Sometimes, arbitration benefits the county — this time by $30 million

By Joe Schoenmann

Friday, May 18, 2012 | 2 a.m.

First, Clark County officials got the bad news: An arbitrator ordered that a former firefighter get back his old job, saying he was wrongly fired last year for suspicion of abusing sick-leave policies. This was going to cost the county about $165,000.

Then, they got some good news: Another arbitrator’s decision from a year ago — this one against firefighters — will boost county coffers by an unexpected $30 million, it was learned this week.

At least for Clark County, binding arbitration is a pendulum that swings both ways.

Commissioner Steve Sisolak, who led the county charge against sick-leave abuse, lamented the decision during a commission meeting Tuesday. But he also acknowledged that arbitration isn’t always a one-way street.

“Binding arbitration might work sometimes, but there’s other times it clearly does not work,” he said. “Sometimes it’s so far out of touch that it’s beyond the pale.”

Colleague Tom Collins added, “I’m thrilled to death that there’s a balance in the system.”

Both commissioners received an internal memo this week that outlined how a January 2011 binding arbitration decision has freed up $30 million that had been earmarked for firefighter long-term disability payments.

That resolution harks back to a year-old decision that led to substantial cuts in firefighter wages and changes in the Fire Department’s sick-leave policies. Two months ago, county officials reported that since 2010, sick-leave use by firefighters fell by 57,000 hours and average firefighter compensation fell from about $189,000 to $175,000.

What wasn’t widely reported was that Norman Brand, the arbitrator in the 2011 decision, also recognized a problem with the way Clark County distributed long-term disability payments.

For decades, the county had been giving disabled firefighters a lump sum payment equal to two years of pay, no matter how much the firefighter was also going to earn from an annual pension.

Brand changed the formula. Now long-term disabled firefighters are entitled to a lump sum payment equal to 60 percent of two years pay. But the bigger change is that the county can now offset that disability payment by the amount the firefighter receives in pension or workers’ compensation benefits.

County officials said the arbitrator realized that long-term disability pay is supposed to “replace” lost income, not supplement it. So when a firefighter is taking home $90,000 or more from a pension, that amount is subtracted from the firefighter’s disability payment.

In the May 14 memo, County Manager Donald Burnette said the policy change led to the need for a new actuarial study “to determine the long-term liability of the benefit for accounting purposes.”

The study was completed May 8, and it found that the county’s long-term liability had been reduced from $31.8 million to a little more than $1 million. The county already had $31.8 million in the long-term disability fund. Now it only needs $1 million in that fund, so it has a little more than $30 million “that can be used for other purposes.”

Burnette is suggesting that $8 million be used to bolster the county’s share of the Las Vegas Police Department’s workers’ compensation fund for detention center employees. Doing that, he added, meets requirements of state law.

As for the remaining $22 million, its use will be up to county commissioners, who have been pinching pennies and slashing jobs to balance budgets in light of massive declines in tax revenues.

Salaries and benefits are not likely to get any of the money, Sisolak said, because the $22 million is a one-time infusion. Salaries and benefits have to be paid year after year. He said he doesn’t have any exciting plans for the money, thinking instead that it might be saved in a rainy-day fund.

“Then if we get another downtick, we have something to fall back on,” he said. “I wouldn’t even want to use it to build a park because then we have to pay maintenance on the park.”

Or maybe the county will need the money for another arbitration decision that doesn’t go its way.