PA Officials Seek Changes in Arbitration Law

By Stacy Brown | PA Independent

A change in the law governing collective bargaining is needed to help municipalities falling on difficult financial times, officials said recently.

A major legal change lawmakers want would require arbitrators to consider a municipality's ability to pay an award that may be granted during the arbitration process.

"We have to do something about Act 111. There should be reform," said state Sen. Jane Earll, R-Erie, who co-chaired a joint House and Senate public hearing Dec. 8 with state Rep. Chris Ross, R-Chester.

The Police and Firefighter Collective Bargaining Law of 1968, commonly referred to as Act 111, authorized collective bargaining between police and firefighters and their public employers.

The law provides for arbitration to settle disputes and requires compliance with collective-bargaining agreements and the arbitrators' findings.

"When you have a financially distressed municipality, it is our job to find a way to help," said state Rep. John Eichelberger, R-Bedford.

Pennsylvania declares a municipality distressed when it can no longer meet its financial obligations without state aid.

State Rep. Rick Saccone, R-Allegheny, said the time has come for Act 111 to be reviewed. Lawmakers have never amended or reviewed the law in its 43-year history.

Lawmakers also should strengthen the Financially Distressed Municipalities Act, commonly referred to as Act 47, Saccone said.

Act 47 allows municipalities that have fallen into a distressed status to receive financial aid from the state.

Earll and Ross are working together on legislation they believe would be the first step toward strengthening Act 47.

Last month, Earll introduced a bill--Senate Bill 1321--that would require arbitration awards and settlements to apply to municipal recovery plans created under Act 47.

Municipal recovery plans are developed by municipalities and a state-appointed recovery coordinator to develop budgeting guidelines and other plans geared toward returning the municipality to financial solvency.

The Senate bill includes the phrase "collective bargaining arbitration award" at key points in the text of Act 47.

The clarification is needed to avoid added costs to distressed municipalities, Earll said.

The new language addresses the state Supreme Court ruling in October that said Scranton must pay interest on arbitration awards to city police and firefighters, despite the city's status as a distressed municipality under the Financially Distressed Municipalities Act.

The court said Act 47 plans don't apply to arbitration awards under the terms of Act 111, which all but eliminates a municipality's ability to reach fiscal solvency by limiting salaries and benefits, officials said.

According to the ruling, the phrase "arbitration settlement" in Act 47 is too ambiguous to be applied to a cornerstone law like Act 111.

The word "settlement" has various legal meanings, the ruling said.

Until that ruling, municipalities under Act 47 counted on arbitrators to consider a city's ability to pay when deciding awards. If arbitrators failed to do so, local courts could overturn awards, which is what happened several times in Scranton.

But the state Supreme Court's ruling tossed out all lower court rulings, meaning each union arbitration victory stands and payment, including penalties and interest, of those previously set-aside awards is retroactive to the original arbiter's decision.

Already faced with $4 million in legal fees that have resulted from fighting the arbitration awards, Scranton now has to fork over more than $20 million to its police and fire unions because of the court's decision, Mayor Chris Doherty said.

"How can a city survive when an outside entity--in this case the state Supreme Court--raises the city's expenses and yet does not provide the city the tools to adequately balance its budget? The system is out of control and cities will need the help of the legislators to fix it," Doherty said.

"The first challenge that the legislators should consider is changing Act 111," he said. "Arbitrators must be compelled to take into consideration cities' ability to pay for the services that the arbitration is mandating."

Last month, Scranton officials announced the layoff of 29 firefighters and 19 other workers while raising property taxes by 29 percent.

The court's decision has severely crippled Act 47, said York Mayor Kim Bracey.

"You, as policymakers, and our commonwealth, as a whole, must look comprehensively at the full picture. Your core communities are crumbling, and we cannot sit idle and passively permit this to happen," Bracey said.

Act 47 hasn't worked because local officials haven't administered it properly, said International Association of Firefighters Local 60 President Dave Gervasi, who represents Scranton firefighters.

"There is absolutely nothing wrong with Act 111. The process is simple. There are three arbitrators, one chosen by the unions, one by the municipality and one independent,'' Gervasi said. "They look at the facts, and they make their decision, and we've been right every time."