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IA-18-05
INTEREST ARBITRATION BEFORE SHERMAN B. KELLAR, Esq., ARBITRATOR
MYRTLE CREEK POLICE OFFICERS ASSOCIATION and CITY OF MYRTLE CREEK. IA-18-06.
 
I.INTRODUCTION
 
The collective bargaining dispute between the parties proceeded to arbitration as provided by ORS 243.742. Negotiations and mediation resolved most of the issues but the parties are at impasse on several issues which they have submitted to interest arbitration before the undersigned Arbitrator. The Arbitrator’s charge is to evaluate the parties’ last best offer according to the criteria contained in ORS 243.742 in order to determine which final package shall be included in the parties Collective Bargaining Agreement. Both parties presented documentary evidence and witnesses, who were examined and cross examined. All witnesses testified under oath, as administered by the Arbitrator.
II.WITNESSES
 
Association Witnesses
1. Timothy Lenihan, Senior Patrol Officer
2. Dana Bennett, Senior Research Analyst
 
City/Employer Witnesses
1. Aaron Cubick, City Manager
2. William Duncan, Fire Chief
III. EXHIBITS
Association Exhibits
A-1 Expired Collective Bargaining Agreement
A-2 Association’s Last Best Offer
A-3 City’s Last Best Offer
A-4 Association Seniority List
A-5 Employees voluntarily terminating service over past five years
A-6 Equipment purchase cost spreadsheet
A-7 Population Comparison
A-8 CPI Comparison
A-9 Total Compensation Comparability - Population based
A-10 Total Compensation Comparability - Local Labor market based
A-11 Impact of City’s LBO on comparability
A-12 Dispatch contracting out cost savings
A-13 Support Data for comparability analysis
A-14 Excerpts from Fiscal Year 2004-2005 Budget Audit
A-15 Excerpts from Fiscal Year 2004-2005 Budget Audit
A-16 City’s Final Offer
A-17 Association’s Final Offer
 
City of Myrtle Creek Exhibits
1 Current Collective Bargaining Agreement
2 Oregon Arbitration Statute
3 Association Last Best Offer
4 City Last Best Offer
 
COMMUNITY INFORMATION
5 Myrtle Creek Profile
6 Douglas County Industry Mix Changes & Community Impacts
7 Long Term Industry Forecasts for Douglas County
8 2005 Distressed Areas
9 Profile of General Demographic Characteristics 2000
Douglas County
 
BUDGET INFORMATION
10 GFOA - Unreserved Fund Balance Recommendations
11 Stabilization Fund Recommendations
12 Oregon Administrative Rules - Fund Balances and Contingencies
13 City of Myrtle Creek General Fund Budget 2005/06
13A Budget Goals
13B Memo (2/6/04) General Fund Expenditures
13C Memo (6/8/04) Proposed City of Myrtle Creek FY 2004-2005
Municipal Budget
13D Notice of City Measure Election (11/2/04) Five year public safety
local option levy
13E Memo (3/3/06) Public Work Director re: construction of 33 residential dwellings1
14 Myrtle Creek Parks Department Description
15 IT Expenditure Chart
16 Dispatch Contract Fact Sheet
17 Dispatch Intergovernmental Agreement
18 Budget Status ½ year 2005/06
 
FN 1 - The exhibits in italics were those submitted at the hearing and not included in the City’s original Exhibits, Table of Contents.
 
AUDIT AND BUDGET HISTORY 2001-2006
19 2001/02
20 2002/03
21 2003/04
22 2004/05
23 2005/06 (not audited)
 
TAX INFORMATION
24 How Property Taxes Work in Oregon
25 Tax Rate & Valuation Summary - Douglas County
 
BARGAINING UNIT DATA
26 Wage & Benefit Chart
27 Wage Increase History
28 Insurance Premium History
29 Insurance Premium Rates August 1, 2005
30 Insurance Plan Summary
 
COMPARABILITY DATA
31 Population Information July 1, 2005 & Selected Comparables
32 Aumsville
33 Bandon
34 Boardman
35 Burns
36 Coquille
37 Hubbard
38 Mt. Angel
39 Myrtle Creek
40 Nyssa
41 Oakridge
42 Reedsport
43 Toledo
44 Warrenton
45 Dundee Intergovernmental Agreement w/Newberg
 
CPI INFORMATION
46 BLS CPI July 2005
47 Business Week Survey for 2006 CPI
 
OREGON INTEREST ARBITRATION CASES
48 Newport Police - January 2006
49 Winston-Dillard Fire - February 2005
50 Tigard Police - February 2004
 
IV.RELEVANT STATUTORY LANGUAGE
 
243.746 Selection of arbitrator; arbitration procedure; last best offers; bases for findings and opinions; sharing arbitration costs.
 
***
 
(3) The arbitrator shall establish dates and places of hearings. Upon the request of either party or the arbitrator, the board shall issue subpoenas. Not less than 14 calendar days prior to the date of the hearing, each party shall submit to the other party a written last best offer package on all unresolved mandatory subjects, and neither party may change the last best offer package unless pursuant to stipulation of the parties or as otherwise provided in this subsection. The date set for the hearing may thereafter be changed only for compelling reasons or by mutual consent of the parties. If either party provides notice of a change in its position within 24 hours of the 14-day deadline, the other party will be allowed an additional 24 hours to modify its position. The arbitrator may administer oaths and shall afford all parties full opportunity to examine and cross-examine all witnesses and to present any evidence pertinent to the dispute.
(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 paragraphs (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. Notwithstanding the provisions of this paragraph, the following additional definitions of "comparable" apply in the situation described as follows:
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state cities of the same or similar size;
(B) For counties with a population of more than 400,000, "comparable" includes comparison to out-to-state counties of the same or similar size; and
(C)For the State of Oregon, "comparable" includes comparison to other states.
(f) The CPI-All Cities Index, commonly known as the cost of living.
(g) The stipulations of the parties.
(h) Such other factors, consistent with paragraphs (a) to (g) of this subsection as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award.
(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. The opinion and order shall be served on the parties and the board. Service may be personal or by registered or certified or certified mail. The findings, opinion and order shall be based on the criteria prescribed in subsection (4) of this section.
(6) The cost of arbitration shall be borne equally by the parties involved in the dispute. [1973 c.536 § 19; 1995 c.286 § 10; 2001 c.104 § 76]
 
243.750 [1963 c.579 §5; repealed by 1969 c.671 §3 (243.751 enacted in lieu of 243.750)]
 
243.751 [1969 c.671 §4 (enacted in lieu of 243.750); repealed by 1973 c.536 §39]
 
243.752 Arbitration decision final; enforcement; effective date of compensation increases; modifying award. (1) A majority decision of the arbitration panel, under ORS 243.706, 243.726, 243.736, 243.742 and 243.746, if supported by competent, material and substantial evidence on the whole record, based upon the factors set forth in ORS 243.746 (4) , shall be final and binding upon the parties. Refusal or failure to comply with any provision of a final and binding arbitration award is an unfair labor practice. Any order issued by the Employment Relations Board pursuant to this section may be enforced at the instance of either party or the board in the circuit court for the county in which the dispute arose.
(2) The arbitration panel may award increases retroactively to the first day after the expiration of the immediately preceding collective bargaining agreement. At any time the parties, by situation, may amend or modify an award of arbitration. [1973 c.536 §20; 1981 c.423 §1l 1983 c.504 §2]
 
243.756 Employment conditions during arbitration. During the pendency of arbitration proceedings that occur after the expiration of a previous collective bargaining agreement, all wages and benefits shall remain frozen at the level last in effect before the agreement expired, except that no public employer shall be required to increase contributions for insurance premiums unless the expiring collective bargaining agreement provides otherwise. Merit step and longevity step pay increases shall be part of the status quo unless the expiring collective bargaining agreement expressly provides otherwise. [1973 c.536 §21; 1995 c.286 §11]
 
ORS 243.650 provides relevant definitions, as follows:

 
As used in ORS 243.650 to 243.782, unless the context requires otherwise:

 
***
 
(11) "Final offer" means the proposed contract language and cost summary submitted to the mediator within seven days of the declaration of impasse.
 
***
 
(14) "Last best offer package" means the offer exchanged by parties not less than 14 days prior to the date scheduled for an interest arbitration hearing.
 
***
 
V. ASSOCIATION’S LAST BEST OFFER
 
MYRTLE CREEK POLICE OFFICERS’ ASSOCIATION
LAST BEST OFFER \ FEBRUARY 15, 2006
 
1. All tentative agreements to date.
 
2. Article 10: Health and Welfare
A.3 During the term of term of this agreement and through successor negotiations, the City shall maintain fully paid insurance which is equal to or better than Employee Benefits Service Trust Medical Plan V - A, w/PPP, $100 deductible, and the Employee Benefits Service Trust Dental Plan IV.
 
3. Article 15: General Provisions
C.1. Each employee required to wear a uniform shall be provided three uniforms for summer and three uniforms for winter. The employer shall grant each patrol employee a reimbursement of up to $300 during the term of this agreement for the receipted purchase of duty related equipment. The employer shall provide bulletproof vests, equal to or greater than a III level, and shall require the officers to wear such vests while on patrol duty. The employer agrees to repair or replace both personal and employer-owned uniforms, equipment and or property damaged or destroyed on duty unless gross negligence can be shown on the part of the employee.
 
4. Article 19: Compensation
A. Effective July 1, 2005 increase the wages for all bargaining unit members by three (3) percent. Add a step 7 to the wage scale reflecting a 3% difference between steps. Employees will move to step 7 effective July 1, 2005 if they have spent a year or more at step 6.
B. Effective July 1, 2006 increase the wages for all bargaining unit members by three (3) percent. Add a step 8 to the wage scale at an addition 3%.
C. Effective July 1, 2007 increase the wages for all bargaining unit members by three (3) percent. Add a step 9 to the wage scale at an additional 3%.
 
5. Article 25: Term of Agreement
This Agreement shall be effective upon the date of execution and shall remain in full force and effect through June 30, 2008.
This Agreement shall automatically renew each year thereafter unless one or both of the parties serve(s) upon the other written notice of a desire to terminate and/or modify the Agreement no later than February 1 of the year in which the Agreement would otherwise expire. This Agreement shall remain in full force and effect during the negotiations for any successor agreement.
 
VI.EMPLOYER’S LAST BEST OFFER
 
City of Myrtle Creek
Final Offer
 
Article 8 - Hours and Overtime
Section J. Call Back. When called to duty on a day off or required to attend court on a day off, if the court appearance cannot be rescheduled, a minimum of three (3) hours at the overtime rateshall be paid. When called to duty, including court appearances, more than one (1) hour before or after his regular shift, on a duty day the employee will be paid for the actual hours worked and will be guaranteed a minimum of three (3) hours at the overtime rate.The employee shall be compensated for the actual time spent at the appearance at the applicable rate. In no event will the employee be compensated twice for the same hours.




Article 10 - Health and Welfare
Effective August 1, 2005, the City will pickup the full premium for the Employee Benefits Service Trust Medical Plan V-A, w/PPP, $100 deductible.
Effective August 1, 2005, the City will pickup the full premium for the Employee Benefits Service Trust Dental Plan IV.
Any premium increase to the above plans beyond what is in effect on August 1, 2005, will be equally shared by the parties (50/50 split). Any contributions required of the employee will be automatically deducted from the employees paycheck. In lieu of such deductions, the parties may mutually agree to adopt alternative medical and dental plans.
The parties understand that the Employee Benefits Service Trust has sole control over plan benefits and design in order to properly maintain the viability of the Trust. As such, the City is not obligated to bargain over any plan changes the Trust deems appropriate.




Article 19 - Compensation
Section A. Effective July 1, 2002, the wages for all employees shall be increased by 5%. Effective July 1, 2003, the wages for all employees shall be increased by 4%. Effective July 1, 2004, the wages for all employees shall be increased by 3%.
Effective July 1, 2005, the City will add Step 7 (3%) to the salary schedule. Employees in Step 6 for one year for more will move to Step 7 on July 1, 2005, and will have July 1 as their new anniversary date for the purpose of continued movement through the salary schedule.
Effective July 1, 2006, the City will add a Step 8 (3%) to the salary schedule.
Effective July 1, 2007, the City will add a Step 9 (3%) to salary schedule.
Section B. Step Increases. All regular employees are eligible for step increases on the employee’s anniversary date of each year. Salary step increases are not automatic. Step increases will be approved only for those employees who have demonstrated acceptable standards of work performance. Length of service in itself will not be considered a sufficient reason for recommending a salary increase. The major emphasis will be placed upon satisfactory job performance. Effective July 1, 2002, the City shall add an additional step and drop off the first step of the wage scales.
Section C. Sworn Officer Incentive. The Employer agrees to pay thirty dollars ($30) $50per month to each sworn officer holding an Intermediate Certificate and to pay thirty dollars ($30)$50a month to each sworn officer holding an Advanced DPSST Certificate.
Section E. FTO/Instructor. Any employee who is asked to and trains a new hire as an FTO or instructor shall receive an additional thirty-five ($35)$50 per month for two (2) months.




Article 24 - Training
Section A. On an annual basis, the City shall provide each certified employee the minimum amount of continuing training needed for certification continuance.
On an annual basis, the City will provide each employee, that is required to maintain a Basic DPSST Certificate, the minimum number of training hours necessary to maintain the Basic DPSST Certificate.
 
VII.FINDINGS AND ANALYSIS
 
A. Burden of Proof
 
All arbitrations need initially to focus on which party carries the burden of proving its position. Interest arbitration is no exception. In an interest arbitration the burden of proof normally lies with the party pressing for a modification of the status quo. Continuity and stability are important to the collective bargaining process and should not be modified in the absence of probative evidence that the status quo has proved to be unworkable, changed by external pressures which require alteration or where a party seeking change offers an acceptable quid pro quo from the other party.
 
In the instant matter, the City bears the burden of proving that there is justification for the changes in the wage structure. The Association is the moving party with respect to its proposal for a larger equipment allowance. Since both parties have put forth changes in the insurance program they have the burden of justifying their respective positions. In the big picture, each of the parties will use the factors they present to establish their last best offer, as a whole, will better serve the interest and welfare of the public.
 
B. Interest and Welfare of the Public
 
This certainly is an inspiring and noble concept. Unfortunately most arbitrators and parties have difficulty quantifying such a subjective concept. Even though the statute has given it first priority in the beauty contest between the last best offers of the parties. Accordingly, it is generally accepted that a more objective interpretation will bring into play the text flowing from the remaining six statutory criteria. Both parties in this matter acknowledge that a problem exists and that secondary statutory criteria must be applied. As a result, before the interest and welfare of the public principle can be meaningfully discussed, examining comparability, ability to pay, recruitment and retention and CPI, etc. needs to occur. This method of fleshing out the process to get to the core subject was formulated by Arbitrator Lankford in Local # 2406 and City of North Bend (Lankford 1999). It is the most frequently used methodology in Interest Arbitration The Association in its brief lists several other cases where such an approach was used.
 
Arbitrator Snow in Portland Police Association and the City of Portland 17 (Snow 2003) sums the concept up most succinctly:
"Use of the public interest standard as the first priority requires an arbitrator to balance all relevant factors. The legislation instructs an interest arbitrator to consider using a balanced process to evaluate relevant statutory criteria. An interest arbitrator must determine whether one Last Best Offer package has been guided by more reasonable considerations than the other."
In addition to the above consideration another aspect of the process is factoring in the fact that while interest arbitrations are important and have long reaching impacts, they are even more important when dealing with law enforcement personnel who have a unique relationship to the community which they serve. It sets them apart from all others. Much more is expected of them than public employees in, for example, the human resource department. They are required to perform at a higher level of efficiency and integrity and for that they should be rewarded accordingly. An effective and appropriately compensated police force is essential to the safety of the community in which they serve. This applies not only to the citizens of the city, but those who visit the city.
 
We will now address the specific issues which are the gravamen of this interest arbitration.
 
C. Hours and Overtime Proposal
 
The City proposes to add additional language to Article 8 of the Collective Bargaining Agreement. This language would deal with call-back hours which have been compensated at the employee’s overtime rate under past practice which has been in effect since the initial contract. The City’s proposal includes new language stating, "In no event will the employee be compensated twice for the same hours." The Association stated that what they believed the purpose of the new language was to deal with a situation which involved Association President Officer Lenihan. He testified that he had been paid twice on at least one occasion. It occurred when the City called him back to work for one purpose and requested he perform additional tasks when he reported to the job. The problem was he ended up being on duty for a longer period than anticipated in the original callback because of the extra duties. He agreed to the perform the duties provided and he was paid for an additional callback. The City agreed and paid him twice.
 
The City provided no evidence to justify this addition to the contract. The Association contended that the provision would lessen the financial benefit provided to the callback provision. This appears to be a minor issue and the Association’s evidence indicated it has only occurred once. The City, however, has failed to sustain its burden justifying its inclusion in the contract. I find that the Association’s position is the more reasonable one.
 
D. Health Insurance
 
The Health Insurance situation for this bargaining unit seems rather strange to say the least. The background on this issue is that some five years ago the City indicated it was going to require all City employees to contribute to their health insurance as the police unit was doing. However, over the ensuing five years that was never implemented and the police unit was required to contribute to its health insurance continuously through the expiration of the 2003-2005 contract. During the negotiations the City proposed to pay the police employees’ entire insurance costs for the first year. The proposal then required that in the next two years the police employees would be required to split 50-50 any insurance premium increases over the current rates. It was established that the Association members are the only City employees who would be required in the second year of the contract to again contribute toward their health insurance by paying for 50% of any premium increases for the balance of the contract term. It was not established that there would be premium increases but various percentages were thrown around. The bottom line for the police employees is they could be required to make contributions to their insurance which could double their prior contribution even if rates increased as little as 8%. Again, the City has ignored its commitment to level the field by requiring the other twenty-one city employees to contribute to their coverage. If not, it is obvious that the police unit is, in fact, subsidizing the city employees. While the amount is not that significant the message it sends speaks volumes. There was absolutely no evidence presented by the City to justify its position. The Association’s contract proposal is based on the City’s history of providing benefits to the majority of its work force in conjunction with the failure to fulfill its commitment during negotiations with the Association for 2000-2003 Collective Bargaining Agreement. Those commitments were that the City would require the rest of the City employees to contribute to the health insurance premiums during the 2001 fiscal year. Five years later, nothing has been done with respect to that guarantee. The Association members are still the only City employees to contribute to their health insurance.
 
I agree with the Association that the City offered not a scintilla of evidence to explain why it should treat the members of the Association differently than the other twenty-one City employees. There is no evidence indicating that the City is offering any quid pro quo for its proposed 50-50 split in insurance premium increases. There has been no justification of the cost-sharing by the Association members. If, in fact, the City, as Cubick testified, expects no rate increases, what would be the reason for requiring Association employees to split any increase premiums 50-50 for the last two years of the contract. His position is totally disingenuous.
 
The City’s proposal of a contributive requirement will have a negative impact on its ability to attract and retain qualified employees. Dana Bennett, the senior research analyst for the Association’s representative, testified that, in her experience of some thirteen years as public human resource manager, the base rate and insurance plan costs were prime factors in the ability of an employer to attract and retain employees.
 
I find that these factors as they are set forth by the Association are, in fact, one of the important realities of securing and maintaining a work force. I am somewhat astounded at the disparate treatment of the Association employees. I find the City did not offer any justification for its position and it is not in the best interest of fostering the recruiting and retaining of experienced and qualified personnel. Those two factors are the cornerstone an effective police department. Accordingly, I find that the Association’s position is the more reasonable one.
 
D. Equipment Cost Replacement
 
The Association’s request for changes in uniforms and equipment is simple. It would change the $150.00 allowance per term of the contract for receipted purchase of duty related footwear. The Association proposes a $300 per contract term reimbursement for duty- related equipment. The items necessary to outfit a patrol officer cost approximately $1,005.81 if he elects to buy low-end equipment. The City did not respond to this proposal. The City currently requires officers to expend an amount equal to 33% of the top officers first month salary to purchase the necessary equipment to perform their duties. The total cost to the City of the Association’s proposal over the term of the contract is $1,500. The was no evidence presented that other employees of the City are required to purchase any equipment to do their job.
 
E. Reasonable Financial Ability of the Employer
 
There should be no doubt in anyone’s mind that the revenues generated by our outdated taxing systems creates significant challenges for all state, county and municipal governments. Myrtle Creek is no exception. During the term of the now expired contract there were serious financial problems resulting in deficits in three of the last four years. It appears however, based on the existing and projected revenues that the City has turned the corner and the future is much brighter.2
 
FN 2 - The City has currently on file 33 planning worksheets for constructions of 33 new residential buildings, two of which are duplexes.
 
I would think it rare that in calculating the cost of the compensation package of the parties over the three year term of the contract, that the one proposed by the City would come in at $45, 778 and the Association’s package would come in at $38,610. In light of these two proposals it is difficult, as the Association contends, to conceive how the City can assert an ability to pay argument. Certainly, this is an anomaly of some type. When you look at the proposals closely you find the major portion of the City’s cost lies in the assumption of a 15% increase in insurance costs. The major portion of the Association’s cost lies with wage increases for patrol officers. The City estimates that the three year contract proposal they put forth costing out at $45,778 assumes a 15% percent health insurance increase. The Association, on the hand, in its proposal of $38,610 for the three year contract term, assumes a 10% health insurance increase in each year of the contract and a 3% wage increase each year of the contract. Given the cost analysis it is clear, as the Association asserts, the ability-to-pay concept is meaningless. Of course, on the other side, the City, as indicated in its opening his brief, is not claiming inability to pay the Association’s proposal. It could do it but what would the cost be to other aspects of the City. This approach is clearly one of prioritizing the City’s needs. It speaks of a low priority for the police unit. This is not in the best interests of the citizens of Myrtle Creek or the public that visits.
 
The City is actually then caught in a crossfire between the concept that they do not want to pay the Association’s proposal because they wish to give priority to other areas than the police unit. Yet, on the other hand, they have already stated they are willing to pay $45,778 on a compensation package. The City finds itself at cross purposes and there is little difference in the proposal in terms of total dollars. There would certainly be no unreasonable financial obligation in awarding the Association proposal as opposed to the City’s. In fact, there would be a benefit.
 
The Association argues that even if the proposal cost the City more money for the contract term, which it has not proven to be the case, any overage could be paid for by savings generated by the out-sourcing of the dispatch functions from the City to Douglas County. According to the City’s documents, there will be a savings of approximately $14,000 in the first year and increasing to as much $50,000 in the next year. In addition, there are savings which the City did not include in the form of unemployment expenses budgeted for but not paid because of the transfer of these four individuals. Also, the City did not incur 157 hours of officer overtime to transport prisoners. The actual figure being 4.5 hours. The Association concludes, based on these figures and analysis that the actual savings by out-sourcing the dispatch functions are more in the neighborhood of $41,000 a year. This is triple the cost of either proposal. It is evident to the Arbitrator that there should be some connection between the savings generated in the out-sourcing of the dispatch operation to Douglas County and the funding of all or at least a portion the Association’s proposal.3 The stark reality of the situation is that the transferring of dispatch duties to the County which generated these savings has come at an increased risk to officer safety. Officer Lenihan testified, without contradiction, that the transfer of the dispatch services has resulted in spotty or nonexistent radio coverage for the Myrtle Creek officers. This department is thinly spread at best and comprising emergency transmission process increases the risk to officers. It must not be forgotten in the scramble of the budget process and drive to attain reserves which satisfy the Governmental Financial Officers Association , ("GFOA" herein) guidelines, that these patrol officers every day they go to work don a flack vest and put their lives on the line so the public can have a safer community.
 
FN 3 - The City’s own budget documents estimate a $158,000 in dispatch salary savings.
 
The GFOA guidelines for an acceptable year end fund balance is between 5% and 15% of the general fund. According to the City’s evidence, the actual audited fund balance at the end of the year was $220,875. The general fund for the year was $1,703,066. The actual percentage based on the figures presented is 0.1296%
 
As indicated earlier the City is experiencing population growth and this translates into steady growth in taxable assessed value and ranks fourth in the county in assessed value. In addition, the City’s evidence indicates it has additional unbudgeted savings not immediately restricted to the reserve. And finally the City budgeted an increase of 15% in insurance premiums. There is no evidence that funds from that overestimate have been restricted. There may also be other items which the Association raised in presenting its position. There is sufficient evidence to put to rest the question of the financial ability of the City to absorb the Association’s proposal. It is obvious to me that the City is able to fund the proposal set forth by the Association with little or no adverse effect on its overall financial position.
 
F. Attract and Retain Qualified Individuals
 
There is no question the City has a retention problem as well as a recruitment problem. The City approaches the problem by pointing out there are two officers with tenure dating back to 1991 and 1993. In doing so they fail to include the fact that a year ago there were five patrol officers and the department is down to four officers now. One officer left the department to take a casino job at some nine months after the expiration 2004/05 contract. Given the longevity of two officers, there is a problem with respect to the remaining positions. The City has lost three officers during the last contract term to surrounding police departments. The Association President testified that the average tenure for a City officer is two years. In addition, he testified that in his fifteen years of work for the department, the City has never successfully recruited a lateral hire. There is no question in the Arbitrator’s mind that the freeze of the pay scale will have a very significant adverse effect on the ability of the City to recruit and maintain patrol officers. The combination of a wage freeze and the better wage rates in other proximate jurisdictions could make it extremely difficult to recruit new officers. Certainly it would eliminate any lateral transfers. Of course, that has not happened in fifteen years anyway.
 
G. Comparability
 
I was very impressed with the depth and scope of the comparisons compiled by Ms. Bennett the research analyst for the Association. It was complete in all facets and presents a very accurate picture of where the employees of the Myrtle Creek police department stand with respect to wages and fringe benefits with their fellow officers both locally and throughout a significant portion of Oregon.
 
The Association commences its discussion of comparability with several observations regarding the City’s presentation with respect to the issue of comparability. The problem the Association has in this area is as follows:
 
1. The City did not use market comparability as a basis for its compensation proposal.
2. The City did not provide any analysis of the raw data it provided at the hearing e regarding the total compensation of the police officers for the City of Myrtle Creek as compared to the total compensation received by its statutory comparators.
 
The Association argues that the only total compensation analysis presented to the Arbitrator and available for cross examination was presented by the Association. Further, the Association argues that it would resist attempts by the City to offer any analysis of that kind in its closing brief because there would be a lack of opportunity for the Association to examine the City’s methodology for its comparability or to present rebuttal testimony.
 
ORS 243.746(4)(d) and (e) is the statutory standard for selection of comparable jurisdiction. It requires the arbitrator consider the total consideration reveived by the employee affected by the award compared to the total compensation received by the employee performing similar functions in like- sized communities. The Association contends it is the only party in this hearing providing a true total compensation analysis to the Arbitrator.
 
The Association selected eight comparables, four up and four down as comparison. Ms. Bennett testified that a majority of arbitrators since enactment of SB 750 have use 6-8 comparables. The jurisdictions selected were:
 
Jurisdiction      Population
Toledo             35,85l
Mt. Angel         3,630
Oakridge          3,680
Coquille            4,205
Myrtle Creek    3,535
Boardman         3,175
Nyssa               3,175
Bandon*           3,065
Burns                3,015

 
I have included the above information to indicate the Association has followed the appropriate methodology in collecting this amount of information. In addition to the testimony the Association presented a notebook full of graphs which are succinct and easily readable.
 
I agree with the contentions presented by the Association. There was no substantive evidence submitted by the City which would serve as an analysis of the comparables nor that in any meaningful manner contradicted the conclusion submitted by the Associaiton.
 
Accordingly, I find from my examination of the information presented by the Association that the City’s police unit employees are significantly behind their comparators in total compensation. This is based on a five year comparison. As the years mount, the difference between Myrtle Creek and it comparables will increase.
 
H. Cost of Living CPI
 
There is little probative evidence produced by the City that the projected CPI would warrant a wage freeze. Most of the discussion about where the CPI is going was speculation by both parties.
 
VIII.CONCLUSION
 
I have made separate findings with respect to of all the statutory criteria which will result in a Last Best Offer that fulfills what is the most reasonable one in terms of the Interest and Welfare of the Public. In this process, I have concluded the Last Best Offer of the Association is, nearly in all aspects, the most reasonable one. Pursuant to the statute, I will issue an order that reflects my conclusion.
 
DATED: May 11, 2006
Sherman B. Kellar, Esq.
Labor Arbitrator
 
IX.ORDER
 
Pursuant to the provisions of ORS 243.746, the undersigned impartial Arbitrator selects the last best offer package of the Myrtle Creek Police Officers Association. The Arbitrator orders the Association’s package to be included as part of the parties 2005/06 Collective Bargaining Agreement.
 
DATED: May 11, 2006
Sherman B. Kellar, Esq.
Labor Arbitrator
 
Appearing for the Association:
Rhonda Fenrich, Attorney at Law, Garrettson Goldberg Fenrich & Makler
 
Appearing for the Employer:
Michael R. Snyder, Snyder’s Consulting Inc.