15 CIR 23 (2004) (See also 15 CIR 37)

NEBRASKA COMMISSION OF INDUSTRIAL RELATIONS

 APPEARANCES:

South Sioux City Education Association (hereinafter, "Petitioner" or "Association") filed a wage petition on February 6, 2004, seeking resolution of an industrial dispute for the 2003-2004 contract year. The Association is a labor organization formed by teachers employed by Dakota County School District No. 22-0011, a/k/a South Sioux City Community Schools (hereinafter, "Respondent" or "District") for the purpose of representation in matters of employment relations. The District is a political subdivision of the State of Nebraska and a Class III school district. The Respondent employed 273 staff members with an FTE of 268.66 for the 2003-2004 school year.

The Commission of Industrial Relations (hereinafter, "Commission") held a Trial on June 1, 2004. At Pretrial and Trial the parties submitted the following issues for determination:

1. Array of comparable employers.

2. Base salary.

3. Method of calculating health insurance benefit and placement of South Sioux City Teachers.

4. Whether to delete or revise the following clauses in the negotiated agreement:

a. Delete the Recognition Statement on Page 1 of the negotiated agreement.

b. Delete the Continuation Statement on Page 1 of the negotiated agreement.

c. Revise Paragraph 1(D) regarding the initial placement of newly hired teachers based on prevalent practice.

d. Delete Paragraph 2(A) and (B) regarding Extra Duty Assignments.

e. Delete the portion of Paragraph 3 regarding Compensation to Cover Another Teacher’s Class that states: "Every effort must be made to hold these to a minimum..."

f. Delete Paragraph 4 regarding Professional Staff Continuing Credit.

g. Delete Paragraph 7 regarding Continuation of Insurance Benefits.

h. Delete Paragraph 8(G) regarding payment for unused personal leave days.

i. Delete Paragraph 9 regarding Association Business Leave.

j. Delete Paragraph 10(B) regarding the Sick Leave Bank.

k. Delete Paragraph 11 regarding AIDS Notification.

l. Delete Paragraph 12 regarding Building Plan For Student Violence.

The Commission has jurisdiction over the parties and subject matter of this action pursuant to Neb. Rev. Stat. § 48-818 (Reissue 1998) which provides in part:

…the Commission of Industrial Relations shall establish rates of pay and conditions of employment which are comparable to the prevalent wage rates paid and conditions of employment maintained for the same or similar work of workers exhibiting like or similar skills under the same or similar working conditions…

The Association proposes eight school districts for their array. The District proposes that seven school districts, all seven of which are proposed by the Association, are appropriate for the array. The common array members are Hastings, Columbus, Fremont, Ralston, Norfolk, Elkhorn and Kearney. The contested array member proposed by the Association is Blair. In determining a proper array, the parties agree that the work, skill, and working conditions of South Sioux City Community School’s teachers are sufficiently similar for comparison under Neb. Rev. Stat. § 48-818 (Reissue 1998) to the following array members: Hastings, Columbus, Fremont, Ralston, Norfolk, Elkhorn and Kearney. With regard to Blair, the Respondent has stipulated with the Petitioner that with respect to work, skill and working conditions Blair is comparable to South Sioux City under Neb. Rev. Stat. § 48-818; however, the Respondent limited its stipulation objecting to the alleged discretionary placement of faculty in shortage area teaching.

The Association proposes an array of eight school districts: Hastings, Columbus, Fremont, Ralston, Norfolk, Elkhorn, Blair, and Kearney. The issue before the Commission is whether Blair should be included in the Commission’s array with the seven other common array members.

The District proposes an array of seven school districts which include Hastings, Columbus, Fremont, Ralston, Norfolk, Elkhorn, and Kearney. These seven common members used by both the District and the Association meet the Commission’s size and geographic proximity guidelines. The Commission has held that arrays consisting of six to eight members are appropriate. O’Neill Education Ass’n v. Holt County School District No. 7, 11 CIR 11 (1990); Red Cloud Education Ass’n v. School District of Red Cloud, 10 CIR 120 (1989); Logan County Education Ass’n v. School District of Stapleton, 10 CIR 1 (1988); Trenton Education Ass’n v. School District of Trenton, 9 CIR 201 (1987).

When choosing an array of comparable employers, the Commission applies a well-established size guideline of one-half to twice as large. See Scotts Bluff County School District No. 79-0064 v. Lake Minatare Education Ass’n, 13 CIR 256 (1999); Yutan Education Ass’n v. Saunders County School District No. 0009, 12 CIR 68 (1994); Crawford Teachers Ass’n v. Dawes County School District No. 0071, 11 CIR 254 (1991); Red Cloud Educ. Ass’n v. School Dist. of Red Cloud, 10 CIR 120 (1989). Employers falling outside this guideline are often excluded from arrays; however, the size criteria used by the Commission is a general guideline and not a rigid rule. Nebraska Public Employees Local Union 251 v. Sarpy County, 13 CIR 50 (1998); Nebraska Public Employees Local Union 251 v. County of York, 13 CIR 128 (1998); 13 CIR 157 (1998); 12 CIR 309 (1997); 12 CIR 248 (1997). Nonetheless, since the size guideline is based on objective criteria, it provides predictability and should not be lightly disregarded when a sufficient number of comparables, which meet the guidelines, exist. See School District of West Point v. West Point Education Ass’n, 8 CIR 315 (1986); Richland Teachers Education Ass’n v. Colfax County School District No. 0001, 11 CIR 286 (1992). The common array members are Hastings, Columbus, Fremont, Ralston, Norfolk, Elkhorn, and Kearney. The contested array member proposed by the Association is Blair. Even in such cases, the Commission does not disregard the size and geographic guidelines. See Id. Blair is the second most geographically proximate school district and is clearly within the Commission’s one-half to twice the size criteria. See Table 1. The parties also stipulated that the district of South Sioux City and the district of Blair are comparable under Neb. Rev. Stat. § 48-818 with respect to work, skill and working conditions. However, the District limited its stipulation, objecting to the alleged discretionary placement of the faculty in shortage area teaching.

In reviewing Exhibit 5, it is clear that only three teachers from the South Sioux City School District teach in shortage areas. Those three teachers minimally impact the difference between the Respondent and the Petitioner with regard to the staff index factor as seen in Exhibit 48. The additional difference in the staff index factor in Exhibit 48 is due to slight differences in the placement of teachers; similar differences occur in all of the seven other array schools. In sum, such an issue has little impact on work, skill, or working conditions. Therefore, without a factor that significantly impacts the work, skill or working conditions, we find that Blair is a comparable school district and shall be included in the array.

The Respondent disagrees with the Petitioner’s method of placing South Sioux City teachers on the array schools of Blair, Elkhorn, Hastings and Ralston, for their specific health insurance benefits. Specifically, the Respondent disagrees with the placement of those teachers in South Sioux City that receive the "cash option" at South Sioux City and are not given the cash option (with the exception of Ralston in specific instances) at the four array schools. The Respondent argues that the Commission should interpret its holding in Educational Service Unit No. 13 Education Ass’n v. Educational Service Unit No. 13, ("ESU 13"), 14 CIR 1 (2002), by determining the teacher’s "economically rational choice" as not being the highest dollar cost premium to the district, but instead as a choice of supplemental insurance.

The Petitioner alleges if the Commission were to adopt the Respondent’s methodology for calculating health insurance benefits it would, in effect, abrogate all of the Commission’s past holdings on this issue.

Under Neb. Rev. Stat. § 48-818, we must decide wages based on overall compensation.

In establishing wage rates the commission shall take into consideration the overall compensation presently received by the employees, having regard not only to wages for time actually worked but also to wages for time not worked, including vacations, holidays and other excused time, and all benefits received, including insurance and pensions, and the continuity and stability of employment enjoyed by the employees.

The Commission and the Nebraska Supreme Court have dealt with numerous cases in the past dealing with total compensation and the fringe benefit issue. In both Omaha Ass’n of Firefighters v. City of Omaha, 194 Neb. 436, 441, 231 N.W. 2d 710 (1975) and Lincoln Fire Fighters Ass’n v. City of Lincoln, 198 Neb.174, 252 N.W. 3d 607 (1977), the Nebraska Supreme Court underscores the importance of establishing "overall compensation" when determining wage cases under Neb. Rev. Stat. § 48-818.

This issue has also appeared numerous times before the Commission, and the Commission’s inference for determining total compensation with respect to fringe benefits has been developed through four primary cases. The first case was Crawford Teachers Ass’n v. Dawes County School Dist. No. 0071, 11 CIR 254 (1991). In Crawford, the Crawford School District provided their teachers with compensation in addition to their salary at the rate of 12.5% under a cafeteria plan which the teachers could use to purchase group health or dental insurance, or the teachers could refuse the insurance, keeping the cash for themselves. None of the array schools offered a cafeteria plan providing such fringe benefits; however, each of the array schools offered group insurance in which the employer paid most, if not all, of the premium. In Crawford neither party wished to change Crawford’s method of providing the benefits, nonetheless the parties could not agree on the percentage of the teacher’s salary Crawford paid to its teachers. The Commission found that to arrive at the percentage, it was necessary to calculate the cost of health insurance at each school in the array as it applied to the Crawford teacher. This was because that, although the health insurance itself was not an issue, the total teacher compensation was at issue and fringe benefits needed to be considered in determining total teacher compensation. The Commission placed those teachers not taking health insurance in Crawford as taking health insurance in the other array schools. Therefore, in determining total teacher compensation, the Commission had to fully take into account the impact of the costs of the health insurance on each base salary.

The second case was Scotts Bluff County School Dist. No. 79-0064 a/k/a Lake Minatare Public School v. Lake Minatare Educ. Ass’n, 13 CIR 256 (1999). The Lake Minatare School District provided no benefits to its teachers, while all but one of the array school districts did provide benefits. The Commission found in its determination that the Lake Minatare teachers should have a higher base salary because the Lake Minatare teachers were not provided benefits, allowing the Commission to find a comparable total compensation package for Lake Minatare. In sum, the Commission recognized that base salary and health insurance under the Commission’s formula were both seen as dollars in determining total compensation.

In the third case, ESU 13, 14 CIR 1 (2002) and 14 CIR 34 (2002), the Educational Service Unit No. 13 had a flexible fringe benefit plan in which employees took an annual sum of money for benefits either in cash, in payment of dependent insurance premiums, or in payment of single health insurance premium with the balance in cash. The Respondent argued that where an array Educational Service Unit did not provide cash, those employees that took cash at ESU 13 should not be placed with any insurance benefits at that array Educational Service Unit. The Commission disagreed, and found that to arrive at the percentage of the teacher’s salary that met § 48-818’s requirement of overall compensation the Commission must place the teachers as taking the maximum level of fringe benefits to which they would be entitled to at the various array Educational Service Units. The Commission noted that due to the overwhelming prevalence of indexed salary schedules in public schools, for decades the Commission has used the mathematical model of determining total compensation. This method allows the Commission to consistently compare and determine total compensation in a manner which is fairly predictable and stable. This method does not require knowledge or speculation of what election the individual employees would actually take.

The Commission, in ESU 13, generally did not consider deposition testimony of employees concerning the benefit choices they would make at the proposed array schools, and placed employees based on the economically rational choice to accept the maximum fringe benefits available. The Commission concluded that this is the logical, fair and consistent method of comparing fringe benefits as part of overall compensation.

Finally in Metropolitan Technical Community College Education Ass’n v. Metropolitan Community College Area, 14 CIR 127 (2003), the Commission followed its holding in ESU 13, whereby each employee would be placed on the array institution’s salary schedules with the maximum fringe benefits as the employee’s "economically rational choice". Therefore, in following the precedent set forth in ESU 13, the Commission felt the maximum fringe benefit would most closely follow the total compensation method required by § 48-818.

In the instant case, the Respondent argues that the Commission should determine the employees’ economically rational choice based on the value of the benefit to the teachers, not on the cost of the benefit. Assuming that those employees at South Sioux City that already take cash would only take insurance as a secondary health benefit, the Respondent further argues that the maximum benefit would be worth about $2,000 to the employee if they were to take a secondary health insurance coverage. The Respondent applied this methodology to Ralston, Elkhorn, and Hastings and found that only Ralston provides less cash-in-lieu of than the hypothetical $2,000 secondary insurance policy. The Respondent, finding that Ralston’s cash policy was too low for all South Sioux City teachers to take, determined that in Ralston, 55 percent of the Ralston teachers take insurance and 45 percent take the cash-in-lieu of insurance. Thus, the Respondent placed 55 percent of the South Sioux City teachers that take cash at South Sioux City on the insurance plan at Ralston and placed 45 percent as taking the cash.

Under the guidelines set forth by the Legislature under § 48-818, the Commission has consistently determined salaries for school districts across the state by using a wage-setting formula as set forth in Centennial Education Ass’n v. School District No. 67-R of Seward Co., 1 CIR Case No. 44 (1971). In Centennial, the Commission held:

Section 48-818. . .also directs the court to take into consideration the overall compensation presently received by the employees. . . . A $6,400 base with index increments of 5 x 4. . .places Centennial at the approximate midpoint in terms of overall compensation among the spectrum of the comparable school districts shown in the evidence. It also aligns Centennial comparably with the York School District as the total teacher compensation . . . .The present case was initiated on behalf of all teachers in the Centennial School District. All teachers are paid on the same index schedule. They also receive the same insurance and other fringe benefits. As we held in Milford Education Association v. School District of Milford, Case No. 43 Findings and Order filed July 15, 1971, it is the total teacher compensation which should be compared with the salary schedules and benefits of other comparable school districts . . . .The effect of actual placement on an index schedule must be considered in carrying out the provisions of § 48-818. To make this evaluation the total teacher salaries of comparable school districts must be compared . . .

Fremont Education Ass’n v. School District of Fremont, 1 CIR Case No. 50, 50-1-2 (1972)(quoting Centennial, 1 CIR Case No. 44 (1971)).

The Commission’s approximately 33-year-old teacher wage-setting equation utilizes total compensation figures and total staff index factors, accounting for variances in benefits and experience. The Commission’s equation places the party’s teachers on the array members’ schedules. Instead of requiring the party district to pay the same actual dollar amount as the array school districts, the Commission requires the party school district to pay the same amount that the array school districts would pay if they employed the party district’s teachers. In a typical wage case in which benefits differ between schools, the Commission’s equation has historically accounted for these differences and assures that the teachers are paid at a comparable total compensation level in accord with Neb. Rev. Stat. § 48-818. This is why the comparable base salary is not usually at the actual base salary midpoint.

The Nebraska Supreme Court stamped this equation with its approval in Crete Education Ass’n v. School District of Crete, 193 Neb. 245, 258 (1975), holding:

It appears from the record that the Court of Industrial Relations in this case established the new salary base for the teachers at the approximate midpoint of the total compensation paid by the schools selected by it for comparison, according to its customary practice. The result reached would appear to be fair, proper, and equitable and in full accord with the discretionary powers vested in that court.

Throughout the last thirty-three years the Commission has consistently included fringe benefits as part of base salary, in order to determine wages under § 48-818. Specifically, health insurance in past cases was converted into dollars in determining a school district’s base salary. In essence, health insurance in teacher wage cases is an integral part of the total dollars paid to teachers in their base salaries. The wisdom underlying the formula recognizes that different array schools have different environments which impact the overall compensation provided to their teachers. For instance, some schools provide fewer dollars in benefits and more in base salary while other districts provide fewer dollars in base salary and more dollars in benefit dollars. This model works, due to the fact that school districts generally pay salary and benefits fairly uniformly. School districts that are comparable with respect to work, skill and working conditions may use a different salary schedule, but they generally do use a schedule. They may have slightly different benefit packages, or even no benefits, but the model can effectively and fairly deal with these scenarios. The consistency and predictability of this model encourages settlement of many salary disputes. However, the formula is not perfect, as it is a simple mathematical formula based on a hypothetical situation. The problem arises when the form of the benefit packages begins to vary to the point that it becomes difficult to compare flexible benefit packages to more traditional benefit packages.

As stated above, in ESU 13 employees were offered a flexible benefit plan providing an annual sum for benefits. Each employee could choose to take this benefit in cash, payment of various insurance premiums, or a mixture. In ESU 13, numerous depositions were offered to prove the reason a particular teacher in the unit made his or her choice, and what they might choose at a proposed array institution. We discouraged this practice, as it was apparent that this evidence was likely to be extremely costly, speculative and lacking in sufficient foundation.

Evidence, in the instant case, was presented indicating that witnesses had considered teachers’ tax consequences, "break points", and personal family situations in determining where to propose placement. Evidence as to what a teacher might choose from a flexible benefit plan at an array school is not helpful, as it is speculation. Neither are attempts at determining tax treatments for the individuals, or speculation about a spouse’s insurance coverage in the array community.

When determining health insurance choices, teachers utilize many possible variables in choosing a particular benefit choice, with most of those decisions ending in the greatest possible economic benefit for that particular teacher. There is no concrete method with which to sort such choices, when all parties involved rely on a hypothetical situation to begin with. On the other hand, the Commission for thirty-three years has simplified those choices into a single mathematical formula which is based solely on dollars and cents to arrive at a dollar number which the Commission and the Nebraska Supreme Court have termed "overall compensation." This method avoids the numerous problems of the methods urged by the Respondent. In order for an employee to be able to answer a question as to what they would actually choose in an array school, it would need to be shown that the employee had information on which to make such a choice, including reasonably accurate knowledge of the benefit and basis for a rational personal choice. Some employees might make a choice that we would not judge to be rational. Developing and testing such foundation and decision making processes would require extremely time consuming and costly efforts, with little benefit to the process. Supplanting the employees’ choices with the determinations of a school administrator or economics expert may make the matter less complex and less time consuming, but it would not make the determinations any more valid or helpful. There are far too many personal and financial issues which go into individual decisions for the Commission to place any weight on such efforts. To adopt such methodology would result in the Commission entering into an endless evidentiary quagmire or accepting determinations on little more than bare speculation. This would not promote the goals of consistency and predictability. Further, it would not promote efforts to reach agreement through negotiations. While the Commission’s developed model is not a perfect model, it does provide the parties to this litigation a predictable method by which the parties can predict what the Commission will do and thus encourage settlement.

This discussion is not intended to add a doctrine, and certainly does not create a presumption, or shift the burden of proof. Each case must be determined from the facts, and the best effort made to fairly make the placements in these benefits package situations. However, testimony that an employee would take a fringe benefit less than that for which he or she is eligible, if hypothetically employed in a comparable school with a different benefits array, is not supported by sufficient foundation, and is thus not helpful in the decision the Commission must make.

In this case, the Commission agrees with the Petitioner’s method of assigning teachers to the health benefit for which they qualify, supplying those teachers with the greatest dollar benefit. This method is based upon all past decisions of the Commission and the Nebraska Supreme Court. The method historically followed by the Commission is based on sound reasoning and policy, and promotes consistency in the bargaining process. See, Centennial, 1 CIR 44 (1971). Therefore, the Commission declines to change its method for determining health insurance benefits in cases where some employees take cash-in-lieu of insurance.

The Petitioner urges the Commission to determine all issues, other than the determination of schedule compensation pending before the Commission, moot. Respondent maintains the issues raised by the Respondent are not moot simply because the school year is over, claiming that the Association should not be rewarded for delaying the filing of its petition by being allowed to avoid a determination based on the prevalent practice of terms and conditions of employment for the 2003-2004 contract year. The Respondent also argues that the issues presented in the case falls under an exception to the mootness doctrine.

This Commission has continually refused to rule on certain fringe benefits when the contract year has passed. A determination as to a benefit that has no carryover into the next contract year would constitute an advisory opinion outside the Commission’s jurisdiction. See Papillion-LaVista Education Ass’n v. School District of Papillion-LaVista, l0 CIR l8, 22-23 (l988), Fraternal Order of Police Lodge No. 23 v. The City of Holdrege, Nebraska, 9 CIR 257, 262 (l988), Trenton Educ. Ass’n v. School Dist. of Trenton, 9 CIR 20l, 204-205 (l987), Winnebago Education Ass’n v. School District of Winnebago, 8 CIR l38, l46-l48 (l985). See also District No. 8 Elementary Teachers Ass’n v. School District No. 8, Dodge County, 8 CIR l26 (l985), School District No. l25 v. Curtis Education Ass’n, 7 CIR 96 (l983). Furthermore, while the Commission recognizes the exception to the mootness rule, it clearly does not apply in this case. As cited by the Respondent in State of South Dakota v. Hazen, 914 F.2d 147 (1995) in describing the exception to the mootness doctrine for cases, "capable of repetition, yet evading review" the federal district court found that:

…we must find the presence of two factors before the exception may be applied: 1) the Corps’ action must be "in its duration too short to be fully litigated prior to its cessation or expiration" and (2) there must be a "reasonable expectation" that the appellee states will be "subjected to the same action again."

If either party in this case would have filed near the middle or beginning of the school year, all issues in the case could have easily been decided before the expiration of the school year. See Yutan Educ. Ass’n v. Saunders Co. School Dist., a/k/a Yutan Public Schools, 12 CIR 68 (1994) and Nemaha Valley Education Ass’n v. Johnson County School District, 12 CIR 83 (1994). Furthermore, under Neb. Rev. Stat. § 48-811:

Except as provided in the State Employees Collective Bargaining Act, any employer, employee or labor organization, or the Attorney General of Nebraska on his or her own initiative or by order of the Governor, when any industrial dispute exists between parties as set forth in Section 48-810, may file a petition with the Commission of Industrial Relations invoking its jurisdiction.

Once an industrial dispute has occurred, the Respondent has equal rights under the statute to file a wage case at any time before the expiration of the contract year. Thus, for purposes of this determination and in keeping with past Commission practice, any dispute over the 12 itemized agreement clauses listed above at Paragraph number 4 of Issues is considered moot for the 2003-2004 contract year.

Table 2 sets forth the relevant information for determining the appropriate base salary. The midpoint of the total compensation $12,365,702 minus the cost of fringe benefits $1,438,619 equals $10,927,083 which, when divided by the new total staff index factor of 403.88, equals a base salary of $27,056 for the 2003-2004 school year.

1. Respondent shall pay the teachers a base salary of $27,056 for the 2003-2004 school year.
2. All other terms and conditions of employment for the 2003-2004 school year shall be as previously established by the agreement of the parties and by Orders and Findings of the Commission.
3. Adjustments in compensation resulting from this order shall be paid in a single lump sum payable within thirty (30) days of this final order, if possible.

All judges join in the entry of this order.

Entered September 15, 2004.

To obtain copies of Tables, call the Commission Office, 402-471-2934.