1997 NAC 121 City and County of Honolulu, Hawaii and Hawaii Organization of Police

Title: City and County of Honolulu, Hawaii and Hawaii Organization of Police
Date: November 21, 1997
Arbitrator: Allen Pool
Citation: 1997 NAC 121

            C. ALLEN POOL
            Arbitrator
            P.O. Box 2591
            Monterey, Calif. 93942
            (408) 372-4138

            Donna Kekauoha, Esq.
            State of Hawaii Organization of Police Officers
            1717 Hoe Street
            Honolulu, HI 96819
            (808) 847-4676

            Dean Matsukawa
            Labor Relations & Training Division
            City & County of Honolulu
            550 S. King Stree
            Honolulu, HI 96813
            (808) 527-4898

            Nancy T. Sugimura, Esq.                                   David J. Gierlach, Esq.
            Paul Tsukiyama, Esq.                                         Michael Green, Esq.
            Richard Wurdeman, Esq.
            Ted H.S. Hong, Esq.
            Margaret Hansen, Esq.

In accordance with Chapter 89 of the Hawaii Revised Statutes and the Amended Arbitration Procedures Mutually Agreed Upon Between the Public Employers and the State of Hawaii Organization of Police Officers (June 23-24, 1997), the parties submitted the dispute to final and binding Interest Arbitration. Through procedures of the American Arbitration Association, the parties jointly selected C. ALLEN POOL to serve as the Impartial Chairperson of the Arbitration Panel.

On August 11, 1997, the Hearing was convened in the State Capitol Building in Honolulu, Hawaii. The Hearing recessed on Friday, August 15, 1997 and reconvened on Wednesday, September 3, 1997 and continued through September 5, 1997. At the Hearing, the parties were the afforded the opportunity, of which they availed themselves, to examine and cross-examine witnesses and to present relevant data, exhibits, and arguments. The witnesses were administered the Oath and a written transcript was made of the Hearing. The parties agreed that the matter was properly before the arbitration panel and that the arbitration panel could formulate an award that accepts the position of either the Union or the Employer or creates a compromise between the parties' positions. Posthearing briefs were exchanged between parties and submitted to the panel members in a timely fashion. Following the Hearing, panel deliberations were conducted through telephone conferences on October 13, November 6, 1997. The Chairperson, with counsel from the panel members, wrote the Award/Opinion which reflects the decision of the majority of the arbitration panel and will close off bargaining for the 1997-1999 Agreement.

In accordance with Hawaii Statute 89 and Procedures mutually agreed upon, the Parties submitted their Final Offers relative to the Articles listed below to the Arbitration Panel on July 7, 1997. On July 25, 1997 the Parties submitted Amended Final Offer Positions on the Issues to the Arbitration Panel. The Amended Final Offers are reflected in the Discussion and Opinion section.

In reaching a decision, the arbitration panel shall give weight to the factors listed below and shall include in a written opinion an explanation of how the factors were taken into account in reaching the decision:

5. The present and future general economic condition of the counties and the State.

6. Comparison of wages, hours, and conditions of employment of the employees involved in the arbitration proceeding with wages, hours, and conditions of employment of other persons performing similar services, and of other State and county employees in Hawaii.

7. The average consumer prices for goods or services, commonly known as the cost of living.

8. The overall compensation presently received by the employees, including direct wage compensation, vacation, holidays and excused time, insurance and pensions, medical and hospitalization benefits, the continuity and stability of employment, and all other benefits received.

9. Changes in any of the foregoing circumstances during the pendency of the arbitration proceedings.

10. Such other factors, not confined to the foregoing, which are normally or traditionally taken into consideration in the determination of wages, hours, and conditions of employment through voluntary collective bargaining, mediation, fact-finding, arbitration, or otherwise between the parties, in the public service or in private employment.

The decision of the arbitration panel shall be final and binding upon the parties on all provisions submitted to the arbitration panel.

In arriving at their conclusions and decisions, the Arbitration Panel considered all of the above criteria.

Article 12. Police Officer's Protection - Administrative Investigation and Interrogations: At a meeting between the parties on July 23 & 24, 1997 a Tentative Agreement was reached for Article 12. A copy of the Tentative Agreement is attached in the Appendix.

ARTICLE 15. OVERTIME: At a meeting between the parties on July 23 & 24, 1997 a Tentative Agreement was reached for Article 15. A copy of the Tentative Agreement is attached in the Appendix.

ARTICLE 20. TRANSFERS: "At a meeting between the Parties on July 23 and 24, the Union withdrew its final offer position on Article 20, Transfers, and agreed with the Employers to keep the existing language in the present Collective Bargaining Agreement.

ARTICLE 36. DURATION OF AGREEMENT: At a meeting between the parties on July 23 & 24, 1997 a Tentative Agreement was reached for Article 36. A copy of the Tentative Agreement is attached in the Appendix.

Article 54. Compensation Adjustments: "At a meeting between the Parties on July 23 and 24, the Employers withdrew their final offer position on Article 54 , Compensation Adjustments, and agreed with the Union to keep the existing language in the present Collective Bargaining Agreement.

The Union seeks a continuation of the service step movement plan and a three (3) percent across-the-board increase to the salary schedule on four (4) occasions: July 1, 1997; January 1, 1998; July 1, 1998; and January 1, 1999.

For the two (2) year period of the Agreement, the Employer has offered a 5.06 percent increase which includes a 2.69 percent across-the-board adjustment to the salary schedule and a continuation of the service step movement plan.

In reaching a decision concerning salary, all factors were considered. It should be noted, though, that none stood alone. They were all very much related to each other. While no single factor reigned, some were accorded more weight than others. The end result, therefore, was a combination of factors that led to the decision on salary.

The lawful authority of the employer. Along with a balanced budget requirement, funding for any salary adjustment has to come from the budget. There is also the requirement for legislative approval to transfer funds between budget categories. In spite of these requirements, however, the decision of the Arbitration Panel is final and binding on the Employer.

Stipulations of the Parties. There was no real issue concerning this except the Union's objection to what was called the Employers' Amended Final Offer of August 11th. The Union felt this went beyond the stipulation to submit amended final offers dated July 24th (Employers Exh. #6). The Employers' amended salary offer of July 24th stated an across-the-board 2.84% salary adjustment. The amended offer of August 11th stated an across-the-board 2.69% salary adjustment. After reviewing the testimony of Gordon Chang, the State's program budget analysis manager for Dept. of Budget and Finance as to why the figure was changed, it became clear that the change was not an amended offer but a mathematical correction necessitated by the errors in the data base provided to Mr.Chang (Trans. Vol. VI, pp. 1121-1133). The Union's objection is, therefore, overruled.

The interests and welfare of the public. The Union's contention was that the public favors a real wage increase for its police officers and that the increase sought by the Union would not have a negative impact on essential services and functions to the public.[1] The Employers' contention was that the magnitude of the wage increase sought by the Union would have a disastrous impact on the Employers' ability to provide essential services and functions to the public. It would also seriously curtail the Employers' efforts to fund an equitable wage adjustment for other bargaining units and hamper efforts to reach settlements with other bargaining units.

Part of the issue here were the respective costing estimates. The Union costed its salary proposal to be $16,395,540, an amount that could be funded from the Unfunded Reserve Balance left over from the FY96 budget. The Employers' costed the Union's salary proposal to be $24.4 million.

Regardless of whose costing estimate was correct, the magnitude of either estimated figure, if applied to the current FY98 and future FY99, would have a negative impact on the interests and welfare of the public and on the Employers' ability to give an equitable salary increase to the other bargaining units. Moreover, as will be discussed in the next section, reliance on unfunded reserve balances as the primary source to fund current and future salary adjustments is not in the publics interest nor welfare (Emphasis added).

The financial ability of the employer to meet the costs. The Union contended that the money is there to fund its wage proposal or some amount greater than that offered by the Employers. In support of its argument, the Union made frequent references to an unreserved fund balance for the four counties of $81,036,447 from FY96 as proof of the Employers' ability to pay (Union Exh. 76). After reviewing U-76 and related testimony from Malcolm Tom, Gordon Chang, and Dr. William Boyd, the Union's argument that $81 million is available to fund its wage proposal for two years without any negative impact was found to be unpersuasive. Moreover, the Union's perception of an unreserved fund balance is fraught with misunderstandings.

An unreserved fund balance, to paraphrase Dr. Mak, is inevitable and is plowed back into the budget to fund needed services and programs. The amount is a result of several factors among which are unexpected revenues or losses in revenues and fiscal prudence or imprudence in some instances. The balance serves as a cushion to smooth out the vagaries of revenue receipts during the fiscal year. It also serves as a backup against unexpected disasters and emergencies.

More to the point, an ending, unreserved fund balance is not a continuing nor recurring source of revenue (Emphasis added). Therefore, it cannot nor should it be the primary source of money to fund wage increases. To do so could place an extreme burden on the current and future budgets by imperiling jobs, adding to uncontrollable costs, and necessitating a potential need to increase taxes and/or curtailment of services and programs.

The Employers do not have the ability to fund the Union's wage proposal. It would give to the Union a disproportionate wage increase relative to other bargaining units. It would also have a negative impact on the Employers' ability to fund essential services and programs. What is significant, though, is that the Employers' are willing to make the effort to reprioritize and reallocate funds within the current budget to see that all bargaining units are given an equitable salary adjustment over the life of the Agreement which is in line with current and future economic conditions.

The present and future general economic conditions of the counties and the State and the average consumer prices for goods and services, commonly known as the cost of living. The unprecedented economic growth of the 80s and early 90s is over. For the past six to seven years the State's economy has been stable but flat and, for the present, continues to be stable but flat. While the cost of living increase on the mainland has been 2½ to 3 % for the past few years, the cost of living in Hawaii for the same period has been below 2%.[2] The cost of living for 1996 in Hawaii was .9% and for the first half of 1997 was again .9%.

Three different economic experts, Dr. Bonhom, Dr. Laney, and Dr. Mak, from three different perspectives, all came to the same general conclusion. The State's and the Counties' economy, given the current condition of near zero inflation, will not rise more than 2% in the next two to three years. The conclusion was based not on just one indicator, but the assessment of all recognized indicators in combination. They included, among others, a low personal income growth, an almost zero job growth, a Gross State Product that barely exceeds 1.0%, an increase in bankruptcies and foreclosures, a Producers' Price Index that has been declining for the past several months, a decrease in retail sales, a loss in construction jobs, a decline in building permits of 33%, and a Grocery Price Index conducted by First Hawaiian Bank showing no rise in grocery prices since 1995. The rate of inflation is so low for the State and Counties the perception by some is that the economy is in a state of deflation.

Comparison of wages, hours, and conditions of employment of the employees involved in the arbitration proceedings with wages, hours, and conditions of employment of other persons performing similar services, and of other State and County employees in Hawaii. Comparability is commonly used as a factor in proceedings such as this. The problem has always been one of determining an appropriate comparable group. On the mainland, muncipalities are compared with other muncipalities of comparable size as are school districts and counties.[3] Given the highly centralized political structure of the State of Hawaii, the problem presents some interesting twists. However, Criterion No. 6, as it is framed, recognizes the problem and provided guidance. Criterion No. 6 specifies comparison to (1) persons performing similar services and (2) to other State and county employees in Hawaii. The most obvious employee group that performs similar services ( public safety) were the firefighters whose union settled with the Employers for a 5.06% salary adjustment prior to this arbitration. A 5.06% salary adjustment, over the life of the Agreement, is the same offer made to the police officers's Union, SHOPO. Moreover, the Employers have made the same 5.06% offer, or one close to it, to all the bargaining units, including State employee units for the purpose of achieving and maintaining parity among the State and counties' employee units.

The Union refered to parity as a "red herring", as an effort by the Employers to avoid giving the police officers a real wage increase. The Union contended that the parity issue avoids the historic practice of giving police officers salary increases greater than other bargaining units. The record did not support the Union's contention. What the record did show was an effort by the Employers to provide all bargaining units with a reasonable and equitable salary increase, a wage increase which for one unit would not be disproportionate to other employee units. An examination of Employer Exhibit No. 55 illustrates the Employers' efforts to attain and maintain parity among employee units over the four-year period of 1995 to 1999.

The overall compensation presently received by the employees, including direct wage compensation, vacation, holidays and excused time, insurance and pensions, medical and hospitalization benefits, the continuity and stability of employment, and all other benefits received. This was not an issue of any significance in this arbitration.

Changes in any of the foregoing circumstances during the pendency of the arbitration proceedings. The only item of note here was the report by the Bureau of Labor Statistics on August 14th that the CPI for Hawaii was still .9%.

Such other factors, not confined to the foregoing, which are normally or traditionally taken into consideration in the determination of wages, hours, and conditions of employment through voluntary collective bargaining, mediation, fact-finding, arbitration, or otherwise between the parties, in the public service or in private employment. The only other factor of real significance was the Employers' demonstrated and expressed effort to fund an equitable wage increase for all employee units, an increase which is actually a bit above the current cost of living (Emphasis added).

It is the considered decision of the arbitration panel that the Employers' final offer is the more reasonable.

(1) Effective July 1, 1997, continue with the existing step movement plan in accordance with Article 30 - Salaries.

(2) Effective January 1, 1998, a 2.69% across-the-board increase to the salary schedule.

(3) Effective July 1, 1998, continue with the existing step movement plan in accordance with Article 30 -Salaries. (See Employers Exhibit No. 52 in the Appendix).

1. The parties reached agreement on the language of Article 17.A. Uniform and Equipment Committee.

2. The Union is seeking a $15.00 monthly increase in both the Uniform Maintenance Allowance (Art. 17, D) and the Firearm Maintenance Allowance (Art.17, E).

The Union is seeking an increase in the Employers' Liability Limit for reimbursement for:

1. No increase in either the Uniform or Firearm Maintenance Allowance. Any increase or modification regarding either allowance should be covered by the Standard of Conduct Differential.

1. Article 17. A. Uniform and Equipment Committee. In an agreement signed on July 25, 1997, the Employers agreed to the language contained in the Union's final offer of July 7, 1997 regarding Article 17.A

2. Article 17. D. Uniform Maintenance Allowance and Article 17. E. Firearm Maintenance Allowance.

The evidence record did not support a change in the language or terms of either. Article 17.D or Article 17.E.

It is the considered opinion of the arbitration panel that an adjustment for inflation warrants acceptance of

Acceptance of the Union's Final Offer of July 7, 1997. Effective date of implementation shall be retroactive to July 1, 1997.

The Parties submitted amended final offers dated July 25, 1997 to the arbitration panel wherein the Union withdrew its Final Offer Positions on Article 18.H. and Article 18.Q. With respect to the following four (4) articles, the Parties stipulated their agreement to the language in the following provisions:

Article 18.N. Gasoline for all units is to be issued at the rate of 10 official duty miles per gallon. Mileage overages many be carried forward but must be cleared within the next calendar month. The present practice of distribution of oil shall be continued.

Article 18.O. The employers agree that any employee who is required to provide a subsidized automobile shall be permitted to use such automobile up to eight (8) years from the date the automobile was first sold, provided such automobile meets the approved standards of the applicable department. Notwithstanding

the above, the subsidized automobile which has been used for eight (8) years may be permitted to be used for an additional two (2) year period upon appropriate application, each of both years, with the Police Department provided such automobile meets the approved standards. Any decision by the Department of each one (1) year extension shall not be subject to the grievance procedure.

Article 18.P. Window Tint -- Subsidized vehicles may have tinted windows provided that the window tint meets all applicable Federal and State standards regarding window tint. In the event of a disagreement as to whether a subsidized automobile's tinted window or windows meet Federal and / or State standards, the employer's representative and the employee shall have the tint tested at an authorized State safety inspection station. The results of the test shall be binding on the parties. When the tint does not meet Federal and / or State standards, the employee shall pay the cost of the test. When the tint meets the standards, the employer representative shall pay the State safety inspection station the cost at the time of the test. Any violation or disagreement by employees of this section shall not be subject to the grievance procedure.

At the Hearing on August 14th, the Union announced, for the record, that it was withdrawing all remaining proposals concerning Article 18 (Transcript, Vol. IV, page 705).

1. Article 31.A.1. Night Differential: The Union seeks an increase from 40¢ to 70¢

2. Article 31.B. Hazardous Pay: The Union seeks 20% hazardous pay for the bicycle detail, 25% hazardous pay for SWAT officers responding to critical incidents, and 25% hazardous pay for patrol officers maintaining a perimeter while waiting for SWAT officers to arrive.

3. Article 31.C. Standard of Conduct Differential: The Union is seeking a $10.00

4. Article 31.D.1 Bomb Technicians: An increase from 10% to 15% of monthly base pay

5. Article 31.D.2. Explosive Canine Handlers: An increase from 5% to 10% of monthly

6. Article 31.D.3. Canine Handlers: An increase from $100.00 to $200.00 per month

6. Article 31.D.3. Canine Handlers: Not opposed to an increase based on economic

1. Article 31.A Night Differential: It is the considered decision of the arbitration panel that an increase to 55¢ per hour is reasonable.

2. Article 31.B. Hazardous Pay: It is the considered decision of the arbitration panel that the Union's request for hazardous pay for the bicycle detail, the SWAT officers, and the patrol officers was brought the wrong forum. With respect to the bicycle detail, the original request for hazardous pay in 1991 was denied when it was submitted to the Dept. of Personnel's Division of Workers' Compensation and Industrial Safety, Mr. Thomas Vendetta's office.

In determining whether hazardous pay is warranted, Mr. Vendetta's office uses three criteria: (1) the hazard has to be temporary in nature, (2) whether it's most severe or severe, and (3) whether it is already included in the pricing of the class. Mr. Vendetta's office conducted its study and recommended that the bicycle detail not be granted hazardous pay. He testified, "We found first of all the work - The bike detail work was not temporary in nature. It was going to be for eight hours a day every day, those who were assigned to that duty. Secondly, when we looked at the statistics for whether or not it was severe or most severe hazard, we found the hazards were moderate and no different than the hazards that any other officer is exposed to, ..... So it didn't meet that criteria, those two criteria. That was our recommendation. We felt that based on the 32-hour training program, the safety equipment that they gave to the officers, and the fact that it was temporary in nature did not - it did not warrant hazard pay". (Trans. Vol. III, p. 676-681).[4]

The evidence record revealed that the request for hazardous pay for the bicycle detail could have been, but it was not, submitted to Mr. Roy Furoyama in the Dept. of Personnel's Classification & Pay Division where the hazard factor could have been considered as part of the position's pricing and

classification (Trans. Vol. IV, p. 865-871). The Employers have a procedure whereby if the Union or the employees are not satisfied with a decision coming from Mr. Furoyama's office, the matter can be appealed to the Civil Service Commission which oversees the activities of Mr. Furoyama's office and / or to the Public Employee Pricing Appeals Board - Compensation Appeals Board. The proper forum for the question of hazardous pay for the bicycle detail is through use of the established civil service procedures which regulate the Classification & Pay Division.

With respect to requests for hazardous pay differentials not contained in the existing Contract, the language of the Collective Bargaining Agreement is very clear. All requests shall be submitted on forms and in the manner prescribed in Article 31.B.3. of the Agreement where they are then reviewed by Mr. Vendetta's office (Emphasis added). The intent of language of the Agreement (Article 31.B.4.) is also very clear where it states that any disagreement on a denial of hazardous pay or the amount shall be subject to the Agreement's grievance procedure up to and including final and binding arbitration (Emphasis added). The proper procedure for requesting hazardous pay for temporary incidents is to use the provision in the Collective Bargaining Agreement.

3. Article 31.C. Standard of Conduct Differential: It is the considered decision of the arbitration panel that a $10.00 per month increase is reasonable.

4. Article 31.D.1 Bomb Technicians: It is the considered decision of the arbitration panel that their existing 10% differential provides for an automatic pay increase in addition to any increase in the wage schedule.

5. Article 31.D.2. Explosive Canine Handlers: It is the considered decision of the arbitration panel that their existing 5% differential provides for an automatic pay increase in addition to any increase in the wage schedule.

6. Article 31.D.3. Canine Handlers: The canine handlers have not had a change in differential since 1989. Inflation warrants an increase to $132 per month.

1. Article 31.A.1. Night Differential: The differential shall be increased to 55¢ per hour

Article 31.A.3. Portion of an Hour: For ½ hour or less, the portion shall be 28¢ per

The night differential shall not be retroactive. The effective date of implementation shall be January 1, 1998.

3. Article 31.C. Standard of Conduct Differential: The differential shall be increased by $10.00 per month. Effective date of implementation shall be retroactive to July 1, 1997.

6. Article 31.D.3. Canine Handlers: An increase to $132.00 per month for all canine handlers. Effective date of implementation shall be retroactive to July 1, 1997.

[1]In its brief, the Union stated that Malcolm Tom, Budget Director for the City & County of Honolulu, acknowledged that the Employers could afford the Union's wage proposal for two years from the unreserved fund balance accumulated from FY96. After a review of Mr. Tom's testimony, I was not persuaded that Mr. Tom made this acknowledgment.

[2]A considerable amount of time and testimony went to debate the degree of accuracy of the CPI issued by the Bureau of Labor Statistics. The debate was interesting and illuminating but the charge of the arbitration panel was not to rule on the accuracy of the CPI. The CPI is recognized and accepted as a reliable measure.

[3]Determining an appropriate comparable group on the Mainland is less complicated, though, where there is the typical three-tier political structure of State, counties, and muncipalities. California, for example, has fifty-eight counties, hundreds of muncipalities, and approximately 1000 school districts.

[4]Any disagreement concerning a decision from Mr. Vendetta's office regarding hazardous pay can be grieved under the Collective Bargaining Agreement up to and including final and binding arbitration.