INTEREST ARBITRATIONS

THE MATTER OF THE INTEREST ARBITRATION BETWEEN CLARK COUNTY PUBLIC TRANSPORATION ) BENEFIT AREA “C-TRAN” or “THE EMPLOYER” AND AMALGAMATED TRANSIT UNION LOCAL 757) “LOCAL 757” OR “THE UNION” HEARING: January 16 and 17, 2012 Vancouver, Washington HEARING CLOSED: March 21, 2012 IMPARTIAL ARBITRATOR: Timothy D.W. Williams 2700 Fourth Ave., Suite 305 Seattle, WA 98121 EMPLOYER PARTISAN ARBITRATOR: Lynn Halsey C-TRAN Director of Operations th 2425 NE 65 Avenue Vancouver, a 98661 UNION PARTISAN ARBITRATOR: Ron Heintzman P.O Box 1194 Silverton, OR 97381 REPRESENTING THE EMPLOYER: Bruce Schroeder, Attorney Summit Law Group Julie DeBoeuer, Sr. HR Manager Diane O’Regan, Dir. of Administrative Services ) ARBITRATOR’S ) ) INTEREST ARBITRATION ) AWARD ) ) ) ) ) ) ) ) PERC Case No. ) 24063-I-11-0570

REPRESENTING THE UNION: Susan Stoner, Advocate Roy Jennings, ATU Executive Board Officer Scott Miller, ATU Liaison Officer Jim Collell, ATU Liaison Officer APPEARING AS WITNESSES FOR THE EMPLOYER: Julie DeBoeuer, Sr. HR Manager Diane O’Regan, Dir. of Administrative Services Debbie Wright, Operations Manager APPEARING AS WITNESSES FOR THE UNION: Roy Jennings, ATU Executive Board Officer Scott Miller, ATU Liaison Officer Jim Collell, ATU Liaison Officer Richard Hofland, Financial Consultant EXHIBITS Joint 1. Collective Bargaining Agreement, September 1, 2007 – August 31, 2010. Employer A. GENERAL BACKGROUND A.1 State of Washington Revised Code of Washington (RCW) A.2 Washington Administrative Code (WAC) A.3 Current Collective Bargaining Agreement A.4 PERC Letter Certifying Issues A.5 Agency’s Proposal A.6 Union Proposal A.7 Agency Description A.8 Organizational Chart A.9 Employee Roster B. COMPENSATION COMPARISONS B.1 Agency’s Methodology B.2 Population Served and Demographic Comparisons of Comparables B.3 NTD Data for Oregon Transit Agencies B.4 Clark County Local Area Profile (C-TRAN) B.5 Benton County Local Area Profile (Ben Franklin Transit) Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 2

B.6 Franklin County Local Area Profile (Ben Franklin Transit) B.7 Kitsap County Local Area Profile (Kitsap Transit) B.8 Spokane County Local Area Profile (Spokane Transit) B.9 Thurston County Local Area Profile (Intercity Transit) B.10 Lane County Labor Trendy (Lane Transit) B.11 Paratransit Service Comparables – Percentage of Contracted Service B.12 2-27-11 letter from Julie Deboeuer to Union re: comparables. C. FINANCIAL OVERVIEW C.1 C-TRAN Financial Overview C.2 C-TRAN Historical Sales Tax Revenue C.3 C-TRAN Historical Interest Income C.4 C-TRAN 10 Year Plan – Expenses vs Revenue, 2012 – 2021 C.5 C-TRAN 10 Year Plan with Union’s Proposal, 2012 – 2021 C.6 Annual Use of Cash and Investments, 2012 – 2021 C.7 Cumulative Use of Cash and Investments with Union’s Proposal, 2012-2021 C.8 Medical Premium Costs, 2001 – 2011 C.9 Cumulative 2-year Cost of Proposals C.10 C-TRAN Operating Results 2006 – 2011 C.11 C-TRAN Operating Expense vs Sales Tax Trends 2006 – 2011 C.12 PERS Rate Increases – Office of the State Actuary C.13 C-TRAN Budget, 2011-2102 C.14 C-TRAN Comprehensive Annual Financial Report, 2010 UNION 1. C-TRAN INFO 1A. Governing law 1B. Collective Bargaining Agreement 1C. Service Area 1D. Paratransit Service Area 1E. C-TAN Organizational Chart 1F. C-TRAN 2011-12 Adopted Budget. 1G. Internal Wage Parity and Community Median Income 1H. Documentation in Support of 1G 1I. Internal Benefit Parity 2. ISSUE OVERVIEW 2A. Stipulation of Parties 2B. Tentative Agreements Reached 2C. Union’s Costed out Proposals 2D. Documentation in Support of 2C. 2E. Budget document showing different cost for status quo wages. Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 3

3. ABILITY TO PAY 3A. Richard Hofland Vitae 3B. C-TRAN Financial History 3C. 11/21/2011 Memorandum, October 31, 2011 Financial Statements. 3D. 8/11/2009, Memorandum – reserves. 3E. 2011-2012 Financial History. 3E(b)Days of Cash on Hand – CTRAN. 3F. 2010 Percent Unrestricted Net Assets to Operating Expenses. 3G. Government Finance Officers Association (GFOA). 3H. Economic and Revenue Forecast Council November 2011 Forecast. 3I. Board of Directors Resolution Effectuating Sale Tax Increase. 3J. Ballet Measure Pitch. 3K C-Tran Financial Statement, December 31, 2011 4. Specific Issues 4A Issue List Summary 4B. Health Information on Transit Bus Operators. 4C. Excerpt: Adopted 2011-2012 Budget. 4D. CTRAN Doc: Operator Injuries. 4E. 15-Years at CTRAN. 4F. Other Agencies and Longevity Chart. 4G. Diagram of Proposal Impact on Ext Board Operators. 4H. Fixed Route Operators in Step Progression. 4I. Goal of Step Parity Proposals with Regard to fixed Route Part Time. 4J. Paratransit Operators in Step Progression. 4K. Goal of Step Parity Proposal with regard to Paratransit Operators. 4L. C-VAN Manifest. 4M. CBA Language Needing Change. 4N. Problem with Current Procedure – Vacation accrual. 4O. CBA Language Needing Change. 4P. Problem with Current procedure – Minimum Bid. 5. Comparators 5A. Washington’s Transit Agencies. 5Ba C-TRAN Indicators. 5Bb Transit Agencies Compared to CTRAN. 5C. Certification of FTA Data. 5D. Explanation of FTA Data Tables. 5E. 2010 FTA Data Tables on Washington and Oregon Transit Agencies. 5F. County Data. 5G. Volatility of Oregon Payroll Tax Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 4

BACKGROUND The Amalgamated Transit Union, Local 757 represent a bargaining unit composed of employees of a public passenger transportation system, subject to the provisions of RCW 41.56.492. The Clark County Public Transportation Benefit Area (hereafter “C-Tran” or “the Employer”) and the Amalgamated Transit Union, Local 757 (hereafter “the Union”) are in the process of negotiating a successor collective bargaining agreement. Unable to reach agreement on a number of issues and based on the mediator’s recommendation, the parties submitted the unresolved issues to interest arbitration. This interest arbitration case was conducted under the authority of RCW 41.56.030 and the other pertinent Washington State Statutes including RCW 41.56.492. A copy of a letter dated June 24, 2011 was provided the Neutral Chairperson. It contained a list of issues certified for interest arbitration by State Mediator Karyl Elinski, in accordance with WAC 391-55-200(3)(b). Those issues, as certified, are: - Article 15, Sections 1 and 5 – Rates of Pay Hourly Rates, Longevity Pay - Article 16, Section 2 – Uniforms - Article 17, Section 1, 2f and 2g – Posting of Fixed Route work - Article 21, Section 2A, 2B, 3, 5, and 7 – Operations of Extra Board - Article 22, paragraphs a, c, and h – Operation of Connector Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 5

- Article 41, paragraph c – Para Transit, part-time work assignments - Article 45 (and Cover sheet) – Wages, retroactivity, step increases - C-Van Schedule A and B – Wages, Vacation Accrual WAC 391-55-220 provides that at “least fourteen days before the date of the hearing, each party shall submit to the members of the panel and to the other party written proposals on all of the issues it intends to submit to arbitration.” The Panel timely received the written proposals from both Parties. The Union’s proposals include: 1. Term of Agreement: Article 45 Beginning date: 9/1/2010 Ending date: 6/30/2012 2. Wages – Schedule A Across the Board raises 2% increase 9/1/2010 2% increase 9/1/2011 3. Longevity Pay, Article 15.5 $0.45/hr after reaching 20 years of providing service to C-TRAN customers while working for C-TRAN, Vancouver Transit, Laidlaw or Dave’s Transporation. 4. Full-Time Fixed Route Extra Board Operators (Guarantee Hours, overtime, penalty) Article 21.2A 1. Position established on a five day basis 2. Guarantee of 8 hours work per day. 3. Overtime after 8 hours worked in one day. 4. Operators unavailable for service will penalized eight hours or run time, whichever is less. 5. Paratransit Extra Board Operators (Guarantee Hours, overtime, penalty) Article 21.2B 1) Operators must be available five days per week. 2) Minimum of 40 hours pay per week guaranteed. 3) Operators available less than 40 hours will have guarantee pro-rated. 4) Operators unavailable for service will be penalized eight hours or run time, whichever is less. Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 6

6. Paratransit & Part-time Operators Schedule A (Rate of Step Increases) Make the Paratransit and Part-time operators’ rate of step increase the same as the fixed route. 7. Full-time Paratransit Operators Schedule B (Vacation Accrual) Make the Paratransit and Part-time operators’ rate of vacation accrual the same as the fixed route. 8. Part Time Operators Schedule BN (Vacation Accrual) 1. Word change, no impact. For 1-3 years of service allow 6 days per year. 2. Word change no impact. For 3+ years of service allow 12 days per year 3. Remove minimum bid hour requirements. The Employer’s list of issues submitted to the Panel is reproduced as follows: Issue 1 – Article 15, Sections 1 and 5: rate of Pay, Hourly Rates, Longevity Pay. There are actually two separate issues within this heading. The first is C-TRAN’s proposal to change the mechanism used to round wage rates. C-TRAN withdraws its proposal on this issue. The second issue involves the Union’s proposal to add longevity pay. C-TRAN opposes that proposal and asks the panel to maintain the status quo. Issue 2 – Article 16, Section 2: Uniforms. C-TRAN withdraws its proposal on this issue. Issue 3 –Article 17, Sections 1, 2f, and 2g: Posting of fixed Route Work. C-TRAN withdraws its proposal on this issue. Issue 4 –Article 21, Sections 2A, 2B, 3, 5 and 7: Operations of Extra Board. C-TRAN proposes no change to this article and opposes the Union’s proposal to implement overtime over eight hours and an eight-hour daily guarantee for Extra Board Operators. Issue 5 – Article 22, paragraphs a, c and h: Operation of Connector. C-TRAN withdraws its proposal on this issue. Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 7

Issue 6 – Article 41, paragraph c” Paratransit part- time work assignments. C-TRAN withdraws its proposal on this issue. Issue 7 – Article 45 and Cover Sheet: Term of Agreement. C-TRAN proposes a three year term, running from September 1, 2010 through August 31, 2013. Issue 8 – Wage Schedule A: Wages, retroactivity, step progression. C-TRAN proposes no general wage increase for the first two years of the contract and a 0.5% increase, effective September 1, 2012. C-TRAN opposes the Union’s proposal to increase wages retroactively in 2010 and 2011 (this applies to issue 9 as well). Issue 9 – C-VAN Schedule A and B: Wages and Vacation Accrual. C-TRAN proposes the same adjustment to C-VAN wage table as set for under Issue 8 for Fixed Route Operators. C-TRAN opposes the Unions proposal to have Full-time Paratransit Operators accrue vacation the same as Full-time Coach Operators. By letter dated January 13, 2012 the Employer notified the Panel that discussions between the Union and the Employer had led to some modifications with regard to the issues to be resolved in interest arbitration. The pertinent part of that letter reads as follows: Based on discussions with Counsel for the Union, the parties have agreed on Issue 7, the term of the agreement. The Parties agree on a two-year term, running from September 1, 2010 through August 31, 2012 Accordingly, C- TRAN’s proposal on Issue 8, the General Wage Adjustment, is also modified. C-TRAN proposes no general wage increase for the two years of the contract. All other C-TRAN proposals remain the same as contained in our January 2, 2012 letter. As a result of these modifications, the Parties ultimately submitted six issues to the Panel. The Union requested a small Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 8

retroactive wage increase for each of the last two years (September 1, 2010 and September 1, 2011) and to make changes to five provisions in the existing collective bargaining agreement (CBA). The Employer argued to maintain the existing wage structure with no increase and to maintain existing language as per the five Union language change proposals. A hearing was held before Neutral Chairperson Timothy D.W. Williams and the two Partisan Arbitrators over a period of two days in Vancouver Washington. RCW 41.56.450 provides that “a recording of the proceedings shall be taken.” In compliance with the statute, an official transcript of the proceedings was taken, and a copy was provided to the Panel. At the close of the evidentiary hearing, the Parties were given the opportunity to do closing written arguments in the form of briefs. Both Parties chose to do so and the final posted copy was received by the Neutral Chairperson on the afternoon of March 21, 2012. Prior to receiving the briefs, the Union Partisan Arbitrator notified the panel that the Union wished to submit an additional piece of evidence which was not available until after close of hearing. The Employer indicated that it had no objection to the admission of this document and it was accepted into evidence as Union Exhibit 3K. In accordance with WAC 391-55-240, the Arbitrator declared the hearing closed on March 21, 2012. Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 9

PANEL’S AUTHORITY The interest arbitration panel’s authority to issue an award is generally derived from statute. RCW 41.56.492 provides in pertinent part: (2) If an agreement has not been reached following a reasonable period of negotiations and mediation, and the mediator finds that the parties remain at impasse, either party may demand that the issues in disagreement be submitted to an arbitration panel for a binding and final determination. In making its determination, the arbitration panel shall be mindful of the legislative purpose enumerated in RCW 41.56.430 and as additional standards or guidelines to aid it in reaching a decisions [decision], shall take into consideration the following factors: (a) The constitutional and statutory authority of the employer; (b) Stipulations of the parties; (c) Compensation package comparisons, economic indices, fiscal constraints, and similar factors determined by the arbitration panel to be pertinent to the case; and (d) Such other factors, not confined to the foregoing, which are normally or traditionally taken into consideration in the determination of wages, hours, and conditions of employment. The Panel is charged with the responsibility of carefully weighing the above factors when rendering its decision. The award is primarily the work of the Neutral Chairperson with input and comment by the Partisan Arbitrators. As he considered each issue in dispute, the Neutral Chairperson has faithfully applied the above criteria. Additionally, he has been careful to give special consideration to those criteria that were the focal points of the discussion between the two parties. Both Parties submitted extensive briefs which contain thorough and Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 10

thoughtful arguments. All of the material presented has been given appropriate consideration. The analysis does not respond to each of the points raised by the Parties. Rather, the Neutral Chairperson has chosen to focus the discussion on those factors that were paramount in reaching the final decision. RCW 41.56.450 grants the Arbitrator 30 days from the conclusion of the hearing to make “written findings of fact and a written determination of the issues in dispute.” The Neutral Chairperson requested and was granted an extension of time until May 7, 2012 to complete the award. In summary, the final decision is provided issue by issue and is based on a thorough review of the documentary and testimonial evidence, a careful study of the closing arguments and the faithful application of the statutory criteria. The final award was discussed by the panel prior to the Neutral Chairperson drafting the analysis and specific terms of the award. Panel members agreed that the decision would be issued under the signature of the Neutral Chairperson. The decision continues with an overview of the Parties positions followed by the award, issue by issue. Introduction: Interest Arbitration C-TRAN and ATU Local 757 pg. 11

ANALYSIS and AWARD Issue 1: Wages – Schedule A Proposals: This is the Union’s only retroactive proposal and it is asking that the Panel award a 2% raise effective September 1, 2010 and an additional 2% September 1, 2011. The Employer argues against granting any across the board raise for the two year term of the CBA. Discussion: Following mediation and prior to the arbitration hearing, the Parties agreed on the term of the collective bargaining agreement (CBA) – a two year agreement ending August 31, 2012. Additionally, C-Tran informed the Panel that it was withdrawing its active proposals. As a result, six Union issues were presented to the Panel, all of which if adopted require increased expenditures by the Employer. Of the six, the most significant new expenditure is the proposal to retroactively increase wages 2% effective September 1, 2010 and an additional 2% September 1, 2011. Not surprising, since all of the issues presented by the Union involve increased expenditures, a significant majority of the evidence and argument provided by the Parties focused on the ability or inability of the Employer to pay the increases. The Union’s basic position is that C-Tran has more than enough ability to pay for what it considers very modest and well Award: Interest Arbitration between C-TRAN and AT Local 757, pg. 12

justified proposals. The Employer’s basic position is that in a time of great economic distress no increases are justified. Ultimately the Panel is awarding a 2% pay increase effective July 1, 2012. Additionally, the overall award will provide some small gains for the operators as is set forth in the remainder of this document. The following summarizes the Panel’s conclusions with regard to the critical factors that led to the terms of the award. First, the Panel is mindful that the basic function of interest arbitration is to provide what should have been achieved at the bargaining table. It is by its nature a conservative process that only reluctantly expands on existing benefits and provisions. The Employer’s bargaining position is that it is willing to maintain all existing benefits, contract provisions and wages at existing levels but that economic conditions do not warrant any gains for members of the bargaining unit. The question, therefore, for the Panel is whether conditions were such that the Union should have been able to negotiate some improvements in the status quo for the period of time from September 1, 2010 through August 31, 2012. That is the question that the Panel considered as it reviewed the Parties’ evidence and arguments. Second, there are a number of factors that the interest arbitration process looks at to determine whether a wage Award: Interest Arbitration between C-TRAN and AT Local 757, pg. 13

increase is justified. One significant factor is any increase in cost of living data (CPI). The Employer sets forth at page 26 and 27 of its brief that wages for members of this bargaining unit over the last 10 years have more than kept up with increases in the CPI; both Fixed Route and Paratransit operators are on the plus side of increases in the cost of living. The Union does not dispute this basic fact. Obviously, therefore, any effort to negotiate a wage increase cannot be fueled by the CPI. Third, both Parties present comparability data. The Panel carefully studied the arguments with regard to those jurisdictions that were considered similar. Ultimately the Panel found five comparables: Whatcom, Kitsap, Community Transit, Intercity and Ben-Franklin. There is substantial difficulty in pinpointing an actual position with regard to a list of comparables. There are always unanswered questions such as, is there an interest arbitration award pending, when did this comparable receive its last wage increase and is there a wage increase scheduled for the near future? The Panel’s best assessment of the data indicates that the operators at C-Tran compare well with the above list and that the 2% increase effective July 1, 2012 maintains the positive relationship to the list of comparables. Award: Interest Arbitration between C-TRAN and AT Local 757, pg. 14

Fourth, ability to pay is another key factor considered in the interest arbitration process. The primary discussion in the instant case focused on C-Tran’s operating reserve. The Panel carefully considered all of the evidence related to the reserve and the Parties arguments regarding the use of the reserve to fund a wage increase both for 2010 and 2011. The Panel is also aware of the facts related to slashing the budget and cost reductions (U Br 43, E Br 16). The Panel draws two conclusions from this data. One conclusion is that operating reserves created by cutting program, personnel and other important budget items should only be used to fund wage increases if there is clear evidence that the wages are deficient (wages not comparable, high employee turnover, etc.). The second conclusion is that the evidence clearly establishes that C-Tran’s prudent handling of its finances and the sales tax increase that took effect April 1, 2012 ensures sufficient funds for the increases provided in this award. In its brief the Union accuses C-Tran of “maintaining excess reserves at the expense of the workers” (U Br 32). The Panel does not find evidence in support of this charge. For one thing, the evidence as discussed above indicates that wages have more than kept up with cost of living increases and compare favorably with comparable jurisdictions. The Panel is also Award: Interest Arbitration between C-TRAN and AT Local 757, pg. 15