|In the matter of the interest arbitration between LINCOLN COUNTY, Employer, and LINCOLN COUNTY SHERIFF DEPUTIES ASSOCIATION, Union, Involving the 2002-2005 Agreement. IA-08-05.
This interest arbitration dispute came before Catherine Harris, Esq., a neutral arbitrator mutually selected by the parties to render a final and binding decision.(1)
Rob Bovett, Assistant County Counsel, appeared on behalf of LINCOLN COUNTY (herein "the County").
LINCOLN COUNTY SHERIFF DEPUTIES ASSOCIATION (herein "the Association") was represented by Diana L. Moffat, Esq., Garrettson, Goldberg, Fenrich & Makler, P.C.
Hearings were held on June 10 and 11, 2004 and on September 15 and 16, 2004 at Newport, Oregon. At the hearing, each party was given the opportunity to present testimonial and documentary evidence,(2) to cross-examine the other party's witnesses and to make argument to the arbitrator.(3) Upon receipt of all post-hearing briefs, the record was closed on December 13, 2004 and the matter was taken under submission.
RELEVANT PROVISIONS OF ORS 243.746 AS AMENDED BY SB 750
(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 (Emphasis supplied):
(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 ...(Emphasis supplied).(4)
(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.
The listing of factors to be taken into consideration and the priority to be given such factors is reiterated in the Oregon Administrative Rules, Chapter 115, Division 40.(5)
Background of the Dispute
The County employs approximately 383(6) workers who fall into the following four categories: 1) approximately 165 employees represented by the Lincoln County Employees Association (LCEA); 2) approximately 38 employees represented by Communications Workers of America (CWA); 3) approximately 77 employees(7) represented by the Association; and
4) approximately 103 employees who are either management or non-represented. Employees represented by the Association are employed by the Sheriff's Office and primarily work in the County Jail as Correctional Officers. The second largest group includes patrol deputies and deputies assigned to criminal investigative services. The remaining members of the Association's bargaining unit work in other divisions of the Sheriff's Office such as the civil division and animal control unit.(8)
The parties' predecessor agreement began on July 1, 1999 and expired on June 30, 2002.(9) On December 4, 2001, the Association gave written notice to reopen contract negotiations pursuant to Article 26, Section 2 of the expired contract. Thereafter, on March 4, 2002, the parties commenced negotiations for a successor contract. Shortly after bargaining began, the County's health insurance providers announced that, based on the County's experience rating and the increasing costs of medical care, the cost of retaining the existing health insurance plans after June 30, 2002, would require a premium increase of approximately 36%, i.e., an amount which far exceeded the increase in the County's health insurance premium contribution under its agreements with the LCEA and CWA.(10)
In response to the announced increase, the Benefits Committee reviewed options and selected a new Core plan (to be fully paid by the County contribution) and a new Buy-Up plan with enhanced benefits (requiring an employee co-pay of a portion of the premium).(11) CWA employees were contractually bound to accept the new Core plan and new Buy-Up plan. LCEA and the County agreed to the recommendation of the Benefits Committee and the County implemented the insurance changes for all nonrepresented employees. As a result of these events, all County employees, except for Association members, were offered open enrollment for their choice of the new Core plan or the optional Buy-Up plan.
In the meantime, bargaining between the Association and the County for a successor agreement was continuing, i.e., bargaining sessions were conducted on April 4, April 18, May 7, and May 18. As the bargaining progressed, it became apparent that the bargaining would continue beyond the employees' enrollment deadline for health insurance plans for the 2002-2003 fiscal year (May 29, 2002) and was likely to continue beyond the expiration of the old health insurance plans (June 30, 2002). During a bargaining session in April of 2002, the County informed the Association that, as of July 1, 2002, it would no longer provide health insurance coverage through Regence Blue Cross and that it was exploring other insurance providers and plans. The Association expressed its objections to the County's unilateral change of the insurance coverage and plan.(12) The County proposed an interim solution, i.e., offering to provide the new Buy-Up plan for each Association member (fully paid by the County) to bridge the gap between June 30, 2002 and the settlement of the new contract.(13) The Association continued to object to the proposed interim solution because the benefits of the new plan were less than the old plan. However, with the threat of no medical or dental coverage, the Association agreed to have its members sign up for the Lifewise "Buy-Up" plan(14) and the new dental plan, while reserving its objections. On June 10, 2002, the Association filed an unfair labor practice complaint against the County alleging that the change in medical and dental insurance benefits during the "status quo" period of bargaining a successor contract constituted an unlawful unilateral change within the meaning of the Public Employee Collective Bargaining Act (herein "PECBA"). The Association also declined to engage in further bargaining with the County pending resolution of the unfair labor practice proceeding.
The Resolution of the Unfair Labor Practice Complaint
In a decision dated July 29, 2002, the Employment Relations Board of the State of Oregon (herein "ERB") rejected the County's primary argument, i.e., that the new health plan was forced upon it as a result of rights, obligations, and procedures provided in collective bargaining agreements with other unions. Noting that no law required the County to change health insurance plans and benefits, ERB found that the County entered into its various contractual obligations voluntarily. Similarly, ERB concluded that the mere fact that the Association did not have sufficient members to maintain group coverage under the old plan did not excuse the County's change of plans and benefits prior to satisfying its bargaining obligations with the Association. Moreover, ERB was not persuaded that the 36% increase in insurance costs rose to the level of an emergency or "business necessity" within the meaning of PECBA.(15) In order to remedy the County's unfair labor practice, ERB ordered a make-whole remedy, i.e., the County was ordered to reimburse members of the bargaining unit represented by the Association for out-of-pocket expenses which they would not have incurred absent the change in insurance.(16)
After the unfair labor practice proceeding was concluded, bargaining resumed. However, on April 23, 2003, the parties notified ERB that they had reached an impasse. The unresolved issues were then submitted to mediation. Mediation efforts were unsuccessful and the parties petitioned for initiation of binding arbitration.
Final Offers At Mediation Impasse
On November 26, 2003, the County made the following final offer with respect to wages: 2% [retroactive] for the first year, 2.6% [retroactive] for the second year, and not less than 2% for the third year (depending on the applicable CPI).(17) In its final offer dated November 28, 2003, the Association proposed a 2.6% increase in the first year, 2.5% in the second year,(18)and 2.5% to 5% CPI-W Index in the third year, as well as educational incentive pay for 21 members of the bargaining unit and the adding of an additional step (Step 7) to the salary schedule.(19)
With regard to insurance, the County proposed to continue the new level of insurance coverages (with employees making a 10% contribution towards insurance premium costs) but to discontinue the status quo reimbursements as ordered by ERB.(20) The Association proposed that it would become a member of the Benefits Committee and that the County would fully pay the costs of any plan offered through the Benefits Committee, plus a fully covered 10% buy-up option. The Association further proposed that the County increase its premium contribution each year by 15%.(21)
As part of its final offer, the County also proposed a team scheduling approach designed to reduce overtime through creation of new flex positions and expansion of scheduling discretion. The County further proposed a change in Article 12 (vacation leave) which would allow more than one person to be on vacation at the same time in the jail. In its final offer, dated November 28, 2003, the Association sought to maintain the status quo with regard to scheduling. Having pursued all of the steps necessary to initiate interest arbitration, the undersigned arbitrator was selected and this interest arbitration hearing followed.
The Parties' Last and Best Offers
On or about May 27, 2004, the parties exchanged last and best offers (LBOs) pertaining to all unresolved mandatory subjects. Unresolved issues involve proposed modifications to the language of Articles 8, 9, 15 and 16 and are generally categorized as insurance, wage, and scheduling issues. In order to better illustrate the positions of the parties, the arbitrator has included the language of the expired agreement, as well as the proposals to change existing language.
The Scheduling Issue
Article 8, Section 1 of the expired contract currently provides:
Workweek/Weekday. The standard workweek for full-time employment shall consist of forty (40) hours of work based on five (5) consecutive eight (8) hour workdays, subject to the provisions of section 3 of this Article.(22)
The Association seeks to modify the language of Article 8, Section 1 to read as follows:
The standard workweek for full-time employment shall consist of one of the following, subject to the provisions of Section 3 of this Article: 1) Forty (40) hours of work based on five (5) consecutive eight (8) hour workdays; 2) Forty (40) hours of work based on four (4) consecutive ten (10) hour workdays, or; 3) For Corrections, three (3) cycles of forty-eight (48) hours of work based on four (4) consecutive twelve (12) hour workdays, followed by four (4) consecutive days off and one (1) cycle of three (3) consecutive work days with five (5) consecutive days off.(23)
(Remainder of the Article as in current contract)
On the other hand, the County proposes the following modification of Article 8, Section 1 to read as follows:
Work Schedule. The standard work schedule for full-time employment shall consist of one of the following, subject to the provisions of Section 3 of this Article:
(1) 40 hours of work per week based on 5 consecutive eight (8) hour workdays.
(2) 40 hours of work per week based on four (4) consecutive ten (10) hour workdays.
(3) Cycles of 28 to 32 days consisting of periods of at least 3, but no more than 5, consecutive workdays, with work hours of not less than 6 consecutive hours nor more than 12 consecutive hours, followed by periods of at least 3, but no more than 5, consecutive days off.
(remainder of the section as in current contract)
As part of their LBOs, both parties also propose changes to Article 9, Section 1. Article 9, Sections 1 (a) (1) and 1 (a) (2) of the expired contract presently provide:
Defintion (sic). Consistent with the provisions of Article 8 of this Agreement, each employee shall work a designated workweek consisting of seven (7) consecutive calendar days. Overtime and Holiday work includes:
(a) Overtime Work:
(1) All work in excess of regularly scheduled workday as provided in Section 1 of Article 8 of this Agreement and except as provided in Article 8, Section 3.
(2) All work in excess of forty (40) hours in an employee's designated work week.
The Association seeks to modify Article 9, Sections 1 (a) (1) and 1 (a) (2) to read as follows:
Defintion (sic). Consistent with the provisions of Article 8 of this Agreement, each employee shall work one of the designated workweeks. Overtime and Holiday work includes:
(1) All work in excess of the regularly scheduled workday as provided in Section 1 of Article 8 of this Agreement and except as provided in Article 8, Section 3.
(2) All work in excess of an employee's designated work week.
The County proposes a modified Article 9, Sections (a) (1) and (a)(2) to read as follows:
Definition. Overtime and Holiday work includes:
(a) Overtime Work:
1. All work in excess of the regularly scheduled workday.
2. All work in excess of work schedule.
The parties agree that, with respect to Article 8 (Scheduling), the Association is seeking to reduce current scheduling practices to writing whereas the County seeks to expand its scheduling authority beyond the status quo. With respect to Article 9, both parties purport to reduce current practice to writing. The County also seeks to modify the language of Article 12 (Vacation Leave) to permit two or more employees in the Jail Division to be on vacation leave for the same period in accordance with office policy.(24)
The Wage Issue
Article 15, Section 1 of the expired contract provides as follows:
Section 1. Compensation for the 1999-2000 and 2000-2001 shall be in accordance with Appendix "A" of this Agreement. Compensation for 2001-2002 shall be as follows: Effective July 1, 2001, the salaries for employees shall be increased by an amount equal to the CPI-W Index, January to January, with a minimum of three percent (3%) and a maximum of five percent (5%).
In its LBO dated May 27, 2004, the Association proposes Article 15, Section 1 language which would provide for a yearly wage increase as follows:
Compensation for July 1, 2002 - June 30, 2003 shall be increased by 2.6% and shall be reflected in this Agreement. Compensation for July 1, 2003 - June 30, 2004 shall be as follows: Effective July 1, 2003, the salaries for employees shall be increased by an amount equal to the CPI-W Index, January to January, with a minimum of two and one-half percent (2.5%) and a maximum of five percent (5%).(25) Effective July 1, 2004, the salaries for employees shall be increased by an amount equal to the CPI-W Index, January to January, with a minimum of a two and one-half percent (2.5%) and a maximum of five percent (5%).
Based upon the CPI-W Index, the Union proposes a 2.5% increase for 2002-2003 (as the CPI-W, Jan-Jan, was 0.9%), a 2.6% increase for 2003-2004 (as the CPI-W, Jan-Jan was 2.6%), and 2.5% for 2004-2005 (as the CPI-W, Jan-Jan, was 1.8%).
In its LBO dated May 28, 2004, the County proposes wage increases for each of the three contract years pursuant to the following Article 15, Section 1 language:
Compensation for 2002-2003 shall be increased 2.0% from the compensation rates for 2001-2002, and are reflected in Appendix "A" of this Agreement. Compensation for 2003-2004 shall be increased 2.6% from the compensation rates for 2002-2003, and are reflected in Appendix "A" of this Agreement. Compensation for 2004-2005 shall be increased 2% from the compensation rates for 2003-2004, and are reflected in Appendix "A" of this Agreement.(26)
Thus, under the County's proposal, there would be retroactive wage increases of 2.0% for the first year and 2.6% for the second year and a wage increase of 2.0% for the third year (retroactive for that period of time preceding implementation of the award).(27)
The Insurance Issue
Article 16, Section 1 of the expired contract provides that during the second and third years of the contract, the County will pay the full cost of the following:
(a) the $200 (individual) and $600 (family) deductible, $5000 stop-loss, medical plan referred to as "2000 Plan."
(b) the V.S.P. Vision Plan.
(c) A family dental plan, $1,500 annual maximum.
(d) A $15,000 24-hour life and AD& D insurance plan, in addition to the statutorily required policy for eligible law enforcement officers.
Article 16, Section 1 additionally provides:
If, during the third year of the contract, the cost of the "2000-Plan" is to increase by more than 26%, the County will have the option to fully pay for that plan or reopen the contract to renegotiate Article 15 and 16.
The County did not contact the Association in order to reopen the contract as provided in Article 16. Rather, the County elected to enter into agreements with LCEA and CWA which ultimately made it impossible for the County to fulfil its contractual obligations to the Association.(28)
In its LBO, the Association recognizes that the County has compensated is members for the first and second years of the contract as a result of direct reimbursements pursuant to the ERB Order. Accordingly, for the third year, the Association has offered:
Third year (or after arbitration decision): Maintain 100% employer paid insurance coverage at current levels of coverage.
Increase employee base wages by $70/month to coincide with the ending of ULP coverage.(29)
In its LBO, the County proposes that beginning on the date of final resolution of the contract, it will continue the current (new) level of insurance coverages (fully paid by the County), but terminate status quo reimbursements as ordered by ERB. In its proposed Article 16 language, the County also limits its insurance proposal for the third year of the contract to fiscal year 2004-2005.
The Reasonable Financial Ability of the County to Fund the Contract
The County has a budget of approximately 65 million dollars; approximately 7.3 million dollars is allocated to the Sheriff's Office through the General Fund. The County's major source of revenue is property taxes.(30) In recent years, property tax measures placed into the Oregon Constitution by Oregon voters have limited revenue available to the County. The County's Finance Director Jim Weider described the County budget process as a continuing challenge in which the County has sought to hold the line on the level of service provided to the public when expenses, particularly jail overtime,(31) are increasing faster than revenues. For the past three years, there has been a freeze on new hires except as to hiring funded by grants. Adding to these pressures, there have been significant cutbacks in other agencies, e.g., the Oregon State Police, which have placed an increasing burden on the County Sheriff's Office.
On the other hand, the County has a history of conservative budgeting, i.e., projecting revenues to be lower than actual revenues and projecting expenditures to be greater than actual expenditures. Finance Director Weider is of the opinion that 15% of expenditures is a comfortable reserve although he is predicting a 13.8% ending fund balance for the 2004-2005 budget. According to Weider, a substantial beginning fund balance is needed on July 1 to fund expenditures until property tax revenues are received later in the fiscal year. Notwithstanding its budget challenges and cash flow problems, the County has not taken the position, either at the time of hearing or in post-hearing brief, that it is financially unable to fund the Association's package, or that the payment of the direct reimbursements ordered by ERB has compromised levels of service.
Cost of Living
The evidence in this case pertaining to cost of living is as follows:
Both parties recognize that with compounding, the difference between their wage proposals is greater than 1%.
Attraction and Retention of Personnel
The Association presented five years of turnover statistics regarding Sheriff's Office employees. While the data does show a marked increase in the % of turnover in the last couple of years, there is no persuasive evidence that the increase is attributable to low rates of compensation. Moreover, there is evidence that changes in the PERS have stimulated a recent surge of public employee retirements.
Overall Compensation and Comparability
The Association selected the following counties as its comparators: Polk, Coos, Columbia, Clatsop and Tillamook. These counties, which range in population from a low of 24, 900 (Tillamook) to a high of 64,000 (Polk), were selected from counties with populations 50% lower than Lincoln County and 200% higher than Lincoln County. Clatsop, Tillamook and Coos Counties, like Lincoln County, are coastal communities whereas Columbia County (a river community) is immediately inland from Clatsop and Polk is immediately inland from Lincoln. Although Malheur County has a population of 32,200, it was not selected due to its location on the eastern side of the state in a different time zone. Similarly, Klamath County, with nearly the same population as Polk (64,600), was excluded due to its geographical location (in central Oregon on the California border) even though it has nearly the same population as Polk.
The Association's expert Dana Bennett made a presentation showing that even if the Association's LBO is incorporated into the comparison, the Association's members are still, on the average, 1.49% behind the Association's comparators.(32) With regard to health insurance, all of the Association's comparators have vision plans and all with the exception of Polk County provide some form of chiropractic coverage. Among the Association's comparators, the highest deductible is $200.00 (compared to $500.00 for Association members under the current insurance coverage); the highest Stop Loss (Maximum per person) is $5000 (compared to $15,000 for Association members under the current insurance coverage); and the lowest employer contribution to health insurance is $714.44 (compared to $626.86 being contributed on behalf of Association members).
The County has identified six comparators, four of which are the same as comparators identified by the Association: Polk, Coos, Columbia, and Clatsop. The County did not select Tillamook (due to the discrepancy between its population of 24, 900 and Lincoln's population of 45,000). Klamath (with a population of 64, 600) was selected in spite of its location in central Oregon on the California border. Malheur (with a population of 32,000) was selected despite its location in eastern Oregon in the mountain time zone. Using these comparators and adding the County's wage proposals for the first and second years (2% and 2.6%), the County's expert found that the County was proposing to pay its corrections and patrol officers more than the average paid in the comparable jurisdictions as follows:
|Level of Experience||Avg. Corrections/Patrol||% Difference Corr./Patrol
|5 yrs. Intermediate Cert.||3561.27 / 3668.42||7.27% / 4.48%
|5 yrs. Intermediate Cert/Med||3516.81 / 3623.96||8.43% / 5.64%
|5 yrs. Advanced Cert.||3657.63 / 3767.25||6.59% / 3.79%
|5 yrs. Advanced Cert/Med||3613.17 / 3722.79||7.33% / 4.93%
|10 yrs. Intermediate Cert||3639.63 / 3750.37||6.18% / 3.32%
|10 yrs. Intermed. Cert/Med||3595.17/ 3705.91||7.33% / 4.475
|10 yrs. Advanced Cert.||3737.79 / 3851.11||5.50% / 2.64%
|10 yrs. Advanced Cert/Med||3693.33 / 3806.65||6.63% / 3.76%
The above-described cells which contain a reference to "Med" have deducted from employee compensation the amount (s) of employee contributions to health insurance costs. The County presented no comparison of benefits with regard to its comparators' insurance plans.
The governing statute, i.e., ORS 243.746, expressly provides that arbitrators must base their findings and opinions on the statutory criteria giving first priority to the interest and welfare of the public. At least one arbitrator has determined that if one party's LBO package is not consistent with the interest and welfare of the public, then it would be unnecessary to address the secondary criteria. See State of Oregon and Oregon State Police Officers Association, IA 22-95 (1996). Other arbitrators have concluded that the interest and welfare of the public cannot be evaluated without reference to the secondary criteria. See Jefferson County and Jefferson County Law Enforcement Association, IA 13-02 (2003). For reasons explained herein, the arbitrator is compelled to find that whether analyzed under the primary or the secondary criteria (or a combination thereof), the County's LBO does not serve the public interest and welfare.
Both parties acknowledge that bargaining, mediation and arbitration of this matter have become protracted in large part due to their ongoing dispute concerning insurance benefits. Having conducted four days of hearing, the arbitrator cannot fail to grasp that insurance benefits is at the heart of this controversy and that the parties have very different views of how the insurance issue should be treated by the arbitrator. On the one hand, the County repeatedly urges the arbitrator to bring finality to a "status quo obligation" for which it claims to have already paid a heavy price, i.e., the administrative costs and reimbursements paid pursuant to the ERB Order. From the County's point of view, selection of the Association's LBO would embed a monetary payment forever within its wage scales as permanent compensation for the unilateral reduction in benefits already remedied by the ERB Order. On the other hand, the Association argues that the County is offering no quid pro quo for discontinuation of the current status quo.
In examining the record herein, and in reviewing the provisions of PECBA, the arbitrator is convinced that the intent of the ERB Order was to restore Association members to the same position which they would have enjoyed absent the County's unlawful unilateral change in insurance plans. Practically speaking, it was impossible to order the County to reinstate a defunct insurance plan no longer available to a 73 person bargaining unit. Therefore, direct reimbursements for expenses which would have been covered under the old plan was a reasonable alternative, especially when combined with the fully paid new plan. Stated another way, the fully paid non-negotiated insurance coverage and the direct reimbursements to Association members became the new status quo pursuant to the ERB Order.
The County has failed to meet its burden regarding changing the status quo with respect to insurance.
In an interest arbitration, the burden of proof generally rests with the party who seeks to change the status quo. This signifies that absent persuasive evidence to justify a significant departure from the status quo, the proposal which most nearly continues the existing terms and conditions of the parties' bargaining agreement will be preferred by the interest arbitrator. Benton County Deputy Sheriff's Association and Benton County, IA 16-01 (2002). In City of McMinnville and McMinnville Police Officers' Association, IA 20-99 (2000), the relationship between the status quo and the primary statutory criterion (interest and welfare of the public) was described in the following manner by Arbitrator Don Wollett:
In the world of collective bargaining, stability and continuity are values of primary importance. The status quo is not realistically subject to major alternation or modification unless (a) there is demonstrable evidence that the status quo has proved to be unworkable or mischievous, or (b) external evidence establishes 'changed circumstances' which impel modification, or (c) there is a perceptible trade-off in which the party seeking change has "bought" agreement. [Citation]
In my view, this is the fundamental analysis which serves the public interest and welfare. Professor Carleton J. Snow of Willamette University puts the point differently: "Inherent in the legislative decision to use a 'last best offer package' approach to interest arbitration is a requirement that each party either meet 'the compelling need' test or show that a quid pro quo exists to justify taking away a benefit previously obtained through a negotiated settlement."[Citation]
Under this analysis, the party proposing the change in the status quo has the burden to show, using the statutory criteria, that its LBO is either supported by a compelling need or that its LBO contains a quid pro quo which justifies termination of a previously negotiated benefit. In the arbitrator's view, the County has not met this standard.
Neither the current fully paid non-negotiated insurance coverage nor the reimbursements ordered by ERB can be considered a "quid pro quo" (defined as something given in exchange for something) as these items became the new status quo pursuant to the ERB Order. Not only has the County offered no quid pro quo for elimination of the status quo, but it has also included language which would further limit its insurance proposal for the third year to fiscal year 2004-2005 (superseding with specific language the general language of Article 26, Section 3).(33) Indeed, the only quid pro quo (for discontinuation of the status quo regarding insurance) to emerge from this record is the Association's offer to exchange discontinuation of the direct reimbursements for the $70.00 per month wage enhancement. While the arbitrator is not persuaded that a monthly payment of $70.00 per employee is an ideal trade-off, it is preferable to the County's proposal because no other reasonable quid pro quo exists to justify terminating an ERB-ordered restoration of a previously negotiated benefit. While it may be true that other groups in the County do not have fully paid insurance (LCEA, CWA, and non-represented), the fully paid insurance was a unilaterally imposed interim solution and not a "quid pro quo" for elimination of the Blue Cross plan, or for discontinuance of ERB's remedy for elimination of the Blue Cross plan.
As explicitly provided in ORS 243.656, it is the policy of the State of Oregon that:
(1) The people of this state have a fundamental interest in the development of harmonious and cooperative relationships between government and its employees;
(2) Recognition by public employers of the right of public employees to organize and full acceptance of the principle and procedure of collective negotiation between public employers and public employee organizations can alleviate various forms of strife and unrest.
Experience in the private and public sectors of our economy has proved that unresolved disputes in the public service are injurious to the public, the governmental agencies, and public employees (emphasis supplied).
In the arbitrator's view, it would violate the stated policy contained in ORS 243.656 to select the County's LBO which would, in essence, allow the County to take away the equivalent of a previously negotiated benefit (the new status quo imposed by ERB) without appropriate justification. Specifically, the County has not demonstrated that its offer to meet or exceed the applicable CPI in each of the three years of the contract, or any other aspect of its package, is a perceptible "trade off" by which it "bought" agreement to discontinue ERB-ordered reimbursements. On the other hand, the Association's offer provides for a reasonable exchange, i.e., discontinuance of an unpredictable amount of direct reimbursements in return for a $70.00 per month wage enhancement.(34) Under the circumstances presented here, implementation of the County's package would leave the insurance dispute unresolved to the detriment of the public, the County, and its law enforcement officers.(35) As found and declared by the Oregon legislature, the citizens of Oregon have a fundamental interest in the development of harmonious relations between the County and its law enforcement officers which will not be served by selection of the County's LBO package.
The County's other proposals do not provide a quid pro quo for discontinuing the direct reimbursements ordered by ERB.
The County's proposals on wages and scheduling provide additional support for the arbitrator's decision to award the Association's package. Like its insurance proposal, the wage proposal seeks to change the status quo, i.e., by eliminating any reference to the formula contained in the expired contract, i.e., a range of increases dependent on the CPI-W.(36) Like its insurance proposal and its wage proposal, the County also seeks to change the status quo with regard to scheduling while it is undisputed that the Association seeks only to reduce existing scheduling practices to writing for inclusion in the contract.(37) Where, as here, the County seeks to override the status quo in all three of the disputed areas (insurance, scheduling, and wages), without offering a quid pro quo for discontinuance of direct reimbursements per the ERB order, selection of the County's package would be antithetical to harmonious labor relations and would violate traditional principles of collective bargaining.
Allegations of unfair labor practices are not before the arbitrator for determination.
In post-hearing brief, the County accuses the Association of bad faith bargaining, i.e., not subjecting its $70.00 per month proposal to the "crucible" of PECBA's dispute resolution process as required by Amalgamated Transit Union v. Rogue Valley Transportation, 16 PECBR 559 (1996). The County also accuses the Association of changing its position dramatically from the time of its final offer after mediation to the time of its LBO. In the same vein, the Association, during the course of the hearing, accused the County of failing to bargain in good faith about its proposed schedule. Despite mutual recriminations, neither party has filed an unfair labor practice charge regarding these issues or expressed an intention to do so. In any event, these issues are not within the scope of the interest arbitrator' authority and have not been considered in rendering this final and binding arbitration decision. While the arbitrator cannot ignore an ERB Order establishing a new status quo in applying the statutory criteria, the adjudication of unfair labor practices is beyond the scope of this proceeding.
The Association did not unlawfully modify its LBO from a 2.5% to 2.6% wage increase in year 2.
Notwithstanding the exclusive jurisdiction of ERB to adjudicate unfair labor practice cases, the arbitrator must determine the parameters of the Association's LBO as part of the interest arbitration process. Accordingly, the arbitrator will address the County's allegation that the Association unlawfully amended its LBO when it changed the wording on the summary of its wage proposal for the second year from:
Year 2: 2.5% to 5% CPI-W Index (which was less than 2.5%) [as reflected in its summary page dated May 27, 2004]
Year 2: 2.5% to 5% CPI-W Index [as reflected in its summary page sent by facsimile dated June 8, 2004].
In resolving this issue, the arbitrator starts with the familiar principle that if a writing is ambiguous on its face, extrinsic evidence may be considered in ascertaining its true meaning. Here, there are two types of extrinsic evidence which the arbitrator has considered in resolving the ambiguity which appears on the May 27, 2004 summary page. First, there is the Association's attached Article 15 wage proposal which omits any reference to the phraseology in parentheses, i.e., (which was less than 2.5%). Additionally, there is an e-mail exchange between counsel dated May 27, 2004 in which Association counsel, using an alternative methodology, calculated an annual average of 2.3%.
In the arbitrator's view, the actual verbatim proposal, contemporaneously attached to the summary sheet, provides the best evidence of how to interpret the Association's shorthand summary of its package. While the e-mail exchange does provide some contrary evidence, it does not reference the specific portion of the LBO summary page containing the ambiguity. When the complete language being proposed for inclusion in Article 15 of the contract is examined, it is clear that the Association was proposing a formula for calculating the wage increase, using the January to January CPI-W Index.(38) Under these circumstances, the arbitrator cannot conclude that the Association unlawfully modified its proposal from a 2.5% to 2.6% increase.
A review of the secondary criteria does not alter the arbitrator's conclusions.
As previously stated, the arbitrator has reached the conclusion that discontinuance of the ERB ordered direct reimbursements without a "quid pro quo" would perpetuate an unresolved dispute causing injury to the public, the County, and Association members within the meaning of ORS 243.656. The implementation of the County's package would take the floor (represented by Article 26, Section 3) out from under the Association in the next cycle of bargaining, thus thwarting the impact of the ERB decision which restored the status quo during this bargaining cycle. Notwithstanding this conclusion, reference to the secondary criteria is necessary to insure that no item in the Association's package harms the interests and welfare of the public to a greater degree than the County's package.
Even though the County is not making an "inability to pay" argument, the arbitrator would be remiss in not considering the reasonable financial ability of the County to meet the costs of the Association's package. Here, there is not a huge discrepancy between the parties' proposals for yearly salary increases, i.e., approximately 1.1% over the course of the three-year contract. The County calculates the difference between its wage proposals (including the $70.00 per month wage enhancement) and the Association's proposals to be $173, 216 whereas the Association calculates the difference at $141,814. This represents, at most, a difference of approximately $66 per employee per month over the course of the three-year contract. Budget documents reflect that the County has already budgeted for implementation of its LBO and that the increased costs of implementing the Association's package will not compromise the County's retention of a reasonable operating reserve against future contingencies.
Similarly, the continuation of the present scheduling practices cannot be deemed detrimental to the public welfare. Here, the County has failed to demonstrate to the satisfaction of the arbitrator that the high incidence of jail overtime will be more effectively managed by implementation of the County's proposed schedule. Moreover, the County has not demonstrated a compelling need to change schedules outside the jail division or that allowing of two or more jail employees to be on vacation at the same time (at the County's discretion) is a sufficient quid pro quo for scheduling changes which impact all Sheriff's Office employees. For all of these reasons, the arbitrator concludes that the County has not demonstrated a compelling need to change the status quo for either financial or non-financial reasons external to the parties' bargaining relationship.
Finally, the record discloses that the overall compensation presently received by unit employees has been significantly impacted by the County's unilateral change of insurance. The Association's evidence, illustrating the discrepancies between insurance benefits received by employees in similar jobs in comparable communities, was unrebutted, i.e., the County did not compare insurance plans. Under the circumstances presented here, i.e., failure to offer a quid pro quo in exchange for discontinuance of direct reimbursements to Association members, the inclusion of employer contributions to premiums in the Association's analysis of comparability was justified. Contrary to the County's assertions, the arbitrator is not persuaded that the Association's comparability analysis is fundamentally tainted.
In reviewing the comparability studies presented by both parties, the arbitrator has concluded that the discrepancies in each party's presentation are due, in large part, to the inclusion of Malheur County in the County's comparators (creating downward pressure on the County's market averages)(39) and the inclusion of insurance premium payments by the Association (exerting an upward pressure on the Association's market averages). In any event, nothing contained in either party's wage and benefit data has persuaded the arbitrator that selection of the Association's package will harm the public interest and welfare, particularly when viewed in light of the alternative mandated by statute.
Even though the record establishes that the County continues to attract and retain qualified personnel, this factor, standing alone, does not mandate selection of the County's package. Similarly, to the extent that cost of living indices favor adoption of the County's package, this factor does not supersede the failure of the County to propose a quid pro quo for changing the new status quo brought about by the ERB Order.(40) In the judgment of the arbitrator, factors (a) through (f) provide sufficient evidence to support the award such that it is not necessary to examine other factors traditionally taken into consideration in determining wages, hours, and other conditions of employment. Based on the entire record, the arbitrator has concluded that the Association's package better serves the interest and welfare of the public whether analyzed under primary and/or secondary criteria.
Based on the foregoing findings and conclusions, the following award is made:
The new language of the 2002-2005 agreement shall include the language proposed by the Association.
January 28, 2005
CATHERINE HARRIS, Arbitrator
1. The neutral arbitrator was selected from a list supplied by the Employment Relations Board of the State of Oregon.
2. During four days of hearing, the arbitrator heard the testimony of the following witnesses: Jim Weider, Candace Ludke, Sgt. Tom Graham, Sheriff Dennis Dotson, Lt. Jamie Russell, Wayne Belmont, Dana Bennett, Steve Bruce, Adam Shanks, Mary Silverthorne, Steve Brandt and Christine Zinter. The arbitrator also received the following documents into evidence: County Exhibits "1"through "62" (except for County Exhibits "17","18", and "19" which were withdrawn) and Association Exhibits "A-1" through "A-40" (except that no exhibit was marked for identification, or received into evidence, as Association Exhibit "39" and Association Exhibit "14" was withdrawn).
3. Originally, the parties agreed to mail their opening briefs on October 22 with optional replies due to be mailed on November 19. However, after it was learned that the recording system during the second session (September 15 and 16) had failed, the briefing schedule was modified. During a telephonic hearing on October 6, 2004, the parties mutually agreed that it would not be necessary to reopen the hearing in order to create a record; that neither the parties nor the arbitrator would utilize the tapes made of the first session (June 10 and June 11); and that a revised briefing schedule would be appropriate, i.e., mailing deadlines of November 15 for opening briefs and November 22 for reply briefs. During this telephone conference, the parties further agreed to afford the arbitrator 45 days from the closing of the record in which to issue her Opinion and Award. The parties also agreed that in the event of another mutually agreed upon extension, 15 additional days of deliberation time would be afforded the arbitrator. The briefing deadlines were subsequently extended by agreement of the parties to November 30 (opening briefs) and December 9 (reply briefs). In accordance with these stipulations, all briefs had been received in the arbitrator's office as of December 13, 2004.
4. None of the exceptions enumerated in the statute apply to this controversy.
5. A reading of the statute and rules discloses that the arbitrator is required to select only one of the last best offer packagessubmitted by the parties. Thus, the arbitrator is precluded from resolving the dispute on an issue by issue basis.
6. This was the total number of employees in July of 2002; however, Director of Finance Jim Weider testified that the County employs approximately 400 workers on the average.
7. At the time of hearing, only 73 of 76 budgeted positions were filled. The numbers referenced above correspond to findings made by the Oregon Employment Relations Board on July 29, 2002 in Case No. UP-31-02.
8. The County's comparability expert Candace Ludke calculated that 16.6% of the Association's bargaining unit has more than ten years of service. This calculation was not challenged by the Association.
9. The agreement which is the subject of this interest arbitration proceeding will expire on June 30, 2005, i.e., less than six months after the instant award becomes final. As further discussed herein, Article 26, Section 3 of the expired agreement contains the following explicit language: "This Agreement shall remain in full force and effect during the period of [such] negotiations."
10. The County and LCEA had agreed to place a cap on the County's contribution toward payment of health insurance premiums, with a percentage increase in the cap based on the Social Security Index. The County and LCEA had also agreed to a Benefits Committee consisting of representatives from each of the three unions, as well as non-represented employees. Each year the Benefits Committee researches health insurance plans and the recommendation of the Benefits Committee is forwarded to the County and LCEA for review and approval.
11. Although Association representatives attend meetings of the Benefits Committee, the Association has never agreed to be bound by its recommendations.
12. The County attempted unsuccessfully to continue the old Buy-Up Plan for Association members after June 30, 2002; however, the insurance providers declined indicating that the number of employees represented by the Association was insufficient to continue that kind of group insurance plan.
13. The premium costs to the County of this interim solution exceeded the cost of the existing health insurance premiums for Association members ($543.40 per month per employee for the new plan compared to $528.19 per month per employee for the old plan).
14. The Lifewise "Buy-Up" plan and the new dental plan fall short of the plans agreed to by the County in Article 16 of the expired agreement, e.g., instead of a deductible of $200.00 for individuals, the "Buy-Up" plan deductible is $500.00 for individuals. Additionally, there is a $25.00 copay (compared to zero copay under the old plan) and there is only 80% coverage of medical costs (as opposed to 95% coverage under the Blue Cross plan). The copay for brand name prescription drugs was increased from $10.00 to $25.00 and the stop loss maximum per person was tripled from $5000.00 to $15,000. The Lifewise "Buy-Up" plan also lacks other benefits such as chiropractic care and vision coverage that were provided under the Blue Cross plan. Additionally, instead of dental coverage with a maximum of $1500.00, the temporary dental policy had a maximum coverage of $1000.00. Beginning July 1, 2003, the County discontinued the "Buy-up" plan and retained the Core Medical Plan. Effective July 1, 2003, Oregon Dental Service replaced Fortis as the dental insurance provider.
15. ERB also found that due to the language of Article 16 and Article 26 of the expired contract, ORS 243.756 was inapplicable. Article 16 provides that during the third year of the contract, the County will pay the full cost of certain items of the "2000 plan" and the "V.S.P. Vision Plan," together with certain other dental, life, and disability benefits. As previously noted, Article 26, Section 3, expressly provides that the agreement "shall remain in full force and effect during the period of negotiations."
16. Although the ERB Order does not specify a duration, both parties interpret the ERB Order to govern disposition of the insurance dispute pending resolution of the successor contract. As further discussed herein, both parties are proposing that the direct reimbursements ordered by ERB be discontinued upon issuance of this Opinion and Award.
17. The County calculated the increased costs of this wage offer to be at least $499,100.
18. The arbitrator notes in passing that the Association's summary of its proposal reflects that in year 2, the Association was proposing "2.5% to 5% CPI-W Index (which was less than 2.5%), i.e., the same ambiguity which appears in the Association's LBO. The record also reflects that when the County analyzed the final offer, the County assumed that the Association was seeking a 2.6% increase in the second year.
19. The Association calculated the increased costs of its wage offer to be $600,346.
20. The County estimated that the additional costs for health insurance premiums would be $13,689 for fiscal year 2002-2003, $88,803 for fiscal year 2003-2004, and $184,257 for fiscal year 2004-2005. As of the time of hearing, the County had paid approximately $113, 333.20 in administrative fees and reimbursements associated with implementation of the ERB Order, i.e., a fraction of what the County would have paid in increased premiums for Association members had the County not changed insurance during negotiations.
21. This proposal would have increased full-family monthly insurance premiums from $528.19 to $803.31 in the third year of the contract.
22. Article 8, Section 3 of the expired agreement provides that the parties may agree to alternate work schedules.
23. According to Correctional Sgt. Tom Graham, subsection (3) describes the schedules that corrections officers currently work in the jail.
24. The Association has taken the position that the County's proposed modification of Article 12 is not a sufficient quid pro quo for the proposed changes in scheduling.
25. The County produced a May 27, 2004 draft of the Association's LBO which contains the following language on the cover sheet summarizing the proposals:"Year 2: 2.5% to 5% CPI-W Index (which was less than 2.5%)". Thus, the County argues that the Association unlawfully modified its LBO (as it pertains to the wage offer for the second year) when it removed the parenthetical from the summary sheet contained in a June 8, 2004 facsimile. The Association responds that the parenthetical should not be read to modify its offer. The County also provided a print-out of an e-mail exchange between Association Counsel and County Counsel, dated May 27, 2004, in which Association counsel miscalculates the CPI-W for 03-04 to be 2.3% (using calendar year averaging).
26. Although the County's cover or summary page, dated May 28, 2004, references "[W]age increases for each of the three contract years indexed at the applicable Consumer Price Index (CPI) but not less than 2.0% per year," this language is not repeated in the proposed revision to Article 15.
27. The County notes that during the first year of the contract, the applicable CPI was either 0.9% (using CPI-W) or 1.1% (using CPI-U), that the applicable CPI for the second year of the contract was 2.6% (using CPI-W or CPI-U) and that the applicable CPI for the third year of the contract (starting July 1, 2004) is either 1.8% (using CPI-W) or 1.9% (using CPI-U).
28. The July 29, 2002 ERB ruling specifically states: "The County's problems were, at least in part, self-inflicted. The County agreed to different contractual obligations and procedures with its bargaining units. It was aware of its contractual obligations to the Association, yet the evidence shows no serious attempt by the County to forestall the insurance changes until its PECBA bargaining obligations were completed. Likewise, the record does not establish that the County made any serious attempt to satisfy those bargaining obligations before making plan changes."
29. This calculation is based on the average employee reimbursement since the current insurance plan became effective in July 2003. The 03-04 average employee reimbursement was $65.00 per month for reimbursements through April of 2004. Thus, the Association argues that the $70.00 per month payment is reasonable compensation for discontinuing direct reimbursements.
30. The timber and fishing industries still contribute to the local economy which has diversified with rapid growth in tourism and retail industries.
31. Approximately 60% of the Sheriff's budget is used to fund jail operations.
32. The Association's presentation reflects that the gap widens with length of service, i.e., those with five years of service are .41% behind the average position of the comparators, those with ten years of service are 1.07% behind, those with fifteen years of service are 1.73% behind, and those with 20 years of service are 2.74% behind. The Association included disposable income attributable to employer paid contributions to health insurance and retirement in its analysis.
33. As previously noted, Article 26, Section 3 of the expired agreement provides: "This Agreement shall remain in full force and effect during the period of [such] negotiations."
34. The arbitrator in no way implies that the $70.00 per month increases should continue in perpetuity; however, there is no persuasive evidence that the $113,333.20 in direct reimbursements and administrative costs thus far paid by the County have fulfilled its bargaining obligation.
35. The County attempts to analogize this case to City of Oregon and Oregon City Firefighters Association Local 1159, IA 04-99; however, unlike the situation here, the City of Oregon did not unilaterally change its insurance program.Rather, it bargained insurance issues to impasse and then submitted the issues to final and binding interest arbitration.
36. The County proposes elimination of the CPI formula even though the Association has proposed lowering the minimum from 3.0% to 2.5%.
37. Due to the broad language of the County's proposed Article 8, Section 1, it is unclear to what extent the County seeks to depart from the status quo. The lack of specificity in the proposal is another factor which favors continuation of the status quo, as proposed by the Association.
38. The County was not prejudiced by this ambiguity as it calculated the cost of the Association's wage proposal, using 2.6% in year 2, in its Final Offers-Cost Estimates. Worksheet.
39. In the arbitrator's view, Oregon law requires comparison of overall compensation of other employees performing similar services with the same or other employees in comparable communities of the same or nearest population range within Oregon. However, once those communities have been identified, it does not preclude consideration of other factors such as geographical location or type of economy, e.g., tourism, resource extraction etc. Thus, the Association's exclusion of Malheur and Klamath Counties is not unreasonable.
40. Neither party has argued that any "stipulations of the parties" should influence the outcome of this proceeding.