WISCONSIN CITY MANAGERS ASSOCIATION

COLLECTIVE BARGAINING IN TROUBLED TIMES:

COMMENTS FROM A GREY FOX

Dean R. Dietrich, Esq.

Ruder Ware, L.L.S.C.
500 First Street, P.O. Box 8050
Wausau, WI 54402-8050
715.845.4336
ddietrich@ruderware.com

Wausau Office: Eau Claire Office:

500 First Street, Suite 8000 402 Graham Avenue
Wausau, WI 54403 Eau Claire, WI 54701
715.845.4336 715.834.3425

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I. CRITERIA UNDER THE BARGAINING LAW.

A. Statutory language:

111.70(4)(cm)7

7. ‘Factor given greatest weight.’ In making any decision under the

arbitration procedures authorized by this paragraph, the arbitrator or
arbitration panel shall consider and shall give the greatest weight to any
state law or directive lawfully issued by a state legislative or
administrative officer, body or agency which places limitations on
expenditures that may be made or revenues that may be collected by a
municipal employer. The arbitrator or arbitration panel shall give an
accounting of the consideration of this factor in the arbitrator’s or panel’s
decision.

7g. ‘Factor given greater weight.’ In making any decision under

the arbitration procedures authorized by this paragraph, the
arbitrator or arbitration panel shall consider and shall give greater
weight to economic conditions in the jurisdiction of the municipal
employer than to any of the factors specified in subd. 7r.

7r. ‘Other factors considered.’ In making any decision under the

arbitration procedures authorized by this paragraph, the arbitrator or
arbitration panel shall also give weight to the following factors:

a. The lawful authority of the municipal employer.

b. Stipulations of the parties.

c. The interests and welfare of the public and the financial

ability of the unit of government to meet the costs of any
proposed settlement.

d. Comparison of wages, hours and conditions of employment

of the municipal employees involved in the arbitration
proceedings with the wages, hours and conditions of
employment of other employees performing similar
services.

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 e. Comparison of the wages, hours and conditions of
employment of the municipal employees involved in the
arbitration proceedings with the wages, hours and
conditions of employment of other employees generally in
public employment in the same community and in
comparable communities.

f. Comparison of the wages, hours and conditions of

employment of the municipal employees involved in the
arbitration proceedings with the wages, hours and
conditions of employment of other employees in private
employment in the same community and in comparable
communities.

g. The average consumer prices for goods and services,

commonly known as the cost of living.

h. The overall compensation presently received by the

municipal employees, including direct wage compensation,
vacation, holidays and excused time, insurance and
pensions, medical and hospitalization benefits, the
continuity and stability of employment, and all other
benefits received.

i. Changes in any of the foregoing circumstances during the

pendency of the arbitration proceedings.

j. 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 through voluntary collective bargaining,
mediation, fact-finding, arbitration or otherwise between
the parties, in the public service or in private employment.

II. WHAT HAVE ARBITRATORS SAID ABOUT LOCAL ECONOMIC

CONDITIONS?

A. It is clear that an interest and welfare of the public argument can justify a low
final offer under two sets of circumstances:

1. Where the economic circumstances of the employer can be shown to be

different than its comparables.

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 2. Where none of the primary comparables are settled and the low offer
comes closest to the settlements reached in an expanded comparable
group.

B. Some arbitrators have not given much weight to local economic conditions.

1. “It is undisputed that Forest County is an economically poor county. It is

characterized by sparse population, a narrow tax base, low wages, higher
unemployment, and low per capita income. Historically, department
employees have been the lowest paid among comparable counties. While
the County has not claimed a lack of ability to pay per se, it has argued
that its final offer is more consistent with what its county residents can
afford to pay....Under the Employer’s final offer, the gap between salaries
for Forest County deputies and deputies in comparable counties would
further widen. The arbitrator is cognizant of the economic constraints
facing the County but is persuaded that the final offer of the Association is
the more reasonable of the two.” Arbitrator Kay Hutchinson, Forest
County (Sheriff’s Department), Dec. No. 27786-A, 4/18/94.

2. “The County, through a series of exhibits not described in this decision,

has demonstrated clearly that Forest County is poor economically in
relationship both to the comparable counties and to counties in the State.
As such, it is in the interest and welfare of the public to minimize the cost
of the new Agreement...the Union’s final offer is selected.” Arbitrator
Edward Krinsky, Forest County Highway Department, Dec. No. 26025-A,
1/5/90.

3. “This Mediator/Arbitrator would add as he has previously stated that

economic data is diminished in value to some degree unless the Employer
can show some specific adverse impact on the community. There is also
good reason to be cautious of “economic data” when summarized in
newspaper or magazine reports. Such “data” is often a broad and
oversimplified assessment of larger macro-economic tendencies.”
Arbitrator Gil Vernon, Kimberly Area School District, Dec. No. 29882,
4/20/83.

4. “With regard to the condition of the local economy, the Arbitrator finds
that it remains strong, despite the dire predictions and uncertainty
expressed by District witnesses. If there are to be massive layoffs as a
result of the acquisition of the mill by Georgia-Pacific, as of date of the
hearing, those have not come to pass. Accordingly, the Arbitrator
concludes that the record evidence does not support the negative view of
the Nekoosa economy which is a basic assumption which underlies the
District’s final offer.

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 Even if such a downturn were to occur, the evidence reflects that the
economy of the paper industry in this area of the state is strong. If the
community wishes to retain residents should a downturn occur as a result
of the acquisition of GNN by Georgia-Pacific, it would do well to
maintain the quality of its school district. That would serve as a
stabilizing factor to encourage residents to remain and perhaps encourage
others to move to Nekoosa. In light of the condition of the economy as it
is “frozen” as of the date of the hearing in this mater, the Arbitrator
concludes that this factor provides some support to the selection of the
Association final offer for inclusion in a successor agreement.” Arbitrator
Sherwood Malamud, Nekoosa School District, Dec. No. 26611-A, 6/4/91.

C. Some Arbitrators have given much consideration to local economic conditions. It

seems the more drastic the situation is, the more weight they place on economic
conditions.

1. “In this proceeding, the Employer has not only made general assertions
about taxpayer difficulties in funding wage increases, particularly the
Association’s package, it has documented these difficulties in farms,
declining milk and corn prices, and percentage of county residents
employed in farming, forestry, and fishing and as laborers as a comparable
basis. While the County does not use this evidence to make an inability to
pay argument, it persuasively argues that there is a real difficulty to pay
the higher costs of the Association’s package.” Arbitrator June Miller
Weisberger, Buffalo County (Sheriff’s Department), Dec. No. 27523-A,
6/21/93.

2. “Vernon County’s low per capita income, the sharp rise in tax
delinquency, and the sharp drop in 1982 farm income all point in the
direction of a moderate wage increase such as the County is proposing.”
Arbitrator Gordon Haferbecker, Vernon County (Courthouse and Social
Services Unit), Dec. No. 19843-A, 11/19/82.

3. “The evidence establishes that the District has one of the lowest equalized
valuation in the Conference as well as in the geographic area, with an
equalized valuation of $34.9 million. It is compromised primarily of
farms and agriculturally dependent businesses, and its residents are subject
to the problems generally facing the agricultural community. The
evidence indicates this District simply does not have the same financial
resources that other districts in the Conference enjoy. This is undoubtedly
a factor which has contributed to the District’s relative standing in the area
of salaries within the Conference.” Arbitrator Neil Gundermann, Taylor
School District, Dec. No. 22927-A, 4/4/86.

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 4. Arbitrator concludes that information regarding economic conditions are
slightly below average when compared to economic conditions in counties
in agreeable comparable grouping and concludes that economic conditions
merit only some consideration, but not determinative consideration, under
the “greater weight” factor. Arbitrator considers dramatic increase in
health insurance premiums and notes that rise in premiums is so great that
it overshadows the impact of the proposed wage increases. Arbitrator
June Weisberger, Forest County (Courthouse Employees Association),
Dec. No. 58796, 10/28/01.

III. EVIDENCE ON LOCAL ECONOMIC CONDITIONS MUST BE PUT INTO

EVIDENCE. WHAT IS AVAILABLE TO PROVE LOCAL ECONOMIC
CONDITIONS FOR A MUNICIPALITY?

A. Overall economy.

1. Report of economic conditions and economic forecast.

2. Welfare statistics - growth or % of claims.

3. County census statistics.

4. Consumer Price Index.

5. Farm commodities.

B. Local income picture.

1. Chamber materials on local business.

2. Real estate sales and new home construction.

3. Percent of industry and residential and farm property vs. business property
in the area.

4. Growth in sales industry and new stores opening.

5. Volume of sales from local sales industry - counties with .5% sales tax
have statistics on amount of sales in county and income generated.

C. Employment picture.

1. Employment statistics.

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 2. Private sector settlements from local businesses.

D. Property values.

1. Increases/decreases in equalized valuation.

2. Number of home foreclosures and defaults on loans.

3. Tax delinquencies and increase in amount of delinquencies.

E. Local businesses.

1. Business growth in communities.

2. Business closings and businesses leaving the area.

3. Layoffs in local business from UC office or newspapers.

4. Business closings - state would have statistics on this.

5. Stock and market success of businesses located in communities.

IV. USING THE “GREATEST WEIGHT” CRITERIA.

A. Arbitrators have been reluctant to apply the “greatest weight” criteria to limit or
control the arbitrator’s review of final offers to that single issue. Arbitrators have
suggested that the “greatest weight” criteria is a form of an “ability to pay”
standard which requires the arbitrator to consider the impact of laws which restrict
a local government unit’s finances. Arbitrators have also held that all factors
must be considered in every case, thus the “greatest weight” factor does not have
an absolute veto over lesser factors without regard to the evidence supporting
those lesser factors.

B. Arbitrator decisions applying the greatest weight factor.

1. There have been very few decisions that have turned directly on the
greatest weight factor. In many cases, the arbitrator has held that the
employer has not provided sufficient data to support a finding that the
greatest weight factor affects the outcome of the decision.

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 2. Arbitrators have held:

“For the ‘greatest weight’ factor to become operable, the limits

must be specifically shown by the affected government unit. To
rely merely on representations, without any evidence of the limit
and the affect that cost of the offers, would have on the limit would
require the arbitrator to do nothing more than guess. . . .”
Arbitrator Kessler, Marathon County (Courthouse),
Dec. No. 29513-A (8/99).

3. Arbitrators have tried to create additional standards under the greatest

weight criteria, such as:

“This arbitrator believes ‘greatest weight’ factor as related to

revenue limitations was meant to have the arbitrator, in individual
cases and in appropriate circumstances, take into the account the
financial and budgetary influence, impact, and pressures that come
to bear under legislative revenue limitations.” Arbitrator Vernon,
Tomahawk School District, Dec. No. 30024-A (2001).

4. Arbitrators have also struggled with what type of data is necessary to

support the greatest weight factor:

“The statistics presented by both parties regarding the district’s fiscal

plight are numbing. There is not end of data from which both parties can
argue the merits of their assertions that the State imposed revenue caps
and resultant budgetary constraints support selection of their final offer.
When pouring over the seemingly endless financial measuring sticks of
the district’s financial help, one can easily understand the frustration that
parents, students, taxpayers, employees, and board members must
experience in attempting to sort it all out when trying to decide what is the
right course to take regarding any particular issue that impacts the district
financially …

“But, I also believe that an employer’s final offer does not automatically
carry the day if it can be shown that adoption of the union’s offer would
exasperate an already difficult fiscal and budgetary situation brought on by
the State imposed expenditure limitations and revenue controls. It is but
only one factor to be considered among the many legislatively established
criteria to be utilized by arbitrators when deciding which final offer to
select … that seems clear from the legislative directive to arbitrators that
they must give an accounting of his/her/their consideration of this factor in
coming to a decision as to which parties final offer to select.” Arbitrator

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 Yaeger, Whitewater School District (Support Staff), Dec. No. 30741-A
(9/04).

V. DECISIONS APPLYING THE GREATER WEIGHT FACTOR.

A. Two circumstances seem to arise where local economic conditions will likely be
considered:

1. Where the economic circumstances of the employer can be shown to be

substantially different than its comparables.

2. Where none of the primary comparables are settled and the low offer
comes closest to the settlements reached in an expanded comparable
group.

B. Arbitrators have struggled with the presentation and value of data on local
economic conditions, such as:

“This Mediator/Arbitrator would add as he has previously stated that

economic data is diminished in value to some degree unless the Employer
can show some specific adverse impact on the community. There is also
good reason to be cautious of ‘economic data’ when summarized in
newspaper or magazine reports. Such ‘data’ is often a broad and over
simplified assessment of larger macro-economic tendencies.” Arbitrator
Vernon, Kimberly Area School District, Dec. No. 29882 (4/83).

C. Arbitrators have also struggled with how you apply the greater weight factor, such
as:

“This factor is tied in with the traditional factors and does not stand alone
as does the greatest weight factor, which must be considered separately
and given weight above all else. The greater weight factor should be
considered along with the other factors but is given greater weight. The
type of data necessary to provide an informed opinion might include
employment and household incomes, the ranking of the community among
other similar communities, and the relative quality of life information.”
Arbitrator Schiavoni, Columbia County (Highway), Dec. No. 28983-A
(9/97).

D. Some unions have used the greater weight criteria to support their final offer
showing that the employer is in good economic conditions or good economic
climate. Some arbitrators have rejected this theory:

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 “The Association’s argument is based on the assumption that if the
economic conditions are good, this favors the more expensive of the
offers. This logic is flawed. Good economic conditions means that the
financial situation is such that a more costly offer may be accepted, that it
will not be automatically excluded because the economy cannot afford it.
While bad economic conditions would foreclose consideration of an
expensive benefit, good economic conditions allows the analysis to
continue.” Arbitrator Engmann, North Central VTAE District (Teachers),
Dec. No. 29303-B (9/98).

VI. NEGOTIATING OVER HEALTH INSURANCE COSTS.

A. Cost sharing.

1. Flat dollar amount employer/employee contribution.

a. Actual premium stated in contract.

b. Stated amount above or below premium.

2. Percentage contribution.

Often employers support premium payment shifting proposals as intended

to control health care costs. At least one arbitrator has expressly rejected
the argument reasoning that other factors are primarily responsible for the
increase in health care costs. School District of Random Lake, Dec. No.
26390-A, Stern, (10/90).

3. Increase over X%.

a. Reopener/side letter.

b. Trigger cost sharing.

4. Reduction of salary schedule to “finance” payment of premium increases.

5. Section 125 Plans.

B. Cost containment.

1. Deductibles.

a. Up front.

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 b. Major medical.

c. Prescription drug.

2. Coverages.

a. Prescription drug.

b. Psychiatric -- 30-day mandate.

c. “Experimental” treatment.

3. Change of carrier/self-funding.

Union’s lack of a proposal to provide the District with the flexibility to

change insurance carriers, while the employer pays 100% of the
premiums, is unreasonable. Beecher Dunbar Pembine S.D.,
Dec. No. 26421-A, Malamud (1/91).

4. Cost containment options.

a. Comprehensive (co-pay) plan.

b. Routine preventive procedures -- cost sharing.

c. Pre-existing conditions clause.

d. Preadmission review/certification.

e. Second opinions.

f. Outpatient procedure/surgery.

g. Short-stay maternity.

h. Weekday admission.

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 5. Arbitration decisions.

a. Cost Containment.

Cost containment achieved by saving $40/month premium cost by

changing to WPS Care Share program. Green County (Sheriff’s
Dept.), Dec. No. 26605-A, Kerkman (4/91).

5% employee contribution legitimate based on District’s desire to

achieve some form of health insurance cost containment and
uniform policy among internals. Ladysmith S.D. (Nonprofessional
Staff), Dec. No. 26897-A, Yaffe (11/91).

Structuring a cost sharing scheme which recognizes out-of-pocket

expenses heightens awareness as to the magnitude of the health
insurance problem and its importance in negotiations. Kiel Area
S.D., Dec. No. 26549, Vernon (1/91).

Implementation of managed health care plan, small employee

contribution and increased deductible for drugs justified --
supported by internals and generally adopted elsewhere. City of
Janesville, Dec. No. 26965-A, Stern (12/91).

b. Qualitative Differences Between Plans.

“An employee’s compensation is best measured by what he/she

receives, not by what the employer pays.” Smaller level of
employer contribution does not make the Union’s case without
evidence regarding qualitative differences between plans. Dane
County (Sheriff’s Dept.), Dec. No. 44775, Richard Tyson (1/92).

C. Criteria for change.

1. Arbitrator Criteria, as summarized by Arbitrator Gil Vernon in Elkhart

Lake-Glenbeulah S.D., Dec. No. 26491-A (1990):

Standard 1 -- Demonstrated need for the change.

Standard 2 -- Degree to which the proposal reasonably addresses the

need.

Standard 3 -- Support among the comparables.

Standard 4 -- Nature of the quid pro quo.

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 2. Adequate Quid Pro Quo.

6% wage offer not adequate quid pro quo in catch-up situation. City of
Viroqua (Police Dept.), Dec. No. 26974-A, Zeidler (2/92).

1% higher wage offer for unit than wages to unorganized employees

considered adequate quid pro quo. Village of West Salem (Police Dept.),
Dec. No. 26975-A, David Johnson (2/92)

Superior wage increase made up for potential loss of earnings incurred by

paying cost of increased deductible. Green County (Sheriff’s Dept.),
Dec. No. 26605-A, Kerkman (4/91)

The “quid” - employees pay 5% of health insurance premiums. The

“quo” - employer offered $175 per employee per year more than the union
and it included improvements overall to the salary schedule. Arbitrator
agreed with the union that this was lacking and rendered the employer’s
proposal unreasonable. However, he found that the union’s intransigence
in making any movement on health insurance was unjustified and on the
balance more unreasonable than the employer’s proposal. Kiel Area
School District, supra.

3. Need For Quid Pro Quo.

Where change is de minimis and party requesting change has met burden
of proof, a trade-off is not always necessary. Brown County (Mental
Health Center), Dec. No. 45310, Rose Marie Baron (12/91)

Quid pro quo not mandatory where employer proposed changing dollar
amount for health insurance (previously at 100%) to amount that would
result in a less than 100% payment. Albany School District, No Dec. No.,
Martin Wagner (1/91)

4. Failure to Demonstrate Need for the Change.

In a case pitting a union proposal to substitute 100% payment of premiums

for dollar caps, against an employer proposal to limit employer premium
payments for traditional health insurance coverage to 105% of the highest
HMO premiums, the arbitrator found that neither party demonstrated a
need to change the status quo. The arbitrator introduced an additional
consideration: proof that the party had “attempted to make its change over
a long period of time, only to be frustrated by the other party’s
intransigence.” He selected the employer’s proposal, noting it preserved

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 control of its health insurance cost increases, a policy accomplished by the
prior contract language, albeit much more modestly. City of St. Francis
Police Department, Dec. No. 26577-A, Edward Krinsky, (5/91).

5. Demonstration of Need for the Change.

Arbitrator Vernon found that the employer established its need for health
insurance modifications with evidence that the premiums increased 76%
in two years and 222% in five years, taking the district from the least
expensive premiums to the second most expensive among the
comparables. Kiel Area School District, supra.

D. Comparables on insurance issues.

1. Other internal units.

Uniformity of contributions among internal units. Menomonee Falls S.D.,

Dec. No. 26916-A, Anderson (12/91); City of Rice Lake (Elec. Utility),
Dec. No. 26888-A, Krinsky (11/91); City of Rice Lake (Police),
Dec. No. 26836-A, Gundermann (10/91); Marshfield Electric & Water
Utility, Dec. No. 43598, Krinsky (8/91).

2. Other external units.

3. Other area public sector employees.

VII. PERMISSIVE AND MANDATORY SUBJECTS OF BARGAINING.

A. A mandatory subject of bargaining is distinguished from a permissive subject of

bargaining if the topic “primarily” or “fundamentally” relates to wages, hours and
conditions of employment, which is known as the “primary relation test.” [City
of Brookfield, 11489-B, 11500-B, 2/27/79, Wisconsin Supreme Court]

B. The applicable standard for determining whether a particular decision is a

mandatory subject of collective bargaining is the “primary relationship” standard.
The question is whether a particular decision is primarily related to the wages,
hours and conditions of employment of the employees, or whether it is primarily
related to the formulation or management of public policy. Where the
governmental or policy dimensions of a decision predominate, the matter is
properly reserved to decision by the representatives of the people. The test can
only be applied on a case-by-case basis, and is not susceptible to broad and
sweeping rules that apply across the board to all situations. [Racine Unified
School District, 12055-B, 11/30/77, Wisconsin Supreme Court]

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 C. Implicit in a finding that a subject is a nonmandatory or permissive subject of
bargaining is the conclusion that the employer may act without obtaining the prior
agreement of the union. To hold otherwise would be to reduce the distinction
between mandatory and permissive subjects to a nullity. This is not to say that an
employer may take unilateral action which has an impact violative of an existing
collective bargaining agreement. [Racine Unified School District, 13696-C,
13876-B, 4/4/78, Fleischli]

D. A holding that, by once agreeing to a proposal which is a permissive subject of

bargaining the employer forever waives its right to contend that the subject is
permissive, would deter collective bargaining settlements. An employer would be
reluctant to agree upon a permissive subject under such a rule. It is more
consistent with the purposes of MERA to encourage employers to consider
agreeing on permissive subjects where doing so would be helpful in settling a
labor dispute. Accordingly, the employer was not barred from arguing that
certain disputed items were permissive subjects of bargaining even though it
previously had incorporated said subjects into collective bargaining agreements.
[City of Wauwatosa, 15917, 11/9/77, WERC]

E. The Wisconsin Supreme Court has interpreted s. 111.70(1)(d) as setting forth a

“primary related” standard. The standard requires the WERC in the first instance
and a court on review thereafter to determine whether proposals are “primarily
related” to wages, hours and conditions of employment, to educational policy and
school management and operation, to management and direction of the school
system or to formulation or management of public policy. The court has
construed “primarily” to mean “fundamentally,” “basically,” or “essentially.”
This primarily related standard is a balancing test which recognizes that the
municipal employer, the employees, and the public have significant interests at
stake and that their competing interests should be weighed to determine whether a
proposed subject for bargaining should be characterized as mandatory. If the
employees’ legitimate interest in wages, hours and conditions of employment
outweighs the employer’s concerns about the restriction of management
prerogatives or public policy, the proposal is a mandatory subject of bargaining.
In contrast, where the management and direction of the school, system or
formulation of public policy predominates, the matter is not a mandatory subject
of bargaining. In such cases, the professional association may be heard at the
bargaining table if the parties agree to bargain or may be heard along with other
concerned groups and individuals in the public forum. [West Bend Joint School
District (sub nom. West Bend Education Association v. WERC), 18512, 11/13/84,
Wisconsin Supreme Court)

F. The WERC in declaratory ruling proceedings under s. 111.70(4)(b) and s.

111.70(4)(cm)6.g., Wis. Stats., is required to decide whether a proposal made in
negotiations by either party is a mandatory, permissive or prohibited subject of

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 bargaining. When making that determination, the Commission looks to the
language of the proposal itself. If the proposal is ambiguous and may be
construed to primarily relate to the formulation or management of public policy, it
will be found to be permissive even if the proponent of the proposal asserts that
no such permissive interpretation was intended. [Nicolet High School District,
19386, 1/12/82, WERC, Slavney concurred in ruling]

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 APPENDIX A

Arbitrators have recognized the importance of maintaining an internal settlement pattern

among bargaining units negotiating with a single employer, especially when dealing with
fringe benefits like health insurance.

Arbitrator Kessler in Columbia County Health Care, Dec. No. 28960-A (8/97) noted:

A revision in a fringe benefit that has been agreed to by a substantial majority of

the bargaining units in a county or municipality should not be ignored in the
remaining units just because a minority of the bargaining units or a single
bargaining unit, will not accept it. Good public policy does not permit
government to be whipsawed by the multiple bargaining units over a single item
which the great majority of the units have accepted. When that occurs, imposition
of the disputed item may be appropriate even without quid pro quo. Particularly
in the administration of health insurance benefits, a government should be treating
all of its employees the same.

Arbitrator Stern, in City of Oshkosh, Decision No. 15258-A (4/77), dealing with that city’s
police unit and the City’s proposal for a uniform contribution toward health insurance wrote:

Where an employer has persuaded the other groups of employees with which it
bargains to adopt a uniform contribution toward health insurance, a final
remaining group should not be able to use the power of the Arbitrator to achieve a
result in bargaining that differs from that achieved by other groups unless there is
a good reason for such a different.

That view was also recognized by Arbitrator Friess in Pierce County Sheriff’s, Decision No.
28187-A, (4/95), where he wrote:

I think the County has an extremely strong (perhaps classic) case for the arbitrator
to place controlling weight on the internal settlement pattern. The fact that four
out of the six organized units settled (and 5 of 7 county employee groups) with
the exact same offer as being put forth here to this unit is extremely important.
Given that the other “hold out” unit is represented by the same union is also an
important factor. The negative impact on the future bargaining environment of an
arbitration award that goes against voluntary settlement pattern cannot be over
stressed.

Arbitrator Raymond McAlpin held in City of Oshkosh, Dec. No. 28284 & 28285 (11/2/97):

This Arbitrator has found in other interest arbitrations that where there are
separate bargaining units, those bargaining units do have the right to bargain for
terms and conditions which would take into account their unique status and
different job duties and responsibilities. This is particularly true when comparing
police and fire units with other City employees. However, in the area of health

{W0229075.DOC\2} -16-
 insurance, with the significant costs demonstrated and with the burdens of health
care falling upon employer and employee, it seems to this Arbitrator that it is
appropriate for the Employer to seek out consistency among its represented
employees and indeed all of its employees. Therefore, the internal comparables
are an important consideration, and they do favor the Employer.

In Green County (Highway), Dec. No. 26979-A (03/92), Arbitrator Zel Rice wrote:

The internal comparables are a very important consideration for an arbitrator to

consider in matters such as this. Wage increases should be quite similar for all of
an Employer’s bargaining units in the absence of some unusual circumstance.
Uniform fringe benefits for all bargaining units are equally important in the
absence of some unique circumstances. The Employer’s agreements with all of
its other bargaining units include the new insurance plan with the same
deductibles that the Employer has agreed on with the Union. All of the other
bargaining units have agreed to contribute 10 percent of the health insurance
premium. Each of them has received a wage increase of 4.25 percent the first
year of the agreement and 6 percent the second year of the agreement as a quid
pro quo for accepting the new insurance plan with deductibles. The evidence
discloses no unique circumstance that would justify departing from that pattern of
wage increases and contributions towards the health insurance premium.

Arbitrator James Stern held in Wisconsin Rapids Water & Electric, Dec. No. 46223 (11/92):

The arbitrator agrees that internal comparables are usually given more weight
than external comparables when evaluating arguments about health insurance
benefits, deductibles and sharing of the premium. As the Employer points out in
its reply brief, this arbitrator has given great weight to the internal comparables in
his decisions in the Kenosha Unified School District Decision No. 26768-A
(8/6/91) and the City of Janesville police Decision No. 269656-A (12/91).

Arbitrator Stern also wrote in City of Janesville, Dec. No. 26965-A (12/91):

This arbitrator has the impression that most arbitrators, when faced with this
choice of relying primarily on internal rather than external comparables in
determining which position on fringe benefits is correct, have chose to rely on
internal comparisons. In the situation where the last group to settle has held out in
order to avoid a contractual change or settlement pattern agreed to by all other
groups in a particular city, arbitrators have been reluctant to issue arbitration
awards which break negotiated patterns.

{W0229075.DOC\2} -17-
As stated by Arbitrator Sherwood Malamud in Marinette County (Sheriff’s Department),
Dec. No. 22910-A, (4/86):

The internal comparability factor, the settlements achieved by one employer with
the remainder of its employees, is a factor frequently considered under this catch-
all criterion. Whether this factor is considered under this criterion or under the
comparability criterion, it is always given great weight. The Association
complains that it had no input into the settlements reached between this Employer
and its other bargaining units. The imposition of such settlements upon this
bargaining unit, the Association argues, will only serve to frustrate the collective
bargaining process.

The Association ignores the reason for arbitral recognition of other internal
settlements where those settlements establish a pattern of agreement. Where an
employer and the representatives of its various collective bargaining units reach
agreement at the same percentage increase and fringe benefit package, such
pattern of settlement reflects the collective decision of many individuals. . . .

An award which runs contrary to that pattern, can and most often is most
destructive to the collective bargaining process. An interest award which is
contrary to a pattern of settlement, would only prevent the achievement of any
consensus on what is an appropriate pattern of settlement. No employee group
will want to settle first, at the risk of finding that it has settled too low. The
Employer may be reluctant to put forward its best offer, out of fear that an interest
award will only increase its best offer, and thereby force the Employer to accept a
more expensive pattern of settlement.

There are circumstances, even in the fact of a pattern of agreement, whereby a

collective bargaining unit may persuade a neutral to “break the pattern.”
However, it is necessary for the unit advocating a break in the pattern, to
demonstrate by convincing evidence that there is some factor, need or
consideration which is unique to that unit which is so compelling that it justifies
the breaking “of the pattern.”

In Sauk County (Highway Department), Dec. No. 26359-B (11/90), Arbitrator Gil Vernon stated
in this regard:

The other factor that got substantial attention was the internal comparisons.
Certainly, when one employer bargains with several different unions, equity
concerns arise about treating these different groups fairly relative to each other.
For this reason, arbitrators give weight to internal comparisons. . . .

{W0229075.DOC\2} -18-
In Marinette County (Social Services), Dec. No. 22574-A (9/85), Arbitrator Jay Grenig similarly
stated:

In addition, arbitrators have given great weight to settlements between an

employer and its other bargaining units. See Brown County, Dec. No. 20455-B
(Michelstetter, 1983); Manitowoc County, Dec. No. 19942-B (Weisberger, 1983);
Milwaukee County, Dec. No. 20562-B (Fleischli, 1983); City of Brookfield, Dec.
No. 19573-B (Rice, 1982); City of Oconto, Dec. No. 19800-B (Monfils, 1982).

The frustration of a union’s being locked into an established pattern of settlement

is understandable, but, in the absence of compelling circumstances, late
settlements above a pattern established earlier penalize employees involved in
voluntary negotiations. This is destructive of the collective bargaining system and
discourages voluntary settlements:

In Dane County (Sheriff’s Dept.), Dec. No. 25576-B (2/89), Arbitrator Daniel Nielsen addressed
the issue of the importance of adhering to internal patterns of settlements. He stated:

The policy favoring adherence to established patterns of settlement is rooted in

declared public policy of encouraging “voluntary settlement through the
procedures of collective bargaining.” Failure to honor an existing pattern will
undercut voluntary collective bargaining, since it tells other units that they should
have taken their chances in arbitration, rather than settling on terms that, while
less than ideal, were consistent with other internal settlements. Moreover, the use
of arbitration to secure superior benefits or conditions of employment will
inevitably have an adverse effect on the morale of other workers. Placing aside
considerations of how an inconsistent result in this case might affect other
workers, the internal pattern should be favored since it is more likely to
realistically reflect the outcome of successful negotiations. In most cases, an
employer which has adopted a firm position in favor of uniformity will not
abandon that position for the sake of settlement with one hold-out unit.

{W0229075.DOC\2} -19-
 APPENDIX B

Arbitration Decisions on Health Insurance Changes

Kenosha County (Correction Officers), Dec. No. 30797-A, (Weisberger):

As for the important changes in health insurance proposed by the County, its final
offer is designed to bring this unit’s health insurance in line with those of the
County’s other bargaining units and is intended to address the national issue of
rapidly rising health care costs which are adversely affecting private and public
sector employers and employees alike. In an effort to reduce somewhat the
impact of escalating health insurance increases on the County’s budget, the
County has proposed that this bargaining unit change to the health and dental
insurance plan in Local 990’s current collective bargaining agreement covering
Professionals (Social Workers). As a quid pro quo, the County has committed
itself to a 3.5% increase in wages at the end of this contract, 12/31/04, as well as
an additions 48 hour payment to each bargaining unit member prior to 12/31/04.
It should be noted that this proposed plan, like the current plan covering this
bargaining unit, does not require any direct employee contribution to health care
premiums. When it is in effect, the new plan establishes or increases employee
co-pays for hospital use, physician office visits, and prescription drugs.
According to County testimony and exhibits, the new plan still provides a
generous overall benefit package when compared with benefit packages of a
number of Wisconsin counties and has been voluntarily adopted by the County’s
other bargaining units. In this era of rapidly escalating health care costs which is
producing a spreading crises throughout our nation, it is not unreasonable to
expect that all County employees, including members of this bargaining unit,
absorb some of the increases for their health care, It is also not unreasonable that
the County wishes its employees be covered by a health plan that promotes
turning patients into knowledgeable and cost-conscious consumers of health care
services. Whether this consumerism approach will become a significant key to
controlling future health care costs is yet to be determined by steps taken in this
direction hold out some promise.

Accordingly, based primarily upon the pattern already established within the
County for health care plans for its other bargaining units, if health care were the
only unresolved issue between the parties, the Arbitrator believes the County’s
final offer is more reasonable. In light of rapidly rising costs for health care
services and prescription drugs, the County’s effort to enlist assistance from all its
employees to help control this large - and rapidly escalating County budget item
is a common route now taken by many public as well as private sector employers
who continue to provide the bulk of funding for these key job benefits,. (Given
the costs involved, it is no longer appropriate to consider this benefit a “fringe
benefit.”) Given the very high cost of health care, particularly in Southeastern
Wisconsin, the County would be remiss if it failed to explore seriously ways to
contain at least some of its rapidly rising health care expenditures.

{W0229075.DOC\2} -20-
City of Marshfield (Clerical/Technical), Dec. No. 30726-A, (Yaeger):

Unlike the Union activity proposal, the issue that is determinative of which final
offer is selected turns on the sufficiency of the quid pro quo for the insurance plan
changes. Arbitrator Torosian discussed the question of what constitutes a
sufficient quid pro quo in Oconto Unified School District, Dec. No. 30295-A
(10/02):

. . . There is no set answer as to what constitutes a sufficient quid pro quo.

It is, in the opinion of the arbitrator, directly related, inversely, to the need
for the change. Thus, the quid pro quo need not be of equivalent value or
generate an equivalent cost savings as the change sought. Generally,
greater the need, lesser the quid pro quo.

Other arbitrators have also addressed the issue of the sufficiency of the quid pro
quo being offered for proposed changes in the health insurance plan provided for
in the parties’ collective bargaining agreement. These arbitrators have engaged in
an analysis of the adequacy and reasonableness of the proffered quid pro quo and
not surprisingly have found it to be adequate and reasonable in one circumstance
and yet not so in another. Their conclusions are clearly based upon the unique
facts of each case and thus no general rule regarding what constitutes a sufficient
quid pro quo has emerged. Thus, the analysis in this case will necessarily be
driven by the unique circumstances surrounding this bargain.

The Union has argued that the City’s methodology used in calculating the value
of its proposed wage adjustment and PEHP plan quid pro quo is flawed. While
clearly other methodologies could have been employed by the City in deriving its
quid pro quo for the insurance plan changes it proposed, and the undersigned
agrees there are flaws in the methodology utilized, bottom line four of six other
City bargaining units voluntarily accept the City’s proposal based upon the
utilization of same methodology. (3) (footnote omitted) Additionally, the City’s
final offer was selected by Arbitrator Dichter in the DPW bargaining unit
arbitration involving this same Union. The undersigned believes that internal
comparability in matters of a fringe benefit as significant as health insurance
should, aside from the greatest weight and greater weight factors, receive
paramount consideration.

{W0229075.DOC\2} -21-
Unified Community Services of Grant & Iowa Counties (Professional and Nonprofessionals),
Dec. No. 30621-A, (Petrie):

(1) The dramatic, ongoing, and frequently double digit escalation in the cost
of public and private health care costs is far exceeding both the rate of inflation
and/or what might reasonably have been anticipated by the parties when they had
originally negotiated employer payment of the full cost of individual and/or
family health insurance premiums. Accordingly the situation represents a
significant and continuing mutual problem, and it clearly meets the first of the
referenced status quo prerequisites.

(2) It is next noted that one of the various possible approaches to the
escalating costs of employee health insurance is the adoption of a reasonable level
of employee contribution to health insurance premiums, the only approach to the
underlying problem before the undersigned in these proceedings.44 In this
connection it is also noted that seven of the twelve intraindustry comparables have
higher percentages of employee contribution to health care costs than proposed by
the Employer, with Adams, Columbia, Green and Sauk Counties having 90%
employer premium contributions for both single and family coverage, and with
Grant, LaFayette and Vernon Counties having 85%, 90% and 80% employer
premium contributions, respectively, for family coverage. On these bases, the
undersigned has concluded that the Employer proposed expanded application of a
5% employee contribution toward health insurance premiums reasonably
addresses the underlying problem, and it thus meets the second of the referenced
status quo prerequisites.

(3) In next addressing the quid pro quo requirement, it is noted that the
District is not proposing the elimination or major modification of a recently
negotiated and/or stable benefit. The Employer is quite correct in noting that
various Wisconsin interest arbitrators, including the undersigned, have recognized
escalating health insurance costs as an ongoing, continuing and mutual problem,
have distinguished proposed changes in this area from other types of proposed
status quo changes, and have required relatively little, if any, quid pro quos in
support of reasonable proposed changes to control these costs.

(a) In the case at hand no apparent quid pro quo has been advanced in
support of the Employer proposed change: there is no evidence that the modest
agreed-upon changes in sick leave payouts for retirees, vacation benefits, and
WRS contributions were related to the Employer’s health insurance proposal; and
absolutely no basis exists for crediting the Employer’s argument that wage
increases under the prior agreement had prospectively provided the Union with a
quid pro quo in the case at hand.

44
It is inappropriate to attach any weight to the Union’s argument that the Employer’s increasing cost of insurance
premium could have been significantly ameliorated by the contract negotiations between Grant County and Local
Union 3377-A in 2003, covering another bargaining unit.

{W0229075.DOC\2} -22-
 (b) If the insurance premium payment dispute had been the only
impasse item before the undersigned in these proceedings, a persuasive argument
could perhaps have been made that little or no quid pro quo was required to
justify selection of the Employer’s final offer. The Arbitrator is, however,
required to select the final offer of either party, in toto, including the 2003 wage
increase proposals discussed above.

(c) On the above bases, a question remains as to whether the

Employer, under all of the circumstances of the case, has fully justified its
proposed change in the status quo ante.

Whitewater Unified School District, Dec. No. 30740-A, (Yaeger):

School Board and Unions are caught in the jaws of a vise -- the outrageously
rapidly rising health insurance costs and the State imposed revenue caps. But, it
is not only Wisconsin that is experiencing this continuing escalation of health
insurance premiums, it is a national phenomenon. As one who regularly reads
portions of several large daily newspapers from around the country, I noted a
week has not gone by in the past year without an story about a company
discontinuing health insurance coverage for its employees and/or retirees, thereby
adding to the already staggering millions of Americans without health insurance
coverage. Many of the articles written about the escalating costs of health
insurance attribute almost half of the cost to paying for prescription medicines.
These events are forcing individuals in Wisconsin and around the country to
reduce their standard of living in order to pay these ever rapidly rising premium
costs and/or go without medical insurance. This crisis of rising health insurance
costs cannot be solved at the bargaining table. The most that can be achieved in
bargaining is the parties can strive to find balanced and reasonable strategies to
cope with the crisis and soften its impact on them.

In Wisconsin, the situation is exacerbated by the outmoded means of financing

public education that pits homeowners and their frustration with continual
escalating property taxes against school districts struggling to provide a quality
education for their students under the burden of an ever increasing number of
legislative initiatives requiring that they do more with less. In the undersigned’s
opinion, the imposition of revenue caps is testament to the fact that the school
district financing system in this state is broken. The wages and fringe benefits of
the secretaries, cooks, custodians and clerical assistants in school districts
throughout Wisconsin have not brought on this financing crisis. And, I am not
optimistic that the crisis will be resolved short of near collapse of our state’s
public education system. In the mean time, local school boards and employee
Unions are pitted against each other in ever more difficult times. One trying to
continue to provide a quality education to its students with evermore shrinking
recourses and increasing mandates, and the other striving to prevent the erosion of
their members wages and benefits and ultimately their standard of living. And,
there are individuals like the undersigned increasingly thrust into the inevitable

{W0229075.DOC\2} -23-
 task of being arbiter of which is the most reasonable of unreasonable choices.
While arbitrators nay have become adept wordsmiths in applying the statutory
criteria to explain a particular outcome, it can at times, nonetheless, be a daunting
and overwhelming task. The task is no less daunting for the parties.

©2009 Ruder Ware, L.L.S.C. Accurate reproduction with acknowledgment granted. All rights reserved.
  
This document provides information of a general nature regarding legislative or other legal developments. None of the information contained herein
is intended as legal advice or opinion relative to specific matters, facts, situations, or issues, and additional facts and information or future
developments may affect the subjects addressed

{W0229075.DOC\2} -24-
{W0229075.DOC\2} -25-
 Volume 41 / Issue 6 • September 25, 2009

Wisconsin School Employment and Labor Law

REVIEW
District wins support staff interest arbitration, achieves change in health insurance
benefit language

The parties in this case were unable to voluntarily reach a settlement for their 2006-2009
contract term, and the Union petitioned for interest arbitration. The parties’ final offers were as
follows.

District

a) “All items shall remain in the 2003-2006 Agreement between the Rice Lake Area
School District and Local 3286, Wisconsin Council 40, AFSCME, AFL-CIO,
except as follows.

b) Revision of the first paragraph of ARTICLE 18 – HEALTH INSURANCE,

Section 18.01, to read as follows;

“The Board agrees to pay 95% of the cost of the family coverage and 100% of
single coverage under the District’s standard medical/hospitalization insurance
program for eligible full-time employees. Effective July 1, 2008, the Board
agrees to pay up to $1,378.63 per month toward the cost of family coverage and
$483.73 per month toward the cost of single coverage under the District’s
standard medical/hospitalization insurance plan.”

c) Revision of APPENDIX A to provide as follows:

“Revise all wage rates 3.0% effective July 1, 2006; an additional 3% effective
July 1, 2007; and an additional 3.5% effective July 1, 2008.”

{W0229075.DOC\2} -26-
 Union

“All items shall remain in the 2003-2006 Agreement between the parties except as
follows:

1. APPENDIX A

Revise all wage rates 3% effective 7/1/06; an additional 3% effective 7/1/07; and
an additional 3% effective 7/1/08.”

As the District proposed a change to the status quo health insurance benefit and
language, the primary issue, according to the arbitrator, was whether the District’s final
offer satisfied a quid pro quo analysis. The arbitrator summarized the application of the
quid pro quo analysis as follows. When a party proposes to modify or eliminate a
previously negotiated right or benefit, the party must prove that (1) “a significant and
unanticipated problem exists;” (2) the proposed change will reasonably correct or address
the problem; and, (3) the party has offered “an appropriate quid pro quo” for the proposed
change. However, according to the arbitrator, proposals that would modify the status quo
to address or resolve a mutual problem, “may require either none or substantially reduced
quid pro quos, depending on individual case-by-case determinations.” To further describe
this aspect of the quid pro quo analysis, the arbitrator quoted from one of his earlier
interest arbitration decisions, when he stated:

Wisconsin interest arbitrators operate as extensions of the contract negotiations

process and they normally require the proponent of elimination or substantial
change in a previously negotiated policy or benefit to advance a quid pro quo
equivalent to that which would have evolved in the give and take of conventional
bargaining. An exception to this requirement may exist where the costs or the
substance of a long standing policy or benefit have substantially changed over an
extended period of time, where they no longer reflect the conditions present when
they were negotiated, and where the proposed change is directed toward
correction of a mutual problem which was neither anticipated nor previously
bargained about by the parties.

With respect to this analysis, the Union argued that (a) the District did not prove
that a “significant and unanticipated problem exists” because it had sufficient financial
ability to continue to provide the status quo health insurance benefit, and (b) even if the
status quo health insurance benefit presented a problem, the District’s final offer did not
include an adequate quid pro quo for the change. According to the Union, the District’s
proposed health insurance change would more negatively affect its unit members than
“the higher paid teachers and other units within the district.”

In support of its final offer, the Union also argued that the health insurance
benefits of the external comparables justified the retention of the status quo benefits.

{W0229075.DOC\2} -27-
 Upon review, the arbitrator rejected the Union’s arguments. First, the arbitrator
held that the need to change status quo benefits need not be based upon the District’s
ability or inability to continue to pay for the increasingly expensive health insurance
premiums. Instead, the arbitrator recognized that the “rapidly escalating costs of
employee health insurance” is a very significant problem, and stated that the Union was
not prevented from reasonably responding to the issue before the District became unable
to pay for such premiums. In finding that the rising health insurance premium costs
represented a significant problem, the arbitrator also held that the District’s final offer
reasonably addressed the problem.

Second, the arbitrator actually chastised the Union for its argument that the
District’s proposed quid pro quo was not adequate. According to the arbitrator,

If the Union felt that the Employer proposed change in group health insurance had
a disproportionate impact upon those in the bargaining unit, it might have
considered proposing a higher quid pro quo at the bargaining table, and its failure
to do so detracts from the persuasiveness of its current arguments. Instead,
however, it apparently chose to resist any modification in the employee health
insurance program and to actually propose a lower wage increase in the third year
of the agreement than proposed by the Employer!

In summary, the arbitrator concluded this section of his analysis by stating that the
rising health insurance premium costs created a significant and unanticipated problem,
the District’s proposed changes addressed the problem, and the District’s proposed quid
pro quo “was clearly the more reasonable of the two proposed third year wage increases
contained in the final offers of the parties.”

Finally, in addressing the Union’s argument that the external comparables

supported its proposal to retain the status quo health insurance benefits, the arbitrator
stated that, while external comparisons may be the more common or important arbitral
criterion in wage disputes, internal comparables are traditionally the more important
criterion in health insurance disputes. Therefore, because a significant majority of the
District’s union-represented employees already agreed to the proposed health insurance
change, the arbitrator found that the Union arguments based upon external comparables’
health insurance benefits were “simply less than persuasive.”

The arbitrator found that the greatest and greater weight factors did not
significantly weigh in favor of either party’s final offer, and after considering all other
statutory criterion, he held that the District’s final offer was more reasonable and selected
it for inclusion in the parties’ agreement.

Source: Rice Lake Sch. Dist., Dec. No. 66201 (Petrie, 2009).

{W0229075.DOC\2} -28-
 Volume 41 / Issue 8 • November 13, 2009

Wisconsin School Employment and Labor Law

REVIEW
Another district successfully changes health insurance benefit though interest arbitration

As is so often the case recently, the parties to this interest arbitration were unable to reach
agreement as to the District-provided health insurance benefits or as to the appropriate wage
increases in light of those health insurance benefits for the school years of 2008-2009 and 2009-
2010. The parties’ final offers were as follows:

Union:

1. Increase wage rates by $.32 per hour in 2008-09 and by $.53 per hour in 2009-10
for aides, secretary, cooks and custodians.
2. Increase wage rates by $.64 per route in 2008-09 and by $1.06 per route in 2009-
10 for bus drivers.
3. Establish extra trip hourly rate for 2008-09 at $11.13 and $11.66 for 2009-10 for
bus drivers.
4. Effective July 1, 2009, switch health insurance plans from WEA Trust Point of
Service to WEA Trust Preferred.

District:

1. Increase hourly wage rates by $.75 per cell in 2008-09 and by $.50 per cell in
2009-10 for aides, secretary, cooks, custodians, and bus driver extra trips.
2. Increase wage rates by $1.13 per route in 2008-09 and by $.75 per route in 2009-
10 for bus drivers.
3. Effective July 1, 2009, switch health insurance plans from WEA Trust Point of
Service to a similar Point of Service plan provided by Dean Health System.

With a difference of $61,974 in costs over the two-year agreement, the parties each
advanced several arguments is support of its offer.

{W0229075.DOC\2} -29-
 The District provided the following evidence:

 It anticipated a $450,000 deficit for the 2009-10 school year

 It already cut costs by:
o Closing five satellite schools and consolidating the elementary and middle
school levels into a single building;
o Reducing bus routes;
o Selling its entire fleet of buses;
o Subcontracting bus driver positions as they became vacant though
attrition;
o Reducing classroom budgets;
o Freezing administrators’ salaries for 2009-10;
o Pursuing the creation of a health insurance purchasing cooperative;
o Negotiating for less expensive health insurance and retirement benefits
with its teachers’ union;
o Deferring several costly building improvement and maintenance projects.

The District also produced evidence that its enrollment had declined by 23% from 1999
to 2007 and as a result, its revenue limit had not increased significantly for almost 10 years.
Consequently, the District passed a two-year referendum to raise $500,000 in each year of the
proposed contract. Without the referendum, according to the District, it would have had to make
cuts in “athletics, support staff positions, and elective offerings at the high school, as well as
increases in class size.”

Citing high unemployment rates, increased usage of the government’s replacement for
the former food stamp program, a higher poverty rate in the area than in the state as a whole, an
average adjusted gross income in the District that was 7% less than in the comparable districts,
agricultural and construction job losses, and significantly higher number of students using the
District’s free and reduced lunch program, the District argued that the local economic conditions
supported its final offer.

Finally, the District provided evidence that, although employees would receive a lesser
benefit or see increased co-pay costs in some areas, they would also see increased benefits and
coverage in other areas, at a dramatically reduced out-of-pocket premium cost under its proposal.
This similar health insurance benefit combined with the District’s generous wage offer, which
would put or keep this bargaining unit’s wages near the top of the comparables in every
classification as a quid pro quo for the proposed health insurance change, supported the
District’s contention that its final offer was more reasonable under the statutory criteria.

The Union’s first argument was that the statutory “greatest” and “greater” weight factors
did not apply because those criteria were repealed as to school district employee interest
arbitrations during the course of this proceeding. Because the statutory changes were in effect as
of the date the initial briefs were due to the arbitrator, the Union argued that the changes were
effective immediately.

{W0229075.DOC\2} -30-
 Citing the fact that the District had a fund balance of 17% of its overall operating budget,
received $245,000 in federal stimulus funds, passed the two-year $500,000 referendum, and
received more revenue under the school finance laws than all but two districts in the comparable
group, the Union argued that the District could meet the costs of its final offer and that the
interests and welfare of the public were better served by its smaller proposed wage increases,
especially in light of its proposed change to a less expensive health plan. According to the Union,
“the District’s [proposed wage] increase is not warranted because the support staff is already at
the high end of the comparability pool in salaries.”

Finally, the Union concluded its arguments by highlighting perceived deficiencies in

quality of service and benefits that would be provided under the Dean health plan proposed by
the District and by arguing that its proposed wage increase was justified by its proposal to switch
to a less expensive WEA health plan in the second year.

The arbitrator began his analysis by addressing whether the statutory “greatest” and
“greater” weight criteria were applicable to this interest arbitration. According to the arbitrator:

None of the applicable language I have seen, however, expressly addresses the
question of proceedings which are pending as of the date the changes go into effect, and
as noted above, the parties dispute whether existing law favors retroactive application of
such changed provisions or not. An arbitrator’s reading of such a purely legal question
would be entitled to no deference [by a reviewing court]. For purposes of clarity,
however, I will apply an assumption that the cited changes were in effect, including with
respect to pending proceedings, as of publication of the budget bill, and apply the new
language accordingly.

Within this framework, the arbitrator next addressed the parties’ health insurance
proposals. The arbitrator noted the difference in cost between the health insurance proposals was
especially significant because the aggregate cost of providing fringe benefits to these employees
actually exceeded the employees’ wages on a per-employee basis. Therefore, because the
District’s proposed plan was comparable as to quality, coverage and out-of pocket costs to the
employees, while being significantly less expensive to the District, the arbitrator favored the
District’s health insurance proposal.

In addressing the parties’ wage proposals, the arbitrator first noted that, although the
District received a boost by the stimulus funds and passed referendum, there was no guarantee
that those sources of revenue were anything but one-time benefits to the District. With the
unrelenting “upward march of the health insurance costs” and highly adequate wages the
District’s offer would continue to provide unit members, the arbitrator concluded that the
“Association’s expectation that wages should be further augmented [under its proposal] because
of its modest move toward a slightly less expensive health insurance plan, under all of these
circumstances, is not reasonable.”

In concluding his statutory analysis, the arbitrator found that the economic savings
produced by switching health insurance carriers under the District’s final offer made it preferred
under the interests and welfare of the public criteria. As to the “external comparables” criteria,

{W0229075.DOC\2} -31-
the arbitrator held that, although the District’s existing health insurance benefit was not the most
costly, its financial adversity, comparable proposed health insurance plan and large wage quid
pro quo were more favorable under this criterion, and the overall compensation criterion,
especially in light of the Union’s unjustified wage proposal.

Finally, the arbitrator found that, while the changes during the pendency of the
proceedings factor favored the Union, those changes were not enough to make a difference.
Because the District suffered severe financial conditions on an ongoing basis, yet offered a less
expensive, comparable health insurance benefit while also providing a generous wage quid pro
quo, the arbitrator held that the District’s final offer was more reasonable under the statutory
criteria.

Source: Iowa-Grant Sch. Dist., Dec. No. 32684-A (2009) (Honeyman, Arb.)

{W0229075.DOC\2} -32-