Whenever the state and counties reach a new contract agreement with one of the public employee unions, it is news, and lots of people are interested. News media are typically quick to report on wage and benefit increases, along with the aggregate costs to the state and, in turn, taxpayers. Then the pundits and editorial writers weigh in with their views of the agreements, pro and con.

But I’ve noticed over the years that reporting rarely gets beyond the basics. The final results, the new hourly wage and benefit levels, are dutifully reported, but we don’t really learn much if anything of the reasoning behind them.

Are the increases fair? Are public workers in different sectors overpaid, as some believe, or working for less than those who work for private employers? What goes into the decisions about how much our public employees are worth, how much they deserve, and how much we can afford? This is the meat of the labor issue, yet reporting never gets down to the details at this level.

In part, this reflects the overall confidentiality of labor negotiations, and the typical unwillingness of participants to speak candidly about what has gone on behind the scenes.

But when negotiations reach an impasse and result in binding arbitration, a formal record is compiled and discussed in a final decision of the three-member arbitration panel. These decisions are rich in detail but are rarely referenced by reporters.

Take the recent arbitration award involving HGEA’s Unit 9, made up of 1,594 full-time equivalent professional registered nurses, most of whom are employed statewide in medical facilities operated by the Hawaii Health Systems Corporation. These include Hilo Medical Center, Maui Memorial Hospital, Kona Community Hospital, Kahuku Medical Center, and several others.

Arbitrators Decision Provides Detailed Background

I was able to obtain a copy of the 39-page arbitration decision, dated April 2, 2013, and it makes interesting, if dense, reading. It begins by reviewing the history of contract negotiations. In this case, nurses had been unable to reach an agreement with the state on contract terms that would have gone into effect on July 1, 2011. And although the two sides agreed to arbitration in March 2011, agreement was reached until September 2012 on the selection of a neutral arbitrator who would also chair the three member arbitration panel. Several days of hearings were held in November 2012.

The arbitrators are required by state law (Section 89-11(f)) to consider a number of specific factors, and their final decision explains how these were taken into account.

The state staked out the position that nurses should take a pay cut because most other public employees had already been hit with a 5 percent reduction beginning in 2011. Because the arbitration process had been delayed, the state called for accelerating the savings with a 24 percent salary cut through the final months of the contract that would end June 30, 2013.

The union’s last best offer called for a 10 percent salary increase retroactively effective to July 1, 2011, and a 12 percent increase as of July 1, 2012. During the hearings, the union dropped demands for night shift and weekend pay differentials.

The arbitrators then turned to the question of whether the state could afford to fund the higher salaries. Arbitrators were told that HHSC “is broke,” and could not afford wage increases which have historically been covered from the state general fund.

Meanwhile, the state focused on what it called the “fairness” issue. Other public workers took a pay cut for two years, and nurses should follow suit.

HGEA, on the other hand, presented evidence that state revenue had already started recovering from the Great Recession during the year ended June 30, 2011. Tax collections continued to grow, according to data compiled by the union, and the three major bond rating agencies “issued very high ratings” on state debt based on their findings that the state’s economy was rebounding and further growth expected.

Based on these data, as well as projections by the Council on Revenues, the panel concluded the state’s two major industries, tourism and military spending, “are strong” and expected to remain so.

“The Panel majority finds that the State’s ‘last best offer’ is not sustainable based on data presented above on economic factors,” their decision said. “The Panel majority finds that the State has the ability to pay….”

A Clash Over Comparisons

The state and union were farthest apart on the question of how the salary and benefits of Hawaii nurses compare to other private and public sector employees.

HGEA first presented data comparing their members to nurses at Tripler Army Medical Center in Honolulu. Nurses at Tripler have a starting salary of $93,000, considerably more than the $68,736 starting pay for nurses in Unit 9. Tripler nurses have a top salary of $114,000, compared to the state’s top tier of $85,320.

The union’s expert witness, a labor economist with the American Federation of State County and Municipal Employees, HGEA’s parent union, then looked at salaries at the six largest private hospitals in Hawaii with collective bargaining agreements.

According to the union’s data, Unit 9 registered nurses are paid $16,379 less than the lowest annual pay at private sector hospitals, and $27,008 less than the highest private hospital nurses receive.

Nurses on the West Coast take six to 13 years to reach the top pay step, but in Hawaii it takes 20 years, the union argued.

Turning to benefits, the union’s data showed HGEA Unit 9 nurses pay $159 a month for medical coverage for themselves, and $490 for family coverage, about the same as Tripler.

But private hospitals in Hawaii provide health coverage for their employees, while nurses pay $90 to $214 per month for family coverage. West Coast nurses also pay considerably less for health coverage, according to the union’s data.

Meanwhile, the state argued that its proposal was consistent with the 5 percent salary cuts taken by other public employees, and that the HGEA nurses salaries are above or equal to nurses pay nationwide. Using a variety of comparisons, the state argued “total compensation is competitive,” with benefits, including vacation, holidays, sick leave, and health insurance, representing 61.11 percent of employee wages.

Generally, the state argued, total compensation of Unit 9 nurses is comparable to salaries in Hawaii’s private sector and “substantially above” public sector salaries nationwide.

Cost of living data was reviewed. The federal government recognizes Hawaii’s higher cost of living with its 28.76 percent cost-of-living adjustment for federal employees on Oahu and Maui, and 22.75 percent for employees on Hawaii Island.

The union also pointed out that Hawaii’s cost of living is, on average, 28 percent higher than in Washington, D.C. The state responded that “CPI is not an infallible measurement” and is just one of the factors to be considered.

Assessing the conflicting data, the majority concluded there was greater support for a wage increase than for any salary reductions, generally favoring the union’s position.

HHSC argued its mission of delivering quality health care “is being challenged by the exorbitant wage increase demands” of the union, and that “the welfare of the public requires the equal distribution of its financial burden among all State employees.”

Although the union made no comment, the panel’s majority felt wage reductions hit employees morale, and low morale in turn impacts the ability to provide quality services to the public.

Lower Pay, Better Benefits

A close review of the data led the arbitrators to the conclusion that nurses receive less in salary than in the local private sector hospitals, while receiving better benefits.

“It appears to the Panel that the Nurses are concerned about the amount of money that they take home to support themselves and their families,” the arbitrators found. “The benefits are great, but they do not pay the rent or buy food and clothing.”

Overall, the majority of the panel concluded the comparable data “favors the state’s position on the overall compensation (wages and benefits) being paid,” and discounted the data from Tripler and Hawaii’s private hospitals as “not consistent” with other national data.

However, the arbitrators concluded the data support a salary increase rather than a pay reduction.

In the end, the arbitrators awarded a pair of 4 percent increases, the first retroactive to January 1, 2013, and the second effective on April 1. The state is not required to pay interest on any retroactive payments.

Does Public Money Mean Public Information?

Public understanding of public employee contracts would certainly benefit from more airing of the issues that arbitrators grapple with when making their recommendations. But are the arbitrators decisions, along with other evidence compiled during hearings, considered public records?

When I called the Hawaii Labor Relations Board office yesterday, I could not get a ready answer. I was instead asked to submit my question in writing to be presented to the board.

A call to the Office of Information Practices was more encouraging. Jennifer Brooks, serving as OIP’s attorney of the day, suggested two ways to look at the question.

Although the arbitrators themselves are independent of the state and the arbitration hearings are not conducted by the HLRB itself, the decisions may still be required to be disclosed, Brooks said.

Hawaii’s Uniform Information Practices Act requires disclosure of certain classes of records, including “(f)inal opinions, including concurring and dissenting opinions, as well as orders made in the adjudication of cases….”

In addition, even if disclosure isn’t automatic under this provision, the general rule is that all government records are considered public records unless they fall under specific exceptions to the law.

“It is not obvious what exception would apply,” Brooks said.

I’ll be following up on this question of the public’s right to know. Stay tuned.

Read Ian Lind’s blog at iLind.net.