Common Sense became interested in the issue of Binding Arbitration (BA) because of our efforts to monitor two contracts negotiated by our Board of Education in 1999 and 2002.

Based on what was learned then it appeared that the specter of BA was indeed contributing to the levels of salary increases that were negotiated. BA reforms are needed but unless the negotiations that take place before BA comes into play are also addressed, the BA reforms may accomplish little.

On October 18 of 2004 a panel discussion on Binding Arbitration (BA) was held in East Hampton. Panelists were representatives of Federation of CT Taxpayer Organizations (FCTO), of the CT Education Association (CEA) and of CT Council of Municipalities (CCM). It was that discussion along with some information obtained from a CEA brochure that obtained after the meeting from a teacher present that has caused a rethinking of our position.

It is difficult to separate BA from the negotiations that take place in each town. The negotiations get the ball rolling. If it isn’t rolling in the right direction, even a reformed BA may not help.

As we all probably know, the current negotiating playing field is far from level. Here are some specifics.

1.       CEA coordinates the positions of the local educator unions. The local Boards of Education are not coordinated.

2.       CEA has access to information needed to make the strong case needed to win in BA. The local BOE may not.

3.       CEA is has money to assemble the case needed to win in BA. The local BOE does not or perhaps would rather give what money it has to the local teachers instead of to lawyers and arbitrators.

5.       The local union is clearly intensely motivated in negotiations since they benefit directly from the whole process. The local BOE is less motivated because they are spending other people’s money and their allegiance to the education system may be greater than that to the taxpayer.

6.       The local boards seem to be primarily guided by other settlements. The result is that over 80% of settlements come in close to a “magic number”. That magic number presumably comes from the CEA and/or perhaps simply from an initial settlement in a wealthy town such as Greenwich.

7.     When cases do go to arbitration, both sides put forward best and final offers that are undoubtedly fairly close to the “magic number” that other towns have been settling for through negotiation. As a result, arbitrated awards also tend to come in close to the “magic number” regardless of which side the arbitrators choose.

8.       Local boards are told (at least in East Hampton) that not only will it cost money to go through the formal BA process, but also that the arbitration award may result in a higher settlement. The higher settlement may result from the local board being unable to present the required strong (and expensive) case and/or because the arbitration board tends to favor the union in their decisions.

9.      Few (10-15%) contracts go to BA. This may be due to the money involved and the fact that the arbitrators seem to come in with awards close to what towns are settling for anyway. So why spend the money?

10.  On the other hand, the union, knowing that they may have more resources, may be much more willing to go to arbitration and that threat may cause boards to cave in

11. The public is shut out of the entire negotiating process and cannot tell how strongly or how well their representatives are bargaining or how logical the rationales are that support the last offers each side puts on the table.

On the political side----

11.   The CEA puts out extensive (possibly misleading) lobbying literature (with data). There is no similar countering literature from taxpayers or towns or BOE’s.

12.   The CEA probably contributes funds to State legislator campaigns. There are little or no contributions from taxpayers or towns or BOE’s. It is not known if CABE (CT Association of Boards of Education) or CCM provide funding. Both organizations probably primarily lobby for more state money for education, and CABE is part of the pervasive education “system”.

13.   Despite claims that arbitration awards are “virtually split” between unions and towns, the salary awards under the Teacher Negotiation Act (TNA) do favor the unions. Clearly, the TNA awards cost the most money and are the primary drivers of increased taxes. Only when the less expensive awards affecting other municipal unions under the Municipal Employee Relations Act (MERA) are combined with TNA awards is parity in the number of BA awards achieved.

14.    The February 2004 CEA brochure entitled “The Binding Arbitration Story” indicates some concern over the activities of FCTO stating (page 4): “FCTO has been aggressive in its circulation of a call to arms on BA. The organization has sent letters to municipal officials all over Connecticut informing them that 75-90% of municipal budgets stem from personnel-related expenses. The letter goes on to say that towns are either settling contracts under the threat of BA or contracts are being sent to arbitration to be decided upon by independent arbitrators with no relationship to the municipality they are financially impacting. Finally, it (FCTO) asks municipalities to pass a resolution to open the debate on BA.”

15.   The CEA brochure then goes on to state (page 5) that “Arbitration is a fair and balanced process…” and (page 6) the “arbitrators accepted the school boards’ proposals 379 (50%) times and teachers’ proposals 377 (50%) times” over the 10 year period from1994 to 2003. However, closer review shows (page 6) that “Of a total of 183 salary issues, school board offers were awarded 42% of the time and teacher offers 58% of the time.” Those values significantly favor the union. Yet the impression is left that all is fair and balanced.

16.   More recent data from Office of Legislative Research (OLR) Report 2003-R-0759 shows that of 19 2004-05 TNA salary awards, 74% favored the union. Of 11 2005-06 awards, 91% favored the union. For 70 awards over a 5-year period (2001-2005) 61% favored the union. Despite this, even the summary of this report leaves the impression that the arbitration process is fair because, again, when the MERA and TNA awards are combined, the number of awards are “virtually split”. The “virtually split” phrase was used in a Hartford Courant letter of April 3, 2004 entitled “BA Works” by Senator Edith Prague.

17.   The CEA brochure also makes other potentially misleading claims namely:

a.       Figure 1’s title is “Arbitrated Contracts Result in Lower Salary Increases.” While true, the difference is tiny. Over 7 years, the arbitrated contracts averaged 0.1 percentage point less than negotiated ones.

b.       Totally ignored is the most important point made by the data presented in the figure, namely that both negotiated and arbitrated contract settlements show a steady rise in settlement magnitude (from the 2.5% range in the mid-90’s to the 5% range in the early 2000’s). This rise happened while the economy and State revenue to towns was declining. The conflict between rising contracts in the face of declining revenues and private sector economic problems is what has caused the current storm over BA.

Conclusions

18.  The entire situation looks very pessimistic.

20.   While BA may have some problems, the principal problem may lie in the unequal negotiating situation at the local town level. Until this is understood and resolved, BA reform may not help.

21.   The negotiating hand of the BOE might be strengthened if they opened the process to the public. Attempts in East Hampton to do this have been unsuccessful.

22. Perhaps the one single improvement in the BA law that might really help would be to require the arbitrators to consider ONLY settlements in the PRIVATE sector. If local boards knew that this was the ultimate standard, they might be more inclined to negotiate based on this standard.

23. Until real reform occurs, the only power the taxpayer has continues to lie in the budget referendum.