THE WASHINGTON PUBLIC EMPLOYMENT RELATIONS COMMISSION
BEFORE SANDRA SMITH GANGLE, ARBITRATOR
In the Matter of the Interest Arbitration )
between )
) PERC Case No. 17918-1-03-0422
YAKIMA COUNTY, )
)
Employer, )
) OPINION AND AWARD
and )
)
YAKIMA COUNTY LAW )
ENFORCEMENT OFFICERS GUILD )
)
Bargaining Representative. )
___________________________________________)
Hearings Conducted: April 14, 15 and 16,2004
Representing the Employer: Anthony F. Menke, Attorney at Law
Menke Jackson Beyer Elofson Ehlis & Harper
807 North 39th Avenue
Seattle, WA 98902-6389
Representing the Guild: James G. Cline, Attorney at Law
Cline & Associates
999 Third Ave., Suite 3800
Seattle, WA 98104
Arbitrator: Sandra Smith Gangle
SANDRA SMITH GANGLE, P.C.
P.O. Box 904
Salem, OR 97308-0904
Date of Decision: October 15, 2004
TABLE OF CONTENTS
Section Page
I. Background ....................................................... 1
II. Relevant Statutory Provisions .................................... 5
III. Statement of the Facts .......................................... 7
IV. Relevant Criteria for Award ...................................... 9
V. Determining Comparables .......................................... 10
A. The Law .......................................................... 10
B. The Parties' Arguments ........................................... 14
C. Findings and Conclusions ......................................... 15
VI. The Issues ...................................................... 19
A. Wages .................................................... 19
1. The Guild's Arguments ............................ 19
2. The County's Arguments ........................... 22
3. Discussion and Findings of Fact .................. 24
B. Insurance ................................................ 28
1. The Guilds Arguments ............................. 28
2. The County's Arguments ........................... 29
3. Discussion and Findings of Fact .................. 30
C. Ability to Pay ........................................... 35
1. Evidence on Ability to Pay ....................... 37
2. The County's Bond Rating ......................... 37
3. History of Problems with Legislation and Tax
Levies ........................................... 38
4. Reduction in Interest and Sales Tax Revenue ........... 40
5. Program Reductions .................................... 41
6. Poverty Level in the County ........................... 41
7. The County Budget ..................................... 43
8. Internal Equity ....................................... 46
9. Recruitment and Retention ............................. 49
10. Road Funds .......................................... 50
11. Conclusions .......................................... 51
VII. AWARD ......................................................... 52
I. BACKGROUND
This matter comes before the arbitrator pursuant to the Washington Public Employees’
Collective Bargaining Act, RCW Chapter 41.56. The public policy of the State of Washington
prohibits a bargaining unit of uniformed public safety personnel from engaging in a strike to
settle a labor dispute with a public employer. RCW 41.56.430. When the process of collective
bargaining between the parties reaches impasse, the law provides that the disputed issues, as
certified by the Executive Director of the Washington Public Employment Relations
Commission (“PERC”), will be resolved through interest arbitration. RCW 41.56.450.
The Yakima County Law Enforcement Officers Guild (“the Guild”) is the exclusive
bargaining representative of the Deputy Sheriffs employed by Yakima County, Washington (“the
County” or “the Employer”). The parties reached impasse during bargaining for a successor
contract to their 2000-2002 collective bargaining agreement and were unable to resolve the
impasse through mediation. On October 15, 2003, five unresolved issues were certified for
interest arbitration by Order of Marvin L. Schurke, Executive Director of Washington PERC.
The parties mutually selected Sandra Smith Gangle, J.D., of Salem, Oregon, through
PERC appointment procedures and pursuant to RCW 41.56.450 and WAC 391-55-210, as the
impartial Panel Chairperson of an arbitration panel that would conduct a hearing and render a
decision in the matter. The Employer appointed Attorney Rocky Jackson to serve as its partisan
arbitrator and the Guild appointed Attorney Christopher Casillas as its partisan arbitrator.
A hearing was conducted on April 14,15 and 16,2004, in a conference room of the
Yakima County Court House in Yakima, Washington. The parties were thoroughly and
competently represented by their respective attorneys throughout the hearing. The County was
represented by Anthony Menke, Attorney at Law, of the Yakima law firm of Menke Jackson
Beyer Elofson Ehlis & Harper. The Guild was represented by James M. Cline, Attorney at Law,
of the Seattle law firm of Cline & Associates.
The parties were each afforded a full and fair opportunity to present testimony and
documentary evidence in support of their respective positions. A voluminous record was
produced, consisting of four volumes of Guild documentary exhibits (Guild Ex. 1 through 157)
and three volumes of County documents, which were divided in separate sections according to
issue (Vol. 1: Section 1, Inability to Pay, Tabs 1-3 1; Section 2, Comparables, Tabs 1-15; Section
3, Internal Equity, Tabs 1-17; Vol. 2: Section 4, Wages, Tabs 1-1 1; Sec. 5, Insurance, Tabs 1-5;
Section 6 (re: certified issues withdrawn; see footnote #1, infra.); Sec. 7, Other Factors, Tabs 1-
10; Sec. 8, Pleadings, Tabs 1-47; Vol. 3: Collective Bargaining Agreements.
All witnesses who appeared at the hearing, including the parties’ attorneys (each of
whom offered some evidence on behalf of their respective clients), were sworn and were subject
to cross-examination by the opposing party. The Association’s witnesses were James Cline,
Mike Russell, Dave Hilton, George Town, Guillermo Rodriguez, Lloyd George and Eric Wolfe.
The County’s witnesses were Anthony Menke, Craig Warner, Sheriff Kenneth Irwin and Linda
Dixon. A court reporter, Deanna Shoemaker, was present and made a verbatim record of the
testimony of all the witnesses. She subsequently prepared a typed transcript in three volumes,
which she mailed to the parties and the arbitrator following the hearing. The transcript and the
exhibits offered by both of the parties constitute the official record of the hearing.
During the arbitration hearing, the parties advised the arbitration panel that three issues,
which were previously certified by PERC Executive Director Schurke, were being removed from
the panel's jurisdiction by stipulation of the parties.(fn:1) The only issues that remain before the
panel for resolution, therefore, are Wages and Insurance. The panel has jurisdiction to determine
the statutory factors, including comparability and other factors traditionally considered by
interest arbitrators, such as internal equity and ability-to-pay, as related to those two issues.
__________
fn:1 Article 18, Discipline; Article 19, Disciplinary Procedures; and Article 20, Grievance Procedure.
At the beginning of the hearing, the County made a Motion in Limine regarding a number
of exhibits which the Guild had provided to the County a few days before the hearing began, yet
was intending to offer in evidence at the hearing. The County contended that the recently-
produced evidence was untimely, and, if it were admitted to the record, there would be unfair
prejudice to the County. After hearing argument by both parties, the arbitration panel declined to
grant the Motion in Limine, ordering instead that the County have a reasonable opportunity to
submit supplemental exhibits to rebut the Guild's recently-provided documents following the
completion of the hearing, but no later than May 7,2004. Pursuant to the Order, the County
presented a number of supplemental declarations and exhibits to the arbitrators on May 7,2004.
Both parties submitted written Briefs of final argument to the arbitration panel on July
28, 2004. Each of the parties raised objections to the opposing party's Brief. The neutral
arbitrator conducted a telephone conference with the advocates regarding the objections and
resolved the matter by allowing both parties to submit Reply Briefs by August 18, 2004.
The arbitrators met for a preliminary caucus in Olympia, Washington on September 2,
2004. The impartial arbitrator informed the partisan arbitrators of her preliminary analysis at
that time and invited them to respond with comments or objections. She also urged the partisan
arbitrators to suggest to the respective parties that they attempt to negotiate a settlement during
the following two-week period. The parties were unable to reach a settlement.
Telephone conferences were subsequently conducted by and between the neutral
chairperson and the partisan arbitrators on September 23 and October 15, 2004. The chairperson
informed the partisan arbitrators of the findings and conclusions that she intended to incorporate
in this Award.(fn:2)
_____________
fn:2 RCW 45.56.450 requires the neutral chairperson to draft the interest arbitration award,
including findings of fact and determinations of the issues in dispute.
The neutral arbitrator has considered all of the testimony and evidence that the parties
offered at the hearing. She has weighed all the evidence, in the context of the legislative purpose
set forth in RCW 41.56.430 and the relevant factors established in RCW 41.56.465. She has
carefully considered the argument of both advocates and the helpful comments of the partisan
arbitrators in reaching her findings and conclusions.
II. RELEVANT STATUTORY PROVISIONS
RCW 41.56.030. Definitions. As used in this chapter:
(1) “Public Employer” means any officer, board, commission, council, or other person or body
acting on behalf of any public body governed by this chapter, or any subdivision of such public
body * * * * *
(2) “Public employee” means any employee of a public employer except any person (a) elected
by popular vote, or (b) appointed to office pursuant to statute, ordinance or resolution * * * or (c)
whose duties as deputy, administrative assistant or secretary necessarily imply a confidential
relationship * * * or (d) who is a court commissioner or a court magistrate * * * or (e) who is a
personal assistant to a * * *judge * * * or (f) excluded from a bargaining unit under RCW
41.56.201(2)(a). * * * *
(3) “Bargaining representative” means any lawful organization which has as one of its primary
purposes the representation of employees in their employment relations with employers.
(4)”Collective bargaining” means the performance of the mutual obligations of the public
employer and the exclusive bargaining representative to meet at reasonable times, to confer and
negotiate in good faith, and to execute a written agreement with respect to grievance procedures
and collective negotiations on personnel matters, including wages, hours and working conditions,
which may be peculiar to an appropriate bargaining unit of such public employer, except that by
such obligation neither party shall be compelled to agree to a proposal or be required to make a
concession unless otherwise provided in this chapter.
*****
(7) “Uniformed personnel” means: (a) Law enforcement officers as defined in RCW 41.26.030
employed by the governing body of * * * any county with a population of ten thousand or more *
****.
RCW 41.56.430. Uniformed personnel-Legislative declaration.
The intent and purpose of chapter 13 1, Laws of 1973 is to recognize that there exists a public
policy of 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.
RCW 41.56.450. Uniformed personnel-Interest arbitration panel-Powers and
duties-Hearings-Findings and determination.
* * * * * The issues for determination by the arbitration panel shall be limited to the issues
certified by the executive director. * * * * * Each party shall pay the fees and expenses of its
arbitrator, and the fees and expenses of the neutral chairman shall be shared equally between the
parties. * * * * * The neutral chairman shall consult with the other members of the arbitration
panel, and, within thirty days following conclusion of the hearing, the neutral chairman shall
make findings of fact and a written determination of the issues in dispute, based on the evidence
presented. A copy thereof shall be served on the Commission, on each of the other members of
the arbitration panel, and on each of the parties to the dispute. That determination shall be final
and binding on both parties, subject to review by the superior court upon the application of either
party solely upon the question of whether the decision of the panel was arbitrary or capricious.
RCW 41.56.465. Uniformed 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 standard 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)(i) For employees listed in RCW 41.56.030(7)(a) through (d), 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 like employers of similar size on the west
coast of the United States; * * * * *
(d) The average consumer prices for goods 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 and traditionally taken into consideration in the determination of wages, hours, and
conditions of employment. * * * *
(2) Subsection (1) 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. [1005 c 273 Section 2; 1993 c 398 Section 3.1
III. STATEMENT OF THE FACTS
The following facts are either stipulated or undisputed by the parties:
Yakima County is located in the south-central area of the State of Washington, on the
eastern side of the Cascade mountain range. Covering 4,296 square miles, it is the second largest
of Washington's 39 counties in total land area. One-third of the County land is owned by the
Yakima Nation, however, and roughly another third is owned by the United States Forest
Service and the Department of Defense. One large city (Yakima) and a number of small cities
are located within the County's boundaries and those cover 55 square miles. The rest of the
county consists of taxable land (about 1,117 square miles) that is largely devoted to agricultural
and rural residential uses.
For purposes of RCW 41.56.465, it is clear that Yakima County has constitutional and
statutory authority to employ the deputy sheriffs and sergeants who provide law enforcement
The Sheriffs Department provides such services mostly in the unincorporated areas
of the County, as the Yakama Nation and each of the cities provide their own police forces.
Mutual aid agreements are in place between the County and the various police forces, however.
Therefore, the Sheriff and deputies sometimes provide assistance on tribal lands and in cities.
This is the first time that the County and Guild have gone to interest arbitration. They
have successfully negotiated their collective bargaining agreements in the past. The jurisdictions
that the parties have used historically as comparables are Spokane, Benton, Clark, Cowlitz,
Kitsap, Thurston and Whatcom Counties.
There are ten separate collective bargaining units of represented County employees.
Those units, which include the Law Enforcement Officers’ Guild unit, are as follows: WSCCCE
Council 2 Local 87 and 87P, AFSCME, AFL-CIO; WSCCCE Council 2 Local 2658 - Yakima
County Appraisers AFSCME; General Teamsters Local 760 - Animal Control employees;
Yakima County Public Works/ Clerical, Technical and Professional Employees; Teamsters Local
524 Corrections Office - Clerical, Pre-Trial and Supervisors Unit; General Teamsters Local 524
Security Officers and Sergeants; Yakima County Public Works Department - Maintenance and
Operations; General Teamsters Local 524 - Sheriffs Office Clerical and Dispatch employees;
Sheriffs Office management Group; General Teamsters Local 524 Corrections Managers; and
Teamsters Local 524 Corrections Officers. There is also a non-bargaining-unit group and some
employees in an unclassified pay plan.
The County has raised a strong inability-to-pay argument during negotiations with all of
its bargaining units for 2003 and 2004. At the time of the hearing in this matter, all of the units
except the Deputy Sheriffs and Corrections Officers and Managers had reached agreement on the
terms of their labor contracts for both years. All units who have settled, except the Sheriffs
Department Management Group, have accepted an offer by the County that is essentially the
same as the offer that the County is making to the Deputy Sheriffs in this proceeding, that is, a
wage increase of 2.25% on the 2002 salary schedule, to be effective as of July 1,2003, and
another increase of 2.25%, also computed on the 2002 schedule, to be effective on January 1,
2004, as well as a freeze of the employees' regular step increases for 2003 and 2004. Those units
also accepted to continue throughout 2003 and 2004 the cap of $420/month per employee that
the Employer paid in 2002 toward health insurance coverage.
Based on principles of internal equity, as well as inability-to-pay, the County proposes to
grant a 2.25% raise on the Guild's 2002 wage, effective July 1, 2003 and another 2.25% raise,
computed on the 2002 wage, effective January 1,2004. The County also proposes to freeze the
Guild's health insurance cap of $470/month per employee in both 2003 and 2004.
The Guild's demand on wages is that the County increase deputies' wages by 4.5% on
January 1,2003 and then grant a second increase of 4.5% on January 1, 2004. The Guild also
seeks full-family insurance coverage. The Guild contends the increases it seeks in both wages
and insurance benefits are justified by comparability with other similarly-situated bargaining
units of deputy sheriffs. The Guild does not accept the County's inability-to-pay argument.
IV. RELEVANT CRITERIA FOR AWARD
The Washington Public Employees Collective Bargaining Act prescribes the criteria that
an arbitration panel should use in making an award in a public sector interest arbitration case.
See RCW 41.56.465, cited herein at p.6-7. The Act does not give guidance as to the relative
weight that should be given to the factors. Therefore, the neutral arbitrator has discretion to
decide how to weigh the various factors and the evidence supporting the factors. This is not an
exact science. However, it is incumbent on the arbitrator to use principled reasoning in drawing
conclusions.
There has been considerable case authority in Washington, by which various
distinguished interest arbitrators have analyzed and applied the statutory criteria. Each of the
parties has referenced some earlier awards in their briefs. To the extent that the reasoning of
those arbitrators is relevant to the facts of this matter, the arbitrator will refer to those cases.
V. DETERMINING COMPARABLES
A. The Law: The threshhold factor the arbitrator must determine is comparability. The
statute requires, in subsection (c)( l), that the arbitrator draw “a 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 like employers of similar size on the west
coast of the United States”. (Emphasis added). The significant inquiry, therefore, is:
What are the “like personnel of like employers of similar size” that should be compared
to the Yakima County Law Enforcement Guild?
It is generally agreed that counties are ”like employers ” to other counties, especially where
units of deputy sheriffs are concerned. City police departments are not comparable to county
sheriffs’ departments for a number of reasons. Their funding sources are different and the kinds
of work the officers perform in the two types of agencies are different. See, e.g., Whatcom
County (Gangle, 2001). Neither party has disputed that fact in this proceeding. The Guild has
asked the arbitrator to consider certain facts about the City of Yakima, without attempting to
call the City a "like employer".
Also, arbitrators generally agree that heavy weight should be given to any list of comparable
jurisdictions that the parties have agreed upon in previous contract negotiations. See, City of
Wenatchee (Savage, 2002); see also Walla Walla (Levak, 1996). Arbitrator Levak clarified that
past comparators should not become a "tail that wags the dog", however; he said a list that has
been used in the past can be changed if conditions warrant a change. A party wishing to
discontinue an historical comparator bears the burden of proving the loss of that jurisdiction's
comparability, according to Arbitrator Levak. Id.
Arbitrators generally agree that geographical proximity of proposed comparables to the
subject employer is an important factor in the determination of "like employers". Employers
who are competing in the same local labor market for similarly-qualified employees seek to
maintain wage rates and other terms and conditions of employment that are competitive, that is,
that do not vary significantly. Otherwise, they may have problems with recruitment and
retention of qualified employees. See, City of Pullman (Gaunt, 1997).
Some arbitrators have found that Eastern Washington and Western Washington constitute
separate and distinct labor markets, because the two regions differ markedly in their economic
and demographic factors. Western Washington jurisdictions are primarily urban and industrial
and enjoy high tax revenues, while Eastern Washington communities are generally rural and
agricultural and take in less tax revenue. Some arbitrators have gone so far as to say that a
"Cascade Curtain" segregates Washington into the Eastern and Western geographic areas, and
that jurisdictions from the two areas should only be considered as potential comparables when
there are insufficient numbers of comparable communities on the same side of the Cascade
mountain range as the location of the subject community. See, e.g., City of Aberdeen (Axon,
2000); Kitsap County (Buchanan, 1998). Other arbitrators consider cross-Cascade comparators
when they conclude it is appropriate to do so, based on demographic or economic factors. See,
e.g., City of Camas (Wilkinson, 2003).
As for the requirement that comparables be of "similar size", one arbitrator has stated that a
comparison of the population figures alone of various jurisdictions would be sufficient for
making that determination. See, Snohomish County (Krebs, 1987). That case has not generally
been followed, although Arbitrator Axon noted, in City of Everett (Axon, 1997), that he believed
the ''greatest consideration should be given to size of the population". Most arbitrators have
looked at population and assessed valuation as two essential factors that should be compared,
along with geographic proximity. See, e.g., Kaplan, "Interest Arbitration and Fact finding",
Univ. of Oregon LERC Monograph No. 13 (1994); see also, City of Kennewick (Krebs, 1997).
Many arbitrators use a "multi-factor" analysis, however, by which they draw demographic and
economic comparisons beyond the three essential factors. For example, Arbitrator Axon relied
on the factors of population-per-square-mile and income-per-capita, in addition to total
population and assessed valuation, in City of Everett (Axon, 1999). Arbitrator Levak considered
per-capita income, median family income, and assessed valuation per-capita in City of Pasco
(Levak, 1990). Arbitrator Buchanan considered geographical size, nature of the economy, crime
rate and total tax income in Kitsap County (Buchanan, 1998). Arbitrator Greer, who stated he
believes labor market considerations are "paramount", considered population-per-square-mile
and the character of jurisdictions as urban or rural. Walla Walla Deputies (Greer, 2000).
Arbitrator Wilkinson has opined that the final list of comparable jurisdictions should be
"balanced in terms of population, wealth, degree of isolation and the like." City of Pasco
(Wilkinson, 1994); King County Fire District (Wilkinson, 2000); see also, Mason County
(Axon, 2001). The goal of achieving balance seems to have acquired more acceptability among
arbitrators in recent years, particularly where the jurisdictions that the parties have proposed are
found to be comparable in some respects, but different in other respects. See, e.g., City of
Camas (Wilkinson, 2003); City of Kennewick (LaCugna, 1985). Arbitrator Axon, in City of
Everett (Axon, 1997), stated that what was important was to leave the parties with a list of
jurisdictions that would "serve as a solid base for future negotiations". In City of Kennewick
(Krebs, 1997), the arbitrator determined that necessary balance would be created by selecting
equal numbers of cities from Eastern Washington and Western Washington as comparables.
Arbitrator Wilkinson stated, in City of Camas (Wilkinson, 2003), that a band of 50% to
150% of the target jurisdiction is the appropriate standard that an arbitrator should apply when
comparing the comparability of various factors, especially population and assessed valuation.
She found that the 50%-150% band had been used in five out of seventeen Washington interest
arbitrations over a six-year period and a band that was very close to 50%-150% (60%-150% or
75%-160%) in six other cases. She acknowledged that a band of 50%-200% had been used in
five cases, however, where the arbitrators had determined there were not enough comparables
available within the 50%- 150% band to make a just award. In her award in the Camas case,
Wilkinson included two jurisdictions as comparables to Camas, whose populations exceeded
150% of Camas's, including Pasco, whose population was 250% of the subject city.
Arbitrator McCaffree preferred the 50%-200% band in choosing comparables. He explained:
"This range of measurement [50% to 200%] is statistically symmetrical and provides equal
weight to units smaller or larger than the unit at issue. . . . This range holds 'size' within
reasonable bounds where similarities of actions and responsibilities will be relatively
similar and comparable among various employers." Thurston County (McCaffree, 1999).
Some arbitrators have determined that a ''relative ranking" among comparables is
appropriate, when the statistics show that one or more of the jurisdictions merits more weight
than the others. See, Walla Walla Deputies (Greer, 2000); Cowlitz County (Lehleitner, 1996).
B. The Parties' Arguments: The parties have mutually relied on seven Western
Washington counties in their past negotiations -- Benton and Spokane in Eastern Washington
and Clark, Cowlitz, Kitsap, Thurston and Whatcom in Western Washington. The Guild asserts
there is no reason to change the prior list at this time, except to eliminate Cowlitz County,
because that jurisdiction's population has dropped to 94,400, which is only 42% of Yakima
County's population of 226,000. All of the other historic comparables fall within the band of
50%-200% of Yakima County's in population and should be retained, according to the Guild.
The County, however, contends that the parties' prior list of comparables is no longer
appropriate and should be changed. The County asserts that Yakima County used to be a "big
dog", able to compete fairly with "big dog" counties of Western Washington. Now it is more
like its neighbors in the Eastern Washington labor market, which may be smaller in terms of
population, but are more similar in terms of economic and demographic factors. The County
proposes to reject Clark, Kitsap, Thurston and Whatcom Counties as comparables and use Grant,
Franklin, Chelan and Walla Walla Counties instead. The County disagrees with the Guild that
Cowlitz County should be eliminated, because that county has a rural agricultural economy much
like Yakima County's, even though it is located in Western Washington. The County agrees to
retain Benton and Spokane Counties as comparables, but proposes to discount Spokane
County's wages and benefits by a factor of nine percent, because Spokane County's population is
now nearly twice the population of Yakima County, its assessed valuation is more than twice that
of Yakima County and its workforce of deputy sheriffs is more than double that of Yakima
County. The County alleges that the difference between the salaries paid to elected officials in
the two counties (18%) should be split in order to find an appropriate measure of difference (9%)
between the wage levels of the two counties.
C. Findings and Conclusions: This arbitrator has followed the rationale of Arbitrator
McCaffree in previous interest arbitrations in Washington, relying on a 50%-200% band for
determining comparability. See, Whatcom County (Gangle, 2000); City of Poulsbo (Gangle,
2002). For consistency, she will use that same band here. She agrees, however, that it is
reasonable to consider a '!relative ranking", as proposed by arbitrators Greer and Lehleitner,
where there are marked differences between the comparables in some respects.
Since the parties have both designated Benton and Spokane counties as comparables to
Yakima County, the arbitrator considers their mutual choice to be a stipulation. She is obliged
under the interest arbitration statute to honor such stipulations. In looking at the population and
assessed valuations of the three counties, the arbitrator notes that Benton County's population is
65% of Yakima's and its assessed valuation is 77% of Yakima's, both of which percentages are
close to the lower end of the band of comparability. The population of Spokane County, on the
other hand, is 188% of Yakima's and its assessed valuation is 170% of Yakima's, both of which
percentages approach the upper limits of comparability. Spokane County's bargaining unit has
more than three times as many deputies as Yakima County's unit and the total amount of taxes
collected in Spokane County in 2002 was 275% of Yakima's tax collection. In spite of these
findings, the arbitrator does not agree with the County that Spokane County's wages and benefits
should be discounted by nine percent. There does not appear to be any arbitral authority for such
discounting. Instead, the arbitrator will rank Spokane County in accordance with its high
numbers and will seek balance on the list of comparables, by ensuring that the number of less
highly populated, less affluent, counties balances the higher populated, more affluent ones.
The County's other five historic comparables are all located in Western Washington. Their
respective populations and assessed valuations, as compared to Yakima County's, are as follows:
County Population Assessed Valuation
Clark 161% of YC 246% of YC
Kitsap 104% " 156% "
Thurston 94% " 135% "
Whatcom 76% " 123% "
Cowlitz 42% " 64% "
This arbitrator believes that it is important to choose comparables within the local labor
market, to the extent that is possible. However, she does not subscribe to the "Cascade Curtain"
theory, in a case like this one especially, where the target jurisdiction is located near the
geographical center of the state and the parties have relied on western comparables in the past,
even though the County is on the east side of the Cascades, and the evidence shows that job
applicants from both Eastern and Western Washington seek employment as sheriffs deputies in
the County. It would be unreasonably draconian to exclude all Western Washington jurisdictions
under such facts. Nevertheless, a list that includes five Western and only two Eastern
Washington comparables seems curiously unbalanced, since Yakima County is on the East side.
Clark County, which is one of the five prior Western Washington comparables, no longer
meets the statutory requirement of "similar size", and should be stricken from the list. Clark
County's assessed valuation is about 246% that of Yakima County. Although Clark County's
population is within the acceptable band (160%) of Yakima's, it is a densely-populated county
(592 persons per square mile) with a bustling commercial-based economy, while Yakima County
is sparsely populated (52.6 persons per square mile) and has an agricultural economy. Clark
County's total tax revenue in 2002 was 250% of Yakima County's total revenue.
The remaining western historic comparables, Cowlitz, Kitsap, Thurston and Whatcom
Counties, all fall within the 50%-200% band in assessed valuation, and the populations of all
except Cowlitz County are within that band. Cowlitz County's population has dropped below
50% of Yakima County's, but it still merits inclusion to balance the other western counties, all of
whom have greater than 100% of Yakima's assessed valuation. None of the four exceeds 175%
of Yakima County's total tax revenue. For these reasons, they all merit continued use.
The arbitrator finds that the list of comparables would not be sufficiently balanced if there
were only two Eastern Washington comparables, one of which is on the high end in population
and assessed valuation, and four in Western Washington, three of which (Kitsap, Thurston and
Whatcom) have considerably higher assessed valuations than Yakima County has. It would
make more sense to have an equal number of comparables from the Eastern and Western regions,
with half of the total number on the lower end of the comparability band and the other half on the
upper end. In order to achieve that balance, the arbitrator has carefully considered the relative
populations and assessed valuations of the County's proposed cornparables on the east side.
The evidence shows that three of those, Franklin, Kittitas and Walla Walla Counties, are
too far below the lower limit of comparability to be placed on the list, even to achieve balance.
All three of those counties have less than 25% of Yakima County's population. The assessed
valuations of Franklin and Kittitas Counties are about 25% of Yakima County's as well, while
Walla Walla County has only slightly more than 25% of Yakima County's assessed valuation.
Grant and Chelan Counties, on the other hand, have populations close to one-third of
Yakima County's population. The assessed valuations of those two counties are 42% and 47% of
Yakima County's assessed valuation, respectively, and the total tax revenues of both counties are
about 50% of Yakima County's total tax revenue. Since the relevant factors of Grant and Chelan
Counties are reasonably close to 50% of Yakima's and both of them are located in close
proximity to Yakima County and are characterized by rural agricultural economies, the arbitrator
finds that there is reasonable balance and symmetry in a list that includes both of them, along
with Spokane and Benton in the east, and Cowlitz, Kitsap, Thurston and Whatcom in the west.
The parties have used seven comparables in the past, and the County argues that seven is
the appropriate number now, with more from the east side than the west. The Guild has asked
for six comparables, based on its contention that all the old Western comparables should be
retained except Cowlitz County. The arbitrator finds that it makes more sense to choose an
equal number of cornparables than an odd number, for geographical balance, since Yakima is
situated near the center of the state of Washington. The list of eight counties that has been
identified includes four that are smaller, or about equal, in population to Yakima County, while
being less well-funded than Yakima, and four counties that are larger and/or wealthier than
Yakima County. The list should be useful to the parties in their future negotiations.
VI. THE ISSUES
A. Wages: The Guild proposes increasing the 2002 wage scale by 4.5% in 2003, and an additional
4.5% in 2004.
The County proposes increasing the 2002 wage scale by 2.25%, effective July 1,2003,
and then increasing wages by an additional 2.25% on the 2002 wage scale, effective
January 1,2004. The County proposes to maintain all step increases in both years.
(1). The Guild's Arguments: The Guild contends that Yakima County deputies'
wages have fallen about 8.6% behind the average of the wages that have been paid to deputies in
the historic comparables over the past ten years. The Guild asserts that a generous increase is
needed in 2003 and 2004 in order to close the wage gap. The County's offer would merely
increase that gap, in the Guild's view. The Guild contends its offer is the minimum that is
necessary to allow the deputies to stay reasonably apace with their colleagues in the historic
comparable jurisdictions.
The Guild contends there is already a shortage of qualified applicants in the statewide
labor market for law enforcement officers. If Yakima County continues to lag behind in wages,
the County's ability to recruit and retain qualified officers will be seriously jeopardized. To
substantiate that argument, the Guild offered as a witness at the hearing Officer Rodriguez of the
Selah Police Department, who testified that he had decided against accepting a position in the
Yakima County Sheriffs Department, after he realized he would have to take a cut in take-home
pay of $500 per month and, in addition, would have to pay $200 per month in family medical
insurance costs that are now paid by his employer.
The Guild points to the recent settlement that the City of Yakima reached with its police
bargaining unit, which included a wage increase of 7.75% over two years, plus new premiums
for education and longevity, as support for its argument that the County must make an effort to
catch up with other law enforcement units in the labor market to remain competitive. There are
currently four openings for city police officers in Yakima. A sales tax measure is going before
the County voters in November, the purpose of which is to raise money to hire even more police
officers in Yakima, as well as fourteen additional deputies in the County. If the ballot measure
passes, the County will be competing with the City to recruit the best officers, says the Guild,
and it may lose out if its wage structure remains significantly lower than the City's.
The Guild denies that the County has an "inability to pay" the wage increase that the
deputies deserve. The County's contention that it is too poor to meet the Guild's offer is merely
an "unwillingness to pay", which is unacceptable. The Guild believes the County may have
exaggerated its poverty in the past. The Guild also believes that the County's present economic
health is good and its long-term economic prospects are positive. The Guild points to a
document entitled "Yakima County Labor Economy (December 2003)" and a recent Chamber of
Commerce report to support that argument, as well as a March 17,2004 newspaper article
showing that 1,100 new jobs had been added in the County between February of 2003 and
February of 2004, including more than 400 jobs at a new Wal-Mart distribution center.
The Guild asserts that the County's reliance on its high unemployment rate, high rate of
welfare, food stamps and other social program enrollments as evidence of a poor economy is
misplaced. The Guild points out that over 30% of the county population speaks a primary
language other than English and that many of the immigrants who are attracted to the County
work in agricultural businesses, which are seasonal and pay low wage rates. While the people
who work as farm laborers may be poor, that does not mean that the County itself is poor.
Even if the County can prove that its tax revenues are down from past years, the Guild
asserts that the County has not done all it can to raise new revenues. The Guild contends that
much of the County's farmland is assessed at low value, yet the agri-businesses that use the land
for production of crops are financially successful and the landowners are very wealthy. Those
taxpayers should be paying a higher amount of tax than they now pay, argues the Guild. The
County could go to the voters to seek a levy lid lift, pursuant to RCW 84.55.050, to increase its
property tax revenues. Also, the County could divert more of its Road Fund levy to the Sheriffs
Department budget than it currently does. The Roads Budget has risen 89% from 1997 to 2004,
while the Sheriffs budget has only grown 21% during the same period. The County could
initiate action to authorize Special Improvement Districts that would raise new tax revenue to
support construction of roads to serve the County's agri-businesses, while freeing up some of the
current road budget for the Sheriff's budget.
The Guild points out that the County's actual revenues have exceeded its revenue
projections for several years. At the end of each year, the left-over funds have been labeled as
"carryout" monies and those have been split between the County Commissioners and the
departments that experienced the savings. At the end of 2003, the ''carryout'' from the Sheriffs
Budget was $534,000. In addition, there was $586,000 in "Commissioners' Carryout". The
Guild believes all that money is like an undesignated savings account that should be available to
pay for the wage increase that the Guild seeks in this proceeding.
The Guild contends that the County's reliance on the fact that some of its other bargaining
units have agreed to a wage settlement that is essentially the same as the offer it is making to the
Guild for 2003 and 2004 is inappropriate. Under the public sector interest arbitration statute, the
wages and benefits of law enforcement officers are to be compared with those of law
enforcement personnel in the comparable jurisdictions, not with employees in other bargaining
units within the local jurisdiction. To the extent that internal equity considerations might be
relevant, however, the Guild points out that the County offered a significant wage increase to
Sheriffs Department Management Employees in 2004, in the form of a new longevity increase,
and, in effect, management employees got a significantly higher wage increase than the offer the
County has made to the Guild in this proceeding.
(2) The County's Arguments: The County has budgeted for the wage increases it
has offered to the Guild for 2003 and 2004 and it acknowledges its resources are sufficient to pay
for that offer. The County believes its offer is reasonable and in keeping with the wages that are
paid to Sheriffs' deputies in the comparable jurisdictions within the local labor market. Also, the
County wishes to maintain internal equity with its other bargaining units, who have accepted
essentially the same wage offer that the County has made to the Guild, based on a recognition by
those units that the County's financial condition does not allow any higher wage increases.
The County argues strongly that it is unable to pay the wage offer that the Guild is
seeking. Yakima County is the second largest county in Washington in square miles, but is near
the bottom in terms of wealth. The County has been enduring severe economic hardships, not
only from the depressed agrarian economy, but from events beyond the Employer's control, such
as changes in the tax structure due to legislation, flat annual sales tax revenues, frequent
annexations of valuable County property by the City of Yakima and some unanticipated
decreases in the County's investment income due to reduced interest rates. The County is
classified as a ''distressed area'' under RCW 43.165.010(3), because its density is below 100
persons per square mile and its unemployment rate has been at least 20% above the statewide
average for three or more years. Its population is largely involved in seasonal farm work. About
two-thirds of school students in the County qualify for free lunches at school, whereas the
statewide average is about one-third. Approximately 17 1/2% of County residents received food
stamps in 2002, as compared about 11 1/2% in other eastern Washington counties proposed by
the County as comparables and only 8.8% in Washington state as a whole. Almost 20% of the
population lives below the poverty level, nearly twice the statewide percentage of 10.6 percent.
In an effort to deal with its fiscal hardships, the County Board of Commissioners has
been implementing significant General Fund budget reductions each year since 2000. The Board
has cut $6.5 million worth of county programs since 2000. It has eliminated positions, laid off
employees and implemented a hiring freeze. It has frozen elected officials' salaries, including the
salaries of the Commissioners themselves, in 2002,2003 and 2004. In spite of these efforts, the
County's reserves at the end of 2003 were at $1,587,579, or 2.91% of the total budget, which is
perilously low, according to Government Finance Officers Association (GFOA) guidelines. As a
result, the County's bond rating is at risk of dropping into the "B" range, and if that happens,
there will be dire financial consequences for the County, including a requirement that it go on
registered, interest-bearing warrants for payment of its bills. Some of its bonds may have to be
sold at a discount, as well, because of stipulations that require the County to maintain "A" rates.
The County asserts that the Road Fund budget is not discretionary, as the Guild suggests,
but is governed by a statutory framework with restrictive criteria. Only a small portion of road
funds can be used by the Sheriff for traffic control purposes. The County has been diverting the
maximum that it believes it can legitimately divert for traffic control, the equivalent of the cost
of two full-time sheriffs deputies. Serious penalties would result if more money were diverted
from the fund than Washington law authorizes.
The County has tried various ways of raising revenue without success. It tried to pass a
criminal justice sales tax levy in 1995 and another in 1997. Both of those were soundly defeated
by the voters. If it were not for the County's entrepreneurial venture of selling jail beds to
outside counties who lack sufficient jail space to house their own inmates, the County would not
have brought in enough revenue to meet its budget requirements in recent years.
For those reasons, the County asks the arbitrator to award the wage offer it has made in
this proceeding.
(3). Discussion and Findings of Fact: Each of the parties relies on its own
list of proposed comparables in asserting that its wage offer is in keeping with the average wage
among "the comparables". Therefore, the arbitrator will begin by looking at the wages in the
new list of comparables that has been established in this report, to determine whether the Guild's
proposal or the County's proposal is more in line with the wages paid in the current comparables.
Contracts are in place through 2004 in four of the comparable counties: Benton, Chelan,
Cowlitz and Thurston Counties. Contracts through 2003 are in place in Grant and Spokane
Counties. Kitsap, Spokane and Whatcom Counties are all involved in interest arbitration at the
present time. Grant County has negotiated a proposed contract for 2004, but that contract
remains unsigned as of this writing. Using wage information in the record for the eight
comparable counties, based on their current contracts, the arbitrator has determined that the
wages that were paid in those jurisdictions in 2002,2003 and 2004, to ten-year deputies and
sergeants, with a longevity premium included, if available, were as follows:
Comparable 2002 deputy 2003 deputy 2004 deputy 2002 sgt. 2003 sgt. 2004 sgt.
Benton(E)(fn:3) 4178 4424 4532 5030 5203 5331
Chelan(E) 3935 4014 4094 4781 4876 4974
Cowlitz 4187 4208 4345 4730 4754 4919
Grant(E) 3797 3962 (NS)(fn:4) 4235 4617 (NS)
Kitsap 4530 (NS) (NS) 5239 (NS) (NS)
Thurston 4482 4616 4755 4997 5147 5302
Spokane(E) 4353 4515 (NS) 5582 5637 (NS)
Whatcom 4434 (NS) (NS) 5529 (NS) (NS)
Average 4237 4290 4432 5015 5039 5132
(All Comps)
Actual (Guild offer) (Guild offer) Actual (Guild offer) (Guild offer)
Yakima 4160 (4347)(fn:5) (4543)(fn:6) 4957 (5180) (5413)
Actual (County offer) (County offer) Actual (County Offer) (County Offer)
4160 (4206)(fn:7) (4347)(fn:8) 4957 (5012) (5180)
(All Comps) Actual C(fn:9) G C G Actual C G C G
Difference -77/mo (-84) (+57) (-85)(+111) -58/mo (-27)(+141) (+48)(+281)
Average 4065 4229 4313 4907 5083 5153
(4 Eastern Comps)
Labor Mkt Actual C G C G Actual C G C G
Difference +95 (+23)(+118) (+34) (+230) +50 (-71)(+97) (+27)(+215)
___________
fn:3 "(E)" notes that the County is located in the Eastern Washington labor market.
fn:4 "(NS)" notes that the contract is not settled.
fn:5 4.5% increase estimated, per Guild's offer for 2003.
fn:6 4.5% increase estimated, over Guild's 2003 offer, per Guild's offer for 2004.
fn:7 1.125% net increase estimated, per County's offer (2.25%, as of 7- 1-03 only)
fn:8 4.5% increase estimated, over 2002 wage, per County's offer for 2004.
fn:9 "C" and "G" indicate County and Guild respectively.
The chart shows that the average wage in 2002 for a ten-year deputy in all eight of the
comparables was $4,237. In the four Eastern Washington comparables, the average was
$4,065.(fn:10) Yakima County's wage for a ten-year deputy that year was $4,160/mo, or $77/mo
below the "All-Comp" average, and $95/mo above the "4-Eastern-Washington-Comp" average.
A Yakima sergeant was paid $4,957mo in 2002, which was $58/mo below the "All-Comp"
average of $50 15 and $50/mo above the "4-Eastern-Washington-Comp" average of $4,907. The
arbitrator concludes from these facts that Yakima deputies were slightly behind their colleagues
in the eight comparable jurisdictions with respect to wages paid in 2002, but slightly above the
average that was paid to deputies and sergeants in the local labor market jurisdictions.
_____________
fn:10 The arbitrator offers the "4 eastern comps" average figures for illustration purposes.
The average figures for all eight comparables have been accorded their full weight by the arbitrator
in reaching the award.
If the Guild's offer were awarded, a ten-year deputy in Yakima would earn $4,347/mo in
2003 and $4,543/mo in 2004. Those figures would be $57/mo above the "All-Comp" average in
2003 and $111/mo above that average in 2004. The figures would be above the "4-Eastern-
Washington" average by an even greater sum each year, by $118/mo in 2003 and $230/mo in
2004. A sergeant would earn $5,180/mo in 2003, or $141/mo above the "All-Comp" average
and $97/mo above the "4-Eastern-Washington-Comp" average. That sergeant would earn
$5,413/mo in 2004, or $281/mo above the "All-Comp" average and $215/mo. above the "4-
Eastern-Washington-Comp" average. In other words, under the Guild's offer, County deputies
and sergeants would exceed the averages in the comparables by a substantial sum each year.
If the County's offer were awarded, a ten-year deputy in Yakima would earn $4,206/mo
in 2003 and $4,347/mo in 2004. Those figures would be below the "All-Comp" average in both
years, by $84/mo in 2003 and by $85/mo in 2004. The deputy would lose a few more dollars
each month, relative to the comparability he had with the All-Comp average in 2002. The
deputy's monthly earnings would also be $23/mo below the "4-Eastern-Washington-Comp"
average, in 2003, but $34/mo above that average in 2004. A sergeant would earn $5,012/mo in
2003, or $27/mo below the "All-Comp" average and $7 l/mo below the "4-Eastern-Washington-
Comp" average. That sergeant would earn $5,180/mo in 2004, or $48/mo above the "All-Comp"
average and $27/mo. above the "4-Eastern-Washington-Comp" average. In other words, under
the County's offer, deputies and sergeants alike would lose some ground as compared to their
rankings among the eight comparables in 2003, but they would regain their position relative to
those comparables in 2004.
The County does not allege it is totally unable to pay any wage increase whatsoever to
the deputy sheriffs and sergeants in either 2003 or 2004. It does, however, raise a strong
argument that it is unable to pay the wage increase that is sought by the Guild. According to
County evidence, the Guild's increase would cost $426,795. The County asserts it is able to pay
the wage increase it is offering and the evidence shows it has already built the cost of that offer
into the County's budgets for 2003 and 2004.
The arbitrator concludes, based on the evidence, that the County's offer is reasonable.
The arbitrator has drawn that conclusion without having to reach the ability-to-pay issue. The
Guild's offer would put the deputies significantly above their colleagues in the comparable
jurisdictions and would be excessive. Under the County's offer, however, the deputies will earn
a small amount per month less than the average of the comparables in 2003, but their wages will
increase to an amount reasonably close to the average wages paid in the comparables in 2004.
The arbitrator will therefore analyze the evidence on ability to pay in the next section of this
report.
B. Insurance: Guild proposes that County pay 100% of full-family medical, dental, vision and
life insurance coverage.
County seeks to retain the status quo, paying $470 per month maximum toward each
bargaining unit member's insurance coverage.
(1) The Guild's Arguments: The Guild asserts that virtually all of its proposed comparable
jurisdictions provide full-family medical insurance coverage to their law enforcement officers.
The only jurisdiction that has a cap on the employer contribution, Kitsap, required a small co-
payment of $29/mo by the employee toward full-family coverage in 2003, according to the
Guild. Yakima County, by contrast, offers to maintain the same Employer-paid cap that was in
place in 2002, $470 per month, for both 2003 and 2004, even though medical insurance costs
have increased dramatically. If the County's offer were awarded, those deputies who have
maintained family coverage would have to make ever-increasing co-payments out of their wages.
The Guild asserts that full-family coverage is essential, if the County wishes to maintain
its ability to recruit and retain qualified officers. The cap system is simply out of step with the
practice in other jurisdictions, in the Guild's view, and is unreasonable. The Guild asserts that it
gave notice to the County when it agreed to the $470 cap in its 2002 labor contract that it would
return with a firm demand for full-family coverage in the successor agreement.
The Guild relies on the 2003 award by Arbitrator George Lehleitner in Kittitas County to
support its position. In that case, the arbitrator found the Employer's proposed contribution cap
to be unacceptable, even ''troubling". The proposal in the Kittitas case would have required an
employee to contribute $441 per month more than that county's comparables for full-family
coverage. The arbitrator directed that the contractual insurance benefit be converted to a system
whereby the Employer would split the cost of full-family coverage with the employee on a
90%/10% basis. Then the arbitrator ordered a specific dollar contribution that apparently
equalled the 90% contribution to be made by the employer.
The Guild states that Yakima County has recently made adjustments to the costing of the
four-tier system (fn:11) that had been in place for establishing the deputies' insurance costs in 2002.
As a result of the rating change, more of the cost of coverage for single employees is now being
passed on to the dependents' tiers of coverage. The employees who need coverage for their
spouses and dependents have actually been paying more for their dependents' insurance than they
would have paid if the old rating system had been continued. The Guild believes that the
County's action in changing the system without negotiating with the Guild was an improper
unilateral change under public sector collective bargaining law, as the rate cap of $470/mo had
been bargained within the context of the rate structure that was in place in 2002 and that
structure would have required a lesser co-pay for full-family coverage, if it had been retained.
____________
fn:11 The four tiers are "employee-only", employee-plus-spouse", employee-plus-dependents" and "full-family"
The Guild asks the arbitrator to award 100% of full-family coverage for both the 2003
and 2004. If, however, the arbitrator should choose to require some sort of co-pay by those
employees with dependents, the Guild asks for an order setting a defined level of benefits with a
defined maximum-dollar contribution by the employee, rather than a percentage of the premium.
(2) The County's Arguments: The Employer acknowledges that some counties
pay 100% of full-family insurance coverage. The Employer contends that the majority of
jurisdictions pay only for employee-only coverage, however, leaving employees with families
responsible for covering their own dependents, or at least a portion of their dependents' coverage.
The Employer does not deny that it has made some adjustments to the costing of the four
tiers of insurance coverage for its employees. The Employer asserts that the changes were made,
based on internal equity and pursuant to recommendations that were made by the County's
workers themselves, in their answers to a questionnaire that was sent out to all employees in
August of 2001. The general consensus of the employees who responded to the questionnaire
was that they wanted full coverage to be provided for employees first and, if there were money
left over from the Employer-paid cap, after paying for employee-only coverage, that the excess
should go toward dependents' coverage. The respondents indicated they did not wish to continue
the previous tiering system, whereby the cost of employee-only coverage was weighted in such a
way as to absorb part of the cost for the dependent insurance that other employees might need.
The County relies most heavily on its inability-to-pay argument, as set forth in the
previous section (wages) of this report. See pages 22-24, supra. The County contends it cannot
afford to pay for the full-family coverage that the Guild is asking for, the cost of which would be
$75,048 for 2003 and $117,323 for 2004, or an aggregate total of $192,370 for the two years,
based upon the coverages that Guild members have selected during those two years.
(3) Discussion and Findings of Fact:
The arbitrator agrees with the Guild that the medical insurance benefit must be
commensurate with the average level of medical insurance benefit that is offered elsewhere in
the comparable jurisdictions, in order for the County to continue to compete for good officers. If
the County's insurance benefit requires an employee with a family to pay substantially more out-
of-pocket for the coverage of his or her spouse and dependents than he or she would have to pay
in the comparable jurisdictions, it is highly likely that that deputy will look for a job elsewhere.
Recruitment and retention of qualified officers with families will suffer. Nevertheless, the
benefit that is awarded must be within the reasonable limits of the County's financial condition.
Let us begin by looking at what percentage and/or dollar contribution toward full-family
insurance is provided by the eight comparable jurisdictions that have been selected by the
arbitrator, and how those figures compare with the County's proposal for a $470 cap, In
compiling the following chart, the arbitrator has relied on the information that was provided by
the County, for the reason that the County made a reasonable effort to assemble, through
telephone calls with representatives of the various counties directly, an "apples-to-apples"
comparison. The caller asked each county how many dollars it was contributing as a maximum
in 2002, 2003 and 2004 toward full-family coverage, under that county's "high plan", and what
percentage of the cost of the plan was covered by the employer's maximum contribution.
Comparables 2002 2003 2004
Benton $500 (100% FF) $572 (100% FF) $694 (98% FF)
Chelan $1331 (100% FF) $1238 (100% FF) $1370 (100% FF)
Cowlitz $576 (74% FF) $619 (65% FF) $661 (65% FF)
Grant $1029 (100% FF) $970 (100% FF) $973 (100%FF)
Kitsap $625 (96% FF) $935 (74% FF) $763 (83% FF)
Spokane $709 (100% FF) $1,053 (100% FF) $977 (100% FF)
Thurston $1002 (100% FF) $1002 (100% FF) $1201 (100% FF)
Whatcom $624 (100% FF) $681 (100%FF) $734 (100%FF)
Average $800 (96%FF) $884 (92%FF) $922 (93%FF)
Yakima $470 (70% FF)(fn:12) $470 C.offer (62%FF) $470 C.offer (55% FF)
___________
fn:12 The percentages of Yakima County's insurance costs were computed by using the Blue Cross Premera "High
Plan" which has been the most popular plan among the deputies, but is not the County's most expensive plan. The
evidence shows that, in all three years, the $470 cap would cover employee-only coverage. In 2002, $470 also paid
for 100% of employee+dependents coverage and 97% of employee+spouse coverage. In 2003, the $470 would only
buy 91% of employee+dependents coverage and 86% of employee+spouse coverage. In 2004, the $470 would buy
even less, only 81 % of employee+dependents coverage and 72% of employee+spouse coverage, under the Premera
Blue Cross "High Plan".
The Guild argues that its evidence on insurance, a summary of benefits compiled by the
Washington State Association of Counties (WSAC), is better evidence than the County's
information, especially regarding Cowlitz and Kitsap Counties. The Kitsap County 2002
collective bargaining agreement provides for 100% of the "lowest-cost'' medical plan, plus 60%
of dental and vision coverage.(fn:13) Also, the "low plan" was the most popular plan selected by
deputies in Cowlitz County and 100% FF coverage under that plan was provided by the
employer. The percentages shown in the arbitrator's chart would be different if the "low plan"
figures had been used for Cowlitz and Kitsap County.
____________
fn:13 The parties stipulated that Kitsap County paid $625/mo, or 96% of full-family coverage, in 2002; the percentages
that are shown in the arbitrator's chart for 2003 and 2004 would be higher, if the cost of the "low plan" were used for
those two years.
The arbitrator has chosen not to use the WSAC summary, for the reason that there seem
to be many unexplained discrepancies between that summary and the County's summary. It is
impossible to determine from the WSAC summary whether the costs of "high plans" or "low
plans" were used by the information-gatherers for the report. Arbitrators prefer "apples-to-
apples" comparisons. Nevertheless, the arbitrator does note that the current Cowlitz County
collective bargaining agreement provides for an Employer-paid contribution of 95% of the
increase in the "lowest cost" insurance plans in 2004 and the 2002 Kitsap County agreement,
which would have been continued in 2003 and 2004, while negotiations were underway for a
successor, provided for 100% of the "lowest-cost" plan, with a co-payment of $29/mo for vision
and dental only. These facts tend to support the arbitrator's conclusion that the trend among the
comparables has been to require a small co-payment by deputies in comparable counties for
family coverage, regardless of whether they choose a "high" plan or "lowtt plan.
The arbitrator is persuaded that Yakima County paid the least amount, in terms of dollars,
of all the comparables for insurance premiums in 2002 ($330/mo below the average $SOO/mo),
and well below the average percentage that the comparables paid for full-family coverage under
"high plans" (70%, as compared to 96%). Nevertheless, Yakima County's cap of $470 per-
employee paid not only for 100% of employee-only coverage, but also 100% of employee+
dependents coverage and 97% of employee+spouse coverage in 2002, under the Premera "High
Plan", apparently because of the way in which the costs of the various tiers were computed.
If the County's offer were awarded here, the percentage contribution that the County
would be making toward deputies' full-family coverage would decrease substantially, from 70%
in 2002 to 62% in 2003 and 55% in 2004. In addition, the County's contributions toward
employee+dependents coverage and employee+spouse coverage would diminish and require co-
payments by the deputies, as shown in footnote 12. This situation is "troubling" to the arbitrator,
just as the offer that Kittitas County made to its deputies in 2003, regarding freezing that county's
insurance contribution, was "troubling" to Arbitrator Lehleitner.
Although the trend has been to shift some of the cost of full-family (FF) coverage to the
employee, the amount of the employee's co-pay has been very small. For example, in 2004,
Benton County paid 98% of its deputies' FF coverage, leaving the employee's share at only 2%.
The average maximum dollar contribution by employers toward FF premiums in the
comparables actually increased, from $800 in 2002 to $884 in'2003 and to $922 in 2004.(fn:14)
None of the comparables has frozen its per-employee insurance contribution in 2003.
____________
fn:14 Curiously, the maximum premium was lower in 2004 than it had been in 2003 in two counties, Spokane
and Kitsap. The reductions may have been due to changes in the insurance plans or reductions in the claims histories.
Yakima County proposes freezing its contribution toward deputies' insurance at $470 for
both 2003 and 2004. In addition, Yakima County has changed its system of costing for the
various coverage tiers. As a result, its employees would have to pay 38% of FF coverage, 14%
of employee+spouse coverage and 9% of employee+dependents coverage in 2003, and 45% of
FF coverage, 23% of employee+spouse coverage and 19% of employee+dependents coverage in
2004 under the County's proposal. This is entirely out-of-step with the pattern among the
comparables. It shifts an ever-increasing burden for payment of dependent coverage onto the
deputy-employee. If awarded, the proposal would effectively reduce or eliminate any pay
increase that those employees with families would receive. It could even reduce the monthly
take-home pay of such employees below 2002 levels: Such an outcome would be disastrous to
the employees' morale. Therefore, the arbitrator finds that the County's offer is unreasonable.
The Guild's demand for 100% full-family coverage is closer to the pattern among the
comparables. However, it is excessive, in that it would place the full burden for all insurance
rate increases, for families as well as individual employees, on the County. This would be
inconsistent with the current trend of requiring a small co-payment for dependent coverage and it
would not follow the pattern that the Yakima deputies had accepted in their 2002 contract.
The arbitrator finds that there is a compelling need to increase the Employer's
contribution for insurance in 2003 and 2004 to match the average level of coverage that was
provided by the comparable jurisdictions in 2003 and 2004. The County should pay, as a
maximum, an amount that would cover 100% of employee coverage, 100% of
employee+spouse coverage, 100% of employee+dependents coverage and 90% of FF coverage,
in the Premera Blue Cross "High Plan", which has been the most widely-selected plan by the
deputies(fn:15), assuming the arbitrator finds that the County has sufficient ability to pay and there are
no other countervailing issues.(fn:16) The arbitrator does not agree that the employee's contribution
should be expressed as a maximum dollar amount per month, as the Guild requested. There is no
precedent among the comparables for such an award.
___________
fn:15 A Blue Cross "Low Plan" and a "Group Health Plan" are available as well. In 2002,47 deputies chose the Blue
Cross "High Plan", six chose the "Low Plan" and four chose "Group Health". Two of the deputies are LEOFF I
employees; the rest are LEOFF II employees.
fn:16 There was no ability-to-pay issue in Kittitus County, while there is an ability-to-pay issue before the arbitrator
here Arbitrator Lehleitner opined in Kittitus County that a composite rate system might be less expensive than the
tiered system that Kittitas County was using. He suggested strongly that Kittitas County consider changing to a
composite system. There was no evidence offered by the parties in the instant case as to whether the overall cost of
insurance might be reduced under a composite system, however.
Ability to Pay: The County has raised a serious argument that it is unable to pay for any
insurance benefits beyond its offer of $470/mo per employee. The arbitrator will now analyze
the law and the evidence on the inability-to-pay issue, in order to determine whether or not the
Employer can pay what the arbitrator has found to be the appropriate percentage of insurance
premiums (90%) and, if not, then what shall be the appropriate award on insurance.
In a well-known article, entitled "Ability to Pay: A Search for Definitions and
Standards in Factfinding and Arbitration ", U of O LERC Monograph No. 3 (1984), the
authors summarized the analysis and findings of a number of interest arbitrators in Oregon cases.
The authors distinguished cases in which public employers alleged a total inability to pay a wage
increase above current level from those who demonstrated a limited or impaired ability only.
The authors concluded, in order to prove limited ability to pay, that an employer must produce
evidence of a current precarious financial condition that mandates a conservative approach to
salaries, not simply a fear of future uncertainties regarding revenue losses or adverse legislative
action. The employer need not be bankrupt, however. Evidence might include a dramatic
downturn in regular revenue receipts, a showing of severely depressed economic conditions, or
high unemployment. Other evidence could include prior levy defeats, layoffs, program
reductions, absence of a contingency fund or other discretionary fund in the budget, or
achievement of a wage freeze with other bargaining units. The employer must offer clear,
authoritative evidence, by experts, said the authors, regarding the negative status of the budget.
The situation must be beyond the employer's control. The employer must convince the arbitrator
that it is unable to raise sufficient revenues to meet an established need for a raise, especially
where there is compelling evidence shown by comparability or cost of living factors. If the
Union disagrees with the employer regarding the employer's stated limited ability to pay, the
Union must produce credible expert testimony to support its refutation.
Another article on ability to pay issues in interest arbitration appeared in 2003. See,
Widenor and Stinson, "Interest Arbitration in Oregon's Public Sector", U of O LERC
Monograph No. 17 (2003). The authors of the 2003 article again distinguished between total
inability to pay, which they determined is rare, and relative inability to pay, which is more
common and easier to prove. The authors recognized that internal equity considerations are
more significant in a relative inability to pay case, because there is often a "me too" effect of an
award to one bargaining unit on the other bargaining units, thereby further aggravating the public
employer's financial constraints.
Evidence on Ability to Pay: In the instant case, the County alleges it has a limited
ability to pay, not complete inability to pay any increase whatsoever in wages or insurance. The
County has not sought to freeze wages at the 2002 level, as it would have if were raising a
complete "inability to pay" defense. The County does, however, seek to freeze its 2002 level of
insurance contribution ($470/mo) in 2003 and 2004. The County points out that most of its
bargaining units have accepted a similar freeze on insurance in 2003 and 2004, thereby
indicating that those units believed the County's contention that it was in a precarious financial
condition and could not pay any more for insurance than it had paid in 2002. And most of the
County's other bargaining units were frozen at $420/mo., or $50/mo less than the amount it is
offering to the Guild in this proceeding. The County believes that internal equity is a serious
consideration, therefore, as it relates to the insurance issue.
The Guild asserts that the County is simply unwilling to pay for an appropriate increase
in insurance benefits. If, to the contrary, the facts show that the Employer is in a precarious
financial condition and is not simply fearful of economic uncertainty, then the arbitrator must
determine whether the compelling need to increase the Guild's insurance contribution to 90
percent of full-family, based on comparability, outweighs the County's limited ability to pay. If
it does, the arbitrator must determine whether there is money available in the County budget to
fund the increased contribution without putting the County at serious financial risk.
County's Bond Rating: The County's expert witness was its Chief Financial Officer
Craig Warner. Warner testified credibly that Yakima County's ordinary policy regarding
reserves is to retain 57% of general operating revenues in reserve, to cover irregular cash flow
needs in the months between October and April, when much of the County's tax revenue is
received. He said the GFOA recommends that public entities keep in five to fifteen percent of
operating revenues in reserve. Yet in 2003, Yakima County's reserves fell below the five percent
floor, to 2.62% ($1.4 million) at the beginning of the year and 2.91% ($1.5 million) at the end of
the year. If the County were to drop any lower, testified Mr. Warner, it would risk losing its
"A-" or "A3" bond ratings, which are the lowest "A" ratings available from Fitch and Moody's,
two respected rating companies. A reduction into the "B" category with either Fitch or Moody's
would put the County in financial jeopardy, because the County could be required to pay higher
interest rates on bonds and it might go on registered warrants to pay its bills. Also, some current
bond-holders might have to divest themselves of County bonds at a loss, thereby causing those
investors to lose confidence in the County for future investing. In its post-hearing brief, the
Guild acknowledged the risks the County could face if it lost its "A-" or "A3" bond rating.
The evidence shows that two of Yakima County's comparables had "A3" bond ratings
from Moody's. Those were Spokane and Cowlitz Counties. Also, Benton County had an "A2"
rating. However, all three of those counties have paid higher premiums for deputies' health
insurance coverage in 2003 and 2004 than they paid in 2002. Therefore, it appears those
counties have met their employees' insurance needs, in spite of a risk that they might drop into
the "B" bond-rating category.
History of Problems with Legislation and Tax Levies: Mr.Warner testified that, as the
result of a recent property-tax-limitation initiative in Washington, the maximum annual increase
in assessed valuation of real property was reduced from 6% to 1%. That change has greatly
reduced the annual property tax revenue in Yakima County. Warner also testified that a 1995
Criminal Justice Sales Tax levy was defeated by 60% of the vote in the County, and a similar
sales tax levy was defeated in 1997. Both of those, if passed, would have generated additional
revenue for the Sheriffs Department budget. Thirdly, a Motor Vehicle Excise Tax amendment
has reduced the fee for auto license tags in Washington to $30. Yakima County has actually lost
$14.5 million from this change in auto license-tag fees alone since 2001, said Mr. Warner. The
State issued a temporary relief payment to replace some of the losses that counties have incurred
due to the loss of previously-anticipated motor vehicle tax funds. That make-up provision
produced $1.9 million for Yakima in 2002, but only $342,000 in 2003 and nothing in 2004, since
the relief measure has been gradually phased out and has now expired.
The Guild offered no evidence to contradict the testimony of Mr. Warner regarding the
revenue reductions that Yakima County has been experiencing. The arbitrator finds that the
revenue reductions have indeed been dramatic. Nevertheless, the property tax assessment lid of
1% per year, as well as the reduction in revenue due to the change in motor vehicle tag prices
were likely statewide concerns in recent years. Therefore, it seems reasonable to assume that
other counties in Washington, including the County's comparables, have been experiencing
similar reductions in those revenue sources to Yakima County's reductions.
The Guild also did not deny that the County went to the voters in the past with levy
requests, and that those levies failed heavily. The Guild alleges, however, that the County
should go to the voters with a request for a property tax "levy lid lift" to recoup some of the
property tax that has been lost since 200 1. The arbitrator does not see that such an effort would
have any likelihood of passing, based on the history of tax levy defeats in the county. Besides,
The County is submitting a special sales tax levy request to the voters in November of 2004, the
purpose of which is to generate additional funds for law enforcement purposes. The Sheriff is
actively promoting this sales tax levy, which would raise $6 million, of which 60% would go to
the County. If the levy passes, both the County and the City of Yakima will hire new officers
with the new money. The County plans to hire fourteen new deputies with its share. Tr. 682-83.
Reduction in Interest and Sales Tax Income: Mr. Warner demonstrated that Yakima
County's interest income has dropped dramatically since 200 I, due to low interest rates. In 2001,
the County's interest income was $2.6 million, but in 2004, it was expected to be only $730,000.
Warner also demonstrated that sales tax revenue in Yakima County has been very flat
since 1995, ranging from $6-7 million per year. The City of Yakima routinely annexes income-
producing properties from the County, thereby removing lucrative sales-tax sources from the
County's tax rolls. Examples include the annexations of West Valley, which Warner said had
cost the County $235,000 a year, and Sunfair Chevrolet, a large car dealership.
It is likely the County's reduction in interest income over the past few years was felt in all
of the comparable jurisdictions. The County's flat sales tax revenue, however, is likely unique to
Yakima County, as it probably derives from the general poverty level of the County's residents,
as well as the annexation problem. The arbitrator notes that the overall tax revenue in the County
was $104 per capita, the lowest of all the comparables and about one-third less than the average
of $162 per capita. If income-producing commercial property continues to be annexed into the
City of Yakima, the County may continue to have a difficult time increasing its sales tax revenue
in the foreseeable future, even though, as the Guild demonstrated, the general level of economic
activity in the County is beginning to grow.
Program Reductions: The evidence shows that between 2000 and 2004, the County
reduced or eliminated $6.5 million worth of programs in order to save money for its remaining
programs. Lower Valley District Court was eliminated, one juvenile pod was eliminated,
county-wide training was eliminated, extension services were reduced, parks were closed or open
hours reduced, health funding was reduced, and customer service activities have been cut back.
Some general fund positions have been eliminated, including seven deputy sheriffs and a
dispatcher. During 2002, the Board of County Commissioners implemented a hiring freeze.
Nearly $1 million has been cut from the Sheriffs Budget since 2000. The 2003 final budget
shows that $400,000 was reduced from the Law and Justice and Public Safety Departments to
balance the budget in that year. The Sheriffs Department is now short-staffed. The arbitrator is
persuaded by this evidence that the County has taken aggressive action in a variety of ways to
minimize its expenses and operate within its limited revenue, while avoiding the reduction of its
bond rating below the "A-" level.
Poverty level in the county: The evidence shows that the County is "rural" because of its
low population density, its agricultural nature and its economic status as a "distressed" county
pursuant to RCW 43.165.010(3). Statistics show that 17.85% of Yakima County's residents are
eligible for Medicaid benefits, 19.7% of its residents live below the poverty level, as compared to
the statewide average of 10.6%, and there is a high percentage of food stamp eligibility and
subsidized lunches. Significantly, Yakima County's unemployment rate was 10.3% in 2003, the
highest among the comparable jurisdictions except Cowlitz County.
The Guild argues that the County places too much emphasis on the poverty of its
residents, many of whom are migrant laborers who work only seasonally and for low wages.
The Guild points out that Census Bureau has characterized the county as "metropolitan". Also,
Guild says much of the agricultural land is actually very valuable and should be taxed at a higher
rate than the special assessments for such property allow. The Guild says many of the farmers
are actually very wealthy and should be paying a greater share of the tax responsibility than they
now pay. The Guild points out that the County has a large quantity of taxable land within its
boundaries, but a low overall assessed valuation, relative to many of the comparable
jurisdictions. The Guild contends the County should utilize the authority given by RCW Chapter
84.34 to create "special improvement districts" in order to generate more tax revenue from the
valuable farm lands. The Guild did not offer any expert testimony, however, on how such
"special improvement districts" could be developed or whether, if developed, the funds could be
used for deputy sheriffs' salaries and benefits.
The arbitrator finds, based on the evidence, that the County is indeed "rural" and
"distressed" economically. The Census characterization of "metropolitan" does not adequately
rebut the statistical evidence offered by the County, nor does it override the statutory criteria
defining "rural" and "distressed", which accurately describe the demographics of Yakima
County. While it does seem that the County could consider using its statutory authority to
attempt to levy property tax "lid lifts" to increase its property tax revenue in future years, it is
unlikely that such levies would pass, based on past history. As for creating "special
improvement districts" that might increase the revenue from high-producing agricultural lands,
the arbitrator finds that the idea may have merit. However, it would be speculative to comment
on the feasibility of such action, based on the record.
The County Budget: According to the County's 2003 Final Budget and testimony of
Mr. Warner, expenditures were expected to exceed revenue by $467,715, so that amount was
taken from reserves to balance the budget, leaving only 2.62% in the "Available Fund Balance".
Because of the double-selling of jail bed space, however, a surplus of $597,253 was actually
generated in 2003 and that money was put into the "Available Fund Balance", increasing it from
2.62% to 2.91%. In spite of that surplus, the County anticipates a deficit of $235,000 in 2004.
The Guild asserts the County had $5.8 million in "savings accounts" at the end of 2003,
including approximately $1.3 million in "Department Carryout" and $586,052 in
"Commissioners Carryout". See Ex. E-1-1-8. The Guild points out that the County had
identified the Commissioners' Carryout fund as available for "Anticipated Budget Adjustments";
therefore, those funds should be available to pay for deputies' insurance increases. The Guild
believes the $1.3 million that is shown as Department Carryout is also available to fund any
award that is issued in this interest arbitration.
The County persuaded the arbitrator that most of the "savings accounts" that the Guild
refers to are "designated funds" that cannot be used for deputies' salaries and benefits. Those
include a loan payable account, investment accrual fund, inmate trust, debt retirement, computer
replacement and jail reserve funds. The "petty cash" account, however, was $47.075 at the
beginning of 2003 and only $240 was deducted during that year, leaving $46, 835 at the end of
the year. The County did not show that that fund was needed for any specific purpose.
Mr. Warner testified that the Department Carryout and Commissioners Carryout are
funds that have gradually been accumulated through frugal spending habits by the Sheriff and the
directors of other County departments over the past decade. He testified as follows with regard
to the adoption of those funds in the mid-1990's:
". . . Yakima County Commissioners realized that we had departments that were --- that
were buying supplies five or six years out in advance [in order to use up budgeted funds
at the end of each year]. So, what the commissioners did was, they established a carry-
out policy, which basically takes whatever monies that -- that -- and there's a process of
calculation we have to go through -- whatever expenditure dollars they don't spend, and
we split those 60/40: 60 percent the Commissioners get back; 40 percent that the
departments get to keep. And those 40 percent dollars are for one-time expenditures
only. In the Sheriffs Office, as an example, I mentioned earlier that's how the Sheriffs
vehicles, their radios, their equipment replacement monies, their laptops, all of that stuff
got funded. That's how we did it. Tr. 504-5; See also, Tr. 655.
Although Mr. Warner indicated that the carryout monies cannot be spent for repeated
expenditures like wages and benefits, he offered no explanation as to why that is so and he cited
no statutory authority to support the argument. While it is indeed admirable that .the County has
been able to buy extra equipment, like vehicles and laptop computers, with funds that were saved
in past years due to frugal spending practices, it would not be appropriate for the County to
require its deputies to sacrifice their demonstrated need for insurance, simply because the County
has established a practice of using its excess funds to buy material goods.
On the other hand, the arbitrator is not persuaded that the $1.3 million in "Department
Carryout" was fully available to pay for deputies' insurance premiums, as the Guild contends.
According to Mr. Warner, the County still had expenses due at the end of 2003, which had not
yet been billed and paid, under the accrual system of accounting. After those expenses were
paid, only about $250,000 was left in January 2004. Tr. 631-3. Then, a $55,000 adjustment had
to be made, because the actual revenue that had been produced from Airport Services in 2003
was less than had been expected. Warner acknowledged that $195,000 remained in Department
Carryout fund, however, and that amount had been divided 60%/40% between the
Commissioners' Carryout and the Department Carryout. Tr. 636- 7. The arbitrator concludes
from that testimony that $195,000 of the $1.3 million carryout fund remained available as a type
of contingency fund at the end of 2003.
It also appears from the evidence that at least some of the "Commissioners Carryout" of
$586,052 remained available at the end of 2003, even after certain "Anticipated Budget
Adjustments'' were accounted for. See Ex. 1-1-8. Mr. Warner explained that the County had
allocated most of that fund for needs that had been identified, including its LEOFF I fiscal
obligation to provide nursing home care for retired deputies, estimated to cost between $100,00
and $150,000; unexpected expenses of the county prosecutor, estimated at between $50,000 and
$100,000; District Court, estimated at $70,000; Public Defender, estimated at $150,000; and
small amounts for the Coroner and other unidentified recipients, adding up to $16,000. See
Tr.507; also Tr. 521. The arbitrator concludes from that testimony that there still was at least
$100,000, and possibly as much as $200,000 (depending on how much was actually needed for
the nursing home expenses and the prosecutor) available for other needs, like an Award granting
higher insurance premiums in this interest arbitration.
Adding together the unspent "Department Carryout" of $195,000 and "Commissioners
Carryout" of at least $100,000, plus petty cash of $47,000, the arbitrator concludes that the
County had at least $342,000 in undesignated funds at the end of 2003. Also, the "Available
Fund Balance" was $160,000 higher than it had been at the beginning of 2003 and, as a result,
the percentage of total budget being held in reserve had increased from 2.62% to 2.91%. This
shows that the County was inching its way out of its financial crisis.
The County demonstrated that the cost of providing full-family coverage under the
Premera Blue Cross "High Plan" would total approximately $192,000 more than it has already
paid for insurance during 2003 and 2004. The arbitrator has found, based on external
comparability, that 100% of employee-only, employee+spouse and employee+dependents
coverage, and 90% of full-family coverage, should be awarded. The arbitrator has also
determined that the County has been dealing with a precarious financial condition for several
years and that it has taken aggressive steps to cope with its financial crisis, including reducing
programs and laying off staff. At the end of 2003 the County had enough money in its reserve
funds to pay for a full award on insurance, as determined to be reasonable herein. However, the
County would be left with less that five percent in reserve and the County would still be at risk
of losing its "A-" bond rating, should any new financial crisis arise, such as loss of contracts for
sale of jail bed space.
There also are "other factors'' in this case that are normally considered by interest
arbitrators and that affect the propriety of an award that would be fully in keeping with the
external comparables. The arbitrator will explain those factors now.
Internal Equity. The County raises a strong argument that internal equity should be
considered by the arbitrator in this case. The County demonstrated that Yakima County
Commissioners have frozen their salaries at $67,692/year through 2006, in order to save money
and to set an example for county employees, who have been asked to share the County's financial
pain. The County Assessor, Auditor, Clerk, Coroner, Treasurer and Sheriff have all accepted
wage freezes since 2001. Also, most of the other bargaining units in Yakima County have
accepted the same offer regarding wage increases for 2003 and 2004 that the County is offering
to the Guild in this proceeding. In addition to the freezes, those units have agreed to forgo their
regular step increases for the two years, while the deputies will get their step increases under the
County's offer to the Guild. Also, eight of the eleven represented bargaining units have accepted
in their 2003-4 collective bargaining agreements the County's proposal to retain the insurance
cap of $420/mo that was in place in 2002 as the maximum County contribution toward full
family medical, dental, vision and life insurance premiums. Of the three remaining units, two do
not have agreements in place beyond 2002; the third, which is the Sheriffs Office Management
Group, has accepted full payment of employee-only medical and vision plus $243.90/mo toward
dependents coverage in 2004 and a cap of $485/mo in 2005.(fn:17)
____________
fn:17 There is a reopener provision in that agreement which could allow renegotiation of the
insurance benefit. The Guild also points out that the Management unit negotiated a substantial
longevity provision in its current contract.
The Guild argues that internal equity is irrelevant in interest arbitration, because the
relevant issue is comparability with other bargaining units of deputy sheriffs. The arbitrator
agrees that internal equity is usually irrelevant in interest arbitration, because the relevant
comparability, according to the statute, is with "like employees of like employers". For the
Guild, "like employees" means other bargaining units of sheriffs deputies in comparable
jurisdictions. It has been held, however, that internal equity is relevant in cases like this one,
where the evidence shows that the public employer has been dealing with reduced revenues for
several years and the employer's other bargaining units have agreed to assist the employer to
meet its tight budget situation by accepting reduced benefits in their labor agreements. In IAM
and Mason County (Arb. Axon, 2001), at 14, for example, the arbitrator stated that, even though
"[t]here is no statutory obligation to award what the other bargaining units in the County have
negotiated in the way of insurance benefits, . . . an award for one group of employees should not
be so different as to be out of touch with the other bargaining units." See also, City of Pasco and
Pasco Police (Arb. Krebs, 1990) at 11; Cowlitz County and Teamsters (Arb. Lehleitner, 1996)
at 15. In an Oregon case, Multnomah County and Corrections Officers Assn. (Arb. Wilkinson,
1993) at 52-3, the arbitrator opined that internal comparators carry considerably more weight in
determining medical benefits than wage benefits. Also, in City of Grants Pass (OR) and IAFF
Local 3564 (Arb. Brown, 2000), an Oregon firefighters' interest arbitration, the arbitrator
recognized that there would be a "me too" effect on other employees outside the firefighters'
bargaining unit by an award that would differ substantially from their agreements. She said she
could not "turn a blind eye to the [Public Employer's other legitimate needs" in that situation.
One monograph author made a similar observation, when he wrote that "internal comparability
exerts powerful influence at the bargaining table. . . . The conventional wisdom, that internal
comparators are of secondary importance in interest arbitration, does not comport well with the
notion that interest arbitration serves as a surrogate for the traditional bargain-and-strike model
of labor relations." Kaplan, "Interest Arbitration and Factfinding: Some Principles and
Perspectives, '' Univ. of Oregon LERC Monograph No. 13 (1994) at 45.
Based on the facts and arbitral authority, the arbitrator finds that morale among County
employees is likely to suffer if the deputies do not share in the belt-tightening that other County
employees have accepted with respect to insurance premium payment for family coverage. Also,
there will likely be requests for similar increases in insurance contributions by the other
bargaining units the next time they have the opportunity to bargain with the County, and the
County's financial constraints will be further exacerbated by such requests. Therefore, the
County's internal equity concern must be given reasonable consideration here, in order to justify
a fair and reasonable award.
Recruitment and Retention: Another factor that arbitrators consider in deciding interest
arbitration cases in whether the public employer may incur difficulty with recruitment and
retention of qualified applicants if a particular award is made. The Guild argues here that the
County is now recruiting from the bottom of its eligibility list and that there is a serious risk the
County will lose qualified officers if it fails to keep pace with the comparable jurisdictions in
wages and insurance benefits. The County, however, points out that the average seniority of
deputies in the department is 11.66 years, and of sergeants 17.52 years, and that there is very low
turnover in the department, in spite of the County's financial constraints. The officers who have
left in recent years have done so for personal reasons unrelated to wages and benefits.
The evidence shows that the number of applicants for openings in the Department in
recent years has indeed been smaller than it was in the past. However, the decrease stems from
the extensive testing requirements and background checking that are done to weed out
inappropriate deputies before they are hired. A similar reduction in qualified applicants is being
noticed by law enforcement officials throughout the state.
The evidence also shows that the deputies who are recruited by the Sheriffs Department
often come from small police departments in cities within the County, that is, from the local
labor market. Those officers have been very good officers. Officer Rodriguez, who testified for
the Guild, however, demonstrated that he would be unwilling to leave his position with the Selah
Police Department because of the pay cut that he would suffer and because he would have to
pay $500/mo for his family's medical insurance.
Even if the County's offer on insurance were awarded, it does not appear there would be
an immediate mass exodus of deputies to other sheriffs' departments or police departments.
However, the County and the City of Yakima may soon be competing for new hires of law
enforcement officers. Even though the City of Yakima is not a comparable jurisdiction, the
practical reality is that the two public employers will be competing for a gradually shrinking pool
of qualified applicants as time passes. That competition may become acute if the November
2004 law enforcement tax levy proposal passes. The practical reality is that good officers will be
attracted to the employer that offers the most competitive benefits in the labor market.(fn:18)
Therefore, the County must pay a higher amount in family insurance premiums than it pays to
members of its other bargaining units.
______________
fn:18 The 2004-5 collective bargaining agreement between the City of Yakima and Yakima Police
shows that the maximum contribution of a police officer toward health insurance for his/her dependents
will be 1.5% of the officer's monthly pay.
The difficult question for the arbitrator is how to balance the finding on external
comparability with the internal equity issue and the need to protect the County's ability to recruit
and retain qualified officers. The arbitrator will look at one more "other factor" before reaching
a final resolution.
Road Funds: The Guild argues that the County seems to have an unlimited availability
of money for road projects. The Guild argues that road funds are discretionary and can be
diverted to the General Fund for deputies' wages and benefits. The Guild identified RCW
Chapter 36.82, as statutory basis for its argument, but did not offer any expert testimony.
The County persuaded the arbitrator, through testimony by Gary Ekstedt, who is
responsible for administering the County Roads Budget, that the Road Fund is a dedicated fund,
which must be used for road construction, bridge building and maintenance of roads and bridges.
While the road fund does include a very large amount of money from property tax, gas tax and
state and federal grants, much of it is premised on a matching basis, whereby the County must
spend a certain amount of its own money in order to qualify for the state or federal dollars.
Furthermore, only a limited portion of the money in the Road Fund can be diverted to use by the
Sheriffs Department -- and that is restricted to traffic patrol purposes. The Sheriff already funds
two traffic patrol officers, about 5-6% of the 32 deputies assigned as road deputies, with those
funds. The Sheriff acknowledged, however, that Thurston County, one of Yakima's
comparables, funds nine officers with road funds.
If the County were to divert more road funds than the law allows for patrol purposes, the
penalty, which is imposed by the state Constitution, would be loss of eligibility for Rural Arterial
Trust Account (RATA) funds. Even if the cost of only one additional deputy could be justified,
however, that would make about $70,000 available in the budget for funding increases to the cost
of the deputies' medical insurance in the future.
Conclusions: For the reasons stated in the foregoing sections, the arbitrator concludes
that the trend among the County's external comparables is that employers and employees share
the cost of full-family coverage, with employees paying no more than 10% of the premium. The
evidence has shown that the County has a limited ability to pay an increase in insurance
premiums to match the 90% contribution paid by the comparable counties. The County has been
taking aggressive, responsible measures to deal with its precarious financial condition for at least
four years and its reserves are very limited. Furthermore, the County's elected officials, as well
as members of at least eight bargaining units of County employees have accepted a freeze on
their health insurance benefits in 2003 and 2004. This shows that the County is not unwilling to
pay; its limited ability to pay is genuine and has been recognized by its overall workforce.
Nevertheless, the County must use some of its limited available resources to bring the
insurance benefit of its deputies more closely in line with the benefits offered to other sheriffs'
deputies. If it does not, recruitment and retention of qualified officers will suffer. In the interest
of public safety, it is critical to maintain recruitment and retention of qualified officers.
The arbitrator concludes, based on the unusual circumstances of this case, that an award
of employee-only, employee+spouse and employee+dependents coverage, all fully paid by the
County under the Premera Blue Cross "High Plan", and 78% of full-family coverage under the
same plan, is reasonable. The arbitrator does not agree that the "tiering" system that was in place
in 2002 should be restored at this time, however, as part of the award.
AWARD
Based upon the statutory criteria in RCW 41.56.465 and the rationale set forth in the
foregoing report, the arbitrator makes the following Award:
(1) The County's proposal on wage increases for 2003 and 2004 is granted. The
following language shall be included in Article 32-Pay Plan:
A pay plan structure exclusively applicable to employees of this unit is established in
Exhibit "A", which reflects, beginning July 1,2003, a 2.25% across the board increase over
the 2002 pay plan levels for Deputy Sheriffs and Sergeants; and, beginning January 1,2004,
a 4.5% across the board increase over the 2002 pay plan levels for Deputy Sheriffs and
Sergeants. (see also attached Exhibit "A")
(2) Article 34-Medical Benefits shall provide as follows:
34.1 LEOFF I Employees: Effective January 1,2003, the employer shall pay for the
medical and vision coverage of employees enrolled in the LEOFF I pension system covered
under the Yakima County Employee Benefit Trust (Medical).
Effective January 1,2003, the Employer shall pay for medical, vision, dental and life
insurance coverage of the spouse o r children of active duty employees enrolled in the
LEOFF I pension system and shall contribute 78% of the premium for full family coverage.
Effective January 1,2004, the Employer shall pay for medical, vision, dental and life
insurance coverage of the spouse or children of active duty employees enrolled in the
LEOFF I pension system and shall contribute 78% of the premium for full family coverage.
34.2 Effective January 1,2003, for non-LEOFF I employees, the employer contribution
shall be 100% of the premium cost for employee only, employee and spouse, and employee
and child coverage, and 78% of the premium cost for full family coverage, all based on the
costs of the Premera Blue Cross "High Plan", for medical, vision, life and dental insurance.
Non-LEOFF I employees may select from all plans and use such contribution for themselves
and their dependents.
Effective January 1,2004, for non-LEOFF I employees, the employer contribution shall be
100% of the premium cost for employee only, employee and spouse, and employee and child
coverage, and 78% of the premium cost for full family coverage, all based on the costs of the
Premera Blue Cross "High Plan", for medical, vision, life and dental insurance. Non-
LEOFF I employees may select from all plans and use such contribution for themselves and
their dependents.
34.3 Employees are not entitled to receive any funds not applied to coverage for
themselves and their dependents under the available plans.
(3) The parties shall share equally in the neutral chairperson's fee and expenses.
Respectfully submitted,
__________________________________________
SANDRA SMITH GANGLE, J.D. Date
Interest Arbitrator
Sandra Smith Gangle, P.C.
P.O. Box 904
Salem, OR 97308-0904
Telephone: (503) 585-5070
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