IN THE MATTER OF THE ARBITRATION
BETWEEN
INTERNATIONAL ASSOCIATION OF )
FIREFIGHTERS, LOCAL 656 )
) INTEREST ARBITRATION
and ) OPINION AND AWARD
)
CITY OF PORT ANGELES )
_____________________________________)
PERC Case No. 17510-1-03-0404
____________________________
ARBITRATION PANEL
Janet L. Gaunt, Neutral Chairperson
Paul Harvey, IAFF Member
Richard Headrick, City Member
____________________________
June 10, 2004
For the Union: For the City:
Alex J. Skalbania, Esq. Bruce L. Schroeder, Esq.
Emma1 Skalbania & Vinnedge Summit Law Group PLLC
4241 - 21St Ave. W., Suite 104 315 Fifth Avenue South, Suite 1000
Seattle, WA 98199-1271 Seattle, WA 98104-2682
TABLE OF CONTENTS
I. BACKGROUND ............................................................... 1
II. APPLICABLE STATUTORY PROVISIONS ......................................... 3
A . The Constitutional/ Statutory Authority of the Employer .............4
B . Stipulations of the Parties ........................................ 5
C . Comparable Employers ............................................... 5
1. Agreed Comparators ............................................. 6
2. Disputed Comparators ........................................... 6
a . Bremerton, Lynnwood and Puyallup ......................... 9
b . Anacortes ............................................... 11
3 . The List of Selected Jurisdictions ........................... 12
D . Cost of Living Changes ............................................ 14
E . Interim Changes ....................................................15
F . Traditional Factors ................................................15
1 . Ability to Pay ................................................16
2 . Workload Changes ............................................. 17
3 . Bargaining Unit Turnover ..................................... 18
4 . Internal Parity .............................................. 18
5 . Local Labor Market Comparisons ............................... 20
III. THE RESOLUTION OF OUTSTANDING ISSUES .................................. 21
A . 2003 Wage Increases ............................................... 21
B . 2004 Wage Increases ............................................... 31
C . 2005 Wage Increases ............................................... 31
D . Medical Premiums .................................................. 32
IV. THE INTEREST ARBITRATION AWARD ......................................... 42
WITNESS LIST
For the Union:
Michael C. Sanders, Firefighter/ EMT, City of Port Angeles
James Mason, President, IAFF Local 656
Kelly Ziegler, Firefighter/ EMT, City of Port Angeles
For the City:
Carol Wilmes, Employee Benefit Trusts Program Coordinator, Association of
Washington Cities
Yvonne Ziomkowski, Finance Director, City of Port Angeles
Bob Coons, Personnel Manager, City of Port Angeles
I. BACKGROUND
Port Angeles is a city situated on the northern coast of the Olympic
Peninsula and located within Clallam County, Washington. The City is separated
from the Puget Sound metropolitan area by the Hood Canal and Puget Sound.
Bordered by non-dense rural land, Port Angeles has seen its population increase
only slightly in recent years. The local economy was detrimentally impacted by
closure of a Rayonier mill in the late 1990’s. Since then, the City’s population has
been rather stagnant. With a population of 18,470, Port Angeles ranks 45th
among all Washington Cities and towns.
The City operates one fire station and utilizes both career fire fighting
personnel and volunteer fire fighters to provide fire suppression and emergency
medical treatment within the City limits. The Fire Chief is Dan McKeen. The
International Association of Firefighters, Local 656 (“Union” or “Local 656”) serves
as the certified bargaining representative for a unit of uniformed firefighting
personnel that includes firefighters, paramedics, and captains. There are
currently twenty positions within the bargaining unit, i. e., nine firefighters, seven
paramedics, and four captains.1 The Department operates three shifts with six
bargaining unit members working per shift, ie., one captain, three firefighters,
and two paramedics.
The City and Union have a long history of collective bargaining. The IAFF
has represented the City’s uniformed personnel for over sixty years. The parties’
most recent collective bargaining agreement (“CBA”) expired on December 31,
2002. In 2002, the City and Local 656 began bargaining over the terms of a
successor contract. They bargained to impasse regarding a number of issues that
were then certified for interest arbitration by the Executive Director of the Public
Employment Relations Commission (PERC). This interest arbitration was initiated
in accord with RCW 41.56.450 to settle those unresolved issues.
Initially, four issues were certified by PERC for interest arbitration: (1)
application of a compensation survey; (2) cost of living adjustment; (3) health care
costs and (4) layoff by seniority. Prior to the arbitration hearing, the parties
resolved the layoff issue. Ex. U-1-A-6. The remaining issues require that we
determine the base wage increases to be received by Local 656’s bargaining unit
for 2003, 2004 and 2005 as well as how medical insurance premiums should be
paid for 2004 and 2005.
As its representative on the tripartite arbitration panel, Local 656
designated IAFF District Representative Paul Harvey. The City designated its
Mayor, Richard Headrick. By mutual consent, Janet L. Gaunt was selected to
serve as the neutral Chairperson (hereinafter “Arbitrator”), who has statutory
authority to issue a final ruling. On January 8, 2004, an arbitration hearing was
conducted in Port Angeles, Washington. Local 656 was represented by Alex
Skalbania of Emmal, Skalbania & Vinnedge. The City was represented by Bruce
Schroeder of the Summit Law Group PLLC. During the hearing, each party had
an opportunity to make opening statements, submit documentary evidence,
examine and cross-examine witnesses (who testified under oath) , and argue the
issues in dispute. The parties elected to make closing arguments in the form of
posthearing briefs, the last of which was received on April 21, 2004. The
Arbitrator drafted the preliminary text of an Award, which was then circulated to
the other panel members for review and comment. Following that consultation,
this decision was finalized by the Arbitrator.
II. APPLICABLE STATUTORY PROVISIONS
The Panel’s authority arises out of RCW 4 1.56, which prescribes binding
arbitration for public employers and uniformed personnel upon declaration by the
PERC that an impasse in bargaining exists. Relevant provisions of the Washing-
ton statutes read as follows:
RCW 41.56.430. Uniformed personnel--Legislative declaration. The
intent and purpose of chapter 131 , Laws of 1973 is to recognize that
there exists a public policy in the state of Washington against strikes
by uniformed personnel as a means of settling their labor disputes;
that the uninterrupted and dedicated service of these classes of
employees is vital to the welfare and public safety of the state of
Washington; that to promote such dedicated and uninterrupted
public service there should exist an effective and adequate alternative
means of settling disputes. [ 1973 c 131 §1]
RCW 41.56.465. Unqormed personnel--Interest arbitration panel--
Determinations--Factors to be considered.
(1) In making its determination, the panel shall be mindful of the
legislative purpose enumerated in RCW 41.56.430 and, as additional
standards or guidelines to aid it in reaching a decision, it shall take
into consideration the following factors:
(a) The constitutional and statutory authority of the employer;
(b) Stipulations of the parties;
. . .
(c)(ii) For employees listed in RCW 41.56.030(7)(e) through (h),
comparison of the wages, hours, and conditions of employment of
personnel involved in the proceedings with the wages, hours, and
conditions of employment of like personnel of public fire departments
of similar size on the west coast of the United States. However, when
an adequate number of comparable employers exists within the state
of Washington, other west coast employers may not be considered;
. . .
(d) The average consumer prices for good and services, commonly
known as the cost of living;
(e) Changes in any of the circumstances under (a) through (d) of
this subsection during the pendency of the proceedings; and
(f) Such other factors, not confined to the factors under (a) through
(e) of this subsection, that are normally or traditionally taken into
consideration in the determination of wages, hours, and conditions
of employment. . . . .
(2) Subsection (1)(c) of this section may not be construed to
authorize the panel to require the employer to pay, directly or
indirectly, the increased employee contributions resulting from
chapter 502, Laws of 1993 or chapter 517, Laws of 1993 as required
under chapter 41.26 RCW. [1995 c 273 § 2; 1993 c 398 § 3.]
A. THE CONSTITUTIONAL/ STATUTORY AUTHORITY OF THE EMPLOYER
Neither party has made any allegation that the proposals of the other party
exceed or are otherwise affected by the constitutional and statutory authority of
the City.
B. STIPULATIONS OF THE PARTIES
Because of the Arbitrator’s travel schedule, and the desire to allow for
adequate consultation with the other Panel members, the parties waived the
statutory requirement that a decision be issued within thirty (30) days of the
hearing’s closure. Further stipulations that relate to particular proposals are
discussed in the sections of this decision that deal with those proposals.
C. COMPARABLE EMPLOYERS
One of the statutory criteria which this Panel must con sider is the
comparison of wages, hours and conditions of “like personnel of public fire
departments of similar size on the west coast of the United States.” The statute
requires the use of comparable employers within the state of Washington if an
adequate number of in-state comparable employers exists. Both sides further
agree that comparators should be chosen from jurisdictions located in Western
Washington State.
The governing statute does not define how “similar size” is to be determined.
In the instant case, the parties agree that the primary considerations for selecting
comparable jurisdictions should be population, and assessed valuation. The
Union used a range described as 50% below and 150% above the population and
assessed valuation of Port Angeles. In reality, however, for its upper limit Local
656 multiplied the population and assessed valuation of Port Angeles by 250%.
Tr. 157 (Sanders).2 The City also looked for comparators that fell within a band
of 50% and 150% for population and assessed valuation, and applied that range
in the traditional way by setting the upper limit at jurisdictions whose population
and assessed valuation was no greater than 150% of Port Angeles’.
1. Agreed Comparables
For the 2003-2005 labor contract, the parties have agreed that the following
Washington cities are properly used as comparables for the purpose of RCW
45.56.465(c)( 1):
Aberdeen
Centralia
Mt. Vernon
Mukilteo
Tumwater
2. Disputed Comparables
The parties disagree over other comparables that each side believes should
be added to the foregoing list.
Union Proposal: Local 656 proposes Bremerton, Lynnwood and Puyallup
be used as additional comparables. The Union contends these three jurisdictions
all qualify as appropriate comparators based upon the parties’ own past
bargaining history and because of their demographic characteristics. Using 2003
data for population, and 2002 data for assessed valuation, all three proposed
comparators fall within the range of 50% below to 150% above Port Angeles in
terms of population served and assessed valuation. Preference was given to
jurisdictions that met the above criteria and had also been either utilized as
comparators by both parties in the past or recently used by the Port Angeles Fire
Department in a relevant context.
Although larger than Port Angeles, inclusion of these comparators serves to
provide a balance against three agreed comparators (Aberdeen, Centralia and
Tumwater) that are smaller than Port Angeles. The Union objects to the inclusion
of Anacortes, because the parties have no history of ever using that jurisdiction
for comparison and because that jurisdiction does not employ anyone in the
firefighting job classification that both parties use as the benchmark for making
compensation comparisons.
City Proposal: The City initially proposed that both Oak Harbor and
Anacortes be added to the list of comparable jurisdictions. After the hearing, the
City dropped Oak Harbor and the only additional comparator that it now seeks
to add is Anacortes. The City contends its list of comparables provides a better
mix of cities both larger and smaller than Port Angeles. The average population
and assessed valuation of the City’s list is much closer to that of Port Angeles than
the Union’s list. Lynnwood, hyallup and Bremerton are not similarly sized to
Port Angeles and the City believes that including them unfairly skews the list of
comparables towards central Puget Sound. The City contends the inclusion of
Lynnwood and Puyallup is especially inappropriate given their significantly greater
valuations.
Discussion and Findings: The selection of comparable jurisdictions is a
process fraught with imprecision. As one of my colleagues has accurately
observed: “The interest arbitrator faces the problem of making ‘apples to apples’
comparisons on the basis of imperfect choices and sometimes incomplete data.”
City of Pasco and Pasco Police Officers Association, 10 (Wilkinson, 1994). Five
comparable jurisdictions is generally considered the minimum number necessary
to make valid comparisons. Having at least seven is preferable, so I would expand
the agreed list of comparators if any other appropriate choices were available.
The most traditional range used by interest arbitrators for determining
“similar size” has been the one used by the City, ie., minus 50% to 150%.
Although the 50% to 150% screen is the most prevalent one, arbitrators do
broaden that screen when necessary to obtain a sufficient number of
comparables. See, e .g ., City of Pullman, PERC No. 12399-1-96-296 (Gaunt,
1997) (upper limit of just under 200% used because of lack of options); Thurston
County and WSCCCE Council 2, PERC No. 14083-1-98-00312 (Axon, 1999) (used
range of -53% to 164% to find more than four comparables).
In the instant case, the relative size of the agreed as well as proposed
comparable jurisdictions is as follows:3
| |
Population |
% of Port Angeles |
Assessed Value |
% of Port Angeles |
| Aberdeen |
16,320 |
88% |
908,090,914 |
67% |
| Centralia |
15,110 |
82% |
692,806,121 |
66% |
| Mt. Vernon |
27,060 |
147% |
1,502,002,342 |
143% |
| Mukilteo |
19,190 |
104% |
2,169,239,709 |
207% |
| Tumwater |
12,740 |
69% |
1,077,517,308 |
103% |
| Bremerton |
38,730 |
210% |
1,585,140,396 |
151% |
| Lynnwood |
34,500 |
187% |
2,713,237,600 |
258% |
| Puyallup |
35,490 |
192% |
2,568,468,374 |
245% |
| Anacortes |
15,110 |
82% |
1,467,464,751 |
140% |
| |
|
|
|
|
| Port Angeles |
18,470 |
|
1,050,028,090 |
|
As can be seen from the foregoing chart, Mukilteo’s assessed valuation is now
more than double that of Port Angeles. The City has nevertheless agreed to the
inclusion of this jurisdiction because Mukilteo has traditionally been used by the
parties as a comparable and is the closest to Port Angeles in population of any of
the proposed comparators. To achieve a sufficient number of comparables, it
remains reasonable to continue using Mukilteo.
a.
Bremerton, Lvnnwood and Puyallup Are Too Much Larger To Be
Appropriate Comparators.
Despite their significantly larger size, the Union contends it is appropriate
to include Bremerton, Lynnwood and Puyallup because those cities have been
used by the parties in the past as comparators for Port Angeles. The parties have
a history of doing prior compensation studies of other jurisdictions for the purpose
of making periodic catchup wage increases for the bargaining unit. A compensa-
tion study was done in 1988 and again in 1994. Bremerton, Lynnwood and
Puyallup were all used in the 1988 and 1994 studies. That would certainly be a
factor supporting their inclusion if the size disparity had not grown so great.
In the years since the prior compensation surveys, the growth of these
jurisdictions has outpaced that of Port Angeles, so there is now a diminished basis
for comparison. Lynnwood’s population is 187% that of Port Angeles and its
assessed valuation is 258%. Puyallup’s population is 192% of Port Angeles and
its assessed valuation is 245% of Port Angeles. I have found no interest
arbitrations that used comparators with so large a disparity.
In an interest arbitration involving the City of Anacortes and its firefighters,
Arbitrator Alan Krebs excluded a jurisdiction previously used as a comparable but
whose population had become more than twice as large as Anacortes. The IAFF
sought inclusion because the jurisdiction at issue had been used during
negotiations for prior two contracts. I concur with his observations.
The fact that the parties recognized Pierce 3 as a comparable
jurisdiction in the past does not bind them forever. The size of
jurisdictions change over time.
Jurisdictions which are of like size
during one set of negotiations may no longer be so years later during
another set of negotiations.
City of Anacortes and IAFF Local No. 1537, PERC No. 17039-1-02-0390, at p.8
(Krebs, 2003)(emphasis added in italics). The Union proposes Lynnwood still be
used and yet two years ago Lynnwood was found too large to serve as a compara-
ble for Mukilteo, which is even bigger than Port Angeles.
City of Mukilteo and
IAFF, PERC No. 16378-1-02-00382 (Lankford, 2002).
Bremerton, with an assessed valuation of 151% that of Port Angeles, is a
closer question because that criteria is close to the 150% upper limit traditionally
applied. Just as a size exception was made for Mukilteo, I have considered
whether an exception is appropriate for Bremerton. I conclude it is not because
the population disparity of 210% is so great. The size disparity from Port Angeles
is also one that is likely to keep growing in the future.
The City and IAFF have never had an interest arbitration that determined
appropriate comparators for the firefighters contract. One of the City’s other
bargaining units, sworn police officers represented by Teamsters Local 589, did
go to interest arbitration, which resulted in a 1999 ruling regarding appropriate
comparators for that labor contract. Arbitrator Jane Wilkinson applied the 50%
.to 150% size threshhold and excluded any jurisdiction that exceeded that range
in either population or assessed valuation.
City of Port Angeles and Teamsters
Local 589, AAA No. 75 300 00215 98 (Wilkinson, 1999). The City reasonably
seeks some consistency in the approach used to select comparators for its interest
arbitration eligible bargaining units. Since Bremerton, Lynnwood and Puyallup
exceed the 50% to 150% screening threshold for both population and assessed
valuation, they are found inappropriate comparators for the IAFF bargaining unit.
b.
Anacortes Does Not Have "Like Personnel".
The City would expand the list of comparables by adding the City of
Anacortes. Anacortes falls within the 50- 150% screening range and shares
certain characteristics with Port Angeles, e.g., it is separated from central Puget
Sound and has a mixed volunteer and paid department. Anacortes differs in one
significant respect, however. That jurisdiction does not employ any career fire
fighters. Instead, all the members of an IAFF-represented bargaining unit are
paramedics. That may explain why Anacortes has never previously been used as
a comparator in any of the parties’ prior compensation studies and has not been
used by the Port Angeles Fire Department for any other purpose.
If Anacortes was selected as a comparator, a hypothetical top step firefighter
would have to be created with speculative wage rates and other elements of
compensation. The City has done that in its exhibits by assuming there would be
a 10% differential between the Anacortes’ paramedic rate and a base firefighter
rate. There is no reason to presume that would be the differential actually
bargained in Anacortes, because the paramedic differential varies among different
jurisdictions. For the comparators proposed by either party in this case, the
differential ranges from 5.5% in Centralia to 10% in jurisdictions like Tumwater
and Bremerton.
I agree with Local 656 that comparisons are not appropriate between actual
Port Angeles firefighter compensation and manufactured data for a non-existent
position in Anacortes. The Union and City have agreed in this proceeding to use
the benchmark position of a firefighter/ EMT (not firefighter/paramedic) for their
wage comparisons. If Anacortes starts hiring non-paramedic firefighters in the
future, it might well become an appropriate comparator but that time has not yet
come. Since the City of Anacortes does not employ like personnel that equate to
the benchmark position agreed upon for the City of Port Angeles, the City of
Anacortes is not deemed an appropriate comparator.
3.
The List of Selected Comparable Jurisdictions.
The number of cities used by the parties for making comparisons has been
steadily declining. Fifteen (15) were used in their 1988 compensation study;
eleven (11) in the 1994 study; and eight (8) cities were discussed (but not agreed
upon) during a mediation that resulted in the 1999 CBA. Union Exs. C-1, C-6,
and Tr. 56. I would have preferred to find seven or eight comparators to use in
this case, but five comparators does suffice as a minimum acceptable number.
It is better to utilize the five agreed comparators, than to expand the list by
creating a speculative firefighter/ EMT wage rate in order to use one jurisdiction
(Anacortes) or by using jurisdictions that have become too disparate in size
(Bremerton, Lynnwood and Puyallup). Pursuant to RCW 41.56.465(c)(ii), the
Arbitrator finds the following jurisdictions are appropriate comparators (listed in
descending order of population):
| |
Population |
Assessed Value |
| Mt. Vernon |
27,060 |
1,502,002,342 |
| Mukilteo |
19,190 |
2,169,239,709 |
| Aberdeen |
16,320 |
708,090,914 |
| Centralia |
15,110 |
692,806,121 |
| Tumwater |
12,740 |
1,077,517,308 |
| |
|
|
| Average of Comparables |
18,084 |
1,229,931,279 |
| |
|
|
| Port Angeles |
18,470 |
1,050,028,090 |
The foregoing list of comparables provides a counterbalanced range of jurisdic-
tions both smaller and larger than the City of Port Angeles. The average
population for the comparables is 98% that of Port Angeles. The average assessed
valuation for the cornparables is greater than Port Angeles, but exceeds by only
17%.
D.
COST OF LIVING CHANGES
RCW 41.56.465(d) requires consideration of “the average consumer prices
for goods and services, commonly known as the cost of living.” This consumer
price index is published by the United States Department of Labor, Bureau of
Labor Statistics (BLS). The parties agree that the appropriate cost of living index
to use is the Seattle-Tacoma-Bremerton CPI-W. The City provided evidence
showing that the top step firefighter wages in Port Angeles grew from $2683 in
1989 to $4569 in 2002, a 70% increase. Over that same period of time, the CPI-W
increased 47.7%. City Exhibit 1.3.3. If Port Angeles firefighters had received
raises equal to 100% of the CPI-W for each intervening year, their pay would have
grown to just $4282, a cumulative increase of 60%. The City thus demonstrated
that the bargaining unit’s salary increases through 2002 have exceeded changes
in the intervening cost of living.
The City also offered evidence that there is a cost of living difference between
Port Angeles and cities located in central Puget Sound. The average rent for a two
bedroom/ 1 bath rental unit as of September 2003 was $469 in Clallam County
where the City is located. Four of the five comparables are located in counties
that have a higher average rental. The average rental in Lewis County (where
Centralia is located) was $544; Skagit County (where Mount Vernon is located)
was $692; Snohomish County (Mukilteo) was $711, and Thurson County
(Turnwater) was $651. Only Grays Harbor (where Aberdeen is located) was slightly
lower than Port Angeles at $457. City Ex. 1.3.4. 2003 median home prices were
also lower in Port Angeles than three of the other comparables (Mount Vernon,
Mukilteo and Tumwater). The disparity is particularly large between Mukilteo’s
median home price of $235,000 and Port Angeles at $155,800. City Ex. 1.3.4.
The Arbitrator has been mindful of these differences when fashioning an
appropriate wage award.
E.
INTERIM CHANGES
Another specified statutory consideration is changes in the cost of living
during the pendency of this proceeding. A s reported by the Bureau of Labor
Statistics, the most recent data for the Seattle-Tacoma-Bremerton CPI-W is April
2004. For the twelve month period ending April 2004, that CPI-W increase was
1.1%. For the twelve month period ending February 2004, the CPI-W increase
was only .9%. Inflation is thus rising, but still remains quite low.
F.
TRADITIONAL FACTORS
RCW 41.56.465(f) directs the Panel to consider “such other factors . . which
are normally or traditionally taken into consideration in the determination of
wages, hours and conditions of employment.” A variety of factors are typically
considered by interest arbitrators, including the fiscal condition of the employer,
changes in workload, bargaining unit turnover, internal parity with other city
bargaining units, and conditions in the local labor market.
1.
Ability to Pay. Local 656 contends the City can reasonably afford an
increase that raises the top step classification to the average wage of comparable
jurisdictions. The City does not claim an inability to pay the wage increases
sought by the IAFF. The City does claim that any wage award should be tempered
by rather stagnant revenue increases and projected budget deficits.
The City is not currently in a dire economic situation, but it has experienced
slow revenue growth at a time of significant increasing expenses. The City’s
Finance Director Yvonne Ziomkowski testified that total City revenues have been
stagnant in the last few years. From 2001 to 2002 total revenues decreased by
1.49%. Revenue for 2003 was estimated to increase by 1.46% but then
projections for 2005 through 2009 are either for decreases or increases barely
more than 1%. At a time of limited revenue increases, the City’s expenses are
continuing to increase at a much faster pace - particularly healthcare with
projected 20% increases for the next few years. Ziomkowski is therefore projecting
a deficit of $400,000 in 2005 and $800,000 in 2006. City Ex. 1.5.1; Tr. 184.
Sixty percent (60%) of the City’s general revenues are derived from property,
sales and utility taxes. The City has reached the limits of its property tax
authority, and is facing a $70,000 refund to Daishowa for a previous property tax
overcharge. Tr, 176 (Ziomkowski). The City’s utility tax is heavily dependent on
the local paper mill and its consumption of power. At present, the City is not
anticipating any increased taxes from this source. Tr. 179. Sales tax revenues
have been shrinking due to the relocation of some large retailers from the City
limits to unincorporated Clallam County. A non-recurring increase of 5.6% in
2003 was attributable to Westport Marine construction. Future projections call
for little if any increase. The Union has noted the passage of a 1% sales tax
increase, but that is dedicated to operation of the Pen Comm 911 Center. The
City lacks authority to direct those funds elsewhere. Tr. 181.
The City is admittedly conservative when doing its financial planning and
budget estimates. Through the purchase of insurance and proactive financial
controls, the City was able to obtain a favorable bond rating. The record as a
whole does support the City’s claim that the local economy is not particularly
robust, but one of the positive revenue changes for the City has been a “Third
Party Payer” program implemented in 2003, which bills insurance companies for
ambulance service. This program is expected to generate $250,000-300,000 per
year or more and results directly from services provided by the Union’s bargaining
unit.
2.
Workload Changes.
Through the testimony of its former Local President Michael Sanders and
the Fire Department’s Annual Report for 2002, the Union established that the
workload of the bargaining unit has increased in recent years. At a time when
staffing levels have remained essentially unchanged, the volume of calls that
career personnel in the Fire Department have been responsible for handling has
increased 34% between 1996 and 2002. The increase in 2002 over 2001 was
15%. Union Ex. B-3; Tr. 86-87. The increased call volume provides reason to
conclude that the City’s firefighters are having to work harder to provide essential
services; services for which the City should be willing to pay equitable wages and
benefits.
3.
Bargaining Unit Turnover.
The extent to which bargainingunit employees are leaving to take otherjobs
is another factor routinely considered by interest arbitrators. Lack of turnover
can be indicative of a compensation package that is sufficiently competitive to
attract and retain qualified employees. Over the last 10 years, only three (3)
bargaining unit members have left voluntarily for reasons other than retirement.
Two left for promotional opportunities elsewhere, and one was said to have left for
personal reasons. City Ex. 1.6.1
4.
Internal Parity. Settlements reached by an employer with its other
bargaining units is also a factor commonly considered under RCW 41.56.465(f)
The reasons for this have been well described by Arbitrator Alan Krebs:
From the standpoint of both the employer and the union, the
settlements reached by the employer with other bargaining units are
significant. While those settlements are affected by the peculiar
situation of each individual bargaining unit, still there is an under-
standable desire by the employer to achieve consistency. From the
union’s standpoint, it wants to do at least as well for its membership
as the other employer’s unions have already done. At the bargaining
table, the settlements reached by the employer with the other unions
are likely to be brought up by one side or the other. Thus, it is a
factor which should be considered by the arbitrator.
City of Kennewick and IAFF Local 1296, AAA No. 75 300 00225 96 (Krebs, 1997).
The weight given to internal parity will vary depending on the issue involved
and the economic situation. During difficult economic times when it becomes
necessary to ask all employees to make sacrifices, internal parity will often merit
more weight. “Obviously, it does nothing for the morale of one employee segment
to accept, for instance, a wage freeze, and then see another group receive a
whopping increase, no matter how deserving the latter group is of that increase.”
Citv of Redmond and Redmond Police Association, PERC No. 16791-5-02-00387
(Wilkinson 2004).
At times when an employer is financially able to pay for increases, internal
parity considerations become more problematic because settlements are affected
by concerns unique to each bargaining unit. One unit may give a higher priority
to achieving step adjustments in a wage schedule than to gaining a higher across
the board increase. For another unit, the reverse may be true. One unit may
accept a lower wage increase because that increase maintains the bargaining
unit’s wages at a level competitive with the wages in other jurisdictions for similar
jobs. Another unit may find the same percentage increase unacceptable because
it does not result in a competitive wage for their particular job classifications.
The City of Port Angeles has five other represented bargaining units. The
IBEW represents a unit of 18-20 linemen. The Teamsters negotiates with the City
for two bargaining units: one a unit of 27 sworn police officers; the other a unit
of 23 non-sworn personnel (dispatchers, records personnel and parking patrol).
The City’s big gest bargaining unit consists of approximately 75 employees
represented by AFSCME. Only the unit of sworn police officers is eligible for
interest arbitration.
During the period of 1990 through 2002, the firefighters wage increases
have exceeded those of the other bargaining units for the same period. The
cumulative increase for the sworn police officers unit was 48.69%, 47.89% for the
IBEW unit and 39.04% for the AFSCME bargaining unit. Non-represented City
employees received the same cumulative increase as the AFSCME unit, ie.,
39.04%. In comparison, Local 656's bargaining unit received increases totaling
53.49%. City Ex. 1.4. 1.
4 For 2003, the Teamsters sworn unit is receiving a 2%
wage increase. The IBEW unit is getting 3%, and the AFSCME unit and non-
represented employees are both getting 1.62%. Id.
5.
Local Labor Market Comparisons. Anyone who has negotiated collective
bargaining agreements - as this Arbitrator has in her prior life as an advocate - is
well aware of the impact that local labor markets can have on the setting of wage
rates and benefits. The consideration of a subject jurisdiction's local labor market
is thus fully sanctioned by RCW 41.56.465(f). The reasons for this have been well
described by UCLA Professor Irving Bernstein:
[Local labor market] comparisons are preeminent in wage determina-
tion because all parties at interest derive benefit from them. To the
worker they permit a decision on the adequacy of his income. He
feels no discrimination if he stays abreast of other workers in his
industry, his locality, his neighborhood. They are vital to the union
because they provide guidance to its officials on what must be
insisted upon and a yardstick for measuring their bargaining skill.
In the presence of internal factionalism or rival unionism, the power
of comparisons is enhanced. The employer is drawn to them because
they assure him that competitors will not gain a wage cost advantage
and that he will be able to recruit in the local labor market. . . .
Arbitrators benefit no less from comparisons. They have “the appeal
of precedent and ... awards based thereon are apt to satisfy the
normal expectations of the parties and to appear just to the public.
Arbitration of Wages, Publications of the Institute of Industrial Relations, 54
(Berkeley: University of California Press, 1954). The City offered a number of
exhibits demonstrating that throughout all of the 1990’s, personal income growth
in Port Angeles has lagged that in Washington State and the nation as a whole.
City Ex. 1.7.1. Specific wage and benefit evidence regarding some local labor
employers is discussed later in this decision.
III.
THE RESOLUTION OF OUTSTANDING ISSUES
A.
2003 WAGE INCREASE
Union Proposal: The Union is asking the Panel to make an award on
wages that is consistent with the parties’ historical practice. The parties have a
history of periodically conducting compensation surveys of comparable jurisdic-
tions and then providing Local 656’s bargaining unit with base wage increases
that bring them up to the average of the wage-related compensation that is
provided to firefighters in the comparable jurisdictions.
A survey of appropriate comparator jurisdictions shows that the Local’s
bargaining unit would need a base wage increase of approximately 9-1 1% in 2003
(depending on the criteria used) to bring their hourly wage-related compensation
into line with the comparators average. In making its compensation comparisons
with the comparator jurisdictions, Local 656 has utilized a framework that is
consistent with the parties’ past practice and with prior interest arbitration
proceedings. The Local has used as its benchmark firefighter, a top step
firefighter who is in the 11th year of service, is an EMT, has an AA degree and who
participates in deferred compensation programs where available. Local 656 has
also made its compensation comparisons on an hourly compensation basis in
order to take into account the number of hours that an individual must work each
year in order to earn his/her annual compensation.
Effective January 1, 2003, the Local is proposing there be a cost of living
wage increase of 100% of the change in the Seattle, Tacoma, Bremerton CPI-W
between August 2001 and August 2002, with a minimum increase of 2% and
maximum increase of 6%. The Union also seeks a “catch up” increase of 4.17% to
bring base wages closer to jurisdictions that are comparable to the City of Port
Angeles. The Union’s proposal for 2003 amounts to a 6.17% increase overall,
because the 2% cost of living minimum increase would be applicable. This base
increase for 2003 is more than justified by the comparator data.
The Local’s proposal is also justified by the fact that the workload of the
Local’s members has steadily increased in recent years. At a time when staffing
levels have remained relatively unchanged, the volume of calls that career
personnel have been handling has greatly increased. Because fire suppression
services are provided with less personnel, the City’s cost per capita for
fire/medical protection in 2002 was significantly lower than the average cost per
capita paid by the comparator jurisdictions that the Department used in preparing
its 2002 Annual Report. The City does not contend it lack the financial resources
to pay the full amount of the Local’s wage proposal. Anything less is not justified.
City Proposal: Effective January 1,2003, the City is proposing an increase
of 1.62%, which represents a cost of living increase based upon 90% of the
Seattle-Tacoma-Bremerton CPI-W from August 2001 to August 2002. The City’s
proposal is fair in relation to comparable data, cost-of-living information, internal
parity, the City’s fiscal resources, the absence of bargaining unit turnover, and
conditions in the state and local economy.
The City has used as its benchmark firefighter, a top step firefighter who is
in the 1 lth year of service, is an EMT, and has an AA degree. Like the Local, the
City has used net hourly compensation as the prime comparison, but disagrees
with including a driver/ operator premium in that comparison. In the calculation
of net hourly compensation, the City has included deferred compensation but
believes the appropriate amount is that which an employer must contribute
regardless of the election by an individual employee. Since Anacortes does not
employ any firefighter/ EMTs, the City reduced the Anacortes’ firefighter/ para-
medic rate by 10% to get a figure for comparison.
The City’s offered increase of 1.62% would give Port Angeles firefighters the
second highest monthly base wage of any comparable. The Local’s net hourly rate
would exceed the average of the comparables by .7%. Other statutory consider-
ations also support the City’s proposal. Port Angeles’ firefighter wages have
exceeded the cost-of-living for more than a decade, inflation is currently quite low,
and the cost of living in Port Angeles is less that for a number of the comparables.
The City’s proposal for a cost of living increase that is based upon 90% of the CPI-
W is consistent with the parties’ practice in the past and appropriate in light of the
fact that the City currently pays 100% of the bargaining unit’s medical premiums.
The wage increase offered by the City is also fair and reasonable in light of
serious challenges to the City’s financial position. Total revenue increases have
been stagnant in recent years, while expenses continue to increase at a faster
pace. In the late 1990's, Port Angeles suffered a serious blow when a local paper
mill closed. Impacted by the loss of major retailers to unincorporated Clallam
County, sales tax revenues have stagnated, and the City is already at the
maximum property tax levy rate permitted under state law. Moreover, a $70,000
refund is due to Daishowa for previous property tax overcharges. Given the
skyrocketing costs of health care premiums, and other City expenses, a budget
deficit of $400,000 is projected for 2005 with steadily increasing deficits through
2007. The City’s financial climate is thus one that calls for tempered wage
adjustments.
From 1990 through 2002, IAFF members have fared better than any other
group of employees at the City. Lack of turnover in the Local’s unit evidences the
fact that the City’s compensation package is sufficiently competitive to attract and
retain qualified firefighters. Conditions in the local labor market should also be
considered. City exhibits show that personal income growth has lagged in Clallam
County versus Washington State and the United States as a whole. The dynamics
of the local economy should be considered when judging the sufficiency of the
City’s offer.
Discussion and Findings: Local 656 and the City are in basic agreement
on the methodology for analyzing the compensation package at the various
comparables. Both parties used net hourly compensation as the prime compari-
son. Both parties used a top step firefighter who has completed 10 years of
service with an AA Degree. U. Ex. F- 1 , C. Ex. 1.2.1. The City and IAFF disagree,
however, with regard to certain elements of the comparability analysis.
Driver/ Operator pay. When calculating the annual wage of comparator
firefighters, the Union has added in a driverjoperator premium that is paid by
certain comparables to some of their firefighters. The Local contends that
inclusion is appropriate because all Port Angeles firefighter/ EMTs must be
certified to drive Fire Department emergency response vehicles, and they share
equally in the work or driving those vehicles. There is no additional pay for
handling this duty assignment. Aberdeen and Centralia do provide extra pay to
individuals, who are designated as “Drivers,” “Driver/ Operators” or
“Driver/ Engineers,” and are regularly assigned to drive emergency vehicles. Local
656 therefore believes this compensation should be included in the calculation of
annual compensation at those jurisdictions.
The City contends inclusion is inappropriate because all firefighters in the
Aberdeen and Centralia bargaining units do not receive the driver premium. In
Aberdeen, fifteen of thirty bargaining unit members currently receive the
driver/ operator premium, while at Centralia only four of twenty full- time
employees receive the premium. Tr. 162. The City notes, moreover, that those
other jurisdictions have an express driver/ operator job classification. Port Angeles
does not. I agree with the City that since every firefighter/ EMT at Aberdeen and
Centralia does not receive the driver/ operator premium, that premium should not
be added to the base firefighter wage in those jurisdictions. However, the fact that
at least some firefighters in those jurisdictions do receive a premium for driving
will be kept in mind when evaluating the overall wage award in this case.
Deferred compensation: Another difference in the parties’ calculations
relates to how they factor in deferred compensation. For example, the City of
Mukilteo is required to make a 2.22% deferred compensation without any required
employee match. An employee in that locality can obtain a 4.44% contribution by
matching Mukilteo’s contribution. In its wage calculations, the City has used the
lower percentage, the Union uses the higher one. Since the amount of deferred
contribution is within the employee’s control (not the City of Mukilteo’s), and the
full 4.44% contribution represents a wage that a firefighter in thatjurisdiction can
obtain, it is appropriate to include the full amount, especially since the IAFF
provided evidence that all Mukilteo bargaining unit members contribute the
maximum amount required to obtain the full 4.44% employer contribution. Union
EX. F-9.
Work year: In calculating the total number of annual hours worked, the
Union used 52.14 weeks a year, and the City used 52 weeks. Both sides
acknowledge that the difference is not significant. Because it is applied uniformly
to each side’s exhibits, it does not affect the overall position of the comparables.
For the purpose of further comparison, I have used the Union’s annual hours
data.
The foregoing adjustments to the parties’ offered data for the selected
comparables results in the following monthly wage comparison for 2003 if the Port
Angeles benchmark firefighter current base wage is increased by the City's offered
1.62%:
| City |
Base Wage |
Long. Pay |
Ed. Pay |
Def. Comp. |
Hol. Pay |
Other Comp |
Monthly Wage |
| Aberdeen |
$4337 |
0 |
0 |
0 |
0 |
87 |
$4424 |
| Centralia |
$3964 |
0 |
0 |
0 |
312 |
109 |
$4385 |
| Mount Vernon |
$4306 |
100 |
0 |
0 |
0 |
10 |
$4416 |
| Mukilteo |
$4670 |
0 |
47 |
208 |
0 |
0 |
$4925 |
| Tumwater |
$4546 |
0 |
0 |
0 |
232 |
75 |
$4853 |
| Port Angeles |
$4643 |
0 |
0 |
44 |
182 |
247 |
$5116 |
The net hourly wage becomes:
| City |
Annual Wage |
Ann. Hours |
Hol. Hours |
Vacation Hours |
Net Hours |
Net Hrly Wage |
| Aberdeen |
$53,088 |
2614 |
960 |
192 |
2326 |
$22.82 |
| Centralia |
$52,620 |
2190 |
0 |
144 |
2046 |
$25.72 |
| Mount Vernon |
$52,992 |
2503 |
144 |
240 |
2119 |
$25.01 |
| Mukilteo |
$59,100 |
2596 |
144 |
192 |
2260 |
$26.15 |
| Tumwater |
$58,236 |
2596 |
0 |
216 |
2380 |
$24.47 |
| Average |
|
|
|
|
|
$24.83 |
| |
|
|
|
|
|
|
| Port Angeles |
$61,392 |
2756 |
72 |
240 |
2444 |
$25.11 |
With the City's offered 1.62% COLA increase for 2003, the net hourly wage of the
Port Angeles benchmark firefighter EMT would rank third among all the
comparables :
Mukilteo $26.15
Centralia $25.72
Port Angeles $25.11
Mount Vernon $25.01
Tumwater $24.47
Aberdeen $22.82
The 2003 wage rate would exceed the average net hourly wage rate for the set of
selected comparables by 1%. The Local’s request for a further “catch up” increase
in the first year of the labor contract is therefore unsupported by the comparator
data.
Other Considerations: The foregoing analysis has been used to determine
what wage increase will maintain the bargaining unit within a reasonable range
of the other comparable jurisdictions. The inquiry does not end at this point. One
must next consider if other considerations merit an upward or downward
adjustment in the wage increase being considered.
The City’s offer of 1.62% is based upon 90% of the Seattle, Tacoma,
Bremerton CPI-W (August 2001 to August 2002). For any cost of living increase
in the collective bargaining agreement, the Union seeks 100% of the applied index
change. The City’s proposal that the cost of living adjustment be limited to 90%
is consistent with what the parties have done in their bargaining since 1990. For
over the past decade, when past collective bargaining agreements have included
a cost of living increase for one or more of the years of the contract, the Union and
City have used 90% of the Seattle-Bremerton CPI-W Index, with a minimum
increase of 2% and maximum increase of 6%. Tr. 228 (Coons); Union Ex. C-2
through C-7. That same cost of living formulation has also been used for the
City’s other interest eligible bargaining unit, i.e., the sworn police officers
represented by Teamsters Local 589. Union Ex. D- 1.
The parties’ prior use of 90% instead of the full CPI-W change evidences
recognition that the cost of living in Clallam County is less than living in counties
where other comparable jurisdictions are located. As noted earlier in this
decision, four of the five comparables (Centralia, Mount Vernon, Mukilteo and
Tumwater) have higher average rental prices. Median home prices are also higher
in three of the comparables (Mount Vernon, Mukilteo and Tumwater).
Use of 90% of the CPI-W index is also appropriate when an employer pays
most of the cost of medical insurance. The CPI-W has a significant medical
component. Even if the City’s full proposal for employee cost sharing of premiums
were adopted, in 2005 the City would still be paying all of the bargaining unit’s
vision and dental premiums and all but 12% of the medical premiums. When
medical insurance premiums are mostly paid by an employer, a reduction in the
applicable CPI is entirely appropriate. See, e.g., City of Poulsbo, PERC No. 15226-
1-02-377 (Gangle, 2002)(opted for a 90% CPI escalator because medical premiums
were largely paid by the employer); City of Sea-Tac and IAFF Local 2929, PERC No.
1595 1-I-01-370 (Krebs, 2002)(opted for 90% CPI because employer covered 100%
of health insurance increases). For the foregoing reasons, I conclude use of 90%
of the CPI-W change is appropriate, but the minimum and maximum increases
customarily used in prior agreements should also apply.
In the past when giving cost of living increases, the City has provided a
minimum 2% increase. The Union’s proposed COLA increase for 2003 would
include that minimum; the City’s does not. If one follows the parties’ customary
practice, a 2% minimum increase would still leave the Port Angeles firefighters
third in rank order among the comparables. The impact on the monthly wage of
the benchmark position is as follows:
| With 2% 2003 Increase |
Base Wage |
Long. Pay |
Ed. Pay |
Def. Comp. |
Hol. Pay |
Other Comp |
Monthly Wage |
| Port Angeles |
$4660 |
0 |
0 |
44 |
184 |
249 |
$5137 |
The net hourly wage becomes $25.22:
| With 2% 2003 Increase |
Annual Wage |
Ann. Hours |
Hol. Hours |
Vacation Hours |
Net Hours |
Net Hourly Wage |
| Port Angeles |
$61,649 |
2756 |
72 |
240 |
2444 |
$25.22 |
The bargaining unit’s rank order after a 2% minimum COLA for 2003 still remains
third in relations to the other comparables:
Mukilteo $26.15
Centralia $25.72
Port Angeles $25.22
Mount Vernon $25.01
Tumwater $24.47
Aberdeen $22.82
The average increase in 2003 for all the other city bargaining units exceeded
2%. Firefighters would be getting the same 2% as the Teamsters sworn unit, less
than the IBEW bargaining unit and more than the 1.62% received by the AFSCME
bargaining unit and City’s non-represented employees. A greater increase than
the latter two units is justified by evidence discussed earlier that the bargaining
unit’s workload has significantly increased. Providing the 2% minimum also
compensates for the fact that Local 656’s bargaining unit has waited a year and
a half to begin receiving that wage increase for 2003.
With a 2% base wage increase for 2003, the benchmark position’s net
hourly wage will be brought to a level that exceeds the average net hourly wage for
the comparable jurisdictions.
Mukilteo $26.15
Centralia $25.72
Mount Vernon $25.01
Tumwater $24.47
Aberdeen $22.82
Average $24.85
Port Angeles $25.22
The Union’s proposal for an additional “catch up” increase is therefore rejected.
However, the Arbitrator will award a cost of living increase of 2%. This increase
has been based upon 90% of the change in the Seattle, Tacoma, Bremerton CPI-W
between August 2001 and August 2002, with a minimum increase of 2%. Since
the applicable change in the cost of living for 2003 was less than 2%, the 2%
minimum increase is awarded.
B.
2004 WAGE INCREASE
Union Proposal: For 2004, the Local proposes a cost of living base wage
increase equal to 100% of the change in the Seattle, Tacoma, Bremerton CPI-W
between August 2002 and August 2003, with a minimum increase of 2% and
maximum increase of 6%.
City Proposal: For 2004, the City proposes a cost of living base wage
increase equal to 90% of the change in the Seattle, Tacoma, Bremerton CPI-W
between August 2002 and August 2003, with a minimum increase of 2% and
maximum increase of 4%.
As is evident from the foregoing proposals, both parties have proposed a
cost of living increase to be effective January 1, 2004. No matter which CPI
measurement is adopted, both sides are utilizing a 2% minimum increase which
they agree has become applicable for 2004 since the applicable change in the
August 2003 Seattle-Tacoma-Bremerton CPI-W was only 1.8%. Union Ex. F-3.
An increase to the 2003 base wage of 2% is therefore awarded for 2004.
C.
2005 WAGE INCREASE
Union Proposal: For 2005, the Local proposes a cost of living base wage
increase equal to 100% of the change in the Seattle, Tacoma, Bremerton CPI-W
between August 2003 and August 2004, with a minimum increase of 2% and
maximum increase of 6%.
City Proposal: For 2005, the City proposes a cost of living base wage
increase equal to 90% of the change in the Seattle, Tacoma, Bremerton CPI-W
between August 2003 and August 2004, with a minimum increase of 2% and
maximum increase of 4%.
The differences in the parties’ proposed COLA clause text becomes the most
relevant for 2005 base wage increases effective on January 1, 2005. As discussed
previously, the dispute over whether to use 100% of the CPI-W change or 90% of
the index change is being resolved in favor of 90%. The parties agree that there
should be a minimum increase of 2940, but differ as to the maximum cap. Local
656 seeks a cap of 6%; the City proposes a 4% maximum. The City’s proposed
cap of 4% is rejected because 6 O h has been the cap consistently used by the
parties in their prior collective bargaining agreements. The record provides no
persuasive reason to deviate from that customary practice.
D.
MEDICAL PREMIUMS
The City currently provides members of the bargaining unit with medical,
dental and vision insurance at no cost to the employees. The medical and vision
insurance is provided through the Association of Washington Cities (AWC). The
City self-insures the vision plan and also some medical benefits. The AWC offers
three Regence Plans (A, B and a PPO), and two Group Health Plans. Regence Plan
A is the most expensive plan. The City’s firefighters were once covered by this
plan but back in 1997 they agreed to switch to Regence Plan B.
5 The City also
self-insures to augment the Plan B level of benefits in a number of areas and
thereby provides Plan A benefits but at lesser cost than insuring under Plan A.
City Proposal: Because of significant premium increases in recent years,
the City proposes to introduce premium co-pays by bargaining unit employees in
the second and third year of this contract. The City seeks a co-payment of 7% of
the health insurance premium in 2004 and a 12% contribution for 2005. In 2004,
depending on the number of dependents, the employee premium contribution
would range from $22.36 for a single employee to $64.05 for full family coverage.
City Ex. 3.2. The exact impact of a 12% contribution in 2005 will not be known
until 2005 premium rates are set in late 2004. Assuming a projected 20%
increase is accurate, the employee contribution would range from $45.99 for an
employee’s own medical premium to $131.77 for an employee with spouse and two
or more children. City Ex. 3.2. The City’s proposal only affects the medical
premium. Port Angeles will continue to pay the full cost of dental, and vision
insurance.
The City’s proposal promotes internal parity. The percentage co-payments
being proposed are identical to those the City has imposed for its non-represented
employees, has obtained from other bargaining units, and is seeking from Police
bargaining unit. Co-payments have become the general trend both in Washington
state and nationwide. Internal parity considerations are more important than
external comparisons to comparable employers, but even most of those
comparables require some level of employee contribution. The City’s proposal is
consistent with trends in the local labor market as well as the economy as a
whole. The switch from Plan A to Plan B in the late 1990’s is not a valid reason
to require 100% City paid insurance for the life of the CBA.
Union Proposal: No change should be made to the status quo. There is
insufficient reason to make such a dramatic change that would have an
unnecessarily onerous impact upon the Local’s members. What City seeks is
neither necessary nor warranted. Local 656 already made a significant concession
regarding medical insurance costs when it agreed to switch from Plan A to Plan
B. That change resulted in increased out-of-pocket costs for the bargaining unit
and thousands of dollars in savings for the City. The bargaining unit’s out-of-
pocket costs increased again in 2003 when the AWC modified Plan B’s prescrip-
tion drug co-payments. The bargaining unit remains vulnerable to other
unilateral changes of that sort that further increase employee costs.
Despite the premium increases, the City pays significantly less per month
for health insurance than do comparator jurisdictions. The bargaining unit’s
switch to Plan B is a primary reason for that. The system for paying medical
insurance premiums that the City is seeking to impose is significantly more
onerous than the systems in place for most of the comparators. The City still pays
100% of the medical insurance premiums for the Police bargaining unit, and given
the hazardous job duties they perform, it is more important for member’s of Local
656’s bargaining unit to have access to good, affordable health care.
Discussion and Findings: The proposed institution of bargaining unit co-
payments toward the cost of medical insurance coverage was the most contentious
issue at the bargaining table. Changes in insurance cost sharing are always
particularly hard-fought battles. No union is very willing to give up a benefit its
members have been enjoying. Perceived “take backs” are therefore vigorously
resisted, particularly when unaccompanied by any other inducement to accept a
demanded concession. With that reality of the bargaining table in mind, interest
arbitrators generally expect the party proposing a reduction in a previously gained
benefit to bear the burden of persuasion.
There is no dispute that premium costs for health insurance has been rising
rapidly in recent years. In recent years, the City has experienced double digit
premium increases. The 2002 premium for AWC Medical Plan B increased 2 1%
over 2001. The premiums increased by 15.5% in 2003, and another 28% in
2004. City Ex. 3.2. Carol Wilmes is the employee benefits program coordinator
for the Association of Washington Cities. Ms. Wilmes testified that based upon
current projections, insurance premiums for Plan B will increase, at a minimum,
by 20% each year from 2005 through 2007. In a departure from the past,
premium increases for Plan B are expected to be higher than those for Plan A. Tr.
125-126; City Ex. 3.3.
In 1996, the City could obtain full-family coverage under AWC Plan B for
$375. By 2004, that rate had grown to $915 per month per employee, an increase
of 144%. The City’s total annual premium for all the employees it covers city-wide
has grown from $769,500 in 1996 to $1,865,600 this year. City Ex. 3.2. Any
employer would be alarmed and seek ways to reduce the impact of such dramatic
increases.
The City is not alone among employers in facing staggering increases in
health care costs or in seeking employee cost sharing. Across the United States,
employers are increasingly seeking some form of cost sharing by their employees
on health insurance. A survey prepared by the Kaiser Family Foundation shows
that in 2003, the average worker contribution for employee only coverage was $42,
and full family coverage was $201. City Ex. 3.6. Arbitrator Jane Wilkinson
reviewed interest arbitration awards issued between 1997 and 200 1 within
Washington State and found there may be a trend towards premium sharing as
a way of managing skyrocketing health care costs.
King County Fire District 44,
PERC No. 15764-I-01-360 (Wilkinson, 2002). The form of cost sharing varies
widely but it is certainly occurring. See, e.g.,
City of Redmond and Redmond
Police Association, PERC No. 16791-5-02-00387 (Wilkinson, 2004) ( 10%
contribution towards dependent medical coverage);
City of Anacortes and IAFF
Local No. 1537, PERC No. 17039-I-02-0390 (Krebs, 2003) ($185 employee
contribution/ per month towards a composite premium rate).
Some employee cost sharing is occurring right in the City’s local labor
market where Clallam County employees pay between $79.67 to $81.60 per
month towards their health insurance. The Clallam County Public Utility District
has had its employees paying 10% of medical premiums for several years.
Westport Ship Yard employees pay for their spouse and dependent coverage.
Olympic Medical Center employees currently pay $151 per month towards the cost
of a spouse’s premium, and Port Angeles School District employees pay $331
towards full family coverage. City Ex. 3.4.
The City wants to apply the same cost sharing to its firefighters as other
employee groups have accepted. The City contends its cost sharing proposal will
promote internal parity. Starting back in November 2003, the City’s non-
represented employees began paying 3% towards the cost of their medical
premiums. Their contribution rate this year is 7% and 12% in 2005. The same
cost sharing has been accepted by the AFSCME bargaining unit and Teamsters’
non-sworn bargaining unit. City Ex. 3.5.
6 The IBEW has accepted a 7%
contribution rate for 2004. That labor contract expires this year and the City is
seeking a 12% premium contribution for 2005. The labor contract for Teamsters
sworn police officers unit expired at the end of 2003, and the parties are still
bargaining over the successor contract. In those negotiations, the City is seeking
the same 7% and then 12% cost sharing it seeks here from the firefighters.
One can appreciate why the City would prefer the ease of administering
uniform co-payments. When it comes to health care benefits, internal parity is an
important consideration. But so is the reality that firefighters face hazards not
normally encountered by the ordinary City employee. The City’s firefighters
understandably feel strongly that the nature of their work exposes them to injury
and infectious diseases that exceed the exposure of other types of employees. This
Panel must remain mindful that we are statutorily required to consider the
working conditions of “like personnel.” RCW 41.56.465(1)(c)(ii). The practices of
the comparable jurisdictions therefore remains a primary consideration.
When doing prior compensation studies, the parties have included the
“monthly cost for health coverage, full family rate’’ as one of the items to be
surveyed. Un. Ex. C-6. The Union presented evidence that as of last year, the
comparable jurisdictions paid the following monthly rates for full family coverage:
2003 Full family
City Medical Ins. Premium
Aberdeen $841.60
Centralia $841.60
Mt. Vernon Composite
Mukilteo Composite
Tumwater $841.60
Port Angeles $714.80
Union Ex. K-3. Two of the comparators (Mount Vernon and Mukilteo) use
composite rates for medical, dental and vision insurance premiums. That makes
it difficult to differentiate between each of those types of plans or to compare
premium costs across different categories of employees. A true “apples-to-apples”
comparison of comparable employers and employee health care costs is impossible
to make because the type of benefits offered and premium structure for benefit
plans varies significantly. However, at least three of the comparables clearly paid
premiums over 17% higher than Port Angeles did last year for medical insurance.
The Union contends one reason for that differential is the fact that Local
656 has cooperated with City in the past to reduce the impact of premium
increases, In 1997, the Local agreed to move members of the bargaining unit and
their dependents from the AWC Medical Plan A to the AWC Medical Plan B. The
change in plans caused the bargaining unit to incur increased out-of-pocket costs
and saved the City over $150,000 in premium costs since 1997. Union Ex. L.4.
After factoring in the cost of benefits that the City self-insures to a Plan A level,
the City’s savings still appear to have exceeded $100,000. Union Ex. L.5.
More recently, the Local’s members have incurred additional out-of-pocket
costs as a result of a change to Plan B’s prescription drug co-payments that was
unilaterally implemented by the AWC Benefit Trust. When the AWC looked into
the impact of that change, it found the average family contribution for prescription
drug purchases increased from $5 to $9 in the first quarter of 2003. Tr. 128
(Wilmes). While the impact of premium increases has clearly been much greater
in dollar terms for the City, the foregoing facts do indicate that members of the
bargaining unit have also been incurring greater costs even while their insurance
premiums were being fully paid by the City.
A further consideration is the extent to which the comparable jurisdictions
are now requiring some sort of premium contribution from their firefighters. The
following chart shows the premium sharing in the comparable jurisdictions (Un.
EX. K-1):
| Aberdeen |
City paid 100% thru 2003 (CBA expired 12/31/03) |
| Centralia |
Employee Paid 10% of medical/dental for depend-
ents (CBA expired 12/31/03) |
| Mount Vernon |
City paid 100% through 2003 when CBA expired |
| Mukilteo |
CBA expires end of 2004. City pays 2002 Plan A
premium rate + employee pays difference between
Plan B 2003 medical increase and Plan A increase. |
| Tumwater |
Employee pays 15% of premium for dependent
dental |
Only one of the cornparables (Mukilteo) has its firefighters paying any portion of
their own medical insurance premium.
7 Three of the comparables (Centralia,
Mukilteo and Tumwater) have some kind of premium cost sharing for dependents,
but in Tumwater that cost sharing is limited to the dental premium. Because
their labor contracts expired at the end of 2003, whether Aberdeen and Mount
Vernon will negotiate any kind of cost sharing is presently unknown.
The City’s proposed premium copayments would have the following impact
on the bargaining unit this year:
2004 7% Employee City
Monthly Premium Contribution Contribution
Ee only $319.40 $22.36 $297.04
Ee/spouse $638.80 $44.72 $594.08
Ee/spouse/1 child $787.05 $55.09 $731.96
Full family $915.05 $64.05 $851.00
City Ex. 3.2. If projected 20% premium increases do occur in 2005, the impact
of the City’s proposal on the Local’s bargaining unit would be the following:
2005 12% Employee City
Monthly Premium Contribution Contribution
Ee only $383.28 $45.99 $337.29
Ee/spouse $766.56 $91.99 $674.57
Ee/spouse/1 child $944.46 $113.34 $831.12
Full family $1098.06 $131.77 $966.29
Given what is known at the present, the practice of the comparables and other
reasons mentioned herein, I conclude that the imposition of cost sharing for the
medical insurance of firefighters themselves is not yet justified. However,
premium increases have been so large that they do provide compelling reason to
initiate an employee contribution towards the cost of dependent medical
insurance.
If the City’s proposed 7% contribution were limited to the insurance
premiums in excess of employee coverage, the impact on the bargaining unit
would be as follows:
2004 7% Employee City
Monthly Premium Contribution Contribution
Ee only $319.40 $0 $319.40
Ee/spouse $638.80 $22.36 $616.44
Ee/spouse/1 child $787.05 $32.74 $754.31
Full Family $915.05 $41.70 $873.35
The City’s proposal to have this change retroactive to January 1, 2004 is rejected.
Given the small base wage increases being awarded for 2003 and 2004, it is more
appropriate to make the change effective July 1, 2004 so bargaining unit members
can plan for the impact on their family budget.
The City would also have the bargaining unit’s cost sharing increased to
12% for 2005. Internal parity is the strongest argument for such an increase.
Internal parity is important, but “not determinative in an interest arbitration
under the Washington statute.” WSCCCE Council 2 and Spokane County. PERC
No. 14916-I-99-329 (Axon, 2000). Because of the statutory mandate mentioned
earlier, the practices of the comparable jurisdictions is an even more compelling
consideration in this case than internal parity. None of the comparable
jurisdictions was shown to have an employee contribution as heavy as 12% would
represent for Local 656’s members. The premium contribution should thus be
kept at 7% through 2005 for a number of reasons. First, that will provide enough
time to see what impact the initiation of employee cost sharing might have on
claims experience and future premium increases. Second, sometime this year or
next, three of the comparators will likely have finalized their 2004/ 2005 contracts.
The City and IAFF can then better judge whether increasing the dependent
premium contribution is reasonable in light of the practice at other comparables.
Since filing of the parties’ posthearing briefs, the IAFF Panel member has
been informed that the City of Centralia and IAFF Local 451 have finalized their
2004 CBA. The firefighters bargaining unit had been paying a percentage of the
AWC Plan A premium for dependents in 2003, but for 2004 the bargaining unit
has reportedly agreed to move to AWC Plan B with the City paying 100% of the
premium for both employee and dependents. If true, the foregoing report does not
change the Arbitrator’s conclusion that 7% cost sharing for dependent medical
premiums should be adopted at the City of Port Angeles, but it does serve to
reinforce the conclusion that the 7% dependent cost sharing should remain
unchanged for the life of the contract.
IV.
THE INTEREST ARBITRATION AWARD
After considering the applicable statutory factors described in RCW
41.56.465, and with due regard for the City’s financial situation, the Arbitrator
makes the following award:
Article IV, Section A of the parties’ 2003-2005 collective bargaining
agreement shall be amended to provide the following increases:
1. Effective January 1, 2003 all bargaining unit members shall have
their base wages increased by two percent (2%).
2. Effective January 1, 2004 all bargaining unit members shall have
their base wages increased by two percent (2%).
3. Effective January 1, 2005, all bargaining unit members shall have
their base wages increased by 90% of the Seattle, Tacoma, Bremerton
CPI-W (August 2003 to August 2004), with a minimum increase of
2% and maximum increase of 6%.
Article VI, Section A (Medical, Dental and Vision Coverage) shall be amended
to include the following provision:
Effective July 1, 2004, members of the bargaining unit shall begin paying
7% of their dependent health insurance premium cost.
Dated this ____ day of June, 2004 by
_______________________________________
Janet L. Gaunt, Neutral Chairperson
Janet L. Gaunt (206) 932-7020
Attorney at Law Fax (206) 932-7021
Arbitration / Mediation / Factfinding
June 10, 2004
Marvin L. Schurke, Executive Director
Public Employment Relations Commission
P.O. Box 40919
Olympia, WA 98504-0919
Re:
IAFF Local 656 / City of Port Angeles
Interest Arbitration (PERC Case No. 17510-03-0404)
Dear Marv,
For PERC’s records, I am enclosing a copy of my Opinion and Award for the above-
referenced case.
Sincerely,
Janet L. Gaunt
JLG/ag
Enclosure (1)
4907 S.W. Othello Street Seattle, Washington 98136-2027
Janet L. Gaunt (206) 932-7020
Attorney at Law Fax (206) 932-7021
Arbitration / Mediation / Factfinding
June 10, 2004
Alex J. Skalbania, Esq.
Emmal Skalbania & Vinnedge
4241 21st Ave. W., Suite 104
Seattle, WA 98199-1271
Bruce L. Schroeder, Esq.
Summit Law Group PLLC
315 Fifth Avenue S., Suite 1000
Seattle, WA 98104-2682
Re: IAFF Local 656 / City of Port Angeles
Interest Arbitration (PERC Case No. 17510-03-0404)
Gentlemen:
Deliberations with the Interest Arbitration Panel have been completed. I am therefore
enclosing a copy of my Opinion and Award, along with a bill for my services. Thank you for
your very competent presentations. As always, it was a pleasure working with you on this matter.
Sincerely,
Janet L. Gaunt
JLG/ag
Enclosures (2)
cc: Paul Harvey
Richard Headrick
PERC
4907 S.W. Othello Street Seattle, Washington 98136-2027
Footnotes
1At the time of the arbitration, one fire fighter position was vacant.
2Union Exhibits are referred to by letter and number as designated on the Union’s
listing of exhibits. (“Union Ex. - "). City exhibits are referred to as shown on the
City’s list of exhibits (“City Ex. - "). The transcript is referred to by page and
sometimes line number (“Tr. : ”) . Witnesses are referred to by last name. References
to exhibits or testimony are intended to be illustrative, not all-inclusive, of evidence in
the record that supports a particular statement.
32003 City Population and Property Tax Information, Municipal Research & Services
Center of Washington (City Ex. B.3)
4The City did not provide data for the non-sworn Teamsters unit.
5The primary differences between AWC Plan A and Plan B are increased deductibles
and the addition of a 20% co-pay for hospital and certain medical costs under Plan B The
Plan B deductible is twice that of Plan A ($100 individual under Plan B versus $50 for
Plan A; $300 family under Plan B versus $150 for Plan A)
6The Teamsters medical plan has a composite rate so the total
insurance premiums for that unit are divided by the number of bargaining unit members,
all of whom pay the same premiums regardless of the number of covered dependents.
7The Mukilteo cost sharing is the result of an interest arbitration award. Rather than
force firefighters into AWC Plan B, the arbitrator required the employees to pay the
difference between the two premiums. The 2004 AWC Plan B premium went up more
than the AWC Plan A premium, so there was presumably a reduction in the Mukilteo
employee premium share for those employees who chose Plan A.