David B. Lipsky.

The impact of final offer arbitration in Massachusetts : an analysis of police and firefighter collective bargaining online

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Suffice to say that the supporters and critics of the law are equally
adamant, but at the same time have not presented evidence on the impact of
law which would allow for a definite conclusion. There is an immediacy to
the resolution of the debate as the law will expire at the end of June, 1977,


unless the legislature votes to extend it.

The purpose of this study is to shed some light on the impact of the law
on both the process and outcomes of bargaining. The bulk of our attention is
directed at an assessment of the economic impacts of the law (measured in this
analysis as the absolute level and change in salaries) as this is the issue
that has generated the greatest amount of debate. Moreover, attention is
given to the analysis of changes in impasse experience of the parties over
the last six years.


Appendix to Section II.

Summary of the Massachusetts Final-Offer Arbitration Law for Police and


The legislative history of final-offer arbitration in Massachusetts is
a fascinating interplay of political forces which culminated in the addition
to Chapter 150E, the comprehensive public employee bargaining law, of a
provision for binding arbitration as a last step in police and firefighters
collective bargaining disputes. Before discussing the details of the pro-
vision, it is useful to look at the legal context in which it occurs.

The first piece of legislation to cover bargaining in the public sector
was Chapter 149, section 178D, passed in 1958, granting public employees the
right to join unions and to "present proposals" to public employers. In
1964 this chapter was amended such that state employees could now bargain
with respect to working conditions, but not wages. A year later additional
provisions were added to allow all municipal employees the right to bargain
about wages, hours, and terms and conditions of employment.

Even this brief description conveys the patchwork structure of laws re-
lating to public sector bargaining. In 1969 the Mendonca Commission, a group
representing unions, cities and towns and the state legislature was established
to study the current system and attempt to formulate a comprehensive piece of
legislation. The Commission served as a forum for discussing various new pro-
posals including final-offer arbitration.

During the period from 1970-1973 there was a great deal of attention
nationally on the problem of interest dispute resolution in vital public
services, especially police and fire. The International Brotherhood of Pro-
fessional Firefighters had urged its state associates to lobby for compulsory


binding arbitration. Indeed, the Professional Firefighters of Massachusetts,
th* union representing most firefighters in the state, had sponsored a bill
CO allow binding arbitration in their collective bargaining, which was passed
by the legislature, but vetoed by the Governor. Furtheraore, other states
w©te experimenting with impasse resolution proceedures which involved some
type of final-offer as a last step. Several members of the Mendonca Com-
i&lasion were especially interested in this concept and solicited various ex-
pert opinions on the subject.

The combination of continuing pressure from the Firefighter's union and
a Consensus on the Commission's part that the time was right for a new ap-
proach prompted the committee to recommend as part of its Comprehensive
Package, a provision for compulsory final-offer, binding arbitration for
interest disputes arising out of collective bargaining with police and
firefighters. Unlike the rest of the new law. Chapter 150E, the final-offer
pr>avision was slated to expire on July 1st, 1977.

It is important to realize that final-offer arbitration in the Massachu-
setts system is the last step of the impasse proceedure. The parties must
pass through negotiation, impasse certification, mediation, and fact-finding
each of which (except negotiation) must occur within a specified time frame.
If after going through these steps an impasse still exists, the employee's
organization must petition the Board of Conciliation and Arbitration to in-
itiate final-offer arbitration. Before initiating this step the Board will
determine if the four following preconditiors exist:

1) all preceding steps have been exhausted, 2) 30 days have elapsed since
th* publication of the fact-finders report, 3) an impasse continues to exist.


4) any complaints of prohibited practices filed prior to the fact-finders
report before the Labor Relations Commission have been adjudicated.

If the conditions are met, the Board will appoint, if necessary, a
three-man arbitration panel. The panel has 40 days from the commencement
of the hearing to take all necessary evidence and conclude the proceedings.
If the impasse still exists at the end of the hearing, each party submits its
final offer on all issues still unsettled. Prior to this the Chairman of
the panel has the authority to remand the dispute for further bargaining,
up to three weeks, if he/she feels the parties are close to settlement.

In evaluating the final offers, the panel must consider the following

1. The financial ability of the municipality to meet costs.

2. The interests and welfare of the public.

3. The hazards of employment; physical, educational and mental
qualifications; job training; and skills involved.

4. A comparison of wages, hours, and conditions of employment of
the employees involved in the arbitration proceedings with the
wages, hours, and conditions of employment of other employees
performing similar services and with other employees generally
in public and private employment in comparable communities.

5. The decisions and recommendations of the fact-finder.

6. The average consumer prices for goods and services, commonly
known as the cost of living.

7. The overall compensation presently received by the employees,
including direct wages and fringe benefits.

8. Changes in any of the foregoing circumstances during the pendency
of the arbitration proceedings.

9. Such other factors, not confined to the foregoing, which are
normally or traditionally taken into consideration in the
determination of wages, hours, and conditions of emplojrment


through voluntary collective bargaining, mediation, fact-finding,
arbitration, or otherwise between the parties, in the public ser-
vice or in private employment.

10. The stipulation of the parties.

Finally, the panel votes on which package to accept, in total. The terms
become binding on the parties.


III. Impasse Experience in Massachusetts, 1972-1977

Data gathererd from the files and records of the Massachusetts Board of
Conciliation and Arbitration allow us to trace the use of impasse procedures
in police and fire negotiations from fiscal year 1972 through December 31 (1976)
of fiscal year 1977. Information was also gathered on the incidence of impasse
in teacher negotiations in order to allow some comparisons to be made between
the use of impasse procedures with and without final-offer arbitration as
the final step.

Table III.l shows that for the five and one-half years covered by our
data there were a total of 1,001 impasses in police, fire, and teacher negoti-
ations. Of these, 305 (30.57.) involved police units, 218 (21.8%) involved fire
units, and 474 (47.4%) involved teacher units. In an additional four cases, a
combined police and fire unit went to impasse. When these data are broken down
into two periods — encompassing the three fiscal years preceding the date that
Chapter 1078 became law (July 1, 1974) and the other the two and one-half years
that elapsed from the date of the new law to December 31, 1976 — the following
becomes apparent:

(1) The number of impasses increased for these three types of
bargaining units from 371 in the pre-law period to 630 in

the post-law period. This is an increase of nearly 70 percent.

(2) Most of this increase is accounted for by a higher incidence
of impasse in police and fire negotiations. The highest per-
centage increase in impasses occurred in firefighter bargaining;
in the pre-law period there wer^ 61 impasses, while in the post-
Law period there were 157 impasses, an increase of 157 percent.

















Police & Fire
(combined units)

TOTAL 1,001 . 100.0%





Police & Fire
(combined unit)

TOTAL 371 100.0%





Police & Fire
(combined units)

TOTAL 630 100.0%






















Police impasses increased from 107 in the pre-law period to
198 in the post-law period, an increase of 85 percent.
Teacher negotiations - again, not subject to final-offer
arbitration - resulted in impasses in 202 cases in the
pre-law period and 272 cases in the post-law period, an
increase of 33 percent.
Thus, of the 371 impasses of police, fire, and teachers coming to the
Board of Conciliation and Arbitration in 1972-74, 45 percent were police and
fire cases, while of the 630 impasses in the 1975-77 period, 57 percent were
police and fire cases.

Since final-offer arbitration is intended to decrease reliance on
third-parties in collective negotiations, these data may be viewed as ■•
running counter to the intention of the law. In order to assess accurately
the presence of a "chilling effect," however, it is necessary to know how
many police and fire untis negotiated in any given year. Paul C. Somers,
Director, Personnel/ Labor Relations, Massachusetts League of Cities and
Towns, has made such estimates for the period FY 1970 — FY 1976. His data
allow an estimate to be made of the proportions of police and fire nego-
tiations that result in impasse. Table III. 2 below shows that the propor-
tion of impasses in the pre-law period went from 19.2 percent in 1973
to 28.1 percent in 1974. In the first year of the final-offer law, however,
the proportion of impasses increased significantly to 53.6 percent. In
the second year of the law, the proportion decreased to 42.1 percent.




The Proportion of Police and Fire
Negotiations Resulting in Impasse

FY 1972— FY 1976

Police and


Proportion Resulting



in Impasse


















Is this evidence of a "chilling effect" resulting from the availability
of final-offer arbitration? Caution must be exercised in drawing such a conclu-
sion. Clearly, many factors, in addition to the presence or absence of arbitra-
tion in the impasse procedures, determine whether the parties will declare
impasse. The environment of bargaining was different in 1975-76 than it had
been in 1972-74. First, cities and towns in the Commonwealth operated under
greater fiscal constraints in 1975-76 than they had in the earlier period. The
recession that began in late 1974 hit Massachusetts particularly hard and no
doubt affected the revenues available to cities and towns for all purposes,
including public safety salaries and benefits. Second, inflation, as measured
by changes in the Consumer Price Index, reached 12.2 percent in 1974 and,
despite the recession, continued at 7 percent in 1975. By contrast the CPI
increased by just 3.4 percent in 1971-72. Third, wage settlements in 1971-73
were affected by constraints imposed by the federal government's program of
wage and price controls under the Economic Stabilization Act. Phase II of the
controls program, for example, imposed a guideline of 5,5 percent on salary
increases in 1972-73. When controls were removed, many unions felt compelled
to bargain for 'tatch-up" wages. The combination of these circumstances insured
that negotiated settlements would be more difficult to achieve in 1975 and 1976
than they had been in the early 1970s. Accordingly, one would have expected
the incidence of impasses to increase in the later period even if there had
not been a change in the law.

In additioTi, it might be expected that the introduction of a new disnute
settlement technique would arouse the curiosity of negotiators. It would be
natural to expect that some negotiators would want to "test the waters" to
discover just how the new - and still rather novel - technique of final-offer
arbitration operated in practice. Expectations about the efficacy of the new


technique might have been unrealistic at first, leading to a greater reliance

on the impasse procedures. When the parties' curiosity was satisfied, reliance

on the procedures could be expected to decline. Undoubtedly some parties were

not sufficiently educated in the way the law operated, and were therefore not

aware of the "risk factor" inherent in the final-offer technique. For some

negotiators, then, use of the law in the first year or two of its existence

constituted a learning experience, which is likely to be followed by a return

to more timeworn, less risky methods of achieving settlement. The fact that

there appears to be some decrease in the number of police and fire impasses,

and particularly in the use of final-offer arbitration, in fiscal 1977 provides

partial support for these propositions.

It can also be argued that the proper measure of a "chilling effect" is

not the total number of impasses occurring in a particular year, but the number

of cases actually ending with a final-offer award. Our evidence indicates that

37 final-offer awards were issued in tae first two and one-half years of the law.

Of that nimiber:

8 cases resulted from impasses declared in the last half
of fiscal 1974, before the final-offer law was passed

23 cases resulted from impasses declared in fiscal 1975

5 cases resulted from impasses declared in fiscal 1976

I case resulted from an impasse declared during the
first six months of fiscal 1977.

These numbers clearly indicate a sharp drop in the number of final-offer
cases after 1975. Even in 1975 less than 9 percent of police and fire units
involved in negotiations resolved their disputes through arbitration. In
fiscal 1975, the proportion fell to less than 2 percent. In other words, over
the first two years of the law 95 percent of those cities and towns that negoti-
ated new police and fire contracts were able to achieve agreement without resort-
ing to arbitration. (It is interesting to note that under the final-offer


statute in Wisconsin, 12 percent of police and fire units utilized arbitration
in the first years of the law.)

It is too early to conclude that the sharp drop in the use of final-offer
arbitration after fiscal 1975 establishes a trend. The evidence for fiscal 1977
is necessarily incomplete. At the time our data were collected only one public
safety case originating out of the current year's negotiations had ended with
arbitration. As of this writing, we understand that at least two more cases
have also ended in arbitration. But it should be understood, first, that most
police and fire contracts that expire with fiscal 1977 expire on June 30, 1977
and, second, that knowledgeable observers believe that many police and fire
negotiators have not pressed forward in the impasse procedures but rather are
waiting to see whether the Massachusetts legislature and the Governor will
decide to extend the law.

Another indication of how the final-offer statute has affected the
negotiating process in police and fire units can be obtained by examining the
stage at which police and fire settlements were achieved. Table III. 3 provides
information on stage of settlement for the pre-law period (1972-74) and for the
post-law period (1975-77). It is clear from the data in this table that the
relative proportion of cases settled through mediation declined in the post-law
period. About 60 percent of public safety impasses were resolved in mediation
in 1972-74, compared to about 33 percent in 1975-77. By the same token, however,
the proportion of mediated teacher cases also declined, from 78,5 percent of
impasse cases in 1972-74 to 44.5 percent in 1975-77. Therefore, it is difficult
to say to what extent one can attribute the apparent decline in the effectiveness
in mediation in public safety disputes to the availability of arbitration as a
final step in the procedure. The proportion of successfully mediated cases might
have declined even in the absence of the final-offer law because of the changing
economic environment in which bargaining took place after 1974,







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Online LibraryDavid B. LipskyThe impact of final offer arbitration in Massachusetts : an analysis of police and firefighter collective bargaining → online text (page 2 of 5)