††††† The Senate State Government, Wagering, Tourism & Historic Preservation Committee reports favorably Senate, No. 5.

††††† This bill streamlines the procedure for resolving contractual impasses between public employers and their police and fire departments and imposes a 2 percent cap on arbitration awards under certain circumstances.†

††††† The bill streamlines the procedure for resolving contractual impasses by mandating that the parties at impasse go directly to conventional arbitration to resolve their contract dispute.† Currently the parties are afforded an opportunity to mutually agree upon a variety of terminal procedures to resolve their dispute.† Among the procedures the parties may now utilize are: last offer, factfinding, and conventional arbitration.

††††† The bill also establishes a 2 percent cap on arbitration awards.†† Under provisions of the bill, an arbitratorís award on a disputed base salary is subject to a 2 percent cap, calculated on an annual basis over the term of the collective negotiation agreement governed by the award.† However, the aggregate monetary value of the award does not have to be distributed in equal annual percentages.† Consequently, the monetary value of an award may exceed the 2 percent in a contract year, but the monetary value of the award allocated in the other contract years must be adjusted so that the aggregate monetary value of the award over the term of the agreement does not exceed the maximum monetary award permitted under the 2 percent cap.†

††††† The bill also changes the procedure for selecting an arbitrator.† Currently, if the parties are unable to mutually agree upon the selection of an arbitrator, the Public Employment Relations Commission (PERC) selects the arbitrator by lot.† Under this bill, PERC will randomly select the arbitrator.† The decision of PERC is final and is not subject to review or appeal.† However, the bill provides that if the parties agree to a method of appointment that differs from the formal procedure set forth in the bill, the terms of that agreement are to be followed.

††††† The bill also provides that an arbitratorís award on economic issues not included in a base salary is not subject to a cap.† Similarly, agreements arrived at through independent negotiation between the parties and agreements reached with the assistance of a mediator or factfinder are not subject to the contractual cap.

††††† Additionally, pension costs as well as health and medical insurance costs are excluded from the contract cap established in the bill.† This provision mirrors the exclusion afforded local governments when calculating the ďadjusted tax levyĒ used to calculate the mandatory 2 percent cap governing their expenditures under P.L.2010, c.85.

††††† The bill specifies that an arbitrator who renders an award may not be assigned responsibility for hearing an appeal of that award.†

††††† The bill revises and clarifies certain arbitration timelines, processes, and procedures, and provides new statutory language concerning the qualifications, duties, and responsibilities of arbitrators, specifically one that would require candidates for initial appointment to have relevant knowledge of local government operations and budgeting.

††††† In addition, the bill allows either party to petition PERC, alleging that the other is not negotiating in good faith.† As part of its finding, the commission is authorized to assess the non-prevailing party for all the legal and administrative costs associated with the filing and resolution of the petition.

††††† Further, the bill requires arbitrators to provide a written report along with each award decision, certifying that the arbitrator took into consideration the statutory limitations imposed on the local cap levy.† The bill requires the arbitration appeal panel to submit a similar written report along with their final determination of an appeal.

††††† The bill also establishes an eight member task force to study the effect and impact of the arbitration changes made under this bill.† Specifically, the task force is to focus on: †local property taxes; overall municipal services; municipal public safety, particularly with regard to crime rates and response times to emergency situations; hiring and retention of police and fire; and personnel changes in the professional profile of police and fire departments, specifically with regard to age, experience, and staffing levels.†

††††† Finally, the provisions of the bill are to sunset in 39 months.† All police and fire collective negotiation agreements that expire during that period are subject to the billís provisions.† The provisions of the bill continue to apply in arbitration cases that began during the three year period, but where the arbitratorís award is not rendered until after the sunset date.† Parties that enter into contracts that expire during the sunset period, but otherwise meet the criteria enumerated in the bill, are not subject to the provision of the bill when negotiating future contracts.†