INTEREST ARBITRATIONS

THE MATTER OF THE INTEREST ) ARBITRATOR’S ) ARBITRATION BETWEEN ) OPINION & INTEREST AWARD ) SPOKANE COUNTY ) ) “THE COUNTY” OR “THE EMPLOYER” ) ) AND ) ) SPOKANE COUNTY DEPUTY SHERIFFS’ ) ASSOCIATON ) ) “SDA” OR “THE ASSOCATON” ) PERC CASE# 128358-I-16 HEARING: March 8 2017 Spokane, Washington HEARING CLOSED: May 8, 2017 ARBITRATOR: Timothy D.W. Williams 2700 Fourth Ave., Suite 305 Seattle, WA 98121 REPRESENTING THE EMPLOYER: Bruce Schroeder, Attorney Jeff Tower, Undersheriff Spokane county Margaret Smith. Sr. Mgmt and Budget Analysis Bob Wrigley, Chief Budget Officer Courtney Taylor, Human Resources REPRESENTING THE ASSOCIATION: Jeff Julius, Attorney Kevin Ritchey, President Association David Skogen, Spokane County Detective Joe Bodman, Secretary Association Greg Lance, Vice-President Association Brian Wallis, Treasurer Association Lyle Johnston, Sergeant At Arms, Association APPEARING AS WITNESSES FOR THE EMPLOYER: Jeff Tower, Undersheriff Spokane county Margaret Smith. Sr. Mgmt and Budget Analysis Bob Wrigley, Chief Budget Officer Courtney Taylor, Human Resources Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 1

APPEARING AS WITNESSES FOR THE GUILD: David Skogen, Spokane County Detective Kevin Ritchey, President Association Stanley Finkelstein, Consultant in Fiscal Management and Budgeting EXHIBITS COUNTY’S 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 Employer’s Proposal A.6 Association’s Proposal A.7 Agency Description A.8 Organizational Chart A.9 Employer Roster B. COMPENSATION COMPARISONS B.1 Employer’s Methodology B.2 Population Served of Comparables B.3 Assessed Valuation of Comparisons of Comparables B.4 Sales Tax Comparisons of Comparables B.5 Property Tax Comparisons of Comparables B.6 Washington Counties Population Assessed Valuation Sales Tax and Property Tax Data B.7 Spokane County Local Area Profile B.8 Clark County Local Area Profile B.9 Kitsap County Local Area Profile B.10 Pierce County Local Area Profile B.11 Snohomish County Local Area Profile B.12. Yakima County Local Area Profile B.13 Geographic Location of Comparables B.14 2015 Spokane Count Interest Arbitration Award C. FINANCIAL OVERVIEW C.1 Spokane County Financial Conditions C.2 Costing of Proposals C.3 Sales Tax in Incorporated vs Unincorporated Areas – Chart C.4 Sales Tax in Incorporated vs Unincorporated Areas – Narrative C.5 Sales Tax Revenue – Top 10 Taxpayers. 2007 – 2017 C.6 GFOA Best Practice Memo, Appropriate Level of Unrestricted Fund Balance C.7 Medical Insurance Impact on General Fund C.8 PERS Rate Increases C.9 Impact of Budget Shift Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 2

Issue 1: Article 10, Appendix A. Wages 1.1 Employer’s Proposal 1.2 Employer’s Position 1.3 Cost of Living 1.3.1 CPI Information 1.3.2 Actual Salary vs CPI 1.3.3 Relative Cost of Living Differences 1.3.4 Salary Adjustment for Cost of Living Difference 1.3.5 Per Capita Income Comparison 1.3.6 Median Household Income Comparison 1.3.7 Median Home Price Comparison 1.3.8 Median Rent Comparison 1.3.9 Housing Affordability Comparison 1.3.10 Average Annual Wage Comparisons 1.4 Internal Comparisons 1.4.1 Contracts Settlement Overview 1.5 External Comparisons 1.5.1 2014 Base Wage Comparisons a. With AA Degree and/or Longevity b. With BA Degree and/or Longevity c. With MA Degree and/or Longevity 1.5.2 2015 Base Wage Comparisons a. With AA Degree and/or Longevity b. With BA Degree and/or Longevity c. With MA Degree and/or Longevity 1.5.3 2016 Base Wage Comparisons a. With AA Degree and/or Longevity b. With BA Degree and/or Longevity c. With MA Degree and/or Longevity 1.5.4 2017 Base Wage Comparisons a. With AA Degree and/or Longevity b. With BA Degree and/or Longevity c. With MA Degree and/or Longevity 1.6 Local Labor Market 1.6.1 Employment Security Department Labor Area Summary 1.6.2 Spokane County Unemployment Rate 2004-2015 1.6.3 Washington State Unemployment Rates by County 1.7 Recruitment and Retention Statistics 1.7.1 Residency of Lateral Hires, 2006 – Present 1.7.2 Residency of New Hires, 2006-Present 1.7.3 Total Number of Applicants, 2006-Present 1.7.4 Voluntary Non-Retirement Separations 1.8 Spokane County Comparable COLA History 1.9 Cost of Association ‘s Proposal ISSUE 2: Article 10.13.4 Detective Specialty Pay 2.1 Employer’s Proposal 2.2 Employer’s Position 2.3 External Comparisons 2.4 Cost of Association’s Proposal Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 3

ASSOCIATION’S OVERVIEW 1. Profile of Spokane County 2. County Organization Chart 3. Sheriff’s Office CURRENT OPERATING DOCUMENTS 4. 2008-2010 CBA 5. 2011 CBA Extension 6. February 8, 2015 Wilkinson Arbitration Award INTEREST ARBITRATION ISSUES 7. August 3, 2016 PERC Certification to Interest Arbitration 8. County’s Interest Arbitration Proposal 9. Spokane County Deputy Sheriff’s Association (DSA)Interest Arbitration Proposal COST OF LIVING 10. CPI-U S-T-B 1999-2016 11. CPI-W S-T-B 1999 COMPARISON OF WAGES/HOURS 12. 2015 Net Hourly Comparison – Deputy 13. 2015 Net Hourly Comparison –Sergeant 14. 2016 Net Hourly Comparison – Deputy 15. 2016 Net Hourly Comparison –Sergeant 16. 2017 Net Hourly Comparison – Deputy 17. 2017 Net Hourly Comparison–Sergeant 18. Comparison of DSA and Comparison Wage Increases 19. Comparison of DSA Wage Increases in CPI (U-June to June) 20. Comparison of DSA Wage Increases in CPI (U-Annual) 21. Comparison of DSA Wage Increases in CPI (w-June to June) 22. Comparison of DSA Wage Increases in CPI (w-Annual) COSTING 23. Sample of DS Positions 24. Sample from DSA Costing Spreadsheet 25. DSA’s Calculation of Cost of DSA Proposal HIRING/RETENTION 26. Budgeted DSA Positions 27. Sample of Hiring/Retention Information from County 28. Hires v Separations Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 4

WORKLOAD 29. DSA’s Call for Service 30. Budgeted DSA Position v Calls for Service COMPARATOR CBAs 31. Memory Stick with CBA’s ABILITY TO PAY 32. Stan Finkelstein Resume 33. Stan Finkelstein Report 34. Section 1 to Finkelstein Report 35. Section 2 to Finkelstein Report 36. Section 3 to Finkelstein Report 37. Section 4A to Finkelstein Report 38. Section 4B to Finkelstein Report 39. Section 4C to Finkelstein Report 40. Section 4D to Finkelstein Report 41. Section 4E to Finkelstein Report 42. Section 4F to Finkelstein Report 43. Section 5 to Finkelstein Report 44. Section 6 to Finkelstein Report 45. Section 7 to Finkelstein Report 46. Section 8 to Finkelstein Report 47. Section 9 to Finkelstein Report 48. Section 10 to Finkelstein Report 49. Section 11 to Finkelstein Report 50. Section 12 to Finkelstein Report 51. Section 13 to Finkelstein Report 52. Section 15 to Finkelstein Report 53. Success Measures and Expectations for Sheriff’s Office Crimes Against Persons Unit 54. Business Measures for Spokane County Sheriff’s Office Task Force and Spokane Valley Investigative Units 55. Repots for Deputies and Sergeants 56. Table for Sergeants for 2014 57. Index for CPIU 58. Index for CPIW Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 5

BACKGROUND The County of Spokane (County) and the Spokane County Deputy Sheriffs’ Association (Association) have a collective bargaining relationship. The last collective bargaining agreement (CBA) expired on December 31, 2014. The Parties have been negotiating a successor agreement but those efforts have not been successful. Under the State of Washington public sector collective bargaining statutes, the Parties are required to use interest arbitration in order to resolve a continuing dispute over the terms of a collective bargaining agreement (RCW 41.56.450). The Parties proceed to arbitration on issues certified by the Washington Public Employment Relations Commission (PERC). Consistent with the requirements of WAC 391-55-200 and by letter dated August 3, 2016 (C-A 4), PERC certified the following issues for arbitration: Issue 1: Article 10.1/Appendix A - Wage Scale, retroactivity of wage schedule Issue 2: Article 10.13.14 - Detective specialty pay (inclusion of detectives who are not currently receiving the specialty pay, e.g. major crimes detective) In accordance with WAC 391-55-205, each Party had the right to name one partisan arbitrator to serve as a member of an arbitration panel. Part one (1) of the cited code provides that “The use of partisan arbitrators shall be deemed waived if neither Party has notified the executive director of its appointee within Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 6

fourteen days following the issuance of a certification of issues for interest arbitration, and the Parties’ principal representatives shall then select the neutral chairperson”. Both Parties waived the use of partisan arbitrators and Timothy Williams was selected as the neutral Arbitrator. A hearing was held on March 8, 2017 in Spokane, Washington. At the hearing, both Parties had full opportunity to make opening statements, examine and cross-examine sworn witnesses, present documentary evidence, and make arguments in support of their positions. RCW 41.56.450 requires that a recording of the proceedings be taken. For this requirement an official transcript of the proceedings was made and a copy provided to the parties and one to the Arbitrator. The Parties agreed to submit written closing arguments, by May 8, 2017, in the form of briefs. The briefs were timely received by the Arbitrator and he declared the hearing closed on May 8, 2017. The Arbitrator requested and was granted an extension of time for filing the final decision. This document contains the Arbitrator’s findings, analysis and final award on the two certified issues. INTEREST ARBITRATION OVERVIEW Interest arbitration is a process commonly used in the public sector for bargaining units that provide critical public services Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 7

and whose work is deemed essential for public safety. Police, fire suppression personnel and prison guards usually fall into this category and interest arbitration is granted by statute in exchange for a prohibition against a work stoppage (strike). The statutes that provide for interest arbitration inevitably include a set of criteria that the arbitrator must use in fashioning his or her decision. The State of Washington follows this model in that it does provide for interest arbitration and in RCW 41.56.465 sets forth the following criteria for uniformed personnel: (1) In making its determination, the panel shall be mindful of the legislative purpose enumerated in RCW 41.56.430 and, as additional standards or guidelines to aid it in reaching a decision, the panel shall consider: (a) The constitutional and statutory authority of the employer; (b) Stipulations of the parties; (c) The average consumer prices for goods and services, commonly known as the cost of living; (d) Changes in any of the circumstances under (a) through (c) of this subsection during the pendency of the proceedings; and (e) Such other factors, not confined to the factors under (a) through (d) of this subsection, that are normally or traditionally taken into consideration in the determination of wages, hours, and conditions of employment. (2) For employees listed in RCW 41.56.030(7)1 (a) through (d) the panel shall consider a comparison of the wages, hours, and conditions of employment of personnel 1 The statute contains a footnote that provides: RCW 41.56.030 was alphabetized pursuant to RCW 1.08.015(2)(k), changing subsection (7) to subsection (14). RCW 41.56.030 was subsequently amended by 2011 1st sp.s. c 21 § 11, changing subsection (14) to subsection (13). Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 8

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. The Arbitrator’s opinion and awards in the instant case are submitted, having given careful consideration to the above criteria, on an issue-by-issue basis. The Arbitrator’s award is based on a careful analysis of the evidence and argument presented during the hearing, as well as the arguments found in the written briefs. On each of the two issues, the Arbitrator will set forth the position of the Parties, his analysis and the award. The County reminded the Arbitrator that “such other factors” found under (e) are routinely determined by interest arbitrators to include such things as “general economic conditions, internal parity with other bargaining units, turnover rates, and the fiscal condition of the employer” (C Br 3). Similarly, the Association notes that “other factors” usually include “recruitment and retention, the employer’s ability to pay or financial responsibility, work load and internal equity” (A Br 6). As is true in most interest arbitration proceedings, the Parties were represented by experienced, highly competent labor professionals. The arguments and evidence set forth by each were carefully crafted to address the pertinent points of dispute between the two Parties. The record in the instant case is voluminous with both Parties presenting extensive documentary and Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 9

testimonial evidence. The Arbitrator has carefully reviewed this evidence in the context of the above stated statutory criteria. While he has given consideration to the whole record, the Arbitrator will not attempt to provide an exhaustive discussion of all points raised or respond to every piece of documentary evidence. The simple fact is that each side provided compelling arguments sufficient to warrant adopting its position on the two issues. Ultimately the Arbitrator’s job is to sift through the arguments and the evidence and make a determination as to which Party made the stronger case; a case supported by the statutory criteria. The analysis that is provided is focused on setting forth the particular points of argument that led to the final award. Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 10

ARBITRATOR’S REASONING AND AWARD ON THE ISSUES ISSUE 1 The first issue involves wage increases which includes what is usually called cost of living adjustments to the salary schedule. Additionally, the wage issue includes the matter of retroactivity and the term of the collective bargaining agreement. The prior agreement expired on December 31, 2014. Thus the Parties are concluding negotiations on a successor agreement that would have commenced January 1, 2015. Article 10.1 provides that the wage schedule is found in Appendix A. Appendix A provides for three classifications: Deputy Sheriff Detective/Corporal Sergeant Position of the Association The Association proposes a three year agreement expiring on December 31, 2017. The Association proposes that the following new language be placed in Appendix A: Effective January 1, 2015 a retroactive (for anyone working at any time after 1/1/15, regardless of whether he/she is on the payroll at the time the contract is finally ratified by both the DSA and the Employer) 5% across-the-board increase. Effective January 1, 2016 a retroactive (for anyone working at any time after 1/1/16, regardless of whether he/she is on the payroll at the time the contract is finally ratified by both the DSA and the Employer) 3.25% across-the-board increase. Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 11

Effective January 1, 2017 a retroactive (for anyone working at any time after 1/1/17, regardless of whether he/she is on the payroll at the time the contract is finally ratified by both the DSA and the Employer) 3% across-the-board increase. Position of the County The County proposes a four year agreement that would expire on December 31, 2018. It offers the following retroactive wage increases: 1/1/15 1/1/16 7/1/16 1/1/17 7/1/17 1/1/18 7/1/18 Deputy Sheriff 0% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% Detective/Corporal 0% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% Sergeant 0% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% Analysis The majority of the Parties’ arguments and evidence focused on wage adjustments in the new collective bargaining agreement. The Arbitrator carefully reviewed all of this evidence and considered the arguments provided by the Parties. Ultimately he fashioned an award based by striking a balance amongst a number of offsetting variables. This analysis continues by systematically explaining the reasoning that led to the final determination. Comparability As is usually the case with interest arbitration, issues around comparability are a primary focus of the evidence and arguments provided by the Parties. Consistent with their historical practice, they are in agreement to use the following five Washington counties as comparable jurisdictions. Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 12

Clark Kitsap Pierce Snohomish Yakima On January 1, 2014 this bargaining unit was provided a 2.5% pay increase by Arbitrator Wilkinson. In that decision, Arbitrator Wilkinson used the above five five comparables when she wrote: In sum, a total compensation analysis shows that Spokane deputies would run roughly in middle of the comparable jurisdictions in pay, even without an increase during the current contract term…. The pay increase proposed by the DSA would again place the pay of bargaining unit members well above average. The County’s proposal also would cause the average bargaining unit pay to rise at all levels to above average, but with a more modest result. (A 6, P 11) Arbitrator Wilkinson discusses the matter of total compensation on pages 8 through 11 of her decision and she does not indicate how, if at all, she factored in the cost of the medical insurance benefit. The instant Arbitrator notes that the County argues against factoring in the cost of the Medical Insurance benefit (Br 13); the Association, on the other hand, strongly supports its inclusion (Br 9-11). In prior decisions this Arbitrator has set forth the conclusion that the appropriate method of comparing compensation between different jurisdictions is the actual, total hourly cost of providing services. Since the cost of the medical insurance benefit is usually the second largest cost, next to the basic wage, Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 13

it cannot be ignored. Moreover, negotiations leading to a collective bargaining agreement can and often do involve a tradeoff between wages and medical insurance. In some cases the parties will agree to a lesser medical insurance benefit in order to acquire higher wages and in other circumstances the exact opposite can happen. The Arbitrator would agree with the County that making the comparison is difficult because there are a number of different variables related to the cost of the benefit and the terms of the benefit that make a comparison troublesome at best. Still, a rough approximation can be made as to the impact on comparability when the cost of medical insurance is included and to exclude it makes a mockery of the concept of total cost of compensation. The Arbitrator carefully studied each Party’s comparability data. The County arrives at the conclusion that it does not have a comparability problem with regard to the wages being paid members of this bargaining unit. Moreover, the wage increase it is offering will, from the County’s perspective, maintain a favorable relationship to the wages provided by the comparables. The Association provides evidence that arrives at an exactly opposite conclusion; the County does have a comparability problem with regard to its wage structure. What quickly becomes evident in studying the data provided by the Parties is that the critical component involves the cost of Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 14

the medical insurance benefit; the Association includes it while the County leaves it out. Comparable jurisdictions have a richer medical insurance benefit and thus provide higher wages on a total compensation basis. This factor, therefore, supports providing wage increases greater than that offered by the County. Recruitment Recruitment and retention have regularly been considered by interest arbitrators as a significant variable in setting wage increases for a bargaining unit. The Arbitrator notes that finding acceptable, qualified candidates is not always easy for a police agency. The Association, in its brief, emphasizes the fact that, between 2009 and 2016, 99 members of the bargaining unit separated from employment. During this time the Department was able to recruit 69 employees to fill open positions. Undersheriff Tower testified that low wages were “definitely a factor” in recruiting difficulties. The Arbitrator takes special notice of the obvious fact that the City of Spokane is a direct competitor for the Spokane County Sheriff’s Department when it comes to recruitment and retention. There is evidence, for example, that officers leave the Sheriff’s Department to go work for the City while the reverse is not true. Simply put, the City pays better. In short, recruitment and retention is a factor that supports a wage increase greater than what the County is offering. Award Summary: 2015 Interest Arbitration between City of Vancouver and VPOG, pg. 15