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Title: City of Modesto and Modesto City Firefighters Association (IAFF Local 1289) 
Date: May 1, 2002
Arbitrator: Norman Brand 
Citation: 2002 NAC 125

STATE OF CALIFORNIA
MEDIATION AND CONCILIATION SERVICE

In the Matter of an Arbitration Under Section 1206 of the Charter of the City of Modesto Between

City of Modesto

                  and

Modesto City Firefighters Association (IAFF Local 1289) 

 

 

DECISION OF THE BOARD

CSMCS Case No. ARB 00-442

NB 2004

Board of Arbitrators

Norman Brand
Chairperson
Chief Doug Hannink
City-Appointed Board Member
Firefighter Don Ridge
Union-Appointed Board Member

 

 

May 1, 2002

 

BACKGROUND

            This is an interest arbitration pursuant to Section 1206 of the Modesto City Charter.  After the parties reached an impasse in their negotiations for the 2001-2004 Memorandum of Understanding (“MOU”), this Board of Arbitrators was appointed in accordance with the impasse resolution procedures contained in Section 1206 (d) of the City Charter.  We held a pre-arbitration meeting on July 3, 2001, to help the parties prepare for the hearing.  Because a critical witness was unavailable to the Modesto City Firefighters Association (“MCFFA”) the Panel granted a continuance.

            We held public hearings on October 29, 30, 31, and December 14, 2001.  At the public hearings the parties provided evidence in support of their pre-arbitration offers made on October 24, 2001.  On January 3, 2002, in accordance with Charter Section 1206 (g), the parties submitted final offers on each of the subjects in dispute.  The City provided final costing data on January 23, 2002.

            The Board of Arbitrators met on February 12 and March 1, 2002 to review the arguments and evidence presented by the parties.  We also explored the possibility of the parties reaching a resolution and withdrawing the matter from arbitration.  When the Board of Arbitrators determined that it was not possible for the parties to reach agreement, we selected the last offer on each issue that we found “most nearly conforms with those factors traditionally taken into consideration in the determination of wages, hours and other terms and conditions of public and private employment.”

CHARTER LANGUAGE

Section 1206 (d)

The Arbitration Board shall decide on each issue by majority vote by selecting whichever last offer of settlement on that issue it finds most nearly conforms with those factors traditionally taken into consideration in the determination of wages, hours and other terms and conditions of public and private employment, including, but not limited to, changes in the average consumer price index for goods and services, the wages, hours and other terms and conditions of employment of other employees performing similar services, and the financial condition of the city and its ability to meet the cost of the award.

The charter essentially creates four criteria for the Board:

1.      Change in the average consumer price index for goods and services;

2.      The wages, hours and other terms and conditions of employment of other employees performing similar services;

3.      The financial condition of the city; and

4.      The city’s ability to meet the cost of the award.

Three aspects of these criteria have guided the Board in its deliberations. 

            First, the charter requires us to decide the issues in dispute on an issue-by-issue basis.  We have no ability to craft the “best” overall package based on some combination of individual offers.  As to each issue, we must decide by majority vote which of the two positions most nearly conforms with the stated factors, regardless of whether it is the most sensible solution in light of the overall package.  Furthermore, we have no ability whatsoever to vary the last offers.  The parties can oblige us to choose between two unpalatable offers, and we must do so by choosing the one that “most nearly conforms” to the Charter criteria.

            Second, although we must choose between the last offers on an issue-by-issue basis, the charter requires us to consider the City’s ability to meet the cost of the award.  The “cost” of the award is the result of our choices on all of the issues before us.  It would be improper to look at the cost of each last offer in isolation.  We must combine them to determine the City’s ability to meet the cost of the award.  Thus, we have taken the cost of all the last offers we chose into account when determining the City’s ability to meet the cost of the award.

            Third, the chief factor “traditionally taken into consideration” is comparability with “other employees performing similar services.”  Much of the hearing was dedicated to arguments about which firefighters the MCFFA should be compared to and how the comparisons should be made.  Both sides recognize that each jurisdiction is unique and it is impossible to make a perfect comparison.  Both recognize that only comparisons based on total compensation are truly useful.  Nevertheless, within those constraints we must construct a useful universe of comparable jurisdictions. 

            The City argues that the proper comparison group, for some purposes, includes the Modesto Police Officers Association (“MPOA”) because the City has been attempting over the last few contracts to create “rough parity” between police and firefighters.  The City cites some broad language from the Chairperson’s discussion of the Charter language in San Jose for the proposition that internal comparisons are as important as external.  It uses that erroneous proposition as a basis for arguing that Modesto firefighters must be treated the same as members of the police bargaining units.  The language of the Modesto charter does not authorize that comparison.

            Police and firefighters are not “employees performing similar services” in any strict sense.  Law enforcement is a different service from fire suppression and prevention.  Both are often combined under the rubric of “public safety,” or “safety services,” or “uniformed services.”  Legislative bodies often recognize that both groups should receive special health or pension benefits because of their hazardous work.  But the “services” they provide are different.  There can be, however, at least three situations in which internal comparisons between police and firefighters make sense. 

            First, a comparison may make sense where the service provided is unique among comparable employees in other police or fire jurisdictions.  For example, the San Jose Firefighters had the first Hazmat team to be found in the area.  Otherwise comparable jurisdictions simply did not have firefighters doing that sort of work.  Since there was no benchmark among employees performing “similar services” for setting the appropriate pay differential for members of the Hazmat team, we looked at the San Jose Police Department’s bomb squad to see what level of premium pay the City had previously used for ultra-hazardous work performed by a group whose normal work was hazardous.

            Second, we can look to internal comparisons where the nature of the benefit requires uniformity within the jurisdiction.  Often health benefits can only be purchased economically by including all employees of the jurisdiction in a single plan.  In those cases, it makes sense to look at internal comparisons.  Thus, in San Jose we looked to the benefits available through the Benefits Review Forum made up of representatives of all City unions.[1] 

            Third, there may be an historical relationship, agreed to by all parties, between the group at arbitration and one or more other groups employed by the City.  For instance, the parties may have agreed to a system of benchmark relationships among different groups of City employees.  This agreement would be the subject of a stipulation in arbitration.  There is, however, no such stipulation here.

            In considering the parties’ last offers, we have applied the Charter criteria in light of our understanding of their interrelationships.  We have chosen the last offers that most closely conform to the Charter criteria.

LAST OFFERS OF THE PARTIES

Issue One: Wages

14.1 Salary

MCFFA Position

(a)     The parties jointly agree that the following base salary ranges and rates shall be applicable on the dates indicated for classifications in this Unit for the period commencing January 2, 2001 and ending December 27, 2004.


Classification Title


Range Effective

 



Fire Fighter Trainee
Fire Fighter
Fire Engineer
Fire Captain

         1/02/01        
56 Hour
203
207
211
217


40 Hour
903
707
711
717

 

(b)    For purposes of this Agreement, base salary range shall mean the salary range assigned to a specific classification as provided in Section (a) of this Article.  Base salary rate shall mean the hourly rate of pay established pursuant to the step placement within the base salary range as provided in this Agreement which shall be updated to reflect the new wage rates effective January 2, 2001.  Salary range shall be those provided in Appendix A (Salary Range Chart) of this Agreement.  Paid time shall be based upon the regular rate of pay with the computation rounded to the nearest cent.

 

(c)    Effective January 2, 2001, the salary ranges provided in Appendix A shall be adjusted upward by six percent (6.0%).  Effective January 1, 2002, said ranges will be further adjusted upward an additional three and one-half percent (3.5%).  Effective January 1, 2003, said salary ranges shall be further adjusted upward an additional three and one-half percent (3.5%).  Effective January 1, 2004, said salary ranges shall be further adjusted upward an additional three and one-half percent (3.5%).

City Position

(a)     The parties jointly agree that the following base salary ranges and rates shall  be applicable on the dates indicated for classifications in this Unit for the period commencing January 2, 2001, and ending December 27, 2004.


Classification Title


Range Effective

 



Fire Fighter Trainee
Fire Fighter
Fire Engineer
Fire Captain

         1/02/01        
56 Hour
203
207
211
217


40 Hour
903
707
711
717

 

(b)    For purposes of this Agreement, base salary range shall mean the salary range assigned to a specific classification as provided in Section (a) of this Article.  Base salary rate shall mean the hourly rate of pay established pursuant to the step placement within the base salary range as provided in this Agreement.  Salary ranges shall be those provided in Appendix A (Salary Range Chart) of this Agreement, which shall be updated to reflect the new wage rates effective January 2, 2001.  Paid time shall be based upon the regular rate of pay with the computation rounded to the nearest cent.

 

(c)    Subject to Article 30(c), effective January 2, 2001, the salary range shall be adjusted upward by four and one-half percent (4.5%).  Effective January 1, 2002, the salary range provided in Appendix A shall be further adjusted upward by an additional four and one half percent (4.5%).  Effective December 31, 2002, said ranges will be further adjusted upward an additional three percent (3.0%).  Effective December 30, 2003, said salary ranges shall be further adjusted upward an additional three percent (3.0%).

 

Issue Two: Overtime

MCFFA Position

MCFFA proposes eliminating Article 8 (b), which currently reads as follows:

(b)    Effective January 6, 1998, sick leave, not including 4850 time, shall not be treated as time scheduled or worked for purposes of computing overtime.  Effective, January 5, 1999, vacation and holiday leave shall not be treated as time scheduled or worked for purposes of computing overtime.

In addition, it proposes re-lettering the other paragraphs to reflect the elimination of paragraph (b).

 

City Position

The City proposes no change in the existing Memorandum of Understanding.

 

Issue Three:  Health Insurance

Article 12.             HEALTH, DENTAL, VISION INSURANCE

Both parties propose changing the existing mis-numbered Article 12 (f) with a correctly numbered Article 12 (e) and to replace the existing language with the following language:

The CITY agrees to provide the benefits described in this Article subject to carrier requirements.  Effective January 1, 2002 the surcharge applied to active employees will terminate, and will no longer be applied to active employees’ health premiums.

 

Article 13. CAFETERIA PLAN 

MCFFA Proposal

            The Union proposes to change Article 13 (b) and 13 (c) so that they read as follows:

(b) For active employees enrolled in Public Employees’ Medical and Hospital Care Act Plan (PEMHCA) medical insurance plan, the City shall contribute toward the cost of coverage for each premium category (i.e., employee, employee plus one dependent, and employee plus two or more dependents) for the cost of premiums (defined as base, administrative fee, vision and dental) for those plans available to employees as follows:

    (1) Effective January 1, 2002

(a)   Employee Only: the dollar amount equal to 100% of the cost of the Lowest Priced Plan (LPP).

(b)  Employee Plus One Dependent: the dollar amount equal to 90% of the cost of the LPP.

(c)  Employee Plus Two or More Dependents: the dollar amount equal to 80% of the cost of the LPP.

      (2) Effective January 1, 2003

(a)               Employee Only: the dollar amount equal to 100% of the cost of the LPP.

(b)              Employee Plus One Dependent: the dollar amount equal to 100% of the cost of the LPP.

(c)              Employee Plus Two or More Dependents: the dollar amount equal to 90% of the LPP.

(3) Effective January 1, 2004, the City shall contribute the

      dollar amount equal to 100% of the LPP for each premium 

      category.

(4) If an active employee chooses to participate in a more

expensive PEMHCA plan than covered by the City’s

contribution, the employee shall pay the additional cost of the premium for the particular plan.

       (c) The Cafeteria Plan shall include the following options:

(1)  Health, Dental and Vision Insurance.  This option provides a monthly allowance toward the combined total premium for the health, dental and vision insurance program provided by the CITY not to exceed the stated monthly maximum benefit of the Cafeteria Plan.  All employees shall select this option at least to the level that provides for health, dental and vision coverage for the individual employee, provided that employees may request a waiver of the health coverage from the Personnel Department.  Such waiver shall only be granted if the employee shows proof of other health insurance coverage from another carrier.  Effective January 1, 2002, an employee who has waived health coverage may also elect to waive dental and vision coverage, provided that the employee shows proof of other dental coverage.  Dental and vision coverage may only be waived together and may not be separately waived.  Should an employee who has obtained a waiver of this provision lose such alternative coverage, the employee shall notify the Personnel Department within five (5) work days and enroll in a CITY provided health insurance program.

(2)  Additional Insurance Programs.  This option provides a monthly allowance toward payment of premiums for additional insurance programs sponsored by MCFFA or the CITY.

(3)  Cash.  That portion of the allowance not utilizing for option (1) or (2) above shall be paid to the employee as cash.  Effective January 1, 2002, the amount paid to the employee under this paragraph shall be capped at the employee only contribution rate.  Such cash shall be subject to all applicable provisions of the tax code.[2]

City Position

            The City proposes changes to Section (b) so it reads as shown below, the addition of a new Section (c), as shown below, and the re-numbering and re-writing of the current Section (c) as Section (d), as shown below.

(b) Eligible employees shall be entitled to the following monthly allowances:

(1) $390.63 for employees with dependent coverage

      (health, dental and vision).

(2) $366.63 for employees who, as of January 1, 2001, 

      have waived health coverage but maintain dependent  

      dental and vision coverage; provided, that only those

      employees who have waived health coverage but

      maintained dependent dental and vision as of January

      1, 2002 shall be entitled to continuation of this monthly 

      allowance.  This allowance shall not be made available

      to any other employees, and shall terminate upon 

      expiration (12/27/2004) of this MOU, whereupon

      employees in this category shall receive the allowance

      provided by Article 13(b)(3)(C).

(3) $301.74 for employees

(A) with employee only  health, dental and vision
(B) who waive health, dental and vision, or
(C) who waive health but keep dental and vision, with the exception of employees covered by the proviso in Article (13)(b)(2) above, who shall receive $366.63 for the duration of this MOU only. 

(c) The rates in Article 13(b) shall be increased as follows:

Effective July 31, 2001, the rates in Article 13(b) will be increased by forty-five dollars ($45.00) per month for employees with Option (1) to $435.63.

 

Effective July 30, 2002, the rates in Article 13(b) will further be increased by fifty-five dollars ($55.00) per month for employees with Option (1) to $490.63.

 

Effective July 29, 2003, the rates in Article 13(b) will further be increased by sixty-five dollars ($65.00) per month for employees with Option (1) to $555.63 and twenty dollars ($20.00) per month for employees with Option (3) (A) to $321.74.

 

Effective December 30, 2003, the rates in Article 13(b) will further be increased by seventy-five ($75.00) per month for employees with Option (1) to $630.63 and twenty dollars ($20.00) per month for employees with Option (3) (A) to $341.74.

 

(d)  The Cafeteria Plan shall include the following options:

(1)  Health, Dental and Vision Insurance.  This option provides a monthly allowance toward the combined total premium for the health, dental and vision insurance program provided by the CITY not to exceed the stated monthly maximum benefit of the Cafeteria Plan.  All employees shall select this option at least to the level that provides for health, vision and dental coverage for the individual employee, provided that employees may request a waiver of the health coverage from the Personnel Department.  Such waiver shall only be granted if the employee shows proof of other health insurance coverage from another carrier.  Effective August 1, 2002, an employee who has waived health coverage may also elect to waive dental and vision coverage, provided that the employee shows proof of other dental coverage.  Dental and vision coverage may only be waived together, and may not be separately waived.  Should an employee who has obtained a waiver to this provision lose such alternative coverage, the employee shall notify the Personnel Department within five (5) work days and enroll in a CITY provided insurance program.

(2)  Additional Insurance Programs.  This option provides a monthly allowance toward payment of premiums for additional insurance programs sponsored by MCFFA or the CITY.

(3)  Cash.  That portion of the allowance not utilized for option (1) or (2) above shall be paid to the employee as cash.  Such cash shall be subject to all applicable provisions of the tax code.

 

Issue Four: 3% at 50 Retirement

MCFFA Position

Article 30.  Retirement

(a)   The CITY shall contract with the Public Employees’ Retirement System to provide for the following retirement benefits as are currently referenced to Sections from the Government Code.

(1)    The 2% @ 50 Full Formula as provided in Section 21362, subject to paragraph (a)(2) below.

(2)    Effective July 1, 2002 the 3% @ 50 Full Formula as provided in Section 21362.2.

If during the term of this Agreement, the Normal Cost of Retirement Benefits exceeds 18.3% due solely to the implementation of the 3% @ 50 Full Formula as provided in Section 21362.2, then employees shall share the cost of the Normal Cost increase in excess of 18.3% on an equal percentage basis (50%/50%) with the CITY through pre-tax employee contributions pursuant to Internal Revenue Code §414(h)(2).\

(3)    Basic Level of 1959 survivor benefits as provided in Section 21571.  Effective upon the implementation of the 3% @ 50 Full Formula, the City shall provide for the Indexed Level of the 1959 Survivor Benefit as provided in Section 21574.5.

(4)    One-Year Fiscal Compensation as provided in Section 20042.

(5)    Post-Retirement Survivor Allowance as provided in Sections 21624, 21626 and 21628.

(6)    Benefits Payable to Surviving Spouse as provided in Section 21551.

(7)    Surviving Spouse-Remarriage as provided in Section 21635.

(8)    Military Service Credit as Public Service as provided in Section 21024.

(b) Pursuant to the provisions of Section 20615 of the California Government Code the CITY shall pay seven and one-half (7.5%) of the nine (9%) percent employee contribution in the employee’s name ot the Public Employees’ Retirement System.  Such payments shall be implemented pursuant to the provisions of Section 20023(c)(4) of the California Government Code.

 

City Position

(a)   The CITY shall contract with the Public Employees’ Retirement System (PERS) to provide for the following retirement benefits (all references to Sections are from the Government Code):

(1)    The 2% @ 50 Full Formula as provided in Section 21362, subject to paragraph (a) (2) below.

(2)    Effective July 2, 2002, the CITY shall modify its contract with PERS to confer the 3% @ 50 Full Formula retirement benefit pursuant to Government Code §21362.2.

(3)    Basic level of 1959 Survivor Benefits as provided in Section 21571.  Effective upon the date of implementation of 3% at 50, the CITY shall amend its contract with the Public Employees’ Retirement System to provide for the Indexed Level of the 1959 Survivor Benefit as provided in Section 21574.5.

(4)    One-Year Final Compensation as provided in Section 20042.

(5)    Post-Retirement Survivor Allowance as provided in Sections 21624, 21626 and 21628.

(6)    Benefits Payable to Surviving Spouse as provided in Section 21551.

(7)    Surviving Spouse – Remarriage as provided in Section 21635.

(8)    Military Service Credit as Public Service as provided in Section 21024.

(b)  Preceding implementation of this 2001-2004 MOU, pursuant to the provisions of Section 20691 of the California Government Code, the CITY has been responsible for paying seven and one-half (7.5%) percent (“employer pick up”) of the mandated nine (9%) percent employee contribution in the employee’s name, implementing such payments pursuant to the provisions of Section 20636 (c)(4) of the California Government code (CITY-paid employee contributions reported to PERS as compensation).  As a partial offset and protection for the increased cost of 3% @ 50, the CITY’s obligation to pay the employee contribution shall be reduced as follows, subject to paragraph 30(c) below:

(1)    Effective January 2, 2001, the CITY shall pay five-and-one-half percent (5.5%) of the employee’s nine percent (9%) contribution in the employee’s name to PERS, resulting in a two percent (2.0%) incremental increase in the employee’s obligation.  The employee shall pay the remaining three-and one-half percent (3.5%).

(2)    Effective January 1, 2002, the CITY shall pay three-and-one-half percent (3.5%) of the employee’s nine percent (9.0%) contribution in the employee’s name to PERS, resulting in a two percent (2.0%) incremental increase in the employee’s obligation.  The employee shall pay the remaining five-and-one-half percent (5.5%).

(3)    Effective December 31, 2002, the CITY shall pay three percent (3.0%) of the employee’s nine percent (9.0%) contribution in the employee’s name to PERS, resulting in a one-half percent (0.5%) incremental increase in the employee’s obligation.  The employee shall pay the remaining six percent (6.0%).

(4)    Effective December 30, 2003, the CITY shall pay two percent (2.0%) of the employee’s nine percent (9.0%) contribution in the employee’s name to PERS, resulting in a one percent (1.0%) incremental increase in the employee’s obligation.  The employee shall pay the remaining seven percent (7.0%).

(5)    Effective July 2, 2002, the CITY shall cease to report CITY-paid employee contributions to PERS as compensation.

(c) For any period of this MOU made retroactive by arbitrator award or stipulation of the parties, incremental increases in the employee’s obligation toward his/her PERS contribution pursuant to Article 30(b)(1) – (5) shall be effected by reduction of the CITY’S responsibility for payment of salary (Article 4(c)), pending implementation of the new MOU and PERS’ reduction of the employer’s pickup.

 

Issue One: Wages

CRITERION 1: CPI

            This criterion is expressed somewhat unclearly in the Charter.  The phrase “changes in the average consumer price index for goods and services” does not direct the Board to any group of consumer price indices to average.  The parties, however, addressed CPI in a more conventional way, showing the changes in the CPI-U for the Western Region that have taken place over past years, and the projections for CPI increases over the term of the contract.  We have accepted that approach as consistent with the Charter.

            The chief reason CPI is considered in wage determinations is to account for the difference between nominal and real wages.  Inflation, as measured by changes in the CPI, reduces the buying power of firefighters’ nominal wages.  Their real wages go down, because the same dollars now buy less.  This reduction in real wages can occur even when nominal wages increase over time.  Thus, changes in CPI act as an indicator of whether firefighter salaries need to be increased simply to maintain the buying power of their nominal wages. 

            The unrefuted data presented by the City demonstrate that firefighter wage increases have exceeded inflation over the past 15 years.  (82.6% increase in base wages exclusive of EMT pay[3] versus 61.9% West Region CPI-U)  Over the past 5 years, they have approximated inflation.  Base wages increase by 12.6 percent, while the CPI-U (West Region) rose by 13.9 percent.  Since the average tenure of Modesto firefighters is about fifteen years, the longer term figure gives a reasonable approximation of the relationship of nominal to real wages for the firefighters. [4]  Thus, applying the criterion of changes in CPI, there is no need to increase firefighter wages to restore lost purchasing power.  In addition, given the changes in CPI since the contract expired, either party’s last offer on wages will exceed CPI changes.  (See, City B-37)

            It is more difficult to apply this criterion to future wage increases.  CPI becomes increasingly difficult to predict over longer periods.  This contract will extend through 2004.  All the projections presented by the City showed low inflation for 2003 and 2004.  In particular, the most current available Association of Professional Forecasters predicted inflation running at a median of 2.55% for the ten-year period.  (City A-24)  Thus, both the City and the MCFFA last offers exceed predicted inflation, and this criterion does not provide a definitive basis for distinguishing between them, although it argues for the City’s lower increase.  That increase is likely to provide firefighters with protection against their nominal wages being eroded by inflation. 

CRITERION 2: COMPARABILITY

            The most significant criterion is comparability.  The Charter declares the City’s intention to adopt a method for “peacefully and equitably deciding disputes” over wages, hours, and other terms and conditions of employment.  The question of what is an “equitable” wage for firefighter’s is an abstract one, incapable of being answered except through comparison. [5]  The Charter requires comparison with firefighters “performing similar services.”  Since all firefighters perform “similar” services, the comparison must be with firefighters in jurisdictions that are similar to Modesto.  That is, jurisdictions with characteristics that make the work of their firefighters similar to the work Modesto firefighters perform.[6]  Most of the hearing was devoted to the parties’ evidence and arguments about the appropriate jurisdictions with which to compare Modesto firefighters.  

            MCFFA argues that the Board should use the “historical” universe of jurisdictions previously used by the City.  In 1988 and again in 1996, the City had Ralph Anderson & Associates survey different jurisdictions to establish the wages paid to employees in all of the classifications employed by the City.  In 1988, Anderson surveyed employers in: Concord, Contra Costa County, Contra Costa County Sanitation District, Contra Costa County Water District, Fremont, Fresno, Hayward, Livermore, Modesto Irrigation District, Pleasanton, Sacramento, Stockton, and Union Sanitary District.[7]  In 1996, Anderson added to the list of jurisdictions certain “Central Valley” cities to provide a “local market” comparison.  It added: Bakersfield, Lodi, Manteca, Turlock, San Joaquin County, and Stanislaus County.  Not all of the surveyed jurisdictions, in either 1988 or 1996, employ firefighters.  MCFFA, of course, can only compare Modesto with those jurisdictions that employ firefighters.  MCFFA’s argument for comparing Modesto firefighter wages with firefighters in jurisdictions surveyed by Anderson is quite straightforward: the City’s consultant chose the cities.  In testimony, MCFFA made it quite clear that it did not ratify, approve, or in any way accept the City’s universe.  MCFFA made no analysis of the appropriateness of the jurisdictions.  It simply accepted them because the City used them in previous years. (See, Tr. 70)

            Where, as here, one side has previously used certain jurisdictions as the basis for wage comparison, there is a presumption that it deemed them appropriate.  The City has come before this Board with a new set of jurisdictions, which it asserts provide an appropriate universe of comparables.  In coming before this Board with a new set of comparables the City has two tasks.  First, it must demonstrate that the earlier universe is inappropriate.  Second, it must show that the universe it now proposes is appropriate.  The City succeeded in showing that neither of the old universes is appropriate for this Board to consider.  It was less convincing in demonstrating its new universe is appropriate.

            There are three reasons the Board cannot rely on the 1988 and 1996 Anderson universes.  First, neither universe was intended solely for firefighter wage comparisons; both were created for all employees and for multiple purposes.  As former MCFFA President Bryant noted, the 1988 study was created:

To study the appropriateness of classifications and whether or not they needed to make adjustments as far as changing the job descriptions and that sort of thing of certain individuals who were performing certain tasks for the City, and then to use it as a reference for comparing where we were at from a compensation and benefit perspective to the survey data.  (Tr. 122:2-8)

The 1996 study served similar purposes. 

            Second, the filters used to choose the jurisdictions in the 1988 survey are unknown.  Given the demographic changes that have occurred since 1988,[8] it would be improper to simply accept those jurisdictions without inquiring into the factors that convinced Anderson they were appropriate comparables.  Only if those factors were appropriate and those same factors still demonstrated these jurisdictions were appropriate, could they be adopted. 

            Third, for the 1996 survey Anderson did not use the filters it determined to be appropriate.  In describing its guideline on cost of living differences Anderson noted: “In order to minimize the impact of cost of living differences, the survey agencies were limited to cities with cost of living indexes within five percent of the City of Modesto.” (U-2, p.5)  Nevertheless, Anderson includes in the survey group Fremont, Hayward, Livermore, and Pleasanton – all of which have cost of living indices more than 10% higher than Modesto.[9]  Including these jurisdictions with higher cost of living indices drives the median up.  Thus, we conclude that neither of the Anderson surveys is appropriate for us to use in determining the comparables for Modesto.

            While the City demonstrates that the Anderson surveys do not provide an appropriate universe of comparables for Modesto firefighters, it fails to demonstrate the appropriateness of its universe.  Mr. Nadol’s report (City’s B-26) and testimony made a good case for the divergence of the Bay area and Central Valley economies.  The Central Valley has not enjoyed the per capita income growth and increase in home values that the Bay area has experienced over the last ten years.  More specifically, Modesto did not experience the growth related to Bay area commute patterns that occurred in eastern Alameda County with the extension of BART to Pleasanton.  There is a direct relationship between the increased wealth and cost of living in the Bay area counties and the wages they pay firefighters.  They are not “similar” to Modesto in wealth or cost of living.  Thus, while cities in the Bay area may have been used historically, given the divergence in economies demonstrated by the City, there is no current basis for including cities in the Bay area counties in the comparables.[10] 

            The chief difficulty with the City’s proposed universe is that it arbitrarily includes cities whose population is as little as a quarter of Modesto’s, asserting that they are “similar” to Modesto.  While Modesto has a population of 188,856, the City includes in its comparison Clovis (68,468), Lodi (56,999), Manteca (49,258), Tracy (56,929), Turlock (55,810) and Visalia (91,565).  In his report, Mr. Nadol states:

As a second filter, all communities with populations below that of the City of Manteca have also been excluded.  Manteca is the smallest community included in the 1996 Anderson study and police comparison groups, with a population of 49,258 according to the 2000 census.  While any numerical selection cutoff is inherently somewhat arbitrary, this population standard of approximately 50,000 is believed to generally identify those communities with sufficient population to be similar to Modesto with regard to such factors as: tax base size and diversity; organizational structure and employee duties and responsibilities; and service demands and activity.  (City’s B-26, p.27)

On cross-examination, Mr. Nadol conceded he did not know which jurisdictions employed volunteers (other than Turlock), how many stations each department operated, or any operational details of the fire departments in any of the cities that he compared to Modesto.  Rather, he looked solely to population as a proxy for organizational factors.  (Tr. 420-424)  Mr. Nadol did not use population density (a potential surrogate for population to approximate fire department organizational structure) to determine if the firefighters he compared had “similar” employment. (Tr. 452-455)[11]  In essence, Mr. Nadol assumed, without any factual basis, that a city of 49,000 has the same “organizational structure and employee duties and responsibilities; and service demands and activity” as a city of 189,000.  It is possible that some of the cities under 100,000 used in the City comparison are sufficiently similar to Modesto to be used as comparisons.  Where the City’s argument fails is in Mr. Nadol’s unsupported assertion that the “organizational structure and employee duties and responsibilities; and service demands and activity” of the small cities are comparable to Modesto’s.  This unsupported assumption is fatal to the City’s comparability argument.  Since there is no basis for saying that cities as small as Manteca are “similar” to Modesto, it is inappropriate to include them in the comparables.[12]

            Having rejected both the MCFFA and City proposed universe of comparables, we are left with constructing a universe of comparables in order to determine which wage offer most closely conforms to the criterion.  We find merit in the City’s assertion that by cost of living and economic data the Central Valley cities (including Sacramento) provide a reasonable basis for comparison.  Similarly, we find merit in MCFFA’s assertion that the closest comparable is Stockton.  But a single jurisdiction is not an appropriate comparison for Charter purposes.  Moreover, Stockton is problematic because its wages are set by a formula that includes jurisdictions from both the Bay area and southern California.  Perhaps because of the formula, it is also a statistical outlier among large cities in the Central Valley in terms of cash compensation.[13]  Given the data available to the Board, it is impossible to create a completely defensible universe of comparables.  We make an approximation by taking only Central Valley cities (including Sacramento) and using only those with approximately half or double the population of Modesto. [14]  That adds Visalia, with a population of 92,000 to the “cities over 100,000” that MCFFA discussed during the hearing.  Including Visalia in the comparison produces the following results.

 

Jurisdiction

Effective Date

 Base Salary 

 Other Cash Compensation 

 Pension Pick Up 

 Holiday Pay 

 Uniform Allowance 

 Cash Compensation 

 

 

 

 

 

 

 

 

Bakersfield

Jul-01

 50,993 

 

 4,590  

 2,732 

 780 

 59,095 

Fresno

Jul-01

 57,492 

 1,200 

 

 

 715 

 59,407  

Sacramento

Jul-01

 49,636 

 

 4,467 

 2,172 

 715 

 56,990 

Stockton

Jan-01

 57,528 

 4,096 

 5,177 

 

 900 

 67,701 

Visalia

Jul-01

 43,836 

 

 3,069 

 1,982 

 

 48,887 

Average (Mean)

 

 51,897 

 

 

 

 

 58,416 

Median

 

 50,993 

 

 

 

 

 59,095 

Modesto

Jan-00

 48,542 

 1,942 

 4,082 

 3,288 

 660 

 58,514 

Modesto (w/ City Wage Offer)

Jan-01

 50,726 

 2,029 

 4,214 

 3,436 

 700 

 61,105 

Modesto (w/ MCFFA Wage Offer)

Jan-01

 51,455 

 2,059 

 4,275 

 3,485 

 700 

 61,974 

 

            Adding Visalia increases the size of the universe making it slightly more statistically robust, although the sample is still quite small.  This grouping has the advantage of including Central Valley jurisdictions (although Stockton imports Bay area and southern California jurisdictions) that have some relationship in population size and density to Modesto.  These data show that Modesto is slightly above the mean in total cash compensation when comparing its January 2000 compensation to compensation for the other jurisdictions as of January and July 2001.  Modesto is below the median by the same comparison on those same dates.  In light of this comparison, The City’s first year offer of 4.5% would put Modesto firefighters above both the median and mean of comparable jurisdictions as of January 2001.  MCFFA’s proposed increase would put Modesto even farther above both.  It would make Modesto the second highest paid jurisdiction in the comparison group, behind only Stockton, where the pay formula includes Bay area, southern California, and Central Valley jurisdictions.

            The City’s last offer for the second year is above any known increase (See, U-3e) for comparable jurisdictions.  Its offers for the third and fourth years exceed predicted inflation.  MCFFA’s second year increase of 3.5%, while smaller than the City’s 4.5%, brings it to a 9.5% increase over two years.  The more significant difference is that MCFFA’s proposal is front-loaded, creating a larger initial increase and larger base for compounding.  Both last offers exceed projected inflation for the out years of the contract, with the City at 3% each year and MCFFA at 3.5% each of the last two years.

            The City’s last offer moves Modesto above the mean and median of comparable jurisdictions for at least two years, insofar as other increase are currently known.  MCFFA’s last offer moves firefighters even farther above the comparable jurisdictions.  The City last offer was, of course, made in light of its last offer on pension, which proposes recapturing part of the wage increase by reducing the 7.5% Employer Pick-up of Member Contributions (“EPMC”) to 2% by December 30, 2003.[15]  The Charter requires issue by issue votes to determine which last offer most closely conforms to the enumerated factors.  We are not permitted to change one party’s last offer on one issue because it is based on an assumption that we will choose its last offer on another issue.  Thus, even though we reject the City’s offer on retirement, which would have reduced the City’s wage offer, we cannot adjust the City’s wage offer to its net value.  Nor can we lower it at all, in order to come up with the “fairest” increase in light of the new retirement benefit.  Rather, we can only decide that the City’s last offer on wages “most nearly conforms” to the Charter’s requirement for comparability.

CRITERION 3: FINANCIAL CONDITION OF THE CITY

            For the City of Modesto, FY 200-2001 “was one of the best years ever” from a “revenue perspective.”  (Tr. 580:13-14)  The City had actual revenues of $86 million on a budgeted $76 million.  In addition, its expenditures were $4 million below budget. (J-18)  The City had an ending fund balance of $34 million.  In its FY 2001-2002 budget the City Council increased the reserve target from 5% to 8% of expenditures.  (Tr.597:23-598:4)  It also lent $5.2 million the Village 1 Storm Drain project and made other commitments for some of the beginning balance.  From the testimony of Modesto Finance Director Robert Stout, it is clear that the City is in excellent financial condition.  Mr. Stout anticipates potential financial problems based on the most recent economic developments and brings them to the attention of the City Council.  (See, City’s B-15 and B-27)  Indeed, Mr. Stout goes beyond the strictures of municipal accounting principles to give the City Council actuarial valuations of their liabilities in the insurance and employee benefits funds, instead of just showing the required cash expenditures.  (Tr. 611-616)  By providing these tools, he ensures the City Council that it can make timely decisions to avoid fiscal difficulties. 

            When Mr. Stout testified on December 14, 2001, there was great uncertainty in the popular press about the economic conditions affecting the country, the state, and Modesto.  According to the popular press, much of that uncertainty, with the exception of the uncertainty surrounding the State budget, has been allayed.  It does not appear that a long and deep recession is upon us.  While Modesto cannot expect the extraordinary increases in sales tax revenue it had in FY 2000-2001, it appears unlikely that it will have even flat sales tax revenues.  Because of its conservative budgeting and spending, Modesto is well positioned to adjust to an economic downturn.  In sum, because of the timely information provided by Mr. Stout and the decisions of the City Council, Modesto is in excellent financial condition and can expect to remain that way during the life of the agreement with MCFFA.

CRITERION 4: ABILITY TO MEET THE COST OF THE AWARD

            Since we have awarded the City’s last offer on wages, we must assume that the City has the ability to pay the cost of the last offer it made.  We recognize, however, that the City’s last offer on wages was made in light of its last offer on retirement, which proposes recouping a portion of the wage increase by reducing EPMC.  We discuss the City’s ability to meet the cost of the total award with our discussion of 3% at 50.
LAST OFFER SELECTED: CITY

Issue Two: Overtime

            The MCFFA last offer seeks to eliminate a provision on overtime pay first negotiated in 1996 for the 1997-2000 contract.  Under that provision, after January 5, 1999, neither sick leave, vacation leave, nor holiday leave was treated as “time scheduled or worked” for computing overtime.  MCFFA argues that the contract language “does not capture the understanding reached between the parties.”  That argument is better addressed in a contract grievance than interest arbitration.  MCFFA also argues that “equity supports adoption” of its final proposal.  While it may well be that one of the “factors traditionally taken into consideration” is the equities raised by a last offer, that factor argues against the MCFFA proposal. 

            The MCFFA proposal would require hours not worked to be treated as time “scheduled or worked” when computing overtime.  Overtime pay is normally thought to compensate employees for having to work long hours.  The MCFFA proposal would compensate them for long hours they did not work.  Why that is equitable is neither immediately apparent, nor made clear by the MCFFA arguments.  Thus, we find no equitable basis for awarding the MCFFA last offer.

CRITERION 1: CPI

            See Criterion 1 for Issue One.

 

CRITERION 2: COMPARABILITY

            In the jurisdictions we have used for wage comparisons, there is only a single jurisdiction that pays employees overtime based on scheduled hours.  The City’s survey data show the following:

AGENCY

FIRE SURVEY

HR SURVEY

Bakersfield FD

Worked

Worked

Fresno FD

Worked

Worked

Sacramento FD

Worked

Worked

Stockton FD

Scheduled

Scheduled

Visalia FD

Worked

Worked

The City’s survey of 15 jurisdictions showed that only 4 used time scheduled but not worked to calculate overtime. (City’s E-3)  Thus, comparability argues against the MCFFA last offer.

CRITERION 3: FINANCIAL CONDITION OF THE CITY

            See Criterion 3 for Issue One. 

 

CRITERION 4: ABILITY TO MEET THE COST OF THE AWARD

            Since the Board has chosen the last offer of the City on this issue, and since that offer retains the status quo, there is no need to analyze the cost.
LAST OFFER SELECTED: CITY

 

Issue Three: Health Insurance

Article 12.   HEALTH, DENTAL, VISION INSURANCE

            Since both parties made last offers changing the existing mis-numbered Article 12 (f) to a correctly numbered Article 12 (e) and replacing the existing language with identical language, there is no need to further consider this aspect of the last offers.

Article 13.  CAFETERIA PLAN

            In considering the last offers of the parties the Board starts with the understanding that, as City Manager Crist testified: “We recognize that we don't compare favorably right now with comparison cities in the health plan area…”  (Tr. 662:7-9)  The parties agree that there is a need to improve payment for health care benefits.  The major difference is that the City proposes a phased dollar increase of $240 per month in its payments for health care, while MCFFA proposes a phased percentage increase to 100% City payment of the monthly cost of the lowest price plan offered by PEMHCA.  MCFFA would immediately raise the City’s payment for Employee only to 100%; raise Employee plus 1 to 100% over two years and raise Employee plus 2 or more to 100% over 3 years.  The cost of the City last offer over the term of the contract is $538,025.  The cost of the MCFFA last offer over the term of the contract is not calculable without assuming a specific increase in health care costs.  The City costs the MCFFA proposal by assuming an annual increase in health care costs of 10%, a figure the Board finds reasonable.  With that assumption, the cost of the MCFFA last offer is $738,510 over the term of the contract.

CRITERION 1: CPI

            Neither party provided specific data on increases in health care costs.  While health care costs are a weighted element of CPI, the increase in these costs cannot be predicted by the overall increase in CPI.  Thus, the Board has no data with which to apply this criterion. 

CRITERION 2: Comparability

            The only data on comparability were provided by MCFFA.  The data show that Modesto firefighters receive a much smaller monthly contribution toward health care costs than the average firefighter in the 1996 Anderson universe.  In the universe we used for wage comparison (excepting Visalia, for which we have no data) Modesto firefighter receive a contribution toward health care that is well below average for every category of beneficiary (employee only, plus one, plus two or more.)  (U-8)  Thus, based on comparability there is a clear need to improve this benefit. 

            Among the 11 jurisdictions in the 1996 Anderson universe there is a wide range of benefit formulae.  The different jurisdictions provide the following:

A.     Two (Stockton and Lodi) pay full medical, dental, and vision for all categories, with Stockton providing no benefit for opting out and Lodi providing deferred compensation for opt outs.

B.     One (Livermore/Pleasanton) provides a specific plan, plus pays for dental (no vision).

C.       One (Manteca) pays 100% of the cost for the employee only, and specific dollar amounts for other categories.

D.      One (Hayward) pays a fixed dollar amount but provides a supplement if that is insufficient to pay the full cost of the premium.

E.     Six pay fixed dollar amounts for each category of beneficiary.  (U-9) 

Among the jurisdictions we used for wage comparisons (excepting Visalia, for which we have no data), only Stockton pays 100% of the cost of medical premiums for all categories, while Bakersfield pays 80% for all categories.  All of the others pay fixed dollar amounts for each category of beneficiary.  Thus, based on comparability, the predominant benefit is not 100% of the cost for each category of beneficiary.  It is a fixed dollar amount. 

            The comparative data reflect the relative scarcity of plans that pay 100% of the premium for every category of beneficiary.  The Board was presented insufficient data to permit it to predict the ongoing benefits to be paid by other jurisdictions.  We note, however, that the City proposal increases the monthly benefit for the category Employee plus two or more by almost 60% over the term of the contract.  We think that is a substantial movement toward comparability.  In light of the paucity of jurisdictions that provide 100% of premiums for all categories of employee beneficiary, we find that the City offer most closely conforms to the Charter criteria.

CRITERION 3: FINANCIAL CONDITION OF THE CITY

            See Criterion 3 for Issue One. 

 

CRITERION 4: ABILITY TO MEET THE COST OF THE AWARD

            Since the Board has chosen the last offer of the City on this issue, there is no need to analyze the City’s ability to meet the cost of the award.  We assume the City can meet the cost of what it proposes.
LAST OFFER SELECTED: CITY

 

Issue Four:  3% at 50 Retirement

            The parties have agreed on the appropriateness of the City providing this benefit, and that it will be implemented in July 2002.[16]  The parties differ in two ways.  MCFFA’s last offer requires the City to pay the full cost of the benefit, but caps the City’s obligation to pay at a normal cost of 18.3% during the term of the agreement.  The City and the employee would split (50/50) any increase in normal costs over that rate.[17]  The City does not incorporate a cap, but incrementally (and retroactively) reduces EPMC from 7.5% to 2%.  Thus, the two differences are the presence of a cap and whether MCFFA gets the benefit “free.”  The cap is self-explanatory.  The cost of the benefit to firefighters, under the City’s last offer, needs further elucidation.

            The City’s last offer reduces EPMC by 4% before the benefit is instituted.  This would mean firefighters pay approximately $360,000 from January 2, 2001, through July 1, 2002, before the City institutes the 3% @ 50 benefit. [18]  Overall, the City’s last offer requires the firefighters to pay $1.443 million (an amount the City is currently paying in EPMC) for a benefit with a net four-year cost to the City of $2.214 million.[19]  Put another way, over the term of the contract the firefighters would pay 80% of the cost of 3% @ 50.[20]  The City’s major justification for its proposal is that it negotiated a larger reduction in EPMC, in exchange for the 3% @ 50 benefit, with its police bargaining units.[21]  In its view, the Board should use the Modesto Police bargaining units as the only comparable in determining which last offer most closely conforms to the Charter criteria.  It also justifies its last offer on the ground that otherwise MCFFA would be getting “something for nothing.”  That is, unlike the usual outcome in collective bargaining, MCFFA would achieve a significant new benefit without providing the City anything in return.

            There are two problems with the City’s position on comparability.  First, as we noted preliminarily, the Charter does not make internal comparisons a criterion.  Second, even if it did, it would not eliminate the need to compare the City’s firefighters with firefighter in comparable jurisdictions.  The City has made no such comparison.  MCFFA has.  We discuss it below. 

            The problem of getting a new benefit “free” is more troublesome, because it may encourage the union to prefer arbitration to collective bargaining.  If that were so, it would undermine the collective bargaining encouraged both by State law and the Charter.  There are, however, two important constraints.  First, arbitration is not free.  When a union chooses arbitration it undertakes significant costs.  It must employ counsel, pay for expert witnesses and their travel, and pay for half the cost of the arbitration.  The union must commit to these payments without any certainty that it will ultimately achieve its goal.  Indeed, in last offer systems it can only achieve its goal or fail entirely, making the process all the more risky.  Second, the employer may make a last offer that contains only a cost that is comparable to what other firefighter who negotiated the benefit paid.  If that were so, then the criterion of comparability would still argue for the employer position.  As we discuss below, that is not the case here.

CRITERION 1: CPI

See Criterion 1 for Issue One.

 

CRITERION 2: COMPARABILITY

            The evidence shows that the 3% @ 50 retirement benefit is generally available to firefighters.  In the comparable jurisdictions we used for wages (with the exception of Visalia, for which data were not available) three of the four jurisdictions were PERS members.  Two have the 3% @ 50 retirement plan.  The fourth jurisdiction, Fresno, is not in PERS.  In PERS jurisdictions, only Sacramento explicitly traded salary for a 3% @ 55 retirement benefit.  In its contract the CPI driven salary increase is reduced by .75% in each year of a three-year contract.  While no other jurisdiction has an explicit trade-off, it is likely that during the course of bargaining the parties took account of the cost of the new benefit in reaching their final agreement.  There are, however, no data to suggest that any group of firefighters paid over 75% of the cost of the 3% @ 50 retirement benefit during the contract period, in order to get the employer to agree to the benefit.  Indeed, the City has provided no comparative data that would suggest other firefighters paid anything to receive the 3% @ 50 retirement benefit.  Nor did it provide data to indicate that police bargaining units outside of Modesto paid as much as Modesto police for the benefit.  The only comparison it made was to its police bargaining units.  We have previously addressed the inappropriateness of using that single comparison.

            The criterion of comparability argues for adoption of the MCFFA last offer on retirement. 

CRITERION 3: FINANCIAL CONDITION OF THE CITY

            See Criterion 3 for Issue One. 

 

CRITERION 4: ABILITY TO MEET THE COST OF THE AWARD

            The cost the City incurs through the Board choosing the MCFFA last offer, above the cost that it was willing to incur if all of its last offers were chosen, is the cost of 3% @ 50 without reducing EPMC and without eliminating reporting of EPMC as City-paid employee compensation.[22]  The cost is approximately $457,000 in 2002 (there is no cost in FY 2001-2002), $917,000 in 2003, and $943,000 in 2004; for a cost of $2.317 million over four years.[23]  The amount of this new cost is, in part, the result of an anomaly that is not apparent from these figures.  The City has not been paying anything for the existing pension plan because of PERS’ successful investment program.  Indeed, PERS has credited it with excess contributions.[24]  By adopting the 3% @ 50 plan the City receives favorable treatment from PERS.  It gets to value its excess contributions (which it will amortize over 20 years) at 95% of market value, rather than 91%.  Thus, there are overall advantages to the City, as well as the firefighters, in adopting 3% @ 50.

            The City does not maintain that it has an inability to pay the cost of an award of the MCFFA position on all issues.[25]  If it is able to pay for the entire MCFFA last offer, a fortiori it has the ability to pay for the last offer on retirement.  The City’s argument is that it would not be prudent for it to pay this amount in light of the economic uncertainties that are facing it and the re-allocation of available funds that has already occurred.  Both arguments are answered by the requirements for paying this portion of the award.  There is no FY 2001-2002 cost.  The cost for the first fiscal year can be accounted for in the City’s budgeting process.  Given the ending balance with which the City began this fiscal year, and given its exemplary prudence in containing expenditures, the City clearly has the ability to pay for 3% @ 50 as it appears in the MCFFA last offer.

LAST OFFER SELECTED: MCFFA

Award of Board of Arbitrators

Issue One: Wages

            We choose the last offer of the City of Modesto.

___________________________
Norman Brand, Chairperson

 

_____________________
   
       Date

I concur

__________________________
Chief Doug Hannink,
City-Appointed Board Member

 

_____________________
          Date

I dissent

____________________________
Firefighter Don Ridge, 
Union-Appointed Board Member
_____________________
          Date

 

 

Issue Two: Overtime

            We choose the last offer of the City of Modesto. 

___________________________
Norman Brand, Chairperson

 

_____________________
          Date

I concur

__________________________
Chief Doug Hannink,
City-Appointed Board Member

 

_____________________
          Date

I dissent

____________________________
Firefighter Don Ridge, 
Union-Appointed Board Member
_____________________
          Date
 

 

Issue Three: Health Insurance

          We choose the last offer of the City of Modesto. 

___________________________
Norman Brand, Chairperson

 

_____________________
          Date

I concur

__________________________
Chief Doug Hannink,
City-Appointed Board Member

 

_____________________
          Date

I dissent

____________________________
Firefighter Don Ridge, 
Union-Appointed Board Member
_____________________
          Date

 

 

Issue Four:  3% at 50 Retirement

          We choose the last offer of the MCFFA

___________________________
Norman Brand, Chairperson

 

_____________________
          Date

I concur

__________________________
Chief Doug Hannink,
City-Appointed Board Member

 

_____________________
          Date

I dissent

____________________________
Firefighter Don Ridge, 
Union-Appointed Board Member
_____________________
          Date

 


[1] As will appear below, there is the difference between the necessity to provide the same benefit and a desire to pay for the same benefit in the same way.

[2] In the January 3, 2002, Last Offer of the MCFFA, this paragraph was apparently inadvertently mis-numbered so that there was a (c) (1), (2), and then (1) again.  We have corrected the mis-numbering.

[3] It would be improper to include an increase based on a new skill required in the job.  That increase reflects an increase in the qualifications of the firefighters and the type of services they provide.

[4] Figures are taken from City’s B-26, pages 42-43.

[5] Although we use the term “wages” because this section of the Award deals with wages, we recognize that the Charter requires us to look at the “wages, hours and other terms and conditions of employment.”  Therefore, we compare firefighters by using total compensation, which reflects other monetary benefits.

[6] Despite Mr. Hudgin’s assertion that: “Firefighter is a firefighter is a firefighter.” (Tr. 9l:17-18) we recognize that the work may differ in a large city from what is done in a rural fire protection district.  In addition, it is not surprising that wealthy cities with a high cost of living pay their employees more.

[7] MCFFA uses the combined Livermore/Pleasanton department for its comparisons, since the individual departments no longer exist.

[8] See, generally, City’s B-25, 26, 27.

[9] It is unclear which ERI cost of living index Anderson used.

[10] Since this analysis is based on dynamic demographic factors, it may well change over the next 5-10 years.  There is some evidence in the record that Lodi has begun to have increases in wealth and housing prices because of Bay area commute patterns.  The change may spread to Modesto, making other comparisons appropriate the next time the parties bargain.

[11] We note another anomaly in the City’s construction of its universe of comparables.  It did not include the Sacramento Metro Fire Department, solely because it is a special district, although it shares characteristics with Sacramento, which is included.  (Tr. 467-8)  It did include the City of Tracy, although it has a response area that incorporates a special district.  (Tr. 502-3) 

[12] Manteca is the smallest city in the proposed universe.  Visalia, which is less than half as populous as Modesto, is the largest. 

[13] Total cash compensation is 14% higher than the next highest jurisdiction, Fresno.

[14] There is an additional reason for using Visalia.  It has a likely population density that is slightly greater than Modesto’s (as measured in the MSA), which suggests similarities in firefighting organization, skills, and services.  (Tr. 451:20-452:10)

[15] Net raises by year would be 2.5%, 2.5%, 3%, and 2.5%.

[16] MCFFA proposes a July 1 and the City proposes a July 2 implementation date.  Neither side has indicated the significance of choosing one date over the other.  If the date needs to be adjusted it can be done in the 10 days following issuance of this Award.

[17] We interpret the language “due solely to the implementation of the 3% @ 50 Full Formula” to mean that the cost increase is not due to market performance, but to a change in the assumptions that affect the normal cost.  Thus, in our view, the proposal contains an enforceable cap on the City’s obligation that is triggered by any change in the assumptions that determine normal cost.  It would not be triggered by sub-standard market performance that leads to increased payment.  We choose the MCFFA last offer with this explicit understanding.

[18]  The Board attempted to calculate the cost of the benefit to each party.  We ultimately relied on the numbers developed by Chief Hannink. 

[19] The City’s cost is affected by both the reduction in EPMC and the change in reporting EPMC as compensation.

[20] This calculation does not account for the loss in pension due to the City’s proposed change in reporting EPMC.

[21] The City and the MPOA had a re-opener in their 199-2004 MOU.  In reopened negotiations the parties agreed to eliminate the entire 7.5% EPMC in increments that provided for a .5% reduction June 2000, a 3.5% reduction February 2001 (coupled with a 4% pay increase, for a net increase of zero for 2000 and 2001), a 3.25% reduction in April 2002 (combined with a 4.5% pay increase) and a .25% reduction in March 2003 (combined with a 2.5% increase.)  (City’s B-6)

[22] This assumes the normal cost of 18.3% over the term of the contract, and amortization of the existing excess over 20 years.

[23] The Board has used the City’s calculation of the cost of its final offer on salary and PERS.  We added to the actual cost at 9.87% the cost of EPMC that the City showed as a saving. 

[24] Although the City’s contribution is zero, employees are still required to contribute 9% of salary.  MCFFA negotiated a 7.5% EPMC (presumably in lieu of straight wage increases) that the City was obliged to pay.  MCFFA argues, with some justification, that the excess contributions being used to offset the normal cost of 3% @ 50, are made up, in significant measure, of firefighter contributions.

[25] Counsel for the City stated: “ the City is not contending that it has a, quote, inability to pay, close quote, in the technical sense of the term.”  (Tr. 524:22-24) and “the City is not technically maintaining an inability to pay.  (Tr.558:17-18) 

 

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