A Citizen's Guide To Police and Fire Contract Arbitration
Contracts: It's All Up To The Man Behind The Curtain
By Ben Waxman
July 1, 2008
On May 22, Mayor Nutter signed his $4 billion budget into law with great fanfare. Yesterday, another big financial milestone passed, but don’t expect public ceremonies anytime soon. Contracts that dictate wages and benefits for 20,000 city workers, which account for 60 percent of the city budget, also expired yesterday. The contracts have been extended and talks continue.
Unlike the public process of City Council hearings and voting that accompanied budget negotiations, many of the details of contracts for uniformed employees are worked out behind closed doors. Labor negotiations for police officers and firefighters are conducted through a process called binding arbitration. Check out a detailed explanation of binding arbitration below.
The financial stakes are huge. Uniformed personnel are among the highest-paid city employees. The city spent $557.6 million on compensation last year for members of the Fraternal Order of Police and the International Association of Firefighters, who had average salaries of $60,795 and $62,162. Another huge cost is health care. The city pays $146.4 million to provide free health insurance (no premiums or co-pays) to police and firefighters.
So what is binding arbitration?
You’ll never see a Philadelphia police officer or firefighter on the picket line. A law passed in 1968 prohibits employees who are essential to public safety from going on strike. Instead, labor disputes between the city and union are settled by a process called binding arbitration. Imagine a court trial that decides the salary, benefits and working conditions for thousands of people. Instead of a judge or jury, a three-member panel hears testimony from the employer and the union. After hearing evidence from both sides, the panel issues a ruling with the terms of the new contract.
Who is on the panel? How are they chosen?
A panel consisting of three people makes decisions that affect thousands of workers and have implications for every taxpayer. One is appointed by the union, one by the employer, and the third is a neutral arbitrator who must be acceptable to both parties. The appointees from the city and the union basically act as advocates for their side. That means the neutral arbitrator has a tremendous amount of power in deciding the ultimate outcome of the hearings.
We picture him as the ultimate man behind the curtain — the all-powerful Oz.
What are the arbitrators’ qualifications, and how much are they paid?
Most arbitrators are well-connected lawyers, like the late H. Thomas Felix III, who worked for every mayor since James Tate. Arbitrators must be screened, approved and trained by the American Arbitration Association. They are paid $700 to $2,500 a day. The city is required to pay for both their appointee and the neutral arbitrator.
What kind of evidence is presented?
The hearings are a heated debate between what is fair to uniformed workers and what the city can afford. The unions present evidence about the compensation of police and firefighters in comparable cities. Sometimes, an economist or academic will examine the city’s finances to look for money that can used to pay for salary or benefit increases.
The city usually trots out various officials to say there’s no money, though Nutter set aside $400 million for contracts this year. The arbitrators weigh the city’s ability to pay against the need for a fair contract.
What issues are decided by the panel?
Almost every aspect of the working life of police officer or firefighter is covered by the contract. Arbitrators decide the size of pay increases, how much money should go to health benefits and the structure of the pension plan. Arbitration awards can also cover working conditions, money for equipment and the settlement of workplace grievances.
How does the process compare to other cities’?
Every municipality in Pennsylvania is must submit to binding arbitration for employees essential for public safety. About half of the states have similar rules in place. Many of the states that do not have binding arbitration do not have public employee unions.
Ben Waxman covers the budget for It’s Our Money.
The joint project of the Daily News and WHYY, funded by the William Penn Foundation, looks at how city government spends our tax dollars. Our previous coverage of contract details for non-uniformed employees can be found here.
Above: Daily News photo illustration ©