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IA-19-99
In the Arbitration Between La Grande Police Association Teamsters Local No. 670 and City of La Grande. (Wages Only) IA-19-99.
 
OPINION AND AWARD
 
INTRODUCTION
 
This case concerns only the wage rates to be paid under the parties' 1999-2002 contract.
 
As required by ORS 243.746(3), at least fourteen days prior to the scheduled March 14, 2000 hearing the parties exchanged "last best offer packages." Under ORS 243.746(4), the Arbitrator must accept, in its entirety, either the association's last best wage offer, or the city's.
 
In deciding which wage offer to accept, the Arbitrator must base his findings and opinions on the criteria stated in subsections (a)-(h) of ORS 243.746(4), "giving first priority," however, to the criterion stated in subsection (a): "The interest and welfare of the public."
 
Accordingly, the ultimate issue is: Will the February 28, 2000 last best offer of the association, or the February 29, 2000 last best offer of the city, better serve the interest and welfare of the public in the City of La Grande, Oregon?
 
FACTS
 
The Parties' 1996-1999 Contract
 
The parties are still operating under their 1996-1999 contract, which had an expiration date of June 30, 1999.
 
Article 12, Wages and Salaries, of that contract stated:
 
"12.1 Wage Schedule. Employees covered by this Agreement shall be paid according to the Wage and Salary Schedule Addendums to this Agreement." (Page 8, Joint Exhibit 1)
(These "Wage and Salary Addendums" showed, however, only the hourly wage rates for the "entry" and the "top" steps for each of the ten classifications in the bargaining unit represented by the association.)
 
Article 12, Wages and Salaries, of that contract also stated:
 
"12.6 Salary Steps. Salaries shall fall within the steps as shown in the Addendums. An annual step increase of three percent (3%) shall be granted to any employee on the employee's anniversary/promotional date if the employee's performance evaluation rates him/her as satisfactory or better, provided however, that in no event shall any employee's pay be established at a rate in excess of the top of the appropriate pay range."
 
* * *
 
"12.8 Cost of Living Increases. Cost of living increases [COLA's] shall be administered in the following manner:
 
"July 1, 1996 -- The salary schedule will be increased by 3.25%.
 
"July 1, 1997 -- The salary schedule will be increased by the [increase in the] National CPI-U [a] minimum of 2% to a maximum of 4% (January 96 to January 97).
 
"July 1, 1998 -- The salary schedule will be increased by the [increase in the] National CPI-U [a] minimum of 2% to a maximum of 4% (January 97 to January 98)." (Pages 9-10, Joint Exhibit 1)
 
Prior to impasse, on October 29, 1999 the parties agreed upon an increase for the 1999-2000 contract year in the entry and top hourly rates for three classifications: clerk typist/receptionist, police department secretary and enforcement officer. They also agreed to make these increased wage rates retroactive to July 1, 1999.
 
Where the Parties' Last Best Offers Are The Same
 
The association and the city each propose a three-year contract covering the period July 1, 1999 to June 30, 2002.
 
Each also proposes a 3% COLA increase for both the first and second year of their 1999-2002 contract (effective for the second year on July 1, 2000) and a COLA increase for the third year from a minimum of 2% to a maximum of 4%, depending on the increase in the National CPI-U between January 2000 and January 2001, effective for that third year on July 1, 2001.
 
Where the Parties' Last Best Offers Differ
 
The Effective Date of the Initial COLA:
 
The association contends that the parties' offers differ as to when the proposed 3% COLA for the first contract year (1999-2000) would become effective for the seven other classifications in the bargaining unit.
 
The association proposes retroactivity to July 1, 1999. (This would match the retroactivity previously agreed-upon for the increases in the entry and top steps for the clerk typist/receptionist, police department secretary and enforcement officer classifications.)
 
The association further contends that under the city's wage offer this 3% COLA would go into effect on the date of the Arbitrator's AWARD.
Percentage Step Increases:
 
The association proposes an increase, from 3% to 4%, in the annual step increases for each of the ten classifications in the bargaining unit (including the classifications of clerk typist/receptionist, police department secretary and enforcement officer), effective on and after July 1, 1999.
 
Because of the city's proposal for the wording of Article 21, Term of Agreement, it appears that not only would the city keep the 3% annual step increases, but it would also would make the step increases for the 1999-2000 contract year for the seven other classifications effective only on and after the date of the Arbitrator's AWARD.
 
Changes in the Sergeant Classification:
 
The association proposes:
 
-- A new entry step of $18.72 (a total increase of 23.4%, consisting of the proposed 3% COLA plus a "special adjustment" of 20.4%); and,
 
-- A new top step of $21.06 (a total increase of 8.3%, consisting of the proposed 3% COLA plus a "special adjustment" of 5.3%).
 
The city proposes a 3% COLA for the sergeant classification, and no "special adjustments."
 
The Effect of the Association's Proposed 4% Step Increases
 
The parties agree that the association's proposal for 4% step increases would effectively compress the steps between the entry step and the top step for each of the ten classifications.
 
They also agree that, because of the association's proposed first contract year "special adjustments" for the sergeant classification (20.4% for the entry step and 5.3% for the top step), the most dramatic compression would be in the sergeant classification, where there would be an automatic reduction from nine steps to four.
 
They likewise agree that if both wage offers were retroactive to July 1, 1999, over the three-year period the difference in costs to the city (between the association's proposal and the city's) would be approximately $29,000; the association's proposal would cost $215,700 and the city's $186,863. (See City's Exhibits C-10 and C-11.)
 
Moreover, although the association does not necessarily agree with City's Exhibit C-13, nevertheless it acknowledges that exhibit tends to show that $24,504 (84.5%) of the $29,000 difference between the competing proposals would be attributable to the association's wage proposals for the sergeant classification.
 
Furthermore, although the association does not necessarily agree with the city's argument that the association's wage proposals for the sergeant classification were specifically designed to immediately increase the pay of the two senior police officers promoted to sergeant on March 21, 1999 (Gary B. Bell and David M. Sams), nevertheless it acknowledges that under the association's proposal these two sergeants would automatically benefit the most during the first two years of the parties' 1999-2002 contract.
 
THE PARTIES' ARGUMENTS
 
The Association's Position and Arguments
 
The association contends that its last best offer would serve the interest and welfare of the public in La Grande, Oregon because:
 
One, as Arbitrator Leslie Sorenson-Jolnik noted in The Interest Arbitration between Marion County Law Enforcement Association and the Board of Commissioners of Marion County (September 1995):
 
"If [Senate Bill 750] allowed the employer to unilaterally determine the interest and welfare of the public, which is the criteria which an interest arbitrator is to give first priority [under ORS 243.746(4)(a)], interest arbitration would be a meaningless process" (Page 30).
 
Moreover, as Arbitrator Sam Kelton recently observed in The Interest Arbitration between the City of Eugene and the Eugene Peace Employees Association (February, 2000), it is in the public interest that the employer have a good police force at a reasonable cost to the taxpayer, and that the cost is proportional to the quality of police officer which can be hired by the employer.
 
Furthermore, as Arbitrator Nancy Brown concluded in the Interest Arbitration between the City of Cornelius and AFSCME (April 1999) the ability of the employer to attract and retain experienced police officers, especially lateral transfers, is "in the public interest."
 
Above all, Article XI, Section 11(3)(a)(D) of the Oregon Constitution, as amended by Ballot Measure 50, now expressly states:
 
"It shall be the policy of this state and the local taxing districts of this state to prioritize public safety and public education in responding to the reductions caused by this paragraph..." (Emphasis supplied)
 
Accordingly, if Ballot Measure 50 (which the city has cited in support of the reasonableness of its wage proposals) is taken as an expression of the public interest and welfare, then it would be in the public interest to fully fund public safety personnel costs (such as the wages of the police and firefighters) even at the expense of other public programs.
 
Fortunately, no such trade-offs are required in this case, since the city acknowledges that it has adequate funds and reserves to fully pay the association's wage proposals. In addition, the city acknowledges that the difference in costs between its wage proposals and the association's is only $29,000, which is certainly not a great sum for the city's General Fund Budget -- projected for the 1999-2000 fiscal year to be in excess of $5,700,000, and
 
for the 2000-2001 fiscal year to be $6,000,000.
 
Two, the city criticizes the association's proposal for a 1% increase (from 3% to 4%) in the police department step increases, while ignoring the fact that the city's contract with its firefighters already provides for step increases of 4%.
 
Certainly, the two public protection agencies in the City of La Grande are the fire and police departments. And what is reasonable for step increases in the fire department (4%) would certainly be reasonable for step increases in the police department.
 
Three, Sgt. Gary Bell testified at length about the difficulties the city has experienced in recent years in retaining its trained police officers.
 
Clearly, the cost considerations of such a high turnover rate should weigh heavily on the Arbitrator's mind in appraising the conflicting proposals of the parties. And Sgts. Bell and Myer testified at length about those costs: (A) The city must pay for the time that a replacement recruit spends at the Police Academy ($60,000, according to what the Oregon Department of Public Safety, Standards and Training told Sgt. Myer).
 
(B) In addition, the city must then double-staff the replacement recruit for at least three months of his/her probationary period while he/she learns the rudiments of the job.
 
(According to Sgt. Bell's testimony, it requires five to six months before a new officer can work solo. And both Sgts. Bell and Myer testified that most officers are "still learning the job" after two to three years.)
 
Moreover, not only has the city's high turnover rate in recent years imposed hidden costs on the city, but also it has affected the morale of the entire force.
 
An effective law enforcement agency requires trained and experienced police officers. When such officers are forced to forego vacations, work overtime and transfer from one shift to another to assure minimum levels of coverage, there is a deleterious effect on morale and an undermining of teamwork.
 
Above all, as Arbitrator Howell Lankford noted, in finding in favor of the Yamhill County Sheriff Deputies:
 
"[A law enforcement officer] becomes more valuable and productive with longer experience in a particular area. A good deal of police work inevitably involves local knowledge; so a police department that is forced to start over with new employees again and again is likely to get far less return for its payroll dollar than a department that manages to retain employees throughout their professional careers." (Lankford, Teamsters Local 670 v. Yamhill County (May 19, 1997),p. 19 (excerpted at Exhibit U-7).
 
Four, the source of the city's retention problem is apparent from a cursory review of Exhibit U-11:
 
-- A fourth-year La Grande police officer makes the same PERS-adjusted wage as a one-year Pendleton officer.
 
-- A third-year La Grande police officer has a PERS-adjusted wage of $2,454, which is less than the entry wage in Baker City, Hermiston, Redmond, Troutdale, Woodburn, Canby, Central Point, Coos Bay, Dallas, Forest Grove or Gladstone (among the jurisdictions of similar size).
 
Moreover, many La Grande police officers have succumbed to the temptation of higher wages elsewhere and left the city's police department:
 
-- Exhibits U-2, U-3 and U-4 show that in the past decade 37 employees have left the La Grande Police Department.
 
-- 25 of the 37 left in the last five years.
 
-- In a single year, one-third of the department was lost.
 
-- In 1998 alone, seven employees left the department, including 3 police officers.
 
-- Of the 41 employees who left the La Grande Police Department since 1989 only four retired from the department.
 
Admittedly, not all of these employees who left La Grande did so for better job offers. Some left because they could not handle the job, and were either terminated or failed probation. This was not due to poor recruiting or screening by the department, but because of the paucity of the applicant pool attracted by La Grande's low wages.
 
Sgts. Bell and Myer related examples of police officers who came for a short stay in La Grande, and moved on to greener pastures. The city responded to their testimony by pointing out that most of these officers were not lost to "comparator jurisdictions" but to the Oregon State Police or other agencies which were not in the comparator pool. However, this response completely misses the point: If the city offered higher wages, fewer trained and experienced officers would leave La Grande!
 
Admittedly, wages are not the only factor that determines an individual's choice of employment. Other benefits -- the nature of the community, family obligations, lifestyle interests and a host of other considerations enter into any employment decision. However, when other factors balance out, wages often are a determining factor. And clearly higher wages will encourage people to stay, and in many cases will be decisive in any employment decision.
 
In a word, the association's wage proposals would significantly reduce the number of jurisdictions able to offer La Grande third or fourth year police officers a pay raise at an entry-level wage.
 
Five, the city's greatest criticism was directed to the association's proposed wage adjustments for the sergeant classification.
 
(A) As the evidence conclusively shows and the city acknowledges, La Grande sergeants are significantly underpaid compared to jurisdictions of similar size.
 
(B) Moreover, the sergeant pay scale is skewed in relation to the pay scale of the police officer classification.
 
(Sgt. Bell testified that when he was promoted from detective to sergeant on March 21,1999 he received no raise in pay. In addition, because his anniversary date was a month before March 1999, he will have to work 13 months without a pay increase, whereas he would have had to work only 11 months (from March 1999 to February 2000) without a pay increase if he had refused the promotion.)
 
(C) Another consequence of the low wage scale for sergeants in the City of La Grande is that some police officers make more than sergeants do as their base pay.
(Sgt. Bell testified that he supervises a police officer who has only been with the La Grande Police Department for one year -- a certified lateral transfer -- who nevertheless makes more in base wages as a police officer than he, Gary Bell, does as a sergeant.)
 
(D) Furthermore, sergeants do not have an easier job than patrol officers. La Grande has such a small police department that all of its sergeants perform the same patrol duties as regular police officers. In addition, sergeants are also responsible for scheduling, supervision and training, and annual evaluations. They also have significant involvement in the discipline process.
 
Clearly, with these extra responsibilities, more pay is appropriate.
 
(E) Even more significant from the standpoint of the public interest, is the sergeants' role in maintaining quality in the La Grande Police Department, and with high turnover quality leadership is important.
 
It is undisputed that above the four sergeants there is only one lieutenant and the chief of police. Hence, the few people who stick around long enough to make it to the sergeant classification have primary responsibility for holding together a police department where most other law enforcement officers are going through a revolving door.
 
Above all, it is undisputed that the department's current four sergeants have demonstrated excellent qualities of training, skill and leadership, and that they have helped make the La Grande Police Department the "most respected department in Eastern Oregon" (testimony of City Manager Wes Hare).
 
Surely "a higher level of skill merits higher-than-average wages." Thus, even if there were no pay equity issue between the sergeant's wage scale and the police officer wage scale, the level of skill and leadership shown by the La Grande sergeants would justify a higher-than-market rate of pay. Yet, even if the Arbitrator adopts the association's last best offer, the La Grande police sergeants will still be left well behind the market wage scales for that classification.
 
For the foregoing reasons, the interest and welfare of the public in the City of La Grande requires the adoption of the association's last best offer.
 
The City's Position and Arguments
 
On pages 14-15 of her post-hearing brief the city's representative succinctly stated her client's position and arguments:
 
"This interest arbitration [case] is about the community interest and welfare. This community's interest and welfare is incorporated in the City's last best offer and should accordingly be granted deference by the arbitrator. The Union has not made a compelling case that its proposal would enhance the quality of recruits, enlarge the qualified applicant pool, or reduce turnover for reasons not in the City's control. The few bargaining unit members who did take positions for more money either had mixed motivations or went to non-comparators.
 
"The Union's proposal primarily benefits only two individuals in the bargaining unit. Even if the changes proposed by the Union are warranted individually, there are simply too many changes at once to the current wage schedule. The City should have the opportunity to bargain compression of the wage schedule since the cost impacts the overall settlement and the City [has not had] the opportunity to consider that impact in the context of the overall offer to the Union, including the cost of fringe benefits [afforded the members of the bargaining unit]. [Above all,] even if changes are warranted in the Sergeant's classification alone, the magnitude of the changes due to the increased compensation and the compression of the [sergeant's classification wage] schedule are unwarranted. *[In a word,] it is too much too soon.*
 
"The City does not lead the market in any classification nor is that a compensation goal of the City. The lag from the average compensation did not occur overnight. There is no compelling evidence under the statutory criteria that would make it imperative in this proceeding [for the arbitrator] to address the compression in the range of the wage schedule for each classification, the Sergeant's selective salary increase and the increase in the step increment. All [of] these factors, and the interest and welfare of the public as reflected in the City's proposal, support the City's request that the arbitrator award the City's last best offer" (**Arbitrator's emphasis).
 
THE ARBITRATOR'S DISCUSSION
 
The Heart of the Matter
 
The $29,000 difference in costs over the three-year period between the association's wage proposal and that of the city conclusively demonstrates that the city's proposed wage increases are just as reasonable as the association's.
 
Admittedly, a serious drawback in the city's last best offer is the city's proposal for the wording of Article 21, Term of Agreement:
 
"This Agreement shall be effective as of the date of its signing by both parties [that is, the date of the Interest Arbitrator's AWARD] or July 1, 1999, *whichever date is later*..."(**Arbitrator's emphasis; page 2 of Exhibit C-8)
 
This language would, on its face, appear to deprive all but the three classifications previously covered by the parties' October 20, 1999 tentative agreement of a 3% COLA from July 1, 1999 to April 17, 2000 (a period of nine and one-half months). It would also appear to delay the 1999-2000 increases for those members of the bargaining unit with anniversary/promotional dates after July 1, 1999 and prior to April 17, 2000.
 
The Arbitrator, however, notes that there is a conflict between the express language proposed by the city for Section 12.8, Cost of Living [Increases], and the above-quoted language from Article 21, Term of Agreement, as also proposed by the city.
 
"12.8 Cost of Living [Increases]. Cost of living increase shall be administered in the following manner:
 
"July 1, 1999 -- The salary schedule will be increased by 3.00%" (Page 2, Exhibit C-8)
 
Accordingly, the Arbitrator finds and rules that irrespective of the city's proposed language for Article 21, Term of Agreement, if he were to choose the city's last best offer, the 3% COLA for the 1999-2000 contract year would be retroactive to July 1, 1999 for the seven classifications in the bargaining unit not covered by the parties' October 20, 1999 tentative agreement.
 
Hence, for this interest arbitration the impact of the city's proposed wording for Article 21, Term of Agreement, would be limited to the 1999-2000 contract year step increases for those members of the bargaining unit whose anniversary/promotional dates were after July 1, 1999 and prior to April 17, 2000.
 
(Of the 31 bargaining unit members whose 1999-2000 step increases could be affected by the date of this OPINION AND AWARD, if the Arbitrator were to accept the city's wage proposal, four -- whose last anniversary dates were before July 1, 1999 -- would not be affected at all. Of the remaining 17, three -- Sgts. Bell, Myer and Sams -- would have delays of less than one month and seven -- Blackman, Duncan, Hays, Schwebke, Snook, Welberg and Whittington -- delays of less than six months. Thus, if the Arbitrator were to accept the city's wage proposal, 17 bargaining unit members would have delays of more than six months; the longest delay would be nine and a half months. See Exhibit C-3)
 
On the other hand, as pointed out by the city's representative, the two drawbacks in the association's last best offer are:
 
(A) The limited, but significant, compression of the steps between the entry wage level and the top wage level for most classifications in the bargaining unit caused by the association's proposed 1% increase (from 3 to 4%) for the annual step increases; and,
 
(B) The dramatic compression of the steps between the entry wage level and the top wage level (from nine steps to four) for the sergeant classification, caused by the combination of the 4% annual step increase and the immediate "special adjustments" in both the entry level step and the top level step in that classification.
 
Accordingly, at the heart of the matter is this question: In view of Arbitrator's ruling on effective dates of the COLA's for each of the three contract years in question, and the $29,000 difference in costs between the association's wage proposals and those of the city, is the association proposing "too much too soon," as the city argues?
 
The Arbitrator's Analysis and Reasoning
 
The Arbitrator is troubled by the language in Article 21, Term of Agreement, as proposed by the city, because the language of that Article could substantially delay the 1999-2000 annual step increases of 17 bargaining unit members.
 
On the other hand, the record shows conclusively that the city's proposal (if retroactive in all respects) would cost only $29,000 less than the association's wage proposals.
Moreover, the record also shows conclusively that if the Arbitrator were to award the association's wage proposals, $24,504 (84.5%) of the $29,000 difference in cost between the competing proposals would be attributable to the sergeant classification, and would benefit primarily only two members of the bargaining unit.
 
Furthermore, the Arbitrator must agree with the city's representative that:
 
"The Union has not made a compelling case that its proposal would enhance the quality of recruits, enlarge the qualified applicant pool, or reduce turnover for reasons not in the City's control. " (Page 15, City's Post-Hearing Brief)
 
Above all, the Arbitrator must also agree with the city's representative that:
 
"There is no compelling evidence under the statutory criteria that would make it imperative in this proceeding [for the Arbitrator] to address the compression in the range of the wage schedule for each classification, the Sergeant's selective salary increases and the increase in the step increment." (Page 15, City's Post-Hearing Brief)
 
Accordingly, the Arbitrator finds, as argued by the city, that the association has proposed "too much too soon."
 
CONCLUSION
 
Thus, the Arbitrator's answer to the ultimate question before him must be:
 
The February 29, 2000 last best offer of the city will better serve the interest and welfare of the public in the City of La Grande, Oregon.
 
AWARD
 
The Arbitrator hereby accepts the city's last best offer of February 29, 2000.
 
April 17, 2000
 
William H. Dorsey, Arbitrator
 
Representing the Association: Henry J. Kaplan, Esq., Bennett, Hartman & Reynolds
 
Representing the City: Candace Ludtke, Local Government Personnel Institute