15 CIR 285 (2007) 


an Unincorporated Association, )
                                  Petitioner, )
         v. ) AMENDED FINDINGS
ALLIANCE PUBLIC SCHOOLS, a Political Subdivision of the )
State of Nebraska, )  
                                  Respondent. )


For Petitioner: Mark D. McGuire
McGuire and Norby
605 South 14th Street, Suite 100
Lincoln, NE  68508
For Respondent: Rex R. Schultze
Perry, Guthery, Haase,
& Gessford, P.C., L.L.O.
  223 South 13th Street
Suite 1400
Lincoln, NE  68508

Entered February 20, 2007.

Before: Judges Orr, Blake and Lindahl

ORR, J. 


Alliance Education Association (hereinafter, “Petitioner” or “Association”) filed a wage petition on May 4, 2006, seeking resolution of an industrial dispute for the 2005-2006 contract year. The Association is a labor organization formed by teachers employed by Box Butte County School District No. 07-0006, a/k/a Alliance Public 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 Commission of Industrial Relations (hereinafter, “Commission”) held a Trial on September 7, 2006. In order to give the Petitioner ample time to review the Respondent’s calculations presented on September 7, 2006, the Trial was continued until October 31, 2006.  The issues presented at Trial are contained with the Commission’s Report of Pretrial filed on August 23, 2006. Exhibits 84 through 88, regarding Petitioner’s Issues c. through i., were not admitted at Trial, thus Petitioner’s Issues c. through i. will not be considered.


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 fifteen school districts for their array. The District proposes that ten school districts be used in its array. The common array members are Lexington, Scottsbluff, Gering, McCook, Ogallala, Sidney, Cozad, Broken Bow, Chadron and Holdrege. The contested array members proposed by the Petitioner are York, South Central Unified School District No. 5 (SCNUD #5), Aurora, Hastings and Wayne.

In determining a proper array, the parties agree that the work, skills, and working conditions of Alliance Public Schools’ teachers are sufficiently similar for comparison under Neb. Rev. Stat. § 48-818 (Reissue 1998) as to the following array members: Lexington, Scottsbluff, Gering, McCook, Ogallala, Sidney, Cozad, Broken Bow, Chadron, Holdrege, York, SCNUD#5, Aurora, Hastings, and Wayne.

The Commission has held that if potential array members share similar work, skills, and working conditions, the Commission will include all of the schools submitted in the array unless there is specific evidence that to do so would be otherwise inappropriate or would make the array unmanageable. Geneva Educ. Ass’n v. Filmore County School Dist. No 0075, 11 CIR 38 (1990); Lynch Educ. Ass’n v. Boyd County School Dist. No. 0036, 11 CIR 25 (1990). Even in such cases, the Commission does not disregard the size and geographic guidelines. See, Id. The Commission need not consider every conceivable comparable, but only “a sufficient number in a representative array so that it can determine whether the wages paid or the benefits conferred are comparable.” Nebraska Pub. Employees Local Union 251 v. County of York, 13 CIR 157 (1998).

The five additional array members proposed by the Petitioner are not as geographically proximate to Alliance as the ten common array members. For example, Wayne is 301 miles from Alliance, which is 85 miles farther than the furthest common array district of Holdrege. The ten common array members agreed to by both sides are sufficient to arrive at a comparable wage rate in the instant case. The Commission, therefore finds, that a suitable array for comparison in this case consists of the common array members of Lexington, Scottsbluff, Gering, McCook, Ogallala, Sidney, Cozad, Broken Bow, Chadron and Holdrege.


FICA and Retirement Contribution on Cash-in-lieu of Insurance

The Respondent argues that the Commission should include “FICA” amounts and “retirement contribution” amounts on the cash-in-lieu of insurance money in the calculation of overall compensation because it is a cost provided as a benefit to the teachers of Alliance. The Petitioner argues that the Commission should not modify its existing method of calculating overall compensation.

The Respondent asserts that the Commission should alter its current practice of determining overall compensation. Currently, the Commission starts with the midpoint of total compensation of the array schools, subtracts the actual benefits paid to the teachers in the subject school, then divides by the staff index at the subject school to determine the appropriate base salary. The Respondent’s proposed calculation method follows the Commission’s calculation method (for the most part) to determine the other benefit costs column and the schedule costs column. The Respondent’s proposed calculation then adds in a 7.65% FICA tax and an 8.0% Nebraska Public Employees Retirement System contribution. In arriving at an amount in the 7.65% FICA column, the Respondent applies the percentage to the salary, plus the actual cash benefit, paid to each teacher. Those amounts are then added to determine a total compensation figure. The Respondent then uses the “total compensation” midpoint as a targeted amount to reach. In order to reach that target, the Respondent uses various base salaries, plugging a base salary into the formula to see how close they are to the targeted compensation. The Respondent must utilize this method, due to the change that occurs in the FICA and the Nebraska Public Employees Retirement System contribution amounts, depending upon the schedule costs that result from a base salary.  

In Beatrice Educ. Ass’n v. Gage County School Dist., 15 CIR 46 (2004), the Commission concluded that if an array school provides a cash option to their teachers and that cash option is sufficiently similar to the subject school’s cash option, the Commission would place the subject school teachers as taking the cash option at the array school. Furthermore, the Commission determined that if an array school does not offer a cash option, or that cash option is not sufficiently similar to the subject school’s cash option, the Commission would place the subject school’s teachers as receiving the maximum insurance benefit for which they are qualified (dependent or individual coverage).

Presently, through a Section 125 Plan, Alliance offers single health/single dental insurance, family health/single dental insurance, family health/family dental insurance, or family dental insurance, with any remaining money (after a plan is selected) given as cash. If a teacher elects no health or dental insurance, the district offers just cash-in-lieu of insurance. Each election in Alliance costs the district $11,121. On this $11,121 Alliance school district elects to pay eight percent to the Nebraska Public Employees Retirement System. Also, Alliance is required to pay 7.65 % FICA, on the $11,121.

In the array selected by the Commission, three array districts (Holdrege, Gering and Scottsbluff) offer some form of cash-in-lieu of insurance. Holdrege does not offer a cash benefit, but they offer an annuity of either $50 dollars in conjunction with insurance, or $100 in an annuity if the teacher elects not to take insurance, for a total yearly benefit of either $600 or $1,200 dollars for the teacher. Gering offers $8,250 per year per teacher for fringe benefits. Gering teachers may elect to take insurance in a Section 125 Cafeteria Plan or the teachers in Gering may elect to take the money as a cash settlement in-lieu of insurance payments. Scottsbluff is similar to Gering and Alliance, however Scottsbluff offers $10, 260 per teacher for fringe benefits.

In the instant case, the Respondent is requesting that the Commission use these two percentages as separate “benefit costs” to be included in its calculation of total compensation.  By bringing the retirement contribution percentage and the FICA retirement percentage into the calculation, the Commission is being asked to introduce too many variables into a mathematical calculation that is known for its predictability. Utilizing past case law, the Commission arrives at an end result by using actual amounts for benefit costs and scheduled costs, rather than starting with the desired total compensation and working backwards, by trial and error, to determine a base salary. The Commission’s current practice is more mathematically sound.

The Commission recognizes that FICA is clearly a cost to all employers, including the Alliance School District. The Commission also recognizes that the money paid towards the retirement contribution is a cost to the Alliance School District. The Respondent has voluntarily chosen to include the cost of the cash-in-lieu of insurance as part of its calculation of the Section 125 plan to be paid towards the retirement benefits for the employees.

When the Respondent includes the additional retirement contributions and the additional FICA contribution in the total compensation calculation, the Respondent is taking a benefit that it has bargained for with the Association, and spreading the cost of that benefit over the entire staff. Despite the fact that some teachers do not take the cash-in-lieu of insurance, all of the teachers, whether the teachers take the benefit or not, pay for the benefit in the Respondent’s calculation method. Cash-in-lieu of insurance is a mandatory subject that must be bargained for between the parties. The evidence presented at trial suggests that offering cash-in-lieu of insurance is not a prevalent practice, since only three out of the ten array districts offer some form of cash-in-lieu of insurance. However, since both sides have agreed to retain the practice of offering cash-in-lieu of insurance and the contract year is over, a prevalency determination is moot.

Exhibit 93 would indicate that Nebraska Public Employees Retirement System does not consider it appropriate to include cash-in-lieu of benefits as compensation for purposes of retirement. Therefore, considering all the evidence presented, the Commission will not include the eight percent retirement compensation nor will the Commission include the 7.65 percent of FICA in its calculation in determining total compensation.


Table 1 sets forth the relevant information for determining the appropriate base salary. The midpoint of the total compensation $7,120,602 minus the cost of fringe benefits of $1,601,894 equals $5,518,708 which, when divided by the new total staff index factor of  220.4763, equals a base salary of $25,031 for the 2005-2006 school year.


1.      Respondent shall pay the teachers a base salary of $25,031 for the 2005-2006 school year.

2.      All other terms and conditions of employment for the 2005-2006 school year shall be as previously established by the agreement of the parties and by the Findings and Order 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.