BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
NORTHERN EDUCATIONAL SUPPORT TEAM
LAC DU FLAMBEAU SCHOOL DISTRICT
Mr. Gene Degner, Executive Director, Northern Tier UniServ
Central, P.O. Box 1400,
Rhinelander, WI 54501, appearing on behalf of the Union.
Ruder Ware, S.C. by Attorney Ronald J. Rutlin, 500 Third
Street, Suite 600, Wausau, WI 54402-8050, appearing on behalf of the School District.
The Northern Educational Support Team (NEST), hereinafter referred to as the
the Lac du Flambeau School District, hereinafter referred to as the District or Employer, are
to a collective bargaining agreement (CBA) which provides for final and binding arbitration
disputes, which agreement was in full force and effect at all times mentioned herein. The
asked the Wisconsin Employment Relations Commission to assign an arbitrator to hear and
the Union's grievance regarding the District's interpretation and implementation of the salary
adjustment clause contained in the CBA under Article XX, paragraph H. The undersigned
appointed by the Commission as the Arbitrator and held a hearing into the matter in Lac du
Wisconsin, on December 10, 2002, at which time the parties were given the
opportunity to present
evidence and arguments. The hearing was transcribed. The parties filed post-hearing briefs
March 3, 2003, marking the close of the record. Based upon the evidence and the
arguments of the
parties, I issue the following decision and Award.
The parties were not able to stipulate to a statement of the issue and left it to the
to frame the issues in this award.
The District proposes the issue as follows:
1. Is the District's interpretation of the
language in Article XX, Paragraph H, as set forth in
Employer Exhibit 1 in violation of the Collective Bargaining Agreement?
2. If so, what is the appropriate remedy?
The Union did not propose issue language.
The Arbitrator phrases the issue as follows:
1. Did the District properly interpret and apply the terms of
Article XX, paragraph H, when it
determined the respective contributions of the District and the employees toward the
and dental insurance premium increases and did it correctly compute the hourly wage
contemplated by that Article?
2. If not, what is the proper remedy?
. . .
ARTICLE XX FRINGE BENEFITS
. . .
H. In the second year of the contract, the District will absorb the
first ten percent (10%) increase
in the health and dental combined insurance premiums. The remainder will be shared
Board and the employes [sic]. The salary rates shall then be decreased one cent (1¢)
for each two
percent (2%) above ten percent (10%)." (.5 and up is rounded up, less than .5 is dropped)
The Lac du Flambeau School District and NEST are parties to a collective bargaining
agreement covering the contract years 20012002 and 20022003. This CBA
contains the language
set forth above under Article XX, paragraph H. This language has been incorporated
in the parties' collective bargaining agreements since contract year 1990. The terms of
were first applied by the District for the 20022003 contract year as a result of the
increases in the
combined health/dental insurance premiums over those experienced in contract year
contract year 20022003, the combined rates for the family plan coverage increased
29.1% over the
20012002 rates and the combined rates for the single plan increased 27.05% for the
Following the District's mathematical interpretation of the terms of this language (the
of which are reviewed in detail below) and the subsequent application of these calculations to
wages of the unit membership, the Union notified the District of its disagreement with the
interpretation of the language and this grievance followed.
There are no procedural impediments to this grievance coming to arbitration and the
properly before the Arbitrator.
THE PARTIES' POSITIONS
The Union agrees with the District in that this case is limited strictly to the
Article XX, paragraph H. This is the first time the language has been applied and the Union
agree with the District's interpretation of it.
The language of the article is clear and this clear language should prevail in its
interpretation. The first
sentence unequivocally states that the first 10% increase in the health and dental combined
insurance premiums is
absorbed by the District. The second sentence, "The remainder will be shared between the
Board and the employes,"
answers the question of what happens to the amount remaining beyond the initial 10% but
does not tell us how that
amount, i.e. in what shares, will be divided between the Board and the employees. The
third sentence, says the Union,
clearly answers this question. It says "The salary rates shall then be decreased one cent
(1¢) for each two percent (2%)
above ten percent (10%). (.5 and up is rounded up, less than .5 is dropped)" This provides
the "method" by which
each party's share of the remaining amount is determined: ". . . by rolling back the
previously agreed upon salary
schedule as contained in the appendix."
The Union asserts that the "only confusion" might be whether "the 10% in the third
sentence related to the
10% in the first sentence?" If it does then the Union agrees that the District has applied the
language correctly with
the exception of one required adjustment: the salary schedule roll back of 1¢ for each
2% increase in combined
premiums should be uniform. In other words, it should not be based on single versus family
coverage but should be
"uniform." "Therefore, a uniform ten cents ($.10) should be rolled off the salary schedule to
create a new schedule."
The Union membership questions "whether the 10% refers to how the union deals
with its share is [sic] to
be divided." If the 10% referred to in the third sentence of Article XX, paragraph H, refers
to the Union's portion of
the remainder then the assumption must be made that each party will absorb the remainder
Another way to view the language in the third sentence is to construe it to mean that
it gives the Union an
additional 10% "cushion" prior to the salary schedule roll back. In other words, once the
initial 10% to be paid by the
District is determined, an additional 10% is subtracted from the remainder which leaves the
actual percentage to be
absorbed by the employee.
The District's position is dependent on a "nexus between the Lac du Flambeau
Education Association contract
and the Northern Educational Support Team contract;" "the NEST contract and employees
being covered by the
Qualified Economic Offer;" "a lack of acknowledgement about percentages that are in the
first and third sentences;"
and "a lack of acknowledgement that the third sentence talks about an adjustment to the
salary schedule by decreasing
the salary according to a percentage increase in the split that is to be shared by both parties."
The Union says that the language in Article XX, paragraph H, is clear if read in the
order it is written:
A) Sentence one states that the first 10% of the increase in insurance is to
be absorbed by the board.
B) Sentence two states that the remainder is to be shared between the
C) Sentence three states how it is to be shared. It is to be shared by
decreasing the wage rates on the salary
schedule one cent (1¢) for each 2% increase in that remaining share.
The District takes the position that the resolution of this matter is uncomplicated due
clear and unambiguous language found in Article XX, paragraph H. The parties do not
the meaning of the first sentence which requires the District to absorb the first 10% of any
in the combined premiums of the health and dental coverage in the second year of the
second sentence calls for the parties to share any remaining premium increase (i.e. any
excess of the initial 10%) equally. The third sentence describes the mechanism by which the
payment of its share will be collected, i.e. the salary rates of employees taking either plan
single) will be reduced by one cent for each 2% premium increase above the initial ten
absorbed by the District.
The District reminds the Arbitrator that well established arbitral law requires that
unambiguous language be given effect and where the language is plain and unambiguous the
Arbitrator may not resort to a matter of construction and must enforce the contract according
The Union does not challenge the District's interpretation of the first two sentences of
the subject language.
Regarding the Union's challenge to the District's interpretation of the third sentence, the
District argues that there can
only be one interpretation, its own, not three as put forth by the Union. The District
interprets the language in
paragraph H as follows:
First sentence: "In the second year of the contract, the District will
absorb the first ten percent (10%) increase
in the health and dental combined insurance premiums."
The first year of the agreement was 2001-2002, the second year was 2002-2003. The
in the health and dental combined premium in contract year 2002-2003 for the family plan
($1,217.80 in year 2002-2003 less $943.36 in year 2001-2002 = $274.44 = 29.1% increase
$943.36) The increase for the single plan for the same period was 27.05%. ($533.30 in
year 2002-2003 less $419.78 in year 2001-2002 = $113.52 = 27.05% increase over
$419.78) The District is
required to absorb the first 10% of these increases leaving a balance of 19.1% (29.1% less
the family plan and 17.05% (27.05% less 10%) for the single plan to be paid equally by the
member participants and the District.
Second sentence: "The remainder shall be shared between the Board
After the District absorbs the initial 10% increase, this sentence requires that the
the employees share the remaining 19.1% (family plan combined premium increase over and
the first 10%) and the remaining 17.05% (single plan combined premium increase over and
first 10%) equally. Consequently, after the District absorbs the initial 10% of the premium
for the family plan, the remaining 19.1% increase is shared equally by the District and the
as is the remaining 17.05% premium increase in the single plan. Thus, since the family plan
increase over and above the initial 10% absorbed by the District is $180.10 [$1,217,80
+ 10% = $1,037.70) = $180.10], the District's portion is one-half or $90.05 and the
portion is the same. Likewise, the single coverage premium increase over and above the
absorbed by the District is $71.54 [$533.30 ($419.78 + 10% = $461.76) =
$71.54]. The District's
contribution is one-half of this amount or $35.77 and the employee's portion is the same.
Third sentence: "The salary rates shall then be decreased one cent
(1¢) for each two percent (2%) above ten
percent (10%)." (.5 and up is rounded up, less than .5 is dropped). It is the District's
interpretation of this sentence
with which the Union takes issue.
This third sentence requires the District to determine "how much over ten percent
(10%) the 'health and
dental combined insurance premiums' increased." Since the increase in the family plan has
been established at 29.1%
and at 27.05% for the single plan, then the percentage increases in excess of 10% are 19.1%
and 17.05% respectively.
Once these figures are determined, the language requires the District to divide them by two
because "salary rates shall
then be decreased one cent (1¢) for each two percent (2%) above ten
percent (10%)." (Emphasis added.) Thus, 19.1%
divided by 2 = 9.5% and 17.05% divided by 2 = 8.5%. The language requires that these
figures be rounded up to 10%
and 9% respectively. Finally, the language requires that the salary rates of the employees
enrolled in the family or
single plan be reduced by one penny for each percentage point or 10¢ and 9¢
The District argues that if the undersigned concludes that the contract language at
issue here is ambiguous
its interpretation must still prevail because it does, in fact, carry out the mutual intent of the
parties and any ambiguity
"usually means that the parties have failed to express that intent with clarity. . ." citing
Elkouri and Elkouri, How
Arbitration Works, 5th Edition, pp. 471-472 (1997).
Since the Union proposed the language at issue here any ambiguity therein should be
construed against it.
Again citing Elkouri & Elkouri, the District says that "enforcement of this rule is
practical because it promotes careful
drafting of language and careful disclosure of what the drafter intends by his language."
Elkouri and Elkouri, How
Arbitration Works, 5th Edition, pp. 509-510 (1997).
The District maintains that an interpretation of the language in the way suggested by
the Union's president
would lead not only to a misguided result but would also necessarily change the language to
conform to that
interpretation. The Union's president, Phyllis West, testified that the third sentence of
paragraph H. refers to the
amount above that percentage finally determined to be the responsibility of the
Union. This would result in the
employees paying nothing toward the increased premiums in this case because their share is
10% for the family plan
and 9% for the single. Since there is no amount "above 10%" then there would be no
employee contribution due. In
order for this interpretation to prevail, says the District, it is necessary to rewrite the third
sentence of paragraph H,
to read "The salary rates shall then be decreased one cent (1¢) for each two percent
(2%) above the employee's share
if the employee's share is above ten percent (10%)."
Regarding the Union's alternative interpretation which would result in the employee's
being 5¢, the District argues this is a distortion of the language in paragraph H,
because it requires
that the initial 10% absorbed by the Board be set aside and ignored in the computation of
of the percentage increase to be borne by the employees.
A contractual provision is ambiguous if it is reasonably susceptible to more than one
unless, of course, the parties agree as to its meaning. In such event, it is irrelevant that
more than one
meaning may be drawn from the language. Such is the case here with regard to the first two
sentences of Article XX, paragraph H.
The parties agree that the language found in the first sentence, "In the second year of
the contract, the District
will absorb the first ten percent (10%) increase in the health and dental combined insurance
premiums" means that
if the total increase in premiums equals 10% of the prior year's premiums, or less, the
District will absorb the first 10%
of the prior year's premiums as that percentage, expressed in dollars and
cents, represents an increase in premium over
the prior year. No matter that the sentence is susceptible to more meanings, this is the one
the parties agree upon and
this is the one which establishes the meaning of the language and the intent of the parties,
absent substantial flaws,
which do not exist here. Hence, if the last year's premiums were $100.00 and the current
year's premiums were
$120.00, the total increase in premiums this year over last year would be twenty percent
(20%), or $20.00, and the
District's portion would be one half of that increase, or $10.00. (By way of
illustration, if the second year's premiums
were $150.00, the increase would be fifty percent (50%) of the last year's premium and the
District would absorb 10%,
or $10.00, of the prior year's premium, or one fifth of the percentage
increase, leaving the remaining 40% to be divided
by the parties. In either case, the District absorbs the same amount of money, i.e. 10% of
the prior year's premium,
The second sentence of paragraph H, "The remainder will be shared between the
the employes" instructs the parties that, following the subtraction of the Board's initial 10%,
to share the rest of the increase. It does not specifically inform the parties as to their
shares of the remainder and so the reasonable conclusion, that they are to share the
should be drawn. And, in fact, the Union's president testified that this was her interpretation
language. Had the parties intended the shares to be other than equal they surely would have,
could have, said so. It is also only reasonable to conclude that the reference to "employes"
employees who purchase either family or single coverage. Thus, only covered employees
called upon to share in the increase.
This leaves us with the final sentence in paragraph H, "The salary rates shall then be
decreased one cent (1¢)
for each two percent (2%) above ten percent (10%)." The Union questions whether this
means above the initial 10%
absorbed by the Board or above the initial 10% to be absorbed by the Board
plus another portion. If the undersigned
were to adopt the latter interpretation, the employees would benefit from an additional
"cushion" (the Union's word).
Certainly, the language does not support such an interpretation and, once again, if the parties
had truly intended for
this to be the case they would have certainly said so, especially in light of the fact that it was
the Union representative
himself who penned the language. The most reasonable interpretation of the language
contained in this sentence is
that it refers to that
amount of premium increase which remains after the initial 10% absorbed by the
subtracted. This is the interpretation implemented by the District. (There is no controversy
the meaning of the language in parenthesis following the third sentence.)
In the instant case, the premium increase for the family plan was 29.1%. ($1,217.80
= $274.44 or 29.1% of the first year's premium.) The District absorbed the "first ten
percent" of that
increase leaving 19.1% ($180.10) to be shared by the District and the employees in equal
$90.05 each. 19.1% is the amount over the 10% initially absorbed by the District so this
divided by 2 ("for each two percent [2%] above ten percent [10%]") leaving 9.5% and then
by one (one cent for each two percent) to give a final share of 9.5¢. Since the
language instructs the
parties to round .5 up, this value becomes 10¢. The District then reduced the hourly
salary rates of
the family plan participants by 10¢ to implement the share plan. The same formula
was used to arrive
at the salary rate reduction for the employees enrolled in the single plan resulting in a
reduction of 9¢
The District properly interpreted and applied the terms of Article XX, paragraph H,
determined the respective contributions of the District and the employees toward the
and dental insurance premiums and correctly computed the hourly wage deduction
Therefore, the grievance is hereby denied.
Dated at Wausau, Wisconsin, this 20th day of May, 2003.
Steve Morrison, Arbitrator