Addendum … In an earlier post I wrote about the extreme starting positions of the police union and the township, and it was my opinion that the “answer for the arbitrator must lie somewhere between these two positions.” In response to my statement, John Petersen assured me that the arbitration award would not be ‘somewhere in the middle’ but rather it would be much closer to the union’s status quo starting position. At the time, I argued with him, figuring that ‘cutting the difference’ between the opposing union/township positions would ‘make sense’ to the arbitrator. In reviewing the arbitration award, it is obvious my assumption was incorrect … further explanation of the arbitration process would be helpful.
According to the township website, there is there has been an ‘Act 111 Interest Arbitration Award’ issued for the collective bargaining agreement between the township and the police union, Tredyffrin Township Police Association (TTPA). Enacted in 1968, Act 111 is a state law that provides binding arbitration to police and fire fighters in exchange for a prohibition against strikes. If collective bargaining reaches an impasse and proceeds to the interest arbitration level, the determination reached by the arbitration board is final on the issues in dispute and binding on both parties
I am not sure who is responsible for the arbitration award appearing on the website – our new township manager Bill Martin or Board of Supervisor chair Michelle Kichline. But to whoever is responsible, thank you … it was a pleasant surprise to find the award pdf on the website, without necessitating a ‘right-to-know’ request.
Since January 2012, the contract between TTPA and the township has been in arbitration; the 3-year police contract expired December 31, 2011. The process has been held captive for nearly a year, waiting for a ruling from the Board of Arbitration, impartial chair Michael Zobrak, Esq. township arbitrator John P. McLaughlin, Esq. and union arbitrator Stuart W. Davidson, Esq.
The biggest roadblock in collective bargaining contract disputes these days is health care benefits (in addition to salaries) and the Tredyffrin Township/TTPA contract proved no different. In reviewing the arbitration award, please understand that I do not claim labor attorney status or an expertise in contract law. However, it would appear that the independent arbitrator favored the township police in his award. Some of the highlights of the arbitration award include –
A 4-year township-police contract, retroactive to January 1, 2012. The term of the contract is January 1, 2012 to December 31, 2015. The arbitration award includes salary increases to TTPA members as follows:
- January 1, 2012: 3.5%
- January 1, 2013: 3.5%
- January 1, 2014: 3.75%
- January 1, 2015: 4%
The previous TTPA contract included yearly salary increases of 3.5% for 2009, 2010 and 2011. As a reference point, this week the Lower Merion Township Police Association signed a new 4-year contract that includes 3.5% yearly increase for the first three years and then 3.75% in the final year. It is interesting to note that unlike Tredyffrin, Lower Merion Township and their police department were able to reach a new contract agreement prior to expiration of their current contract. The TTPA contract expired December 31, 2011 and has been in arbitration for over 11 months.
The healthcare changes contained in the arbitration award for TTPA members should save the township some money. Under the new agreement, the township will be able to change to medical coverage as soon as possible to a less costly plan (from Aetna PPO to IBC Personal Choice). Co-pays will be $5 generic and $20 brand. TTPA members will not contribute toward the cost of their health care insurance premium for 2013; township will analyze premium contributions annually starting in 2014.
Here is a twist in the health care coverage that could produce savings for the township but also some extra money for our police officers – an ‘Opt Out’ plan. By opting out, the Township will pay officers the following amounts on a yearly basis:
- Officer drops single coverage: $3,500
- Officer drops dependent coverage (officer still covered) $4,000
- Officer drops dependent coverage (officer not covered) $4,500
- Officer drops spouse (officer still covered) $4,500
- Officer drops spouse coverage (officer not covered) $5,000
- Officer drops family coverage (officer still covered) $5,500
- Officer drops family coverage (officer not covered) $6,000.
I like this incentive based healthcare coverage idea. If police officers give back on their medical coverage, it will save the township money and in return, produce a financial incentive for TTPA members … a win-win for police officers and the township.
The arbitration award contains an adjustment in minimum payment upwards for officers’ appearance at non-District Justice Court to 4 hours (previous contract was 2 hours). The award contains a downward adjustment on clothing allowance – previously, the clothing allowance was $600/yr. but is now amended to $200/yr. The arbitrator dropped the clothing budget by 66% for TTPA members but Lower Merion police officers saw an increase in their clothing allowance in their new contract … $900 for 2013, $950 in 2014, $1000 in 2015 and $1050 in 2016.
Other than the above points, all terms and conditions of the collective bargaining agreement, which expired December 31, 2011, continue under this new agreement. If you recall, one of the sticking points during the contract negotiations had to do with the post-retirement benefits contained in the former police contract. According to the arbitration award, post-retirement health care coverage for TTPA members is included in the new 4-year contract.
As a reminder, the 2009-11 police contract stated that if an officer retired on or after 1/1/2009, the township may coordinate its obligation to provide post-retirement medical coverage with available Medicare coverage. “For those persons eligible for Medicare, the township shall reimburse them for any cost associated with acquiring Medicare, including the cost of Plan B coverage. In addition to being responsible for all costs associated with Medicare coverage, the township shall purchase supplement insurance and the township shall self-insure such as is necessary to provide the retired officer and spouse with the same level of insurance coverage they enjoyed before coverage was coordinated with Medicare.”
The contract further stated that, “… Officers who retired prior to 1/1/09, as well as their spouses and eligible dependents, shall be permanently vested with, and continue to enjoy, the same level of healthcare benefits being provided for them by the Township as of 12/31/2008 at no cost, except for co-payments and deductibles then in effect.”
Part of the problem with the wording of the contract is that although the township will pay for Part B once a retired police officer qualifies for Medicare; there is not an absolute requirement for the police officer to go on Medicare. However, the costlier issue for the township has to do with the years of service requirement. According to the contract, the requirement for retirement before 1/1/99 was only 15 years of service. After 1/1/99, it became 20 years of service. Conceivably, a police officer could retire many years in advance of Medicare qualifying age but continue to receive full healthcare benefits for him or herself plus spouse and dependents.
It would appear that the longevity bonus pay also remains intact for TTPA members as in the previous contract. The bonus is computed as follows:
- After 4 years of service 2% of Basic Yearly Salary
- After 8 years of service 4% of Basic Yearly Salary
- After 12 years of service 6% of Basic Yearly Salary
- After 16 years of service 8% of Basic Yearly Salary
- After 20 years of service 10% of Basic Yearly Salary
It should come as no surprise that the township appointed arbitrator John McLaughlin included his dissent with the arbitration award, claiming a “lack of overall balance in the award.” McLaughlin states that the “neutral arbitrator [Michael Zobrak] issued an unbalanced award that fails to address the Township’s central issue of post-retirement health benefits and the unfunded liability that the Township is facing as a result of those benefits.”
For the record, the township’s unfunded liability is currently $40M. The township’s 2013 budget contains an annual contribution of $500K to begin to ‘buy down’ the debt, however the unfunded liability grows annually by about $2M. McLaughlin claims that Zobrak was fully aware of the township’s unfunded liability issue but that he inexplicably, “failed to address this issue in the award. Instead, he [Zobrak] cherry picked around this issue, and issued an award that is a disservice to the Township’s taxpayers and all involved with this proceeding.”
It also should come as no surprise that the union arbitrator, attorney Stuart Davidson, concurred with the arbitration award. So … how do you explain the arbitration award? Did Davidson do a better job of presenting the union’s position at the arbitration hearing than McLaughlin did for the township? Or is McLaughlin’s suggestion correct, that fault lies with Zobrak, for the ‘unbalanced award’? And what about Zobrak, the independent arbitrator? Why did it take him 11+ months for this award decision? My research has shown that it typically takes 3-4 months in arbitration. Perhaps a timelier award could have saved the taxpayers some legal fees and certainly would have made the 2013 budget planning easier.
Beyond the financial responsibilities to the township contained in the new police contract, exactly how much did this yearlong arbitration cost the taxpayers? Earlier in December, I asked township manager Bill Martin that very question in a right-to-know request. As of December 14, 2012, the township had paid McLaughlin of Ballard Spahr $57,067.50 for 2012 legal fees. (McLaughlin’s billing rate is $300/hr.).
According to Martin, Zobrak, the independent arbitrator is paid on a per diem basis and submits his bill at the conclusion of the arbitration. Martin stated “He [Zobrak] charges for hearing days, days when executive sessions were held and study days (when he reviews materials and drafts the award). He also might charge partial days when the parties have relatively short conversations.” I have received conflicting information as to who pays Zobrak’s bill – my understanding from the township manager is that the bill is split between the two sides but a police union representative told me that the township would pay the entire bill. Now that the arbitration award is public, I will submit a new right-to-know request and obtain the total costs. (** See Note)
Now that the police contract arbitration is settled, I have to wonder how quickly (or rather how slowly) the current police department staffing needs in the township will be met. There are currently 40 uniformed police officers, although there were 47 officers listed in the 2012 budget. The 2013 township budget approved the hiring of two additional police officers for a total of 42 officers, although the ICMA police operations and data analysis report indicated a minimum of three additional uniformed officers (total of 43 officers) were required to maintain the safety of the community. Police Supt Tony Giaimo’s request to reinstate 47 officers in the 2013 budget was denied.
Every time I think about that boilerplate consultant’s report that cost the taxpayers $49K I get angry – what a complete waste of money. I wonder if the intention of some supervisors (in hiring consultants to review the police department) was to intimidate the police union during the negotiation process. Based on the outcome of the arbitration award, if that was their strategy, I’d say that their plan failed miserably.
Here’s hoping that the police department gets their budgeted, additional officers quicker than the sidewalks have gone in at St. Davids Golf Club!
** Note: According to Allegheny Institute of Public Policy, under the conditions of Pennsylvania’s Act 111 law, “The employer has to pay the costs of its arbitrator as well as the costs of the neutral arbitrator.” In other words, there will be no ‘splitting’ of Zobrak’s arbitration fee with the union — the taxpayers will pay bill for the township arbitrator and the independent arbitrator.
To make it sting more, I was told by several officers, that the township did not spend much time negotiating with the union, opting to go straight to arbitration. It makes me wonder — could the township have saved a year’s worth of legal fees if they had tried reasonable negotiations with the union. Upper Merion Township was able to negotiate with their police union without arbitration; signing a new 4-year contract prior to the expiration of their last contract.
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There are a number of issues to address here. I’ll tackle the healthcare changes.
I see the plan is changing from a PPO plan to a high deductible (HD) plan with a $3,000 deductible. Normally, this would drive conservative use of healthcare services because the employee is responsible for the first $3,000 of any healthcare. But the township is paying the entire deductible so there is no incentive to be a wise consumer of healthcare services. I don’t see any savings from the plan change. What will save some money is the contract clause that requires employees to contribute 4% toward the premium in years where the employees exceed 50% of the aggregate deduction. I’m going to estimate the average plan costs $15K so the district in some years might save $600 per employee. This is not big money.
Contrary to what was mentioned above, the opt-out provision is not new; it’s in the current contract. The language in the arbitration award just increased the “reward” for opting-out. Further, the opt-out language should be considered a win-win situation only in a very narrow sense. The opt-out provision is used only when the employee has a spouse who shifts the entire family’s healthcare coverage (including the TT employee) to his or her employer. The township is rewarding an employee for burdening another employer with their employee’s healthcare expense. The equitable solution is for both employers to share equally. Most private employers have provisions in their employee contracts that prevent them from getting penalized with this opt-out shift. Guess which employers don’t have protection against the opt-out penalty? Most school districts including TESD and UCFSD.
Now I understand why that Second Amendment is relevant today. Here we have tyranny by government employees, rather than officials, that could drive citizens to use its provisions.
In the first place, it becomes more and more important to citizens to be properly armed, because we can’t afford sufficient officers to protect us when the compensation of an individual officer is a multiple of the median household income.
Secondly, since because of OPEB liability the full cost is a) unknowable and b) open-ended, it could escalate to a point where the only affordable option is to form our own militia. If the township were to hire a 25 year-old officer today, we will expect to be paying the healthcare for that officer and his family (while they are dependents) until 2072. 2072! By then, Keith’s $15,000 premium, compounded at 5% for 60 years is $280,000 a year.
Of course, that’s such a silly number the plan will have to change, but we’re stuck with this contract until 2016. One other item of note in addition to Pattye and Keith’s good points:
“The scope of coverage under the IBC Personal Choice HD4-HC1 Plan shall not be less than that provided under the DVHIT Aetna PPO Plan. If the coverage for a treatment or procedure is less than that provided under the DVHIT Aetna PPO plan, the Township shall assume the additional cost.”
Turning to a more constructive line of enquiry: why is it that two arbitrators have found so convincingly against taxpayers in our township/school district? Do our lawyers present our case poorly? Are we viewed as rich enough to afford any settlement? What can we do about it?
In the case of the school district the strategy worked out fine, because the findings were not binding and the employees stepped up, recognized their position relative to their peers and to the taxpayers. In the police case, Pattye’s question is a good one: was there another route that could have been taken to avoid the binding outcome? Was there indeed “not much time” spent negotiating? How much is not much?
Now I wonder how the township budget will be impacted. I doubt that the staffing levels were based on this compensation package, but I suspect that the greatest dollar difference is in the OPEB assumption rather than the current cost. So maybe the township can reduce some other expense to find the extra cash to hire the budgeted 42 officers, and just kick the can down the road.
Now, where do I sign up for that NRA training?
The 3.5% to 4% salary increases over 4 years are in-line with the LM contract, but excessive in relation to historical statewide police salary increases. Here is the average salary history for PA police protection from the Bureau of Labor Statistics.
2009 $54,916 1.92%
2010 $54,538 -0.69%
2011 $55,487 1.74%
It’s evident that the arbitrator, rightly or wrongly, took into account the township’s wealth and ability to shoulder large (3.5% to 4%) increases.
What seems to bother the township’s lawyer is that the arbitrator failed to address the township’s large unfunded liability for post retirement benefits. He bemoaned, “the neutral arbitrator issued an unbalanced award that fails to address the Township’s central Issue of post-retirement health benefits and the unfunded liability that the Township is facing as a result of those benefits.”
The arbitrator might have asked –
– Was the township historically making a good faith effort to fund those post retirement healthcare benefits?
– Did the township already have a reserve fund set aside that was ravaged by the downturn in the markets?
– Was the township conveniently ignoring the problem and avoiding the necessary tax increase?
(I don’t know the answers to these questions)
If the township was already making a good faith effort to fund the benefits, the neutral arbitrator might have asked the police to share the burden.
If the township was hiding the problem, the arbitrator might have chastised the past supervisors that ignored the problem and placed the burden back on the taxpayers.
For those interested in the details of the BLS information:
Quarterly Census of Employment and Wages
Series Id: ENU4200050392212
Area: Pennsylvania — Statewide
Industry: NAICS 92212 Police protection
Owner: Local Government
Size: All establishment sizes
Type: Average Annual Pay
When compensation is tied to longevity and not productivity or excellence, the game is over. municipal pensions are worse than a ponzi scheme.
Now that there is police contract arbitration is resolved, what’s going to happen to the township budget that was just approved. Based on what the supervisors thought the arbitrator would do, assumptions were made when calculating the budget. Since the arbitrator ruled in favor of the union, any guess where that leaves the budget, or rather where does that leave the Tredyffrin taxpayer.