Binding arbitration bill makes waves

A labor bill introduced by the Rhode Island House of Representatives is already poised to become one of the hot button issues of the new legislative session, as the proposed bill, H5260, would expand the reach of binding arbitration in the state – opening the doors for outside, neutral arbitrators to decide fiscal disputes within contracts with rulings that are mostly unobjectionable.

Similar efforts have occurred throughout history in Rhode Island, most recently in 2011, and police and fire collective bargaining disputes between their municipalities can already be wholly decided by arbitrators – finances included – but this new reprisal of the effort has erupted polarized opinions all the same.

To simplify what this bill would mean, it is essential to understand how collective bargaining works in Rhode Island.

Unions which represent police officers, firefighters, teachers and municipal workers – who staff the various departments such as DPW – bargain with municipalities every few years to craft new contracts that often include new provisions, such as changes to vacation time or sick time policies or, in more serious negotiations, changes to things like healthcare and pension benefits.

These negotiations do not always go smoothly, and sometimes require the aid of partial mediators (one advocating for the municipality and the other for the union) to help wrangle both sides and come to a more even middle ground. If mediators are unable to solve the issue an independent, third party arbitrator – appointed by the American Arbitration Association – may come in and make a binding ruling that cannot be appealed unless that ruling violates Rhode Island law.

In the case of fire and police unions, binding arbitration can include every aspect of a negotiation – from personnel policies to matters that have financial consequence. However, in the case of teachers and municipal workers, independent arbitrators can only decide issues of contractual disputes “not involving the expenditure of money,” as dictated by law. This bill would expressly eliminate that language as it pertains to teachers and municipal employees.

Proponents of the bill say that the threat of potentially unfavorable, binding arbitration would be a tool that unions don’t currently have that would force municipalities to negotiate fairly and in good faith.

“We don't have the right to strike and have no binding arbitration,” said Darlene Netcoh, president of the Warwick Teachers’ Union and a proponent of the bill. “Teachers have been held to an unfair position at the bargaining table now for a long time.”

Those against the bill say that it opens the door for potentially devastating financial decisions being made by people without adequate understanding of municipalities’ financial situation or the impact their decisions will have going forward into the future.

Brian Daniels, executive director for the Rhode Island League of Cities and Towns, said on Wednesday that since many municipalities have budgets where a vast majority of costs go to personnel in these departments, giving authority to an outside arbitrator to dictate how that municipality must allocate its finite resources is dangerously irresponsible.

“When as much as 75 percent of a budget is dedicated to personnel, and an arbitrator has exclusive authority over those costs, including out-year costs [like pensions and healthcare provisions]…Those are costs for years and years to come,” Daniels said. “Some municipalities are still struggling with decisions made by arbitrators in the 80s.”

Daniels said that arbitrators are often not from Rhode Island and don’t have enough perspective on the cities and towns they arbitrate on behalf on, let alone understand the financial realities of their budgets.

“A lot have backgrounds in labor law but don’t necessarily know Rhode Island, they don't necessarily know local provisions and they don't need to provide a fiscal note to show how much their decision will cost. There is no requirement that the arbitration remain within approved budget levels,” he said. “So, if you're halfway through a fiscal year and an expensive arbitration deal comes down, you could immediately be in a deficit.”

He said the League was in favor of adjusting the current binding arbitration law before even considering expanding it.

“We have not said get rid of binding arbitration, period. We would rather reform the existing process,” Daniels said. “It was originally intended to be concluded within a month and be a quick end to a contract dispute, but we’ve seen it takes months and months and costs thousands of dollars in legal fees. I think we need to take a look at what binding arbitration was intended to do.”

After attending a league meeting Tuesday with fellow mayors and town managers, Mayor Joseph Solomon said the legislation raises financial concerns.

“I’m the new guy on the block. I’m trying to learn about it,” he said Tuesday.

Netcoh said that she, personally, would prefer negotiations to continue between parties without the need for arbitrators, but that doesn’t reflect the reality of negotiating in the modern age. Those in Warwick need no reminder of the two recent prolonged labor disputes between the city and the teachers’ union, one of which just recently ended and the other which wound up with Warwick teachers being imprisoned for striking.

“I prefer contract continuation and for both sides to continue to negotiate,” she said. “We want to sit down and negotiate in good faith and do what is educationally sound and financially responsible, but our problem is when their side does not come to the table with the appropriate attitude, then we're stuck. It's unfortunate that we need laws to make them negotiate in good faith.”

The bill has two Warwick representatives backing it as sponsors – Camille Vella-Wilkinson in the House and Majority Leader Michael McCaffrey in the Senate.

Reached Wednesday, McCaffrey said that both sides of a negotiation should be negotiating in good faith before a decision via arbitration is ever considered, and that it should be a “last best offer.” He said that if the decision were to cause financial hardships, municipalities would be able to raise that issue through the process. However, it was unclear which portion of the bill outlined this process.

A recent hearing on the bill at the Rhode Island State House attracted those for and against the measure. Cranston Mayor Allan Fung was among the municipal leaders who testified against the legislation during the hearing.

“It’s an important issue not only to myself but to all the mayors, town administrators and school committees all across the state,” he said.

Fung said binding arbitration decisions in the past have resulted in significant financial burdens for the city, including other post-employment benefits, more commonly referred to as OPEB.

“The expansion of it would really handcuff future mayors, school committees and superintendents from having responsible negotiations…on behalf of taxpayers,” he said.

Vella-Wilkinson did not respond to requests for comment on this story by press time.