Omaha World-Herald, March 4, 2010, Thursday

Omaha World-Herald

March 4, 2010, Thursday

Omaha World-Herald

City finances not in pay equation

By Robynn Tysver

When a city in Nebraska sits down to negotiate a labor contract with its firefighters or its police officers, all the parties at the table understand that a little-known state commission might have the final word.

The five-member Nebraska Commission of Industrial Relations, which is appointed by the governor, can settle a labor dispute by dictating wages and conditions of employment, based upon market conditions in comparable cities.

For example, many of the provisions in the police contract currently being debated in Omaha stem from a 2008 ruling by the commission.

The ruling established the number of sick days that an Omaha police officer receives every year, the number of paid holidays and the number of vacation days that an officer can earn throughout a career. It also ordered the City of Omaha to begin giving officers an allowance for uniforms and ordered officers to begin paying health care deductibles.

The commission has long been a source of frustration for county boards, school boards and city councils across Nebraska. The Douglas County Board has been known to complain about the commission frequently, and there have been various attempts by the League of Nebraska Municipalities to alter the commission process.

A key source of frustration is that the commission is not allowed to take into account a public employer's ability to pay for a contract.

Other states, including neighboring Iowa, require their labor arbitrators to take into account a city's financial picture.

“Currently, there is no consideration given for the economic stress a city or its taxpayers are under,” said Paul Landow, a critic of the CIR process during his tenure as chief of staff to then-Omaha Mayor Mike Fahey.

“While that shouldn't be the only factor the CIR weighs in making a decision, it should definitely be one of the factors,” Landow said.

In Omaha, the commission's name has been invoked numerous times recently as the City Council considers a new police contract and negotiates a new contract for firefighters. The council is currently scheduled to vote on the proposed police contract Tuesday.

The complaints also have given rise to a movement to alter the commission process.

Among the labor bills introduced by State Sen. Tony Fulton of Lincoln this year is one that would require the CIR to consider a city's ability to pay. The bills are unlikely to go anywhere this session, but all parties have agreed to talk over the summer.

The idea, Fulton said, is to return next year with bills that might be more palatable to both public employers and unions.

Unions are wary of any call to change the commission process, fearing that it is an attempt to stack the deck in favor of management.

Aaron Hanson, president of the Omaha police union, said he would have to see any proposed change before taking a position. But in his experience, he said, the commission is a “neutral arbitrator” that objectively sets wages and working conditions based upon the average market rate in comparable cities.

Hanson objected to adding a city's ability to pay to the conditions considered, asking: How could the commission compare Denver's ability to pay to Omaha's ability to pay?

“It's a complicated issue,” he said. “What do we expect the commission to do? Look into the city's entire budget?”

The commission was created in 1947. Members are appointed by the governor, with the Legislature's approval. Currently, no member comes from Omaha.

The commission was created to settle labor disputes between public employers and public workers, who are not allowed to go on strike.

Many of the commission's practices have evolved through the years and have been upheld by the Nebraska Supreme Court. For example, it was the court that ruled in the 1970s that the commission could not take into account a city's ability to pay for a contract.

Over the years, the commission has developed a mathematical formula to establish wages and benefits.

It all starts with choosing comparable cities.

Once the commission has chosen five to seven cities — with input from both sides — it then compares all wages and benefits. After all the information is gathered, the commission uses a mathematical formula to calculate the midpoint.

For example, the commission finds out how many sick days each police officer in the seven cities receives each year. The commission then calculates the midpoint.

“Once the array is determined, we just crank math,” said G. Peter Burger, president of the commission and a McCook attorney.

The choosing of comparable cities is especially critical for the state's two largest cities — Omaha and Lincoln.

Rural schools in Nebraska typically know their comparable schools. They are all around them. This allows them to use computer programs to work out contracts that are based upon the commission's own mathematical formula.

It avoids a lot of labor disputes.

But the state's largest cities have to look outside the state for comparables.

Every state handles labor disputes differently. Some, in fact, allow their public employees to go on strike.

Lee Adler, a senior associate at the Cornell University School of Industrial and Labor Relations, said he has heard of other states and entities using comparable cities when the two sides reach an impasse.

But Adler did not know of any other state with a commission that relied so extensively on a mathematical formula to arrive at wages and benefits.

For example, comparables are used by New York arbitrators, but not exclusively. They are also required to consider a city's financial situation and the realities that have led to the contracts in the comparable cities.

In Iowa, labor disputes are handled through a neutral party who can be a professional mediator, a professor or anyone else chosen by the two sides.

Generally speaking, Iowa has a process in which an independent arbitrator is called in when the two negotiating partners reach an impasse.

If mediation doesn't work, a “fact finder” is appointed. That person conducts a hearing, listens to both sides and then makes a recommendation to resolve the dispute.

If that doesn't work, the parties can request binding arbitration. In that process, the arbitrator has three choices to pick from: the union's final offer, management's final offer or the fact finder's suggestion.

In making a decision, the arbitrator also must take into account the cities' or the school districts' ability to pay.

Contact the writer:

444-1309, robynn.tysver@owh.com