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Communities Controlling Their Own Costs -
PA 312 and Mandatory Binding Arbitration

Source: Crain's Detroit Business

State Officials Look at Changing Arbitration Laws

By Amy Lane

6:00 am, June 18, 2007

LANSING - Changes to a 1969 state law that mandates binding arbitration for police and fire union contract disputes are mixing into discussions over government reforms as the state reshapes its budget.

And from the perspective of the Michigan Chamber of Commerce, looking at Public Act 312 only makes sense.

Businesses have a stake in seeing a well-run, efficient local government system, said Tricia Kinley, director of tax policy and economic development at the chamber. Our job providers, our members, want to not only feel that they have police and fire protection, but that they have it in a way that is efficiently run.

How far reforms to PA 312 will go remains to be seen.Paul Hufnagel, president of the Michigan Professional Fire Fighters Union, said the union is open to steps that would produce cost savings, speed decision-making and make the system more efficient. But the union also believes that Michigan's binding-arbitration law works the way it is and does not need to be reopened.

Well over 90 percent of contracts in fire and police throughout the state are settled in negotiations or in a mediation step, Hufnagel said. So we feel the bill is working.

Gov. Jennifer Granholm's office is looking for ways to alleviate delays and draw more experienced arbitrators, Granholm press secretary Liz Boyd said.

One idea is to increase arbitrators' daily pay or remove a compensation cap, which could attract a bigger pool of qualified arbitrators and in turn lead to faster resolution of cases.

State officials are also looking at removing the state from its obligation to pay one-third of the arbitrators' compensation. Currently, the state, union and employer equally share the cost.The Michigan Municipal League supports such measures but has other issues that it sees as key. For example, the league wants to make sure a community has the ability to afford an award they're given, said Andy Schor, legislative associate. That includes determining the impact on a community over a five-year period and blocking an arbitrator from considering unused millage or assessment capacity or identifying funds with a different government purpose, when determining ability to pay.

Hufnagel said arbitrators already consider financial ability of a governmental unit to meet the costs of an award.

Rep. David Agema, R-Grand-ville, says arbitrators in contractual disputes should be able to pick a compromise position.

His House Bill 4213 would allow the arbitrator to adopt a position within the range of each parties' last settlement offers.To me, it's just a logical thing. An arbitrator should be able to arbitrate. And right now they can't, they just pick a side, said Agema, a former pilot with American Airlines and member of the American Pilots Association union.

To me, this is a win-win. I just want the arbitrator to be able to truly arbitrate, which would force, in my opinion, both sides to get together closer, before they ever call an arbitrator.

But Hufnagel said that a system using a last, best offer on its own drives both sides to a reasonable conclusion of what the fair offer is. That's why you have so many settlements.

Amy Lane: (517) 371-5355, alane@ crain.com

 

 

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