1

IN THE MATTER OF THE INTEREST ARBITRATION BETWEEN

____________________________________________________________________________

Anoka County

EMPLOYER

and BMS Case No. 16-PN-0668

Law Enforcement Labor Services, Inc.

Representing Local # 381, the County Dispatchers

UNION or "LELS"

____________________________________________________________________________

ARBITRATOR: Richard J. Dunn

DATE AND PLACE OF HEARING: October 27, 2016

DATE AND RECEIPT OF POST-HEARING BRIEFS: November 18, 2016

DATE OF AWARD: November 29, 2016

ADVOCATES

For LELS:

Ms. Kimberly Sobieck

LELS Staff Attorney

Law Enforcement Labor Services, Inc.

327 York Avenue

St. Paul, MN 55130-4039

For the Employer:

Mr. Scott M. Lepak, Attorney

Barna, Guzy & Steffen, Ltd.

200 Coon Rapids Boulevard NW, Suite 400

Bloomington, MN 55435-5834

2

JURISDICTION

The hearing for this case was convened on October 27, 2016 at the Anoka County Government

Center pursuant to the Minnesota Public Employment Labor Relations Act (MPELRA).

The parties wrote to the undersigned on September 21, 2016 indicating that they selected him as

the arbitrator for this case. The October 27, 2016 date was subsequently agreed upon by all parties

to the hearing.

Both parties indicated at the hearing that they understood this to be a final and binding decision by

the arbitrator. The parties stipulated that the issues were properly before the arbitrator, except for

one issue, namely Issue Number Nine, where the County raised an objection. The County chose

to address Issue Number Nine in the course of the County’s presentation, and the Issue was

eventually withdrawn from consideration upon the agreement of both parties.

Appearing through their designated representatives, the parties were given a full and fair hearing.

Witnesses testified under oath and witness testimony was cross-examined. Each party presented

exhibits, testimony, arguments, and addressed questions during the hearing. Each party also

presented three ring binders at the hearing, referred to as Union Exhibit One, and Employer Exhibit

One, complete with tabs for material included in the binders. The

County presented a brief at the hearing. Each party filed a post hearing brief dated November 14,

2016, complying with the due date agreed upon at the hearing to send these to the Arbitrator both

via e-mail and United State Postal Service.

The Arbitrator took these material and briefs under advisement.

The Commissioner of the Minnesota Bureau of Mediation Services on June 7, 2016 certified nine

(9) items for submission to the arbitrator. (Union Exhibit One, Tab 2) (Employer Exhibit One, Tab

C, Tab 1)

3

APPEARANCES

For the Employer, Anoka County

_______________________________________________________

Mr. Michael Roff, Director of Employee Relations for Anoka County

Ms. Dee Guthman, Deputy Anoka County Administrator

Ms. Valerie Sprynczynatyk, Manager, Central Communications

For LELS

________________________________________________________

Ms. Romaine Drowns, Dispatcher

Ms. Kari Morrissey, Lead Dispatcher

Ms. Karen Kruschke, Dispatcher

Mr. Jim Roberts, Business Agent

ISSUES

The following nine issues were certified at impasse on June 7, 2016 by the Commissioner of the

Minnesota Bureau of Mediation Services, pursuant to Minn. Stat. 179A.16, subd. 2 and Minn. R.

5510.2930. This certification was after the Bureau received on May 19, 2016. a written request

from the union to submit contract negotiations to conventional interest arbitration. (Union Exhibit

One, Tab 2) Each party on June 14, 2016 submitted final positions on the issues certified at

impasse for binding interest arbitration. (Union Exhibit One, Tab 3) (Employer Exhibit One, Tab

C, Tab 1) The nine issues are:

Issue # 1. Duration of the Contract – Article 21

Issue # 2 Amount of General Compensation Increase, if any, for 2016 – Article 15,

Appendix A

Issue # 3 Amount of General Compensation Increase, if any, for 2017 – Article 15

Append A

Issue # 4 Amount and Calculation of Merit Increase, if any, for 2016 – Article 15,

Appendix A

Issue # 5 Amount and Calculation of Merit Increase, if any, for 2017 – Article 15,

Appendix A

Issue # 6 Amount of Market Adjustment for 2016, if Awarded – Article 15,

Appendix A

4

Issue # 7 Amount of Market Adjustment for 2017, if Awarded – Article 15,

Appendix A

Issue # 8 Compensation – Stability Ranges. Should Stability Ranges be Eliminated

and Replaced with the County Compensation Rules Regarding Movement Beyond

Range Top? – Article 15, Appendix A.

Issue # 9 Holiday Pay. Should the Memorandum of Agreement Language Be Put in

the Contract? Article 8

FACTS AND BACKGROUND

This interest arbitration focuses on Dispatcher I, Dispatcher II, and Lead Dispatcher in the Anoka

County Dispatcher unit. The thirty-six (36) Dispatchers have been covered by a collective

bargaining agreement which expired on December 31, 2015. The contract in the form of a

Memorandum of Agreement covered the period January 1, 2014 through December 31, 2015.

(Employer Exhibit One, Tab 4) (Union Exhibit One, Tab 1 ) This agreement was executed on

June 22, 2015.

Dispatchers in Anoka County work for Minnesota’s fourth largest county with a population of

344,151. (Employer Exhibit One, Tab 1) The County is located in the northwestern portion of

the traditional seven county Twin Cities metropolitan area. The employees are members of the

bargaining unit and are “essential employees” who cannot strike, but can request interest

arbitration upon reaching impasse after negotiations.

Law Enforcement Labor Services, Inc. Local No. 381 (hereafter the Union or LELS) is the

exclusive representative of the bargaining unit. LELS also represents nine other bargaining units

in the County.

A memorandum of Agreement between Anoka County and Law Enforcement Labor Services, Inc.

Dispatcher Unit for the term January 1, 2014 through December 31, 2015 in Article 15 includes

reference to a Pay Plan. This document refers to a salary schedule attached to the Agreement and

marked as Appendix A. (Employer Exhibit One, Tab 4, page 12-14) (Union Exhibit One, Tab 1,

page 12-14)

5

Negotiations, as well as mediation between the parties, did not result in resolving all the open

issues for a successor contract. The parties submitted final positions to the Bureau to proceed to

arbitration. (Employer Exhibit One, Tab C-2) (Union Exhibit One, Tab 3)

Arbitrator Christine D. Ver Ploeg and Arbitrator Mario Bognanno have described some useful

points in decisional thinking with regard to interest arbitration. Arbitrator Ver Ploeg wrote the

following:

The two primary bases for decision in any interest arbitration are:

(1) Determining what the parties would likely have negotiated had they been

able to reach agreement at the bargaining table, or, in the case of essential

employees, to settle a strike. Although the determination is speculative,

arbitrators understand that to award wages and benefits different than the

parties would, or could, otherwise have negotiated risks undermining the

collective bargaining process and provoking yet more interest arbitration.

(2) Seeking to avoid awards that significantly alter a bargaining unit’s relative

standing, whether internal or external, unless there are compelling reasons

to do so,”

Minnesota Teamsters Public and Law Enforcement Employees Union, Local

No. 320 v. Carver County, BMS 12-PN-0380 (Ver Ploeg, 2013)

Arbitrator Mario Bognanno recently wrote the following to describe how interest arbitration in

Minnesota is to be employed when bilaterally negotiated settlements cannot be reached.

Interest arbitrators, acting in the public’s interest – in support of collective

bargaining negotiations – endeavor to issue awards that are analogous to the

settlements the parties might have reached had their negotiations not failed. The

evidence that best approximates what the parties’ settlement on an issue might have

been is found in labor contracts that were successfully negotiated by other

bargaining units and the instant employer – internal comparisons -and/or similarly

situated bargaining units that share a common regional or labor market – external

comparisons.

County of Dakota and the Minnesota Teamsters Public and Law Enforcement

Employees’ Union, Local No. 320, Awarded on October 15, 2016. (Bognanno

2016)

These are useful tenets in decisional thinking about cases such as this, and they can be profoundly

important in guiding arbitrators when writing decisions and awards

6

ISSUES, DISCUSSION and AWARD

Issue # One Duration

The County’s position on the issue of duration is for a one-year contract. The Union’s position is

for a two-year contract, covering 2016-2017.

The Union makes an argument that a two-year contract is consistent with stable labor relations,

and avoids soon placing the parties into negotiation for a 2017 contract. Furthermore, the Union

claims that waiting for the County to set wage matters for non-union employees or until another

bargaining unit settles, is unreasonable and antithetical to collective bargaining. The Union cites

that two of the four external comparable dispatch communications centers in other counties have

settled contracts for 2017, serving as an adequate basis for an arbitration decision. These are

counties that both parties have traditionally compared to Anoka County dispatchers for

compensation and related contract matters.

The County also refers to the fact that only two of the four comparable counties have settlements

for 2017. This is not sufficient external competitiveness data, argues the County. With regard to

internal comparables, numerous other Anoka county units anticipate or are already involved in

arbitration. The County states that “there was not a significant number of internal comparables

that an arbitrator could use for support.” (Employer Post-hearing Brief, page 1) Furthermore the

County argues there is no economic data to rely upon for 2017.

Discussion

An initial focus on internal comparables is key in arbitration, because when an arbitration decision

on contract duration and contract compensation sets a precedent for other bargaining units, there

is a greater opportunity for whipsaw bargaining. But in this case, numerous units in Anoka County

are undergoing arbitration in about the same period of time. Indeed, one arbitration decision was

awarded already on November 7, 2016. This award was for a two-year contract duration beginning

January 1, 2016 and ending December 31, 2017 for the licensed deputy sheriffs in Anoka County.

7

(Arbitration Award by Arbitrator Harley Ogata, Anoka County and LELS Sheriff’s Deputies,

November 7, 2016, BMS Case # 16.PN-0461)

Arbitrator Ogata noted “ that a one year contract would place the parties right back into bargaining

a successor agreement that would be due in two months. In the interest of stable labor relations, a

two-year contract is awarded here.” (Id., Page 3) Arbitrator Ogata noted that “the economic

forecast for the 2017 year is no more undiscernible than most years when parties face collective

bargaining for the future”, and that “there are no compelling issues outstanding internally that

bring great unknowns to this table.” (Id., Page 3-4)

The year 2017 is upon us shortly. The consequence of the parties resuming negotiations for a new

contract beginning in 2017 would result in further instability of labor relations.

Furthermore, it is highly unlikely that County finances will change substantially in the near term.

With regard to external economic conditions, the impact on the county is somewhat stabilizing

after a period of significant upheaval. The economic factors relevant to the new year are no more

undiscernible than is typically the case.

Issue # One Award

While there are marginally sufficient competitiveness external data to support a decision, the very

recent precedent set by Arbitrator Ogata regarding contract duration in another Anoka County

Sherriff’s Department bargaining unit, the need for stable labor relations, and the fact that 2017

comes in about a month, lead this Arbitrator to conclude that a two-year contract duration is

appropriate. There is no impending dire circumstance either internally or externally that would

cause the duration of the contract to be limited to one year.

A two year contract also provides more certainty to the County for budgeting and forecasting

expenditures for 2017. This should enable the County to fulfill its obligation to manage the County

effectively and efficiently without the possibility and associated expense of another prolonged

negotiation and expense associated with another possible arbitration regarding 2017 contract

matters for dispatchers.

8

Issue # Two – Wages 2016 – Amount of general increase, if any, for 2016 –

Article 15/Appendix A

Issue # Three – Wages 2017 – Amount of general increase, if any, for 2017 –

Article 15/Appendix A

The Union position proposes a two (2%) percent general wage increase in 2016 and a 2.75 (2¾%)

percent increase in 2017. The County’s position is for no general increase in wages during 2016

and no increase in 2017. (Union Exhibit One, Tab 3) Employer Exhibit One, Tab C, 2)

Arbitrators in interest arbitrations typically consider external market comparisons, internal equity,

the employer’s ability to pay a general increase in wages, changes in the cost of living and other

economic factors. The Union acknowledges that a strong internal wage increase pattern does not

exist for 2016 or 2017 for County bargaining units. (Union Post-hearing Brief, page 4) But the

Union also notes that Anoka County does not practice a pattern of identical wage increases among

bargaining units and non-union employees, nor even amongst the bargaining units. Non-union

employees did not receive a general wage increase in 2016.

The Union compiled external comparisons for the accepted four counties which the parties have

traditionally included in a market comparison, namely Dakota County, Ramsey County, Scott

County and Washington County. (Union Exhibit One, Tab 10-4) This data depicts a general

wage increase of one (1%) percent in Scott County (which increased merit movement by one

percent (1%) to three percent (3%) and the top rate by six percent (6%)), 2.5 percent (2 ½%)

increases in Dakota County and Ramsey County, and a two (2%) percent increase (along with a

three percent (3%) increase in movement) in Washington County for 2016. (Id. Tab 10-4)

For 2017 Dakota County awarded dispatchers in its Communication Center a 2.5 percent (2½%)

general wage increase, and an arbitrator awarded a 2.6 percent increase in Ramsey County.

Scott County and Washington County have not settled on an increase yet for 2017. In Anoka

County the Union position is for a 2.75 (2 ¾ %) percent increase in 2017. (Id., Tab 3)

9

Union Exhibit One, Tab 10 – 2 depicts actual Anoka County Dispatcher II top wages compared to

the other four counties’ top wages. (Id., Tab 10-2) This depiction of Anoka County Dispatcher II

actual wages indicates that Anoka Dispatcher II incumbents are somewhat below the average top

wages in the other four counties, calculated as 1.1 percent lower than average in 2015 and 2.3

percent lower than average in 2016. (Id., Tab 10 –2) Anoka County Dispatcher II wages rank

fourth among the five counties in this Exhibit. The Union claims that this ranking of actual wages

represents the real situation with regard to Dispatcher II wages The Union exhibit indicates that

the Anoka County Dispatcher II top wage has been declining relative to the market average. (Id.

page 10-1) It should be noted that the Union uses average Dispatcher II wages for incumbents who

have been in their current position for over twenty (20) years. It should also be noted that no

Anoka Dispatcher II incumbents earn the top wage. (Id., Tab 10-2)

Thus, the Union argues that the proposed increase is supported by the external comparison of

wages, and the positioning relative to the agreed upon external market counties where dispatch

units exist. Dispatchers in these counties received significant annual increases from 2014 to 2016.

(Union Post-hearing Brief, page 9) Clearly all these counties are trying to make pay more

attractive for dispatcher recruitment and retention, as well as for the reward system.

Furthermore, the Union cites turnover data for dispatchers, which is particularly acute for

Dispatcher I incumbents, and less so for Dispatcher II’s. But it is also noted that Dispatcher II’s

are key for training new dispatchers and for the years of experience which they bring to the job.

Testimony was given at the hearing by Ms. Romaine Drowns, a Dispatcher II in Central

Communications with five and one-half years of service. She testified regarding resignees from

Anoka County Communications Center, and where they moved for employment, saying that many

moved to other dispatcher job where they earned a significant wage increase.

The Union claims that the existing internal wage pattern supports the Union’s proposed wage

increase.

With regard to pay equity, Union Exhibit One, Tab 8 indicates that the Pay Equity Implementation

Report produces a statistical analysis test result of an Underpayment Ratio of 116.70 for 1956

10

employees in 390 job classes. For Dispatcher I, the maximum monthly salary is $87.74 in excess

of the predicted pay level, for Dispatcher II the maximum monthly salary is $251.24 below the

predicted pay level, and for Lead Dispatcher the maximum monthly salary is $277.27 under the

maximum monthly salary level. The County is in compliance with the Pay Equity Act. (Union

Exhibit One, Tab 7 -1)

The Union also comments that the Anoka County recovery surpasses the State’s recovery

economically, citing market values and unemployment rates. The consumer price increase data

should also support an award of wage increases to ensure dispatchers maintain pace with the

increase in cost of living, according to the Union.

In contrast, the County argues that the amount of the cost of wage increases must come from

somewhere and it would strain the County’s general expenditures to fund the Union’s proposed

salary increases. (Employer Post-hearing Brief, page 5) The County estimates that adding two

percent (2%) would cost $35,614.33 in 2016. (Employer Hearing Brief, page 13) Such an increase

was not budgeted for 2016. (Id., Page 14) For 2017 the County anticipates additional cuts rather

than additional tax dollars. (Id., Page 12)

In his November 2016 award, Arbitrator Ogata did not award a general adjustment for 2016 or

2017 to the deputies in his award to this bargaining unit, which is the largest essential bargaining

unit in the County. The County claims that this award provides strong evidence for not awarding

a general increase to the dispatchers.

The County also characterizes the current economy as “wobbly”, particularly citing concerns by

economists and retirees. The County bond rating was downgraded from AAA to AA+ Stable by

Standard and Poors in 2013. (Id., Page 12) Furthermore, State and federal mandates are

frequently unfunded, further straining county fiscal management. This contributes to the current

budget planning for 2017 which the County claims will involve additional cuts rather than more

tax revenue. (Employer Hearing brief, page.15) The County argues that ongoing obligations such

as general and market increases should not be awarded based upon existing fund balances. The

11

finances of the County led to no general increase for 80 percent of the employees of the County in

2016.. (Id., page 16)

In both its Hearing Brief and Post-hearing Brief, the County argues that a 2016 general increase in

wages would strain the County’s general fund resources, particularly if a precedent were to be set

by a relatively small group of 36 employees who represents 1.8 percent of the total County

workforce. County finances do not support a general wage increase, concludes the Employer.

Regarding internal equity, the County again cites that 85 percent of the County workforce received

no general increase for 2016, which supports the County position of no general increase in wages.

External comparables show that the Dispatcher II classification average top wages (using the

proposed top stability rate) are well above the market average in 2016. The grades and ranges are

claimed to be competitive in 2016. (Employer Post-hearing Brief, page 8) The County assesses

the Dispatcher II classification at 99 percent of the 2016 market average. (Id., Page 9)

Furthermore, the County cites the Union data depicting that the highest paid Anoka County

incumbent Dispatcher in 2016 is paid above every other range top for the four comparable counties.

(Id., Page 9) This would also hold for 2017.

With regard to purchasing power, the County cites a CPI increase of 1.5 percent for the first half

of 2016 according to the Bureau of Labor Statistics – All Urban Consumers in the Minneapolis St.

Paul area. (Id., Page 10)

The County also argues that there are no retention problems for dispatchers in this bargaining unit.

Discussion

The County is moving continuously toward merit pay rather than across the board general wage

increases. Indeed, this was supported previously internally in Anoka County for this bargaining

unit by Arbitrator Laumeyer who did not award any general increase in wages in 2014 and 2015,

12

but decided that his award should feature merit increases. This pay philosophy has also grown

more prevalent in the external market.

The County’s arguments are persuasive in the current case that financial issues still exist to some

extent. Ongoing obligations should not be funded from an existing fund balance.

To award general wage increases is counter to the merit pay philosophy, and would communicate

the wrong message to employees. In conclusion, there is not a compelling need to award a general

increase. Funds are better directed in support of the performance-oriented pay plan.

Issue # Two Award and # Three Award

The Arbitrator concludes that no general increase in wages is awarded for 2016 and 2017.

Issue # Four Compensation – Amount and Calculation of Merit Increase, If any for 2016 –

Article 15/Appendix A.

Issue # Five Compensation – Amount and Calculation of Merit Increase, If any for 2017 –

Article 15/Appendix A

The 2014-2015 Agreement includes a reference in Article 15, Section 4 to Performance-Based

Range Movement (Merit Pay)/Minimum Range Movement. Section four (4) provides for merit

increases within applicable ranges on the same basis as non-union employees. (Employer Exhibit

One, Tab 4, page 13) (Union Exhibit One, Tab One, page 13)

The Union position is for Merit Increases of three (3%) percent in 2016 and three (3%) percent in

2017. The County position is for a two percent (2%) merit increase in 2016 and a “me too” for

2017.

13

The Union argues that the merit pay system remains broken even after the three (3%) percent

increase in 2014 and an additional three (3%) percent in 2015, both awarded by Arbitrator

Laumeyer. This broken system is so characterized because three Dispatcher II incumbents with

as many as 22 years in their positions have not reached range maximum, and only one of the three

earns wages greater than anticipated at the 8-year stability range pay. (Union Post-hearing Brief,

Page 14) A Dispatcher II will need 31 years of service to reach maximum of the pay range,

according to the Union. A Dispatcher will need 26 years of service to reach maximum. (Id. Page

14) These actual cases exemplify that it requires extraordinary years of service to move through

the pay ranges, as well as to reach range maxima.

The Union further argues that the 2017 “me too” position of the County is not a sound position,

and that what is imposed unilaterally on the non-union employees should have minimal influence,

as described in a previous arbitration award for this bargaining unit by Arbitrator Ogata in his

decision in LELS v. Anoka County BMS Case No. 16-PN-0461, p. 11.

In summary, the Union makes a case that a significant merit increase would support retention and

meaningful rewards in the current performance-oriented pay plan. The Union concludes that a

three percent (3%) merit increase in 2016 and 2017 should be awarded by the Arbitrator.

The County makes a case that management’s focus is on allowing employees the ability to continue

to earn more pay within a broad range rather than feature a pay plan where employees reach the

maximum without the opportunity for further merit movement. An individual case is cited

depicting an actual pay reduction for a Dispatcher II incumbent if the County had a range

maximum that equaled the average of the other four counties. (Employer Post-hearing Brief, Page

13)

Another point made by the County has to do with employee expectations for attaining a particular

rate or level of compensation at a designated year. The County argues that the speed of movement

through the ranges is largely a result of negotiated merit movement opportunity rather than a

defined number of years. (Id., Page 13.)

14

The County argues that internal equity should be the focus. Non-union employees, who are eighty

percent (80%) of County employees, were granted a two percent (2%) increase in 2016, and the

increase for 2017 has not been established. The increase agreed upon for the large licensed deputy

bargaining unit is a two percent (2%) performance increase for 2016. The arbitration award for

this unit was also a two percent (2%) merit increase for 2017. Therefore, internal equity supports

a two percent (2%) merit increase for the dispatchers in 2016, according to the County, and the

2017 merit increase should be set in concert with other eventual pay changes and settlements.

Discussion

The external pay data among the five counties indicates that the pay structure ranking of top

monthly wages for Anoka County Dispatcher II was first in 2015 and second in 2016. (Union

Exhibit One, Tab 10-2) The pay structure top for Anoka County Dispatchers was eight (8%)

percent above the pay structure top in 2015 and five (5%) percent above the pay structure top in

the other counties in 2016. (Id., Tab 10-2) The Anoka County Dispatcher II actual average wages

ranked fourth in 2015 and in 2016 compared to the top average monthly wage in the comparison

group. Actual Anoka County Dispatcher II average wages were 1.1 percent below the counties’

average in 2015, and 2.3 percent below average in 2016, based on pay for Dispatcher II’s who

have been in their current position for over twenty (20) years. (Id., Tab 10-2)

The cost and the ability to pay for any increase are factors that must be considered in resolving

wage and salary issues. The Union estimates the cost of their total demands equals $92,865 for

2016 for an average dispatcher 2016 wage increase of $2350. (Union Post-hearing Brief, page13

and Union Exhibit One, Tab 24) For 2017 the Union’s cost estimate equals $144,345. (Union

Exhibit One, Tab 24) The County indicates that the Union’s proposed additional costs during

2016 and 2017 would be $170,561.68 rather than the Union estimate of $237,209. (Employer

Post-hearing Brief, page 5) This $170, 561 is beyond the amount budgeted by the County for

these years. (Employer Hearing Brief, page 13.) The County fund balance is $37.3 million dollars

which is 36.3 percent of total general fund expenditures. In its Post-hearing Brief the County

indicates that the imposition of an additional $237,209 “would further strain the existing 36.3

15

percent of total fund expenditures for a relatively small group. (Employer Post-hearing Brief, pages

4-5)

The cost of the below award is estimated to be about $44,500 in 2016 and $45,900 additionally in

2017, using the estimates cited in the County’s Hearing Brief (Id., Page 13) The entire levy for

the County in 2016 is $122,385,080. (Id., Page 13) Again, the current fund balance is $37.3

million dollars. The total payroll costs approximate $120 million dollars. The County-proposed

two percent (2%) for a merit increase in 2016 would cost $35,614, which presumably was

budgeted for 2016. Thus the additional unbudgeted cost for 2016 approximates the cost of the

merit amount, namely $44,500 minus $35,614, equaling $8,886. The costs for the Arbitrator’s

2017 merit award approximates $45,900, which may or may not have been budgeted in a

preliminary 2017 budget, in anticipation by the County of its “me too” settlements which position

the County advocated. The County proposed that dispatchers should receive merit increases in

2017 equal to the amount of the non-union employees. In conclusion, these merit increase amounts

should be affordable for the County.

Turning to the issue of movement through the merit pay plan, the County appears to have a history

of restrained progression in the pay plan for dispatchers. The Union notes that employees could

originally earn merit increases of ten percent (10%) per annum, but the system changed and the

maximum merit became three percent (3%). (Union Post-hearing Brief, page 13) The previous

award by Arbitrator Laumeyer awarded some amount for “catch-up” in 2014 and 2015 after the

Arbitrator decided that merit movement had insufficient funds to support this pay plan.

Restrained progression can cause serious problems and confusion in the pay program. Employees

are not progressing according to either their performance or their tenure. The maxima associated

with the pay ranges appear to be typically unattainable, causing internal and external issues. When

wide pay ranges are combined with restrained progression because of budget issues commonly

associated with recessions, the real wages of employees can soon become non-competitive

externally. This can be compounded by not offering general wage increases. More merit funds

would help to overcome this restrained progression history.

16

Some aspects of this issue about the rate of pay progression can be attributed to lack of clarity

regarding objectives and features of the pay program. For example, the following questions might

be asked of this pay design. What is the wage level associated with the objective level of

performance on the job? What is the expectation for achieving maximum wage levels, either in

terms of service longevity or performance? What is the logic underlying the construction of the

pay plan and its ranges? Responses to these questions and others would help to build employee

understanding of how the merit system in intended to support the connection between pay and

performance in Anoka County.

The County makes a spurious argument that the pay ranges are designed to always allow for more

compensation opportunity. It is a strange primary purpose of sound pay plan design to offer

continuous increases in pay opportunity. The maximum of a pay range represents the most that an

employer can justify paying an incumbent for the work responsibility- not for a continuing pay

opportunity. To continue offering more and more pay opportunities for job performance is counter

to the responsibility of jurisdictions to manage fiscal affairs and human resources efficiently and

effectively. Again, the main issue is appropriate funding of the merit program, not adding pay

ranges or steps so as to present ‘opportunities’ that are rarely if ever attained, either through

performance or longevity.

Sound pay plan design needs to set parameters and features where employees can realistically

understand the pay opportunities, as well as the pay and performance connection.

The following award of the 2016 increase adds modestly to the two percent (2 %) internal pattern,

which was granted to eighty percent (80%) of County employees. This award will support merit

movements for performance during 2016 and 2017 and assist in resolving the history of restrained

progression, which was most acute during the recent recession when the County asked dispatchers

and other employees to adhere to restrictive practices with regard to the reward system. This caused

the subsequent malfunction in the merit program.

17

While the data for 2017 is incomplete, economic dynamics and forecasts indicate a likely increase

in inflation and the Consumer Price Index. And recent wage settlements have awarded two and

one-half (2 ½%) to three percent (3%) pay increases in numerous public sector awards.

The award also reflects the likely compromise that the parties would have reached in a negotiated

settlement regarding wage increases in 2016 and 2017.

Issues # Four Award and # Five Award

The award is for a two and one-half percent (2 ½ %) merit increase in 2016 and a two and one-

half percent (2 ½ %) merit increase in 2017.

For purposes of implementation of the 2016 merit award, the following is intended as guidance to

County pay administrators for back pay administration of the two and one-half percent (2 ½ %)

salary increase for 2016. For those incumbents who were employed for the full 2016 year-to- date

and who have performed satisfactorily, the merit increase should equal a two and one-half percent

(2 ½ %) increase in wages. For those incumbents who began work after January 1, 2016 and have

performed satisfactorily, their salary increase should begin as of the date of employment, and the

two and one-half (2 ½ %) percent should be prorated based on the date when they commenced

service. Back pay for salary increases to incumbents who were employed in 2016 should be issued

either by separate check or electronic transfer within 45 days of this Award.

Issue # 6 Compensation – Amount of Market Adjustment for 2016, If Awarded –

Article15/Appendix A

Issue # 7 Compensation – Amount of Market Adjustment for 2017, If Awarded –

Article 15/Appendix A

18

The Union is proposing a market adjustment of $0.75 per hour in 2016 or 2017. The County

argues there is no need for a market adjustment in either year, based on external comparisons.

The Union does not elaborate in its Post-hearing Brief specifically regarding the $0.75 per hour

adjustment in 2016 or 2017. Data is presented in Tab 7 of Union Exhibit One indicating that

members seek $0.75 increase per hour in 2016, or if not granted in that year, a $0.75 increase

market adjustment in 2017.

Testimony at the hearing on behalf of the Union indicated that pay was a reason for dispatcher

resignations. Witness testimony cited numerous cases when pay rates caused resignations,

particularly for Dispatcher I incumbents. (Testimony of Ms. Romaine Drowns) The Union

depicted nine (9) Dispatcher I resignations in 2016 so far. (Union Exhibit One, Tab 12)

The County claims that recruitment and retention issues are not prevalent for the dispatchers.

(Employer Brief, page 15) The County contends that the existing wage ranges should be

continued into 2016 because the top pay will continue to be above the external market average of

the four comparable counties, and Anoka County dispatchers are at or near the top of the

comparable group. (Id., Page 15) Starting pay is not an issue, according to the County. And

unlike the licensed deputies, dispatchers are not stuck near the low end of the pay range. In

conclusion, there is not a retention problem with dispatchers. Also, starting pay rates are not a

problem for recruitment of Dispatcher I jobs, according to the County.

Discussion

The Anoka county Personnel Rules and Regulations offers the following commentary about

Market Rate Adjustments: . (Union Exhibit One, Tab 17-1 and 17 - 2)

Although the County considers internal compensation relationships of primary importance

in maintaining pay equity, it is also necessary to recognize the external compensation

relationships through market rates and market rate adjustments. Authority to approve

market rate adjustments is delegated to the Management Committee

19

a) Market rate adjustments or extensions may be considered and external market

relationships examined when:

(1) A salary range is insufficient to attract qualified candidates for employment: or

(2) A continuing pattern of turnover, in a given position can be directly linked to

established compensation levels; or

(3) A given position deviates from the market rate by a substantial percentage.

(b) Market rate adjustments or extensions also may be considered and external market

relationships examined when management deems that a specific external market

relationship must be examined.

There are no turnover statistics presented to support a market rate adjustment for dispatchers. Only

one (1) Dispatcher II resigned in 2016. Dispatcher I incumbents frequently ‘wash out’ in their

performance, such that a higher turnover rate can be expected. This fails to support a market

adjustment. Additionally, the Union did not present any evidence or case that starting pay is a

problem for recruitment.

Union Exhibit One, Tab 7-3 depicts the proposed hourly and monthly wage proposals with the

$0.75 increase, but without much narrative to support this market adjustment.

The County makes a case that dispatchers are competitively paid compared to the external group.

And the County, which has a responsibility to recruit and retain dispatchers, does not see an issue

warranting a market adjustment.

The conclusion from this is that the criteria described in the Personnel Rules and Regulations do

not call for a market rate increase at this time. Recruitment of Dispatcher I positions is satisfactory

according to the County, relevant turnover data is lacking, and previously discussed external

market data does not indicate any substantial percentage deviation from the four comparison

counties.

The two positions for which significant pay increases were granted are management positions for

which the County increased job responsibilities as well as salary. Mr. Michael Raff , Director of

Employee Relations for the County, testified that these pay increases were associated with the

increase in job responsibilities. (Testimony of Mr. Michael Raff) One manager absorbed the

20

responsibilities of another job in addition to continuing current responsibilities, and the other

manager’s pay was increased for reasons of equity with other directors in the same department.

(Testimony of Mr. Michael Roff) (Employer Post-hearing Brief, page 7)

Issues # Six Award and # Seven Award

The award is for no market adjustment for 2016 or 2017.

Issue # 8 Compensation – Stability Ranges. Should Stability Ranges Be Eliminated and

Replaced with the County Compensation Rules Regarding Movement Beyond Range Top?

– Article 15/Appendix A

The 2014-2015 Agreement in Article 5, Section 4 provides for Stability Ranges in the wage

structure. These are additional ranges available for movement for any employee who is in at least

the 8th, 12th, 15th and 20th year of service on January 1. (Union Exhibit One, Tab 4, page 13)

(Employer Exhibit One, Tab 1, page 13.) The current pay plan allows an employee to move into

the Stability range beyond the plan range maximum upon achieving these years of service. For

each of the dispatcher job levels, there are four stability pay ranges in excess of the maximum for

each job level. (Union Exhibit One, Tab 7)

Only one Dispatcher II is within the Stability range, and four Lead Dispatchers are within the

stability range. (Id., Tab 13-2.)

The County proposes to eliminate stability ranges and replace them with the same wage structure

as that for non-union employees. The Union position is for no change to the wage structure.

The wage structure for non-union employees was revised in 2016. The stability ranges were

removed and replaced by the stability maximum wage for the range. The midpoint wages were

increased and utilized to calculate merit increases, thereby nominally increasing the dollar value

of merit increases over the previous calculation result where actual base salary served as the basis

21

for the merit award. This effect of calculating a merit increase of two (2%) percent on a midpoint

is equal to about 01.9 cents per hour for Dispatcher IIs. (Id., Tab 14-6)

The stability range maxima have been criticized as unattainable, resulting in internal and external

inequities. A previous arbitration by Arbitrator Laumeyer made this point. (Employer Exhibit

One, Tab 6 ) Other arbitrations have also said that there was not sufficient progression through

the pay ranges so as to achieve the stability ranges. The County claims that this criticism caused

the proposed change to eliminate the interim stability ranges and utilize a range maximum

equivalent to the top current stability pay range. There would be no reference to years of service.

The County states: “employees in specified ranges (called shadow bands) may move to the next

grade in order to continue to increase base pay.” (Employer Hearing Brief, page 25) The County

position is that this move would simplify and benefit employees. Movement through the pay plan

would be according to the negotiations with the Union.

External comparables take a similar approach to pay plans, according to the County. This is cited

as the case in Scott Count and Washington County. (Id., page 25)

The Union does not approve of this change, claiming it failed to meet the burden of proof for the

need for this change and the reasonableness of the change. (Union Post-hearing Brief, page 15)

The Union position is that the change does not resolve the broken merit system, largely because

the revision will not increase the rate at which dispatchers attain maximum pay. (Union Exhibit

One, Tab 14 -8)

Discussion

Although the undersigned has designed many pay plans over 35 years, including merit-based

designs, this Arbitrator does not believe it is appropriate for him to design a pay plan, particularly

one based on the limited information available in this case. Such plan design changes should be

negotiated by the parties with proposals that address the objective of the new design, plan costs,

timing of the change, the bases and timing for progression though the range, the impact on

22

incumbent employees, and other features associated with merit pay plans etc. Such specifics are

not all available in the detail needed to design a sound plan.

Issue # Eight Award

Although the County proposal may have some merit, pay plan design changes should be discussed

and refined in negotiations between the parties. The new wage structure is not awarded, and the

Union’s position prevails.

Issue # 9 HOLIDAY PAY. SHOULD THE MEMORANDUM OF AGREEMENT

LANGUAGE BE PUT IN THE CONTRACT? ART.8

This Number Nine Holiday Pay Memorandum issue was among the nine issues certified for

arbitration by the Commissioner of the Bureau of Mediation Services.

The County in its hearing brief objected to the arbitrator’s consideration of this issue, where the

Union originally proposed that the language in the Memorandum of Agreement regarding

interpretation of Holiday Pay language be incorporated into the collective bargaining agreement.

(Employer Hearing brief, page 26)

The Union in its post-hearing brief requested that this issue be withdrawn from consideration by

the Arbitrator with the understanding that the Memorandum of Understanding itself will continue

to be effective throughout the duration of the contract. (Union Post-hearing brief, page 16)

Issue # Nine Decision

The undersigned will not address Issue # 9, and will consider this as mutually agreeable by the

parties for no arbitration consideration or decision as part of this arbitration.

23

The parties should now proceed to draft appropriate contractual provisions for their Memorandum

of Agreement covering 2016 and 2017. The Arbitrator shall retain jurisdiction to resolve any

issues associated with administration of the retroactive merit amounts due employees, as well as

implementation of other provisions of the Award.

The following on page 24 is a summary of all decisions and awards on these issues.

24

SUMMARY OF DECISIONS AND AWARDS

Issue # 1 Award: (Duration)

It is the decision of the Arbitrator to award a two-year contract covering 2016 and

2017

Issue # 2 Award and Issue # 3 Award (General Wage Increases)

The decision of the Arbitrator for Issue Two and Issue Three is to award the

position of the County for no general wage increase for 2016 and 2017.

Issue # 4 Award and Issue # 5 Award (Merit Increases)

The decision of the Arbitrator is to award a two and one-half percent (2 ½ %)

merit increase in 2016 and a two and one-half (2 ½%) merit increase for 2017.

Issue # 6 Award and Issue # 7 Award (Market Adjustment Increases)

The decision of the Arbitrator is not to award any increase for 2016 or 2017 for a

market adjustment

Issue # 8 Award (Eliminating and Replacing Stability Ranges)

The decision of the Arbitrator is not to eliminate and replace the Stability Ranges

in the pay plan

Issue # 9 Decision (Holiday Pay Memorandum)

The parties agreed not to have the Arbitrator consider the Holiday Pay Memorandum. This Issue

was withdrawn from consideration at the request of both parties.

25

The parties are to be complimented for their professional conduct at the interest arbitration hearing,

for their oral presentations, and for their preparation of informative briefs associated with this case.

THE ABOVE AWARDS ARE ISSUED AND ORDERED

On this 29th day of November, 2016.

________________________________

Richard J. Dunn

Labor Arbitrator

________________________________

Dated at Plymouth, Minnesota