a 4.5% cost.
 
Regarding the recruitment/retention criterion, as noted by Arbitrator Brown in City of Cornelius, the ability to retain qualified employees can be the overriding factor in determining the interest and welfare of the public. In this case, the State has had difficulty retaining firefighters, yet incredibly, it has a hard time admitting that fact. The Base has lost employees at the rate of more than one per year: In 1992, it lost Ken Hooser to the City of Gresham department and Tim Buchannan to the City of Lake Oswego department; in 1993, it lost David Koch to the City of Vancouver department; in 1994, it lost Travis Kent to the City of Vancouver department and Jim Patton to the City of Corvallis department; in 1995, it lost Doug Banry to PDX; in 1997, it lost Chris Bryant to PDX; in 1999, it lost Rick Larson to the City of Portland department and Brett Venneri to the City of Longview, Washington department. Former IAFF Local 1660 President Reed testified:
 
I'm unaware of any Oregon department that has a turnover that approaches 10% a year. Firefighters are pretty stable: they tend to stay at a department for their 25 years. A firefighter who takes a new job is probationary for a year, and can be terminated at will. There are a number of reasons why people can leave, but when you can walk across a runway and make a $1,000.00 more a month, that's not a decision.
 
While money is not the only factor in why someone might leave, when all a Base firefighter has to do to make an additional $1,000 per month is walk across the runway to PDX, the temptation must be overwhelming. Captain Boggs, the youngest captain at the Base, also explained:



Most of the turnover is in the lower ranks. A captain who left would have to start over as a firefighter at another dept, so it would cost me a lot to leave. That's why the turnover tends to be in the firefighter ranks.
 
Besides the wage disparity, the total compensation package at PDX is $4,601, compared to $3,489, a difference of 24%. The difference in wages and overall compensation is why Bryant left the Base, and why six other current firefighters have tested at PDX, nine have tested at Tualatin Valley, seven have tested at the City of Portland, six have tested at the City of Vancouver, and one at the City of Gresham, Clark Couty District 5, Clark County District 6 and Newberg. All of those departments have significantly higher wage/benefit packages than the Base. What economic sense does it make to train a Base firefighter so he or she can take their expertise to another department?
 
Finally, as Boggs also testified, there is a cost to the turnover in employees, in terms of training, overtime, shift disruption and overall team work. If the Association's proposal is accepted, and if that acceptance were to keep a single firefighter from leaving, then the additional cost of compensation would pay for itself.
 
Regarding the comparability criterion, the Base is outside the typical conditions contemplated by ORS 243.746(4): The only other State operated, federally funded air base in Oregon is in Klamath Falls. Accordingly, since the comparability criterion is directly relevant to the recruitment/retention criterion, and since the statute says "'comparable' includes comparison to other states," it is appropriate to consider both comparators from the Portland metropolitan area, and out of state air national guard departments from other states that are funded by the federal government. See, Oregon State Police, Bethke, 1996; Department of Corrections, Kienast, 2000. And while the living conditions in other states are necessarily less comparable than those in the Portland area, the more accurate comparison will be with Portland area departments.
 
The local comparators selected by the Association are the six major fire agencies in the Portland area: City of Portland, Tualatin Valley Fire and Rescue, City of Gresham, Clackamas Fire District, City of Lake Oswego and PDX. The average top step of those six departments is $4,226, 23.1% higher than the Base top step. In addition, those comparators have a wide range of incentive pay and time off: Tualatin Valley has $94 per month deferred compensation; the six comparators have an average days per year time off of 16 days/$547, compared to the Base's 15 days/$400; Lake Oswego has a $.38 per hour education incentive; Portland, Tualatin Valley and Gresham have HAZ/MAT compensation of $204, $226 and $156 respectively, compared to the Base's of $50. The average total compensation package for an 11-year firefighter with all incentives is $5,514, compared to the Base's $3,699, a variation of 33%; and the lowest package, at Lake Oswego, is $5,183. The list of out of state departments is very short: Connecticut, Oklahoma, Alaska, Nevada and Iowa. The average wage in those states is $37,666, compared to the Base's $38,964; and the average salary/pension is $41,882, compared to the Base's $44,577. However, Oregon is the only jurisdiction among the six that pays the above rates at a 56-hour week schedule; firefighters at the comparators work from 37.5 hours to 53 hours per week, and an average of 45 hours. Consequently, the hourly rate for Base firefighters is only $15.31, compared to an average of $18.27, an 18% variation.
 
Regarding the cost of living criterion, the CPI-All Cities Index shows an inflation rate of 2.6%. On its face, this factor is not very helpful, since the two LBOs straddle the CPI, one higher, one lower. However, given the need for a "catch-up," this criterion should be given less weight.
 
V. State Contentions.
 
First, regarding the criterion of interest and welfare of the public, it is the theory of the State's case that the Association carries the burden of persuasion; that is, as the moving party, it has the burden of showing how the State's LBO does not meet the interest and welfare of the public. Moreover, any argument that interest and welfare of the public means that Base employees should be well compensated diverts attention from service recipients to service deliverers. The concept of interest has been properly interpreted by Arbitrator Paull in Multnomah County, 1999, to mean that citizens pay enough--but just enough--to deliver effective services, that is services of a good value. Thus, the interest and welfare of the public is met when public order/safety/protective services are delivered consistently, effectively and economically.
 
Regarding the ability to pay criterion, the Association's assertion is incorrect that federal funds are unlimited and therefore additional funds to pay its salary proposal is not at issue. The requirements associated with MCA funding are detailed under 36-5 Authorized Charges (b)(2)(a) & (b), and provide that pay raises at the Base must be consistent with those accorded all other State employees and must not exceed those raises. The State's LBO is consistent with those requirements. The vast majority of State employees agreed to raises of 2% plus 2%, and a small majority also accepted the $38 raise. The Association's proposal is in obvious violation of the MCA. Moreover, the federal government has no obligation to fund the Assocation's proposal, and an absence of funding might result in layoffs, in derogation of the public interest and welfare.
 
Regarding the recruitment/retention criterion, that criterion constitutes a directive to insure continuous and effective service delivery, delivery that may be interrupted by the departure of many productive employees or the hiring of unqualified employees. The evidence in this case, provided by the testimony of OMD Personnel Manager Carla Ploederer, is:
 
Applicant quality and quantity has been more than adequate and has, in fact, yielded excellent recent recruitment choices.
 
Since 1994, three firefighters have been hired to replaced promoted firefighters, a natural activity. Moreover, staff stability is demonstrated by the fact that, with the exception of two recently hired firefighters, the next lowest senior member of the bargaining unit has over five years of service. The bargaining unit enjoys an average longevity of 7.57 years of service. Moreover, lower wages is not the reason why most firefighters leave the Base. Chief Roush testified:
 
In exit interviews the number one reason given for firefighters leaving was a lack of job security; another reason was a lack of calls; a third reason was a lack of upward mobility; and a fourth reason, and the last in order, was wages.
 
And in any event, as Arbitrator Williams stated in Malheur County, 1997, an inference of a retention problem cannot be drawn from the fact that lower wages are paid. In sum, the interest and welfare of the public continues to be met because protective services continue to be provided consistently, effectively and economically.
 
Regarding the overall compensation criterion, regardless of which grouping of states is utilized, Oregon is in the middle by size but near the top in compensation, both in base pay and overall compensation. Moreover, when the state comparators are geographically leveled, it can be seen that the Association's own figures are fatally flawed. For example, corrected rates for Alaska should be $29,394, rather than the Association's $39,507. Furthermore, the Association's reliance on weighted Portland area comparators is also fatally flawed, since nothing in the statute permits such reliance. As Arbitrator Dorsey stated in Clackamas County, 1998,
 
There is not a single word in the statute which implies that "overall compensation" comparisons must be based on "weighted averages."
 
Regarding the comparability criterion, it is clear both from the language of the statute and from the changes from the original definition that the legislature intended State government to be compared with other states; only other states are appropriate comparators. Thus, the Association's proposed labor market comparison is inconsistent with the statute. When other states are compared, it is revealed that Base firefighters are paid 8% above their counterparts. Alaska is even further ahead, at 8.75. And eliminating the lowest paying state, Oklahoma, the difference becomes much greater. In addition, it should be noted that the Department also employs firefighters at the Kingsley Air Base in Klamath Falls, Oregon, and that those firefighters have accepted the State's offer, with the exception of the June 1, 2001 wage adjustment, an adjustment that is subject to a "me too" agreement. Moreover, the State's LBO is consistent with the adjustments accepted by most other State bargaining units. The Arbitrator is referred to Arbitrator Kienast's decision in Department of Corrections, 2000, which directed a correctional unit to accept the State-wide package.
 
Regarding the cost of living criterion, the only evidence is that Base wage increases since the first bargaining agreement have kept pace with inflation, and that implementation of the State's LBO will continue that pace.
 
VI. Arbitrator's Findings of Fact and Opinions.
 
The Arbitrator concludes for the following reasons that the interest and welfare of the public is best served by awarding the Association's LBO.
 
The Interest and Welfare Criterion: Preliminary Remarks.
 
The statute requires that an arbitrator must base his findings and opinions on the criteria set forth therein, giving first priority to the interest and welfare criterion and secondary priority to the remaining criteria; provided, further, that the other factors criterion shall not be utilized if, in the judgment of the arbitrator, the preceding criteria suffice. In the opinion of the Arbitrator, it is now well established both: (1) that the primary criterion is inextricably linked to the secondary criteria; and (2) that the other factors criteria should not be considered where the preceding secondary criteria are sufficient to resolve the issue. Preliminarily, then, the Arbitrator would note that it is his judgment that the other factors criterion, which was not relied upon by either party, need not be utilized.
 
The parties are in some substantial disagreement concerning the interest and welfare criterion. While that criterion may be difficult to define, it is the opinion of the Arbitrator that the statute directs an arbitrator to attempt to balance the interest and welfare of the entire public and the particular employer with the interest and welfare of the particular employees--that is, the awarded costs should be fair both to the tax payer and to the employee. In that regard, the Arbitrator would note that most arbitrators who have applied the statute have the same opinion as the Arbitrator's: They have determined that a work force will best meet the public's needs by assuring good morale through a fair wage, and a wage that is within the ability of the particular employer to pay. Thus, in the Arbitrator's view, fairness to the employee simply must be considered, as unfair wages cannot help but injure employee morale, which in turn ordinarily will both effect not only recruitment/retention but work product itself. And it follows that since the secondary criteria are inextricably linked to the primary criterion, the way that an arbitrator attempts to effect balance is to first examine the relevant secondary criteria and then to apply his or her findings regarding those criteria to the first criterion.
 
The parties also are in disagreement over the so-called burden of persuasion. The Arbitrator determines that no such burden falls to either party. Burden of persuasion generally applies to language disputes or coverage disputes. Thus, where one party is proposing a change in language or coverage status quo, that party is charged with the burden of persuading the arbitrator that the change is necessary or appropriate. The only situation where burden of persuasion usually applies is to a simple wage or benefit level dispute is where the difference between the two LBOs is relatively inconsequential, e.g., one percent over three years. In fact, in such cases, a union will generally recognize that an arbitrator ordinarily will defer to the employer's determination and will not even pursue arbitration, recognizing that it cannot overcome the burden of persuading the arbitrator that a slightly higher proposal should be awarded. In the instant case, the difference between the two LBOs is not relatively inconsquential.
 
The Ability to Pay Criterion.
 
Turning then to the first applicable secondary criteria, that of the reasonable financial ability of the unit of government to meet the costs of the proposed contract, the Arbitrator finds that this criterion favors the Association. Indeed, since the statute speaks solely to the financial ability of the unit of government--in this case the State--to meet the costs of a union's LBO, and given the fact that the federal government will be solely responsible for funding any awarded increase, the criterion, as a matter of law, cannot aid the State.
 
The Recruitment/Retention Criterion.
 
This takes us to the recruitment/retention criterion, a criterion over which the parties strongly disagree, and a criterion which the Arbitrator finds supports the Association's LBO. The evidence of a retention problem was simply overwhelming, indeed so compelling that the Arbitrator adopts the above stated Association contentions regarding this criterion as his findings of fact. In sum, since 1992, the Base has lost firefighters at the rate of more than one per year, and compelling evidence in the form of testing by Base firefighters at area comparators established that that rate may increase dramatically if those applied for openings become available. Base firefighters resign and go to other Portland area jurisdictions primarily because of the substantial disparity in wages and benefits paid by the State and by area comparators. Roush's testimony to the contrary was not persuasive. The excessively high turnover has had its cost in training, overtime, shift disruption, morale and overall team work. Furthermore, compelling evidence revealed that State managers may not have been aware of the scope of the problem prior to arbitration. Consider Ploederer's admission at the hearing that, "If I found that one a year were leaving, I guess that could be a problem."
 
The Comparability Criterion.
 
The next relevant secondary criterion is that of comparability. Again, the parties are in vigorous disagreement over applicable comparators. And again, the Arbitrator finds himself in agreement with the Association. In the Arbitrator's opinion, ORS 243.746(4)(e)(C) is clear and unambiguous: It expressly allows an arbitrator to consider both communities with similar populations within Oregon and other states. The State argues that the word "includes" in paragraph (C) limits an arbitrator's authority to comparisons with other states. The Arbitrator cannot agree. Had the legislature intended such a limitation, it would have instead utilized a phrase such as "is limited to."
 
Regarding community comparison, the Arbitrator deems it appropriate, for two reasons, to compare Base firefighters with other firefighters employed in the same community, namely: the Portland area, an area which is its own statistical measuring area. First, the Base's situation is almost unique, both because the Base has no population range of its own, and because the only other base of its type exists within the State in a community that does not have a population range similar to that of either the City of Portland or the Portland area. Second, the Base's situation is similar to that of Portland area fire districts, and employees of such districts are normally first compared to other districts and departments within that area. Turning to the only evidence offered to the Arbitrator concerning community comparability, as noted above, the average top step of the six community departments is $4,226, 23.1% higher than the Base top step; the average total compensation package for an 11-year firefighter with all incentives is $5,514, compared to the Base's $3,699, a variation of 33%; and the lowest package, at Lake Oswego, is $5,183. Clearly, community comparability favors the Association's LBO.
 
Regarding comparison with other states, the Arbitrator finds that the evidence favors neither party. The evidence is clear that the wages of Base firefighters are higher than wages paid by out of state comparators; however, it is equally clear that Base firefighters work longer hours to earn those wages. In the opinion of the Arbitrator, those two factors offset each other.
 
The Cost of Living Criterion.
 
Viewed in a vacuum, the CPI criterion is neutral, as the only evidence is that, historically, Base wage increases have kept pace with the CPI-All Cities Index, and there is insufficient evidence to determine whether the State's offer would not allow Base firefighters to maintain that pace. On the other hand, the "catch-up" factor mitigates against a neutral application of the criterion.
 
Under the prior law, where comparability data alone revealed a significant lag in wages, arbitrators ordinarily determined that an increase should not be limited by the CPI, and that a "catch-up" should be awarded. In such cases, they determined that the CPI should be the starting point for measuring the catch-up needed to bring unit employees into a competitive position. The prior law, has been tempered by changes imposed by the legislature in 1995, and particularly by the addition of a specific recruitment/retention criterion. However, it seems clear enough from decisions that have been rendered since 1995, that where both favorable comparability evidence and favorable recruitment/retention evidence support a catch-up award, neutral or negative CPI evidence will not mitigate against the catch-up. In the instant case, since Base firefighters lag far behind all community comparators, and since the recruitment/retention evidence strongly favors the Association, a catch-up increase is warranted.
 
The Interest and Welfare Criterion: Conclusions.
 
The Arbitrator's examination of the relevant secondary criteria leads him to conclude that the interest and welfare of the public will best be observed through the implementation of the Association's LBO. In his opinion, the wage increase proposed by the Association is absolutely necessary if the Base's retention problem is to be seriously addressed and ultimately corrected.
 
The Arbitrator also wishes to note that in this case, he not only has considered the interest and welfare of the State and its constituents, he necessarily has considered the interest and welfare of the federal government, not only because the federal government is paying the bills, but because it has a direct interest in a maintaining a skilled and motivated firefighter force to protect its planes and pilots. In that regard, the Arbitrator has also considered the State's argument that the implementation of the Association's LBO ultimately might result in layoffs. In the opinion of the Arbitrator, the argument is speculative. Thus, the Arbitrator can only conclude that the implementation of the Association's LBO will best serve federal interests.
 
VII. Award.
 
The Arbitrator selects the last best offer of the Association. The State is directed to implement that offer.
 
Dated this 28th Day of February, 2000,
 
Thomas F. Levak, Arbitrator,
 
Portland, Oregon



Footnotes:
 
1. Association Witnesses: Barry Quinn, Marc Reed, Doug Boggs and Doug Bannery. Employer Witnesses: Kate Schmidt, Carla Ploederer Allen Roush, John McAllister.