Title: City of Astoria and IAFF, Local 696
IN THE MATTER OF THE INTEREST ARBITRATION BETWEEN INTERNATIONAL ASSOCIATION OF FIREFIGHTERS, LOCAL 696, and THE CITY OF ASTORIA. Base Salary Issue - 2000-2003 Contract. IA-14-00.
This interest arbitration between the International Association of Firefighters, Local 696 (hereinafter the "Union") and the City of Astoria (hereinafter the "City" or the "Employer") is confined to the single issue of determining the appropriate base salary increases to be paid to the City of Astoria Firefighters for the term of the July 1, 2000 to June 30, 2003 under the Collective Bargaining Agreement (hereinafter the "Agreement"). The parties reached an impasse, waived mediation and submitted the issue to arbitration. The Arbitration hearing was held at the City Hall in Astoria, Oregon on October 31, 2000. The Union was represented by its counsel, Michael Tedesco and the City was represented by its counsel, Patrick Mosey.
At the arbitration hearing the parties stipulated the matter was properly before the Arbitrator and that the parties had complied with all of the preliminary statutory steps set forth in ORS 243.742. During the course of the hearing, each party had an opportunity to make opening statements, introduce exhibits, and examine and cross-examine witnesses on all matters relevant to the issue in dispute. At the conclusion of the hearing, the parties waived oral argument and agreed to submit their respective positions to the Arbitrator in the form of written post-hearing briefs. Upon receipt of the post-hearing briefs, the hearing record was closed and the Arbitrator took the matter under advisement.
I. RELEVANT STATUTORY CRITERIA.
This interest arbitration is controlled by the criteria set forth in Oregon Public Employees Collective Bargaining Act ORS 243.746(4) which provides:
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:
(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 a available toward a settlement.
(c) The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provides.
(d) The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received.
(e) Comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this paragraph, "comparable" is limited to communities of the same or nearest population range within Oregon. Notwithstanding the provisions of this paragraph, the following additional definitions of "comparable" apply in the situations described as follows:
(A) For any city with a population of more than 325,000, "comparable" includes comparison to out-of-state cities of the same or similar size;
(B) For counties with a population of more than 400,000, "comparable" includes comparison to out-of-state counties of the same or similar size; and
(C) For the State of Oregon, "comparable" includes comparison to other states.
(f) The CPI-All Cities Index, commonly known as the cost of living.
(g) The stipulations of the parties.
(h) Such other factors, consistent with paragraphs (a) to (g) of this subsection as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award.
This interest arbitration involves the level of wages to be paid to the City of Astoria Firefighters during the term of their new three year contract. The City's firefighters are represented by the International Association of Firefighters. There are fourteen members of the bargaining unit; six lieutenants; six engineers and two firefighters. These firefighters serve the City of Astoria which, according to the 1999-2000 Oregon Blue Book, has a population of 10,090 residents. The City and Union entered into negotiations over the terms of the new three year contract that was to be the successor to the labor agreement which expired on June 20, 2000. The parties reached agreement on all the terms of the new agreement except the level of base salary increases for bargaining unit members during the term of the contract.
At the arbitration hearing, the positions of the parties on the wage issue were as follows:
UNION POSITION Base Salary Increases
2% on July 1st, 2000; 2% on January 1st, 2001; 3% on July 1st, 2001; 2% on January 1st, 2002; 3% on July 1st, 2002; 3% on January 1st, 2003.
CITY POSITION Base Salary Increases
3% on July 1st, 2000; CPI (3-5)% on July 1st, 2001; CPI (3-5)% on July 1st, 2002;
III. ANALYSIS AND FINDINGS RELATING TO STATUTORY CRITERIA OF ORS 243.746(4).
In accordance with ORS 243.746(5) the Arbitrator "*** shall select only one of the last best offer packages submitted by the parties and shall promulgate written findings along with an Opinion and Order." ORS 243.746(4) establishes a criteria upon which the Arbitrator's findings are to be based "*** giving first priority to *** (a) the interest and welfare of the public" and "second priority" to other criteria listed in Sections (b) through (h) of the statute.
The legislature provided little guidance in the passage of SB 750 as to how the term "interest and welfare of the public" is to be defined or how it should be applied by interest arbitrators. In the absence of legislative definition, interest arbitrators have generally recognized that the "interest and welfare of the public" cannot be determined without first considering the secondary criteria set forth in subsections (b) through (h), which relate to employer's ability to pay, comparability, recruitment and retention, the CPI-cost of living and "other factors * * * traditionally taken into consideration." This is particularly appropriate in this case, where the sole issue is a determination of the level of base salary increases that should be awarded for the term of the Agreement. The general view of most interest arbitrators was best expressed by Arbitrator Howell Langford in the IAFF, Local 2406 and The City of North Bend, interest arbitration:
Although the statute requires that the interest and welfare of the public be given "first priority" in choosing between the final offers of the two parties, that factor usually cannot be meaningfully discussed before considering comparability, ability to pay, recruitment and retention, etc. Those are the terms in which we traditionally address issues of interest and welfare of the public when the question is one of compensation rate for public employees.
Accordingly, the Arbitrator shall first consider the secondary factors and then, based on these findings, determine which of the two last best offers best serves the interest and welfare of the residents of the City of Astoria.
A. Secondary Statutory Factors - ORS 243.746(4)(b)-(h).
1. Ability to Pay.
"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." ORS 243.746(4)(b)
Although the ability to pay factor is often raised by the employer as justification for its inability to respond to the Union's request for a substantial increase in wages and benefits, the ability to pay issue is not a consideration in this case for two reasons.
First, the total economic package requested by the Union in the form of wages and benefits over the term of the three year contract represents an amount that is only $32,846 more than that presented in the City's last best offer. This is a modest increase in costs for a City that has had a general fund balance of over $1 million for each of the past four years.
Second, given their solid financial position, the City concedes that it has the ability to pay the Union's requested increase. The City's finances have been well managed over the years. The general fund year-end balance of over $1 million for each of the past four years represents an amount equal to 25% of the City's annual general fund of over $4 million. The financial records clearly reflect the City will have sufficient funds to meet the costs of the Union's wage proposal.
2. Ability to Attract and Retain.
"The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provides." ORS 243.7436(4)(c)
The Union argues the City has had difficulty retaining firefighters in the Astoria Fire Department. According to the Union, over the past fifteen years, many of the fifteen firefighters who have left the Astoria Fire Department, left to work in other Fire Departments. The Union attributes this ongoing exodus to the fact that other fire departments are offering higher pay and better career opportunities that currently exists in the Astoria Fire Department. As a recent example of the retention issue, the Union cites two firefighters who left the Astoria Fire Department in the past few months to take positions with other fire departments at higher pay. The Union contends that its last best offer meets the best interest and welfare of the residents of Astoria by offering a wage level that will not only attract, but more importantly, retain firefighters for the City of Astoria.
In response to the Union's contention, the City noted that the average tenure of the current fire department employees is nearly fourteen years and indicates that since July, 1990 there have been only four resignations.
Neither party offered persuasive evidence regarding the retention factor. However, the Arbitrator concludes the evidence submitted by the Union demonstrates the City has had difficulty retaining firefighters at the current level of wages and benefits.
3. Current Benefits.
"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." ORS 243.746(4)(d)
As in the previous factors, there is no real dispute between the City and the Union that the level of benefits currently proposed for the new contract is reasonable and comparable to the level of benefits provided to firefighters in other comparable communities. At the hearing, the Union agreed the benefits currently provided for the firefighters is fair.
4. Comparable Jurisdictions.
"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." ORS 243.746(4)(e)
Although the parties acknowledge the Arbitrator must consider all the statutory factors set forth in ORS 243.746 (4) in reaching a decision, the Union and City both agree the outcome of this arbitration will ultimately be determined by which set of "comparable communities" the Arbitrator selects for purposes of comparing "overall compensation of other employees performing similar services." The parties agree that if the Arbitrator selects the City's comparables, then the City's last best offer must be adopted. Conversely, if the Union's "comparable communities" are found to be most closely related to the City of Astoria as appropriate comparitors, then the Union's last best offer must be ordered by the Arbitrator. Consistent with this position, the evidence submitted during the hearing and the arguments of counsel, as set forth in their post-hearing briefs, focused on this issue.
The parties are in basic disagreement over which cities are to be considered as "comparable communities" as required by the statute. The parties selection of comparable communities was determined, to a large degree, by the criteria each party adopted to select the comparable cities.
The Union argues that consistent with the statute, the criteria should be limited solely to those communities that have a population range that is nearest to the population of the City of Astoria, irrespective of whether the City is served by a separate fire district. The City disagrees with the Union's method of selecting comparables. The City contends that cities which are served by fire districts, rather than municipal fire departments, should not be included as comparables to the City of Astoria. It is along these lines that the parties have aligned their selection of comparable communities.
(a) The Union's Comparables.
The Union selected its comparable communities based on strict statutory construction that limits the selection to those "communities of the same or nearest population range" in comparison with the population of Astoria, irrespective of whether they are served by a fire district. The Union takes the position that the only criteria that is relevant in determining what constitutes a "comparable community" is the "population range." On the basis of this criteria, the Union selected nineteen Oregon cities based on their population being within a range of 7,500 to 12,500 residents and therefore within the "population range" of the City of Astoria's population of 10,000. As reflected in the Union's lists of comparables, nine of the Cities listed have contracted with local fire districts for fire prevention services. The Union's comparable communities are listed below:
Community / Population / Servicing Fire Department
Astoria / 10,090 / City of Astoria
Baker City / 10,160 / City of Baker
Canby / 12,465 / Canby FD
Central Point / 11,255 / Jackson County FD#3
Cornelius / 8,170 / City of Cornelius
Cottage Grove / 8,190 / City of Cottage Grove
Dallas / 12,530 / Polk County FD
Gladstone / 11,745 / City of Gladstone
Hermiston / 11,595 / Hermiston FD
La Grande / 12,795 / City of La Grande
Lebanon / 12,480 / Lebanon FD
Monmouth / 7,980 / City of Monmouth
Newport / 10,240 / City of Newport
North Bend / 9,910 / City of North Bend
Ontario / 10,680 / City of Ontario
Redmond / 12,435 / City of Redmond
Sherwood / 9,600 / Tualatin Valley FD
St. Helens / 9.060 / St. Helens FD
Sweet Home / 7,915 / City of Sweet Home
The Dalles / 11,765 / Mid Columbia FD
Wilsonville / 12,290 / Tualatin Valley FD
(b) The City's Comparable.
The City takes the position the statue requires a comparison between employer "communities of the same or nearest population range", whether they be cities or fire districts. However, the City contends they cannot be both. For purposes of comparability, a city cannot be included in the Astoria comparison if it is served by a fire district. The City has based this contention on the assertion that interest arbitration comparability has always been to compare those employer governmental units that provide similar services. On the basis of this criteria, the City contends that the following six comparable communities are the most appropriate for purposes of comparing overall compensation of firefighters:
Community / Population / Servicing Fire Department
Astoria / 10,090 / City of Astoria
Baker City / 10,160 / City of Baker
Cornelius / 8,170 / City of Cornelius
La Grande / 12,795 / City of La Grande
North Bend / 9,910 / City of North Bend
Ontario / 10,680 / City of Ontario
Sweet Home / 7,815 Fire - 16,000 Med. / City of Sweet Home
Critical to the decision of which set of comparable communities is to be selected by the Arbitrator is the underlying consideration of whether cities served by a fire district should be excluded from consideration as a comparable community under the statute. Neither the statute nor the legislative history of SB 750 provide interest arbitrators any guidance on this issue and as a result it has been the subject of considerable discussion by interest arbitrators.
After a careful review of the statute, the arguments of the parties and a consideration of the decisions of other arbitrators who have considered this issue, the Arbitrator in this case concludes that whether or not a city operates its own municipal fire department or contracts with an outside fire district, is not determinative of the issue of the community's comparability. The Arbitrator has reached this conclusion based on the following analysis.
(c) The Statutory Language is Clear.
ORS 243.746(4)(e) specifically limits the definition of "comparable" to "communities of the same or nearest population range within Oregon." The legislature provided no additional criteria in the statute to qualify the term "comparable communities." Comparability is defined solely on the basis of population. The City seeks to qualify the language of the statute by excluding from consideration communities which are served by fire districts. The City does so on the basis that the statute requires a comparison of "employers" of comparable size in the service area, whether it be a fire district or a municipal fire department. The City argues the Arbitrator must factor in the nature of the "employer", that is, the governmental entity that is providing the service to the community in determining whether the community is, or is not, comparable.
The Arbitrator understands the City's position but reaches a different conclusion. In the Arbitrator's view, the City's interpretation, in effect, adds an additional qualification to the term "comparable" that is not included in the statute. The clear language of the statute does not suggest the legislature intended such a distinction. The legislature clearly defined the term "comparable" communities by relying upon the "population range" as the sole basis for determining comparability. Had the legislature intended the "nature of any employer" to be a factor, it would have included that factor in the statute. Accordingly, the clear and unambiguous language of the statute, requires the Arbitrator to consider only those communities that are of the same or nearest population range in comparison to the population of the City of Astoria, irrespective of whether they are served by a separate fire district.
(d) The Preponderance of Arbitral Authority Supports The Union's Position.
A review of the articles and arbitration decisions that have considered this issue, both prior to and after the passage of SB 750, supports the following conclusion: that for purposes of determining the comparability of communities, the community's population, and not the nature of the governmental entity that is providing the service to the community, is the determining factor. A review of just three of these authorities is instructive.
Arbitrator Thomas Levak commented on this issue as early as 1989 when he stated:
The statute focuses upon comparable "communities", not upon comparable entities. Therefore, it is appropriate to compare units of employees in different types of entities who perform the same types of services -- e.g. fire districts with county fire departments; county sheriff's departments with city policy departments. Handbook of Oregon Interest Arbitration and Factfinding Thomas Levak, (1989) Page 105.
The most recent decision to address this issue was that of Arbitrator Nancy Brown in IAFF, Local 3564 and The City of Grants Pass, rendered on May 11, 2000. In that case, the City of Grants Pass was taking the same position the City of Astoria is now taking in this case:
The City argued that fire districts such a Tualatin Valley, Clackamas and Klamath are distinctive governmental entities with greater resources and that their salaries distort comparability and should not be used. The City argues that statutorily the arbitrator is limited to comparing only cities of comparable size. The Union counters that there is ample precedent to use cities that are part of a fire district as comparable and that there is no statutory prohibition to their use. Id. at pp. 12-13.
In interpreting ORS 243.746(4)(e) favorably to the Union's position, Arbitrator Brown held:
The legislative criteria speaks to employees performing similar work There is no reference made to cities providing similar services but rather the generic word "communities" is used. I do not find in a reading of this criteria any language that would lead me to believe that the previous arbitral precedent to include cities that provided fire services through fire districts as a comparable community had been legislatively overturned. Id. at p. 13.
A similar conclusion was reached by Arbitrator Howell Langford in the interest arbitration involving IAFF, Local 2406 and The City of North Bend, where Arbitrator Langford held:
The City also objects to the Union's inclusion of fire protection district salaries in its list of proposed comparables. Once, again, however, it is not clear that the statutory language leaves room for such a distinction. IAFF, Local 2406 and The City of North Bend, Decision and Award, October 25, 1999, Page 6.
After reviewing the decisions of Arbitrators Brown and Langford, and the decisions of other arbitrators who have considered this issue, the Arbitrator in this proceeding concludes the weight of arbitral authority in Oregon supports a finding that the term "comparable communities", as used in ORS 243.746(4)(e), does not preclude the consideration of those cities that are served by fire districts. As interpreted by this Arbitrator, it is the population range, not the nature of the governmental entity, that determines whether a community is "comparable" for purposes of the statute.
On the basis of the above analysis, the Arbitrator concludes that the comparable cities selected by the Union are more consistent with the criteria set forth in ORS 243.746 (4) (e), than those proposed by the City. Accordingly, these cities will be used for the purpose of evaluating the overall compensation to be paid to the Astoria firefighters
Although the parties have generally agreed that the outcome of this arbitration would be determined by which list of comparable cities the Arbitrator selected, a brief comment regarding the basis for this conclusion is appropriate. When the level of compensation paid to firefighters in comparable cities is compared to the compensation paid to Astoria firefighters, it is readily apparent the firefighters in Astoria are not comparably paid. Specifically, the evidence supports a finding that at every classification from entry level Firefighter position to the Lieutenant level, the compensation for Astoria firefighters lags behind their counterparts in comparable cities. This disparity in compensation for Astoria's firefighters was apparent even in those cities cited by the Union as comparable who were not served by a fire district. On the basis of this finding, the Arbitrator concludes the last best offer submitted by the Union is the compensation package that will bring the level of compensation paid to the Astoria firefighters more in line with the compensation paid to their counter-parts in comparable communities.
5. CPI Index.
"The CPI-All Cities index, commonly known as the cost of living." ORS 243.746(4)(f)
The CPI-All Cities Index currently reflects a running year-to-date inflation rate at 3.4%. The Union's and City's last best offers both exceed this cost of living rate and therefore this is not a factor to be considered in determining which of the two proposals best serves the interest and welfare of the public. The Union does acknowledge that firefighters' pay has generally increased by more than the CPI during the past year and based on agreed upon increases for the coming year are slightly greater than 5%. Therefore, the CPI index is simply not a relevant factor to be used in this case.
6. Stipulation of the Parties.
"The stipulations of the parties." ORS 243.746(4)(g)
Other than those previously referred to, there were no stipulations which are relevant to a determination of the issue of which of the last best offers best serves the interest and welfare of the public.
7. Other Factors.
"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." ORS 243.746(4)(h)
The Arbitrator has determined that there are no "other factors" to be considered in determining which of the last best offers best serves the interest and welfare of the citizens of Astoria. In the judgment of the Arbitrator, the factors in ORS 243.746(4) paragraphs (a) to (g) provide sufficient evidence for an award in this case.
8. Interest of the Public.
(a) The interest and welfare of the public. In the opinion of the Arbitrator, the interest and welfare of the public are best served by the Union's proposal. This conclusion has been reached based on the modest cost of the increase proposed by the Union in comparison to that proposed by the City; the City's ability to pay the increase; and, the comparison of the compensation provided to Astoria's firefighters in comparison with the level of compensation paid to firefighters in comparable communities. These factors, in addition to the Arbitrator's consideration of the additional criteria set forth in the statute, lead to the conclusion that the citizens of Astoria are best served by the proposal submitted by the Union. Accordingly, the Union's last best offer will be ordered by the Arbitrator.
The Arbitrator in arriving at this decision has reviewed all the evidence, exhibits, hearing notes and has considered the arguments of the parties as set forth in the post-hearing briefs. For the reasons set forth in this Opinion, the Arbitrator has determined that when all the evidence is considered and applied to the statutory factors set forth in ORS 243.746(4)(a)-(h), the interest and welfare of the citizens of the City of Astoria are best served by the Union's final offer.
Accordingly, it shall be the Order of the Arbitrator that the City of Astoria shall increase firefighters base salary for the term of the 2000-2003 Collective Bargaining Agreement in the amount proposed in the Union's final offer.
Eric B. Lindauer, Arbitrator
December 7, 2000
For the City: Patrick J. Mosey, Attorney at Law
For the Union: Michael J. Tedesco, Attorney at Law