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City of Tulsa, Oklahoma	)
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	City	)
		)		FMCS Case No.:  08-56581
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Lodge #93, Fraternal Order of Police	)
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	Union	)
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ARBITRATOR’S OPINION AND AWARD

Arbitrator:	Michael B. McReynolds, Neutral Panel Member, selected by the parties through the procedures of the Federal Mediation and Conciliation Service

		Amy Polonchek, Chief of Staff, Office of the Mayor, City of Tulsa, City’s Interest Arbitrator

		Ron Bartmier, President, Oklahoma State Lodge, Fraternal Order of Policy, Union’s Interest Arbitrator

Place and dates of hearing:	Tulsa, Oklahoma
		January 22, 23, and 24, 2009


Appearances:

	For the City:	Tony G. Puckett, Attorney at Law
		McAfee & Taft

		Jean Ann Hudson, Deputy City Attorney
		City of Tulsa

		Joyce Powell, Senior Labor Relations Analyst,
		City of Tulsa	 
		
	For the Union:	James R. Moore, Attorney at Law
		Moore & Vernier, P.C.

		Laurel Ledbetter, Chair, Negotiating Team
		Lodge #93, Fraternal Order of Police
 

Statement of the Case
	This case is an interest arbitration proceeding conducted pursuant to the Oklahoma Fire and Police Arbitration Act (FPAA or the Act), 11 O.S. § 51-101, et. seq. As set forth in greater detail below, the Arbitration Board hearing this matter was convened under the specific provisions of § 51-108 of the Act in order to decide the unresolved issues in the negotiations between the City of Tulsa, Oklahoma, and the Fraternal Order of Police, Lodge 93, for a successor collective bargaining agreement.
	Tulsa is the major city in a large metropolitan area in northeastern Oklahoma. With a population of more than 380,000, Tulsa is the second-largest city in the State. As a municipality subject to the Act, the City of Tulsa, the City, is obligated to recognize and bargain with labor organizations certified by the Oklahoma Public Employees Relations Board (PERB) as bargaining agents for its firefighters and police officers. The Fraternal Order of Police, Lodge 93, the Union or the Lodge, has represented the employees of the Tulsa Police Department for over 30 years. The parties have negotiated a series of one-year contracts during that time.
	The FPAA, 11 O.S § 51-101, et. seq., governs not only the general relationship between Oklahoma cities and various labor organizations, but also certain detailed aspects of those relationships. Under § 51-106, for example, when a city and a firefighter or police union are unable to reach agreement on new or renewed terms of a collective bargaining agreement, any and all unresolved issues are to be submitted to arbitration, upon the request of either party. The procedures for selecting the arbitration board are contained in § 51-107, while § 51-108 provides for conducting the hearing and addresses post-hearing processes. Under this section, at least seven days before the hearing the parties are to submit to each other and to the Board written arbitration statements listing all resolved and unresolved contract terms. The arbitration statements must also include each party’s final offer on each unresolved issue. These statements,  the “last best offers” or LBO, are significant because § 51-108 requires the Board to select the last best offer of one party or the other without modification, addition or deletion. Finally, § 51-109 identifies certain factors to be considered by the Board in arriving at its decision. The Act does not limit the Board to considering only the enumerated factors. Rather, it lists five specific factors that, among others, are to be “given weight” by the Board.
	Of the five factors listed in § 51-109, the first three require the Board to compare wages, insurance, retirement and other fringe benefits of the employees in the bargaining unit with those of other identified employees. First is the prevailing wage rates or hourly conditions of employment of skilled employees of the building trades in the local operating area. Second is a comparison with employees exhibiting like or similar skills under the same or similar working conditions in the local operating area. The third is a comparison of these items with fire or police departments in cities, towns or other political subdivisions of comparable size and economic status both within and without the State of Oklahoma. The parties here have agreed upon ten named cities as the “universe of cities” for purposes of market survey comparisons under § 51-109, Factor 3. (Article 21.9 of the previous contract, identified in Joint Exhibits 1 and 2 as a resolved issue by both parties.)
	The fourth factor for the Board to consider actually contains two elements. The first is the interest and welfare of the public, and the second is the revenue available to the municipality. The fifth factor is a comparison of the peculiarities of employment in regard to other trades or professions, including hazards of employment; physical qualifications; educational qualifications; mental qualifications; and job training and skills. In short, the Act requires the Board to examine a series of economic and non-economic issues, both tangible and intangible, in selecting one offer over the other.
	In reaching this opinion and award the Board has carefully considered all the evidence presented by the parties, including assessing the testimony of the witnesses, reviewing the documentary evidence, and studying the extremely helpful briefs submitted by counsel.

Bargaining History
	As noted above, the City and the Union have had a collective bargaining relationship for more than 30 years. Because the Oklahoma Constitution prohibits cities from incurring indebtedness that exceeds the income and revenue provided for any year without the assent of three-fifths of the voters, the agreements between the City and the Union are almost exclusively limited to a duration of one year. The Supreme Court of Oklahoma has stated that the “purpose behind this constitutional provision is to force cities and municipalities to operate on a cash basis, and to prevent indebtedness extending beyond one year.” City of Del City v. Fraternal Order of Police, Lodge No. 114, 1993 OK 169, 869 P.2d 309 (1993), citing Independent School District No. 1 v. Howard, 336 P.2d 1097 (Okla. 1959). (Other citations omitted.) This constitutional limitation plays its own role in this case, as will be discussed below. For the parties here, the contract year runs concurrently with the City’s fiscal year, which is from July 1 of one calendar year to June 30 of the following year. Negotiations for a successor contract, then, typically begin in the spring of each year. The goal is to have a contract in place at the same time the City Council adopts the City’s budget for the coming fiscal year. For the City, in particular, the negotiating process goes hand in hand with the annual budgeting process.
	In 2008 the Union notified the City of its intent to negotiate terms for a new contract on February 14. The new contract would be for Fiscal Year (FY) 2008 – 2009, or from July 1, 2008, through June 30, 2009. The Union submitted an initial set of proposals to the City on February 21, 2008, and the parties held their first meeting on March 10. They met six more times over the next few weeks, but made little progress toward an agreement. The Union had proposed several changes, including increases in both the wages and benefits. The City proposed “clean-up” changes in the general language of almost every article in the contract. Much of this language had been in the contracts for years, and there is no evidence that this wholesale “clean-up” was prompted by any problems with the language. The Union initially resisted the changes on the grounds that they were not necessary. For the most part, however, the Union eventually agreed to the changes.
The City also proposed several contract changes that would have the effect of reducing certain benefits from previous levels or implementing more restrictive measures than had been included in previous contracts. One such change was to increase the minimum amount of time for requesting compensatory time from 24 to 72 hours. Another was to limit the benefit of taking assigned vehicles home to those officers actually residing within the Tulsa city limits. In addition, the City proposed changes to the existing drug testing policy to provide for random testing. With respect to health and welfare contributions, the City proposed that contribution levels remain unchanged from those in effect since the FY 2004 – 05 contract. The Union presented several wage proposals, but the City did not counter these proposals during this phase of the negotiations. Then, toward the end of April or early May, the Union informed the City of its intent to seek interest arbitration of the contract terms because the parties had reached a bargaining impasse.
	The parties continued to meet as the matter proceeded toward interest arbitration. They eventually reached agreement on most of the issues between them. The record reflects that representatives for the two sides signed interim agreements approving various articles of the contract as late as October 21, 2008. While these agreements reflect that most of the proposals had been submitted to the Union by the City, it is clear from the testimony of witnesses from both sides that the agreements on the resolved issues were the product of difficult but effective bargaining.
	It is not disputed that the City did not make a wage proposal of any kind until January 15, 2009, when it submitted its last best offer to the Union and the Board. It is significant, however, that on June 17, 2008, before the previous contract expired, the City and the Union agreed to a Memorandum of Understanding (MOU) that accomplished two things. First, the MOU extended the provisions of the FY 07-08 contract, subject to the confines of Oklahoma law and any successor agreement that might take effect. Second, the MOU provided for the continued payment of any Satisfactory Performance Increases (SPI’s) as provided in Article 21 of the prior agreement. The MOU included the following statement, which actually appears in two places in the MOU:

The parties acknowledge such SPI’s represent an increase in salary for those eligible to receive them and, as such, are a component of salary costs and constitute a budgetary cost for FY 08-09.

(City Exhibit 4.)

The MOU, and particularly the foregoing statement, is significant because it reflects an agreement by the City to pay scheduled or anticipated merit increases specified in the prior contract. Under most circumstances such an agreement would not be necessary, since the general rule under Federal law is that during the time following expiration of a collective bargaining agreement the parties may not alter the status quo concerning their relationship without first bargaining to impasse. If the parties here were subject to those rules, the City would be obligated to pay the SPI’s to any eligible police officers after the 07-08 contract expired. In City of Del City, supra., however, the Oklahoma Supreme Court held that an “Evergreen” provision in § 51-105 of the Act  violated Article 10, § 26, of the Oklahoma Constitution. The “Evergreen” provision required municipal police and fire collective bargaining agreements to remain in effect following their expiration, pending the negotiation or impasse process leading to a successor agreement, The Court held that municipalities subject to the FPAA could not be involuntarily held to the terms of a collective bargaining agreement beyond one year. City of Del City specifically addressed the issue of payment of SPI’s, holding that the City there could not be obligated to pay the SPI’s by a legislative act. This background bears directly on some of the unresolved monetary issues facing the Board here.

Unresolved Issues
Article 11 – Police Department Rules and Regulations
	The City had proposed changes to Section 11.5 relating to the period of time for which records of various disciplinary actions would be retained for purposes of consideration for any future disciplinary actions.
	The City withdrew the proposal in its LBO. At the same time, the Union agreed to the proposal in its LBO. The parties presented no evidence on this article at the hearing. In these circumstances, it must be concluded that, for all practical purposes, this article has been resolved. The Board need not address this article further.

Article 12 – Vacations and Leave
	The Union proposed that the language of this article remain unchanged. The City proposed that the period of time for submitting requests for compensatory leave be extended from 24 hours, the existing practice, to 72 hours prior to the requested time off. This was in the form of adding Section 12.7 to the contract.
	This article was the subject of considerable discussion during the negotiations. The City had initially proposed a five-day time period for submitting the leave requests. The Union eventually countered with the 72-hour proposal. It appears that there was a tentative agreement on some aspects of the issue, although the parties did not indicate such an agreement by initialing the article as they did on those articles that were resolved. The City argues that the Union breached the tentative agreement on Article 12, noting that the Union had agreed to Article 13, which contains a specific reference to Article 12.7. Because this breach of a tentative agreement constitutes evidence of bad faith, the City urges the Board to reject the Union’s LBO.
	It is true that, as a general rule, the withdrawal of a proposal upon which parties have reached tentative agreement may be evidence of bad faith bargaining. Such a withdrawal, however, must be without good cause. In any event, the National Labor Relations Board has also made it clear that the mere withdrawal of a tentative agreement is not a per se violation of Section 8(a)(5) of the National Labor Relations Act. It is only one factor to consider in determining good or bad-faith bargaining. Merrill M. Williams, 279 NLRB 82, 83 (1986). Here, the Union did not withdraw an agreed-upon proposal. The mere reference to Article 12.7 in Article 13 cannot be said to constitute agreement on Article 12, especially since the reference deals only the non-substantive procedural matter of authorization of compensatory time before it is taken. Moreover, the Union never conditioned final agreement on the contract terms on this proposal. Finally, whether a party has engaged in bad faith bargaining is a matter for the PERB, not this Board. The City’s argument on this point, therefore, is rejected.
	The City’s evidence to support this proposal was that this issue was significant to the Police Department administration. According to the City, there had been questions about when some leave requests had been submitted, as well as which office or supervisor was to receive and act on requests for compensatory time. Although the City provided some general testimony that the language was necessary to reduce overtime costs there was no documentation specifically supporting the proposal on that basis.
	The Union states that this proposal reflects another concession the City wanted from the FOP. The negotiations over this article, as noted by the City, were in conjunction with Article 6, Seniority, and Article 13, Basic Work Period and Overtime. The articles are interrelated in some respects as they apply to vacation, holidays, sick leave and compensatory time and how these benefits are requested or used. Although the Union viewed the proposal as a reduction in a benefit obtained in prior negotiations, it agreed to the language extending the period for requesting compensatory time from 72 to 24 hours. Management then countered with a proposal to add language permitting even timely requests to be denied if they would cause the City to incur overtime costs.
Clearly, arranging schedules in order to provide for last minute leave requests is an important matter in Police Department operations. It is true that the longer notice period may cause some inconvenience to employees. Too, it is significant that the City’s proposal reflects a reduction in existing benefits. At the same time, even under the City’s LBO any leave requests submitted less than 72 hours before the requested time off could be approved, based on staffing levels. Standing alone, it cannot be said that the City’s proposal on this article is unreasonable.

Article 19 – Educational and Language Incentive Pay
	In their LBO’s both parties proposed no change to this article. The parties presented no evidence on this article at the hearing. In these circumstances, it must be concluded that this article has been resolved. The Board need not address this article further.

Article 20 – Clothing and Equipment
	This article was one of the major sticking points between the parties during their negotiations. Tulsa Police Officers have been permitted to take their assigned vehicles home and use them to commute to and from work for years. The record does not establish how long the benefit itself has been in effect. The current status of the benefit is set forth in Article 20, Section 20.10, of the contract. This provision allows all sworn Tulsa Police personnel assigned a vehicle to drive the vehicle to their residence, provided they live within a 25-mile radius of the geographical center of the Tulsa city limits. Somewhat less than half of the officers live within the Tulsa city limits. The remainder live in adjoining cities or suburbs. Of the 780 or so sworn officers on the force, approximately 415 benefit from the extended limits.
	In its current state, the take-home vehicle benefit came into the contract during the 2005 – 06 contract negotiations. Although the City’s bargaining team was resisting the Union’s proposals to extend the benefit to officers living outside the city limits, record testimony indicates that the mayor at that time agreed to the increased limit in separate discussions with the Lodge President. Despite the “back-door” nature of the agreement when it was reached, the 25-mile limit has remained in the contract since 2005 – 06. Although the parties went to interest arbitration over wage issues for the  2006 – 07 contract, the take-home vehicle benefit was not changed that year. Similarly, in the most recent contract the benefit continued in effect without any apparent problems.
	During the current negotiations the City proposed to return the benefit to the level that existed prior to the 2005 – 06 agreement, and to limit the use of assigned vehicles for commuting purposes to those officers residing within the Tulsa city limits. The Union resisted the City’s proposal. The City’s LBO was to place the foregoing proposal in effect on June 1, 2009. The Union’s LBO was that the existing provision remain unchanged.
	At arbitration the City supported its proposal under Factors 3 and 4 of § 51-109 of the Act. Citing a telephone survey conducted by the City of Tulsa HR department that polled seven of the ten cities in the comparison universe, the City noted that all of the cities surveyed had take-home policies that are much more restrictive than Tulsa’s. In Austin and Dallas, Texas, “on-call” officers and tactical units are allowed to take vehicles home. The geographic limit for both of those cities is 20 miles. Tucson, Arizona, permits only detectives and commanders this benefit, again with a 20-mile limit.
	Under Factor 4 the City states that its proposal is based on a policy determination by the City Council that driving City vehicles outside City limits lacks a public purpose. Citing City Ordinance No. 21588, adopted June 28, 2007, the City argues that, “[A] marked police vehicle in plain view inside the city limits of the City of Tulsa provides an inherent public safety benefit to the citizens of the City of Tulsa. There is no inherent benefit to the citizens of the City of Tulsa provided by a marked police vehicle parked outside of the city limits of the City of Tulsa.” (City’s Brief, pages 10 and 11, citing City Exhibit 7.) The Chief of Police also testified that there was no such public benefit.
In negotiations the Union first offered to have those officers with take-home vehicles pay $25.00 per month for off-duty use of the vehicles. The City did not counter this proposal, and the Union eventually withdrew it. The Union offered the testimony of a Tulsa Police Officer who is assigned to the Department’s Crime Analysis, Planning, Education and Research Section (CAPERS). This officer had researched the issue as part of an assignment, completing it in December 2008. He testified to several positive aspects of a take-home vehicle policy or program. One of these was the general perception of an increased police presence when officers commuted to and from work in their assigned vehicles. He did not identify or calculate a cost for the benefit.
As to the public policy and intangible aspects of the benefit, the Union presented evidence that the City regularly cites the take-home vehicle benefit in its recruiting efforts. Moreover, there is evidence that City officials have listed the benefit as a positive factor in reducing Police Department attrition in recent years. The Union argues that this evidence outweighs the general and unsupported testimony to the effect that the citizens of Tulsa do not benefit from the use of take-home vehicles by officers who live outside the Tulsa city limits.
Even though Tulsa’s existing policy on take-home vehicles is more generous than those of the comparison cities, the fact remains that it has been in effect for more than three years. Factor 3 requires more than a simple demonstration that Tulsa leads the pack on this point. In circumstances where the City is seeking to reduce an existing benefit, it must show compelling economic or public policy factors to support such a  proposal. The City’s witnesses, however, testified that there had been no determination of a cost factor related to the take-home vehicles. Although a representative of the Labor Relations department testified that cost was the primary issue for the City relating to the take-home vehicles, she also testified that the City “did not quantify the amount.” The City’s Finance Director was unable to identify any costs or potential savings related to the benefit. In short, the City offered no evidence as to the annual cost of the benefit or the savings, if any, that would accrue to the city if the benefit were reduced. Because such benefits may be taxable as income in some situations, it is surprising that no such evidence was adduced.
It is not improper or inappropriate for an entity to seek concessions in collective bargaining. At the same time, however, although this case does not involve an asserted inability to pay, the Supreme Court’s observation in NLRB v. Truitt Mfg. Co., 351 U.S. 149 (1956), is instructive here.

Good-faith bargaining necessarily requires that claims made by either bargainer should be honest claims . . . . If such an argument is important enough to present in the give and take of bargaining, it is important enough to require some sort of proof of its accuracy. Op. cit., 152 – 153.

Interest arbitrators considering other cases under the FPAA have selected the unions’ proposals in situations where a city has sought concessions without providing adequate explanation. While these cases are not precedential, they present good examples of the types of obstacles a city must negotiate if it is to prevail in arbitration. On the issue of the take-home vehicles in this case, it is the view of the neutral arbitrator that the City has failed to sustain its burden of demonstrating that there are cost factors or public policy factors sufficient to warrant the proposed reduction in this benefit.

Article 21 – Wages
	In its LBO the Union proposed a 3% across-the-board wage increase in Police salaries, to be effective January 1, 2009. The City proposed a 2% increase, effective July 1, 2008.
	During negotiations the Union had initially sought a much higher increase in wages. The Union views the pay structure in Tulsa to be substantially below that of most of the ten cities in the market universe used by the parties. Based on figures explained by an accountant with extensive experience in this area, the Union contends that Tulsa ranks tenth or eleventh of the eleven cities in compensation, and well below the average of the other ten.
	The City made no wage proposal until it submitted its LBO. The City explained its offer through wage comparisons with skilled trades employees employed by the City (Factor 1); with police officers in local police departments (Factor 3); with police officers in the comparison cities (Factor 3); and with a discussion of available revenues (Factor 4). 
The City contends that the Police salaries in Tulsa exceed the wages of the skilled trades employees. It is noted, however, that the City’s figures did not account fully for employees in the building trades in the private sector, especially those represented by unions. Further, the City’s calculations did not take into account any pension or insurance benefits for those employees. This omission creates some doubt as to the overall reliability of the City’s figures. The same is true of the City’s informal survey of local police departments. While it is undoubtedly accurate that the Tulsa Police officers are more highly paid than those in the smaller cities and counties of northeastern Oklahoma, the evidence on this factor is not persuasive in the general consideration of the City’s offer.
Because the parties have agreed on ten cities for purposes of comparison under Factor 3, this factor seems to warrant more attention than the first two. It is significant because this market universe reflects a cross-section of similar municipalities, as defined and agreed to by the parties. As the City points out, there is no requirement that Tulsa meet or exceed any point or calculation in the market universe. Tulsa competes with such cities for police recruits, however, and how Tulsa compensates its officers in comparison with these cities warrants careful consideration.
To support its position that its wage proposal, and its LBO, should be accepted, the City argues that the Tulsa wage rates are competitive with the comparison cities. This argument, however, is based to a large extent on data that the City has effectively diluted. In making its comparisons the City relies not on the actual salaries in the other ten cities, but on figures that reflect adjustments to those salaries the City made in order to account for the cost of living in the other cities. There is no provision in the contract to make such adjustments. Absent such a provision, it must be concluded that the parties selected those cities based on their joint determination that the cities themselves reflected accurate comparisons with Tulsa. To dilute those figures departs from the clear agreement expressed in the contract. Based on its own figures, the City’s offer of a 2% wage increase would put the Tulsa officers above the market average only if the diluted figures were applied. Further, it is noted that this calculation compares the 2007 – 08 salaries of the comparison cities with the projected 2008 – 09 salaries of the Tulsa officers resulting from the City’s offer. Using the City’s unadjusted figures for the comparison, the 2% increase would leave the Tulsa officers more than $2,200.00 below the annual average. The 3% increase proposed by the Union would still leave them more than $1,500.00 below the average.
The Union also argued that its proposal would result in an increase approximating the inflation levels. The City disputes this, arguing that – using the Union’s own figures – the Consumer Price Index (CPI) actually decreased by .6% for the period from January 2008 to January 2009. The operative period, however, would necessarily be the period of the FY 08 – 09 contract, not a period that extended for six months after that contract expired. For that period the CPI increased by 5.1%. The Board may take administrative notice that the Social Security Administration, in an action widely reported in the national media, increased general benefit payments by 5.8% in January 2009, based on cost of living figures for the period ending September 30, 2008.
The Union’s proposal, as the parties agree, would result in a lower total cost to the City for FY 08 – 09. This is because the Union’s 3% proposal would  be effective for only the second half of the year, resulting in a 1 ½ % increase spread over the full budget year. Of concern to the City, however, and of some significance here, is that the 3% increase would raise the floor for the 2009 – 10 contract negotiations. To support its proposal the Union asserts that even the 3% increase will not bring the Tulsa officers up to the average of the ten-city market. Based on its own calculation of total compensation for the Tulsa officers compared to that of the market cities, the Union contends that the Tulsa officers are 21% below the survey average. These figures are based on the Union’s own survey of the market cities, which included wages and benefits implemented by at least eight of those cities for 2008 – 09. This comparison, therefore, contains its own set of skewed totals. Under either proposal, however, as noted above, Tulsa would remain well below the ten-city average for purposes of comparison under Factor 3.
Also related to Factor 3 is the City’s argument that the SPI’s paid in July 2008 should be considered part of the pay package. By the City’s calculations, its 2% wage proposal would cost $1,074,000, while the FOP wage proposal would cost $805,000. Added to those totals are the Union’s health insurance proposals, calculated to be an additional $719,000. The City, however, also adds to this figure its calculation of the SPI’s implemented on July 1, 2008, pursuant to the MOU discussed above. This adds another $1,187,000 to both figures. The City uses the SPI figures in order to support an argument that, because the SPI’s reflect a 5% increase in real wages, the Police officers will realize an overall increase of 7%.
While it is true that the City agreed to pay the SPI’s in July 2008, the SPI’s represent intermediate steps between entry-level pay and the maximum salary for the position. These intermediate steps appear in the wage chart, Appendix A, included in the contract each year. An officer becomes eligible for an SPI upon completing a requisite period of satisfactory performance. These SPI’s are obviously part of the general compensation package. To include them as a separate cost item, then, has the effect of counting them twice. Even though the City is not obligated to pay the SPI’s following the expiration of a contract as a matter of law, there is no valid basis for concluding that these amounts would not be payable at some level and at some point. Moreover, it is noted that the City did not include SPI’s as a separate cost item in calculating its own wage proposal or in its comparisons under Factors 1 through 3. There the City used an average of the minimum and maximum pay rates. Clearly, using such an average takes into account the fact that officers are paid based on where they are at various steps of the pay chart. The City’s argument that the 2% offer must be considered in conjunction with the SPI’s, therefore, must be rejected.
As to whether the City has adequate revenues available to fund the proposals, the consideration under Factor 4, the Union notes that its proposal would result in a lower cost to the City for FY 08 – 09. The Union also points out that it made the proposal in this manner in order to make it easier for the City to fund the Union’s health and welfare proposals, addressed below. The City, on the other hand, argues that the 3% proposal would require a substantial budget increase for FY 09 – 10. Because of anticipated declines in revenue, the City contends that its proposal is the more reasonable.
At arbitration the City relied extensively on economic data and projections that focused on recent developments in the national economy. No less than 18 of the City’s many supporting exhibits were media reports written after November 1, 2008, including several published in January 2009. There is no question, as more recent events have shown, that the economy is in a recession. As a result, it is likely that all of us would like to turn back the calendar and make our financial decisions for June and July of 2008 based on what we now know happened weeks and months later. This Arbitration Board, however, must concern itself with the circumstances and events preceding the negotiations for FY 08 – 09, the period in which the relevant budgeting and bargaining processes occurred. Evidence of any subsequent economic downturn and revenue decline must form the basis for future negotiations, not those in issue here.
Citing a prior award, City of Kingfisher and IAFF Local 3434, FMCS No. 900617-12764-8 (Arbitrator Wang, 1999) the City contends that the Board should reject the Union proposal because it is designed to slide costs from FY 08 – 09 to FY 09 – 10. City of Kingfisher is inapplicable here, however, as that award does not explain how the Union’s proposal would have permanently bound the City of Kingfisher to recurring commitments in subsequent years. In any event, the parties here must soon begin negotiations on yet another agreement. Although the eventual contract for FY 08 – 09 will no doubt serve as a starting point for future negotiations, there is nothing in the Union’s proposal that binds the City to any future commitment.
Despite extensive testimony relating to the City’s financial situation, there was no evidence to establish that the City could not fund the Union’s proposal from existing revenues. In fact, the City’s Finance Director conceded that a budget allowance for increased fuel costs in the Police Department, reflecting gasoline prices during June and July 2008, had resulted in a surplus of some $300,000 during the first half of FY 08 – 09. He anticipated that this surplus would increase for the rest of the year, with savings exceeding $600,000 by July 1, 2009. This was due to the decline in gasoline prices later in 2008. While there was also testimony that sales tax projections for FY 08 – 09 might be smaller than actual revenues, the record evidence did not show that either the General Fund or that portion dedicated to Police operations could not absorb the cost of either of the two proposals.
In all the circumstances, applying the general principles of Factors 3 and 4, and considering the arguments and evidence discussed above, the neutral arbitrator concludes that the Union’s wage proposal is the more reasonable of the two. In addition, I have considered the evidence that the City requires its police officers to have a college degree, an element of Factor 5.

Article 25 – Health Insurance
	The City proposed that the health and welfare contributions for FY 08 – 09 remain at the same level as the previous year. The Union proposed that the contribution level be increased to the amount the City currently pays for City employees who are covered by the City’s own health and welfare program. The parties agree that this would cost the City between $719,000 (City’s estimate) and $796,574 (Union’s estimate) for the contract year (FY 08 – 09).
	Until December 2007, the Police Department employees participated in the City’s group insurance plan. In the 2004 – 05 contract, however, the parties agreed to contract language that would permit the Union to create a trust to establish its own insurance plan. The Union decided to pull out of the City plan and create its own trust in December 2007. At that time the City’s contribution levels were unchanged from FY 04 – 05. The City began making its contributions to the FOP trust fund at that level.
	In negotiations for the next contract the parties agreed to the following language in Article 25.6 (c):

The City shall pay the Trust those City Health and Welfare contribution dollars which would normally be paid for Police Officers, Police Officer retirees and all eligible dependents had they remained within the City’s Health and Welfare programs.

This language was retained, without change, in the City’s LBO.
Whether by accident or design, the following sentence was also included in the contract:

This City contribution amount shall be calculated by multiplying the City’s FY 04 – 05 single and dependent Health and Welfare contribution rate for Police Officers and retirees times the average number of Police Officers and Police Officer retirees electing the specific single or family medical, dental and life insurance coverage options over the previous five (5) years, effective FY 00 – 01 through FY 04 – 05.

The Union contends that the references to the previous years was a “scrivener’s error,” and that the language describing the calculations should have reflected the amounts currently paid by the City for the employees in its plan. The City disputes this, noting that there was ample opportunity for the Union to propose changes to the language. In any event, the Union’s current proposal, as reflected in its LBO, is for the City to contribute to the FOP Trust the same amount per employee as it does for employees who are in the City’s plan. The Union notes that the City recently agreed with the Firefighters Union, which created its own trust several years earlier, to contribute at the current levels.
	The City opposes the Union’s proposal for two reasons. First, the City argues that there is no need to increase its contributions, since the Union has been able to secure adequate coverage at current contribution levels. Second, the City contends that the Union’s main concern was not the cost of insurance for current employees,  but rather building a reserve for future retirees. According to the City, this approach constitutes an impermissible insistence on a permissive subject for bargaining. The City cites two prior interest arbitration awards on this point. In IAFF, Local 2359 and City of Edmond, FMCS No. 03-05770 (Arbitrator McKee 2003), the Board rejected the Union’s proposal because “the Union also engaged in interest arbitration to achieve an end not associated with a mandatory subject of bargaining.” Ibid., page 10. The City also notes that under federal labor law it is an unfair labor practice to insist to impasse on a permissive subject of bargaining.
	As to the City’s first argument, the short answer is that it is not the City’s role to  assess the level of benefits the FOP Trust may be able to obtain. If, indeed, the Trust can obtain acceptable levels of coverage for lower premiums, that is a matter for the Trust. On this point, the record does not reflect the amounts contributed by the officers for the benefits obtained by the Trust.
	The City’s second argument is much more compelling, especially in view of the awards rejecting Union proposals because they included benefits that would accrue toward retirees, who are not members of the bargaining unit. Whether the Union’s LBO constituted an unfair labor practice, however, was not an issue before this Arbitration Board. Further, as noted above, whether a party has engaged in bad faith bargaining is a matter for the PERB, not this Board. Absent a determination by the PERB or a court of competent jurisdiction that the Union’s LBO, as presented in this case, constituted an impermissible insistence on a non-mandatory subject of bargaining and, therefore, an unfair labor practice, there is no basis for the Board to reach such a conclusion here. To do so, in the view of the neutral arbitrator, would exceed the Board’s authority.
	The Union’s proposal on this article would do nothing more than compel the City to comply with the clear language of the agreement contained in the first sentence of Article 25.6 (c). The City has increased the amounts paid on behalf of all other City employees, including those covered by the Firefighter Trust. There is no compelling financial or policy basis for the City to pay a lower amount for its Police Officers. The neutral arbitrator concludes that the Union’s LBO is the more reasonable as to this issue.

Article 30 – Drug Testing Policy
	The City proposal would bring the Police Officers within the policy the City applies to its other employees. This policy includes a provision for termination after a second positive test for prohibited drugs. The Union does not resist drug testing generally, but opposes random testing. In addition, the Union proposes language that would put any adverse action resulting from a second positive test under the contractual grievance procedure, eliminating the strict termination language proposed by the City. The Union would also adopt the State requirements for drug testing following an accident, which contain limits based on personal injury and property damage amounts.
	Despite the Union’s concerns, there is no showing that the City’s proposal would remove disciplinary action based on a positive drug test from the grievance procedure. The contractual grievance procedure is sufficiently broad to guarantee Police Officers their rights to due process, even if the City were to impose termination automatically upon a second positive test. The City’s proposal is not unlike drug testing policies in effect in both the public and private sector all over the country. The neutral arbitrator, therefore, concludes that the City’s proposal on this article is the more reasonable.

Award
	The Arbitration Board must adopt one proposal or the other in its entirety. Because the City’s proposal on the take-home vehicles would remove an existing benefit with no compelling economic or policy justification; because the City’s wage proposal would not address the disparity between the compensation of the Tulsa Police Officers and those in the ten-city market comparison as closely as would that of the Union; and because the Union’s health and welfare proposal would simply raise the City’s contributions to the level to which the City has already agreed in principle, the Union’s LBO is the more reasonable on these critical issues. The City’s more reasonable offers on the remaining issues are not sufficient to warrant adopting its proposal in full. Accordingly, the Board selects the Union’s last best offer as the collective bargaining agreement of the parties for Fiscal Year 2008 – 09.
	February 19, 2009.
						
Michael B. McReynolds, Neutral Arbitrator


												
Amy Polonchek					Ron Bartmier
City’s Interest Arbitrator				Union’s Interest Arbitrator

Concur		      Dissent				Concur			Dissent	
 The PERB and Oklahoma Courts have held that it is appropriate to consider federal labor law in the construction of the FPAA. IAFF, Local 2479, v. City of Ponca City, PERB Case No. 00377 (1987), among other cases.
 The parties define this point as the intersection of 4100 South Yale Avenue in Tulsa.









City of Tulsa, Oklahoma, and FOP Lodge 93
FMCS Case No. 08-56581