LABOR MANAGEMENT DIVISION LABOR Tel: 605.773.3681 Fax: 605.773.4211 REGULATION January 26, 2017 Sioux Falls Argus Leader PO Box 5034 Sioux Falls, SD 57117-5034 RE: HF No. 21, 2016/17 Fraternal Order of Police Labor Council v. City of Sioux Falls Greetings: Pursuant to SDCL 60-10?2, enclosed please find a copy the Fact-Finder?s Report of Issues and Recommendations. Sincerely, 8777M. James E. Marsh Division Director Enclosure 123 West Missouri Avenue Pierre, SD 57501 SOUTH DAKOTA DEPARTMENT OF LABOR AND REGULATION DIVISION OF LABOR AND MANAGEMENT FRATERNAL ORDER OF POLICE LABOR COUNCIL, HF No. 2016/17 Pe??onen REPORT OF ISSUES and AND RECOMMENDATIONS CITY OF SIOUX FALLS, Respondent A fact-finding hearing was held pursuant to SDCL 60?10?2 on January 12, 2017 before James E. Marsh, Director, Division of Labor and Management, South Dakota Department of Labor and Regulation. The purposes of the hearing are to impartially investigate the matters in difference between the parties, and make a report of the issues involved and a recommendation for settlement of the controversy. Petitioner, Fraternal Order of Police Labor Council (FOP), and Respondent, City of Sioux Falls (City), appeared to provide facts and rationale about the issues. ISSUES There is one issue remaining between the parties, as all others have been agreed upon on or set aside. FOP has proposed all City police officers and sergeants receive a three percent (3 raise from their previous contract, the contract to be in effect for two years; City proposes a one and five tenths percent (1 .5 raise, and agrees the contract should be two years. Over the last ten years, negotiations between the parties have largely been constructive and mutually beneficial. When economic conditions were less favorable in the early 2010?s, the police unit agreed to no raise, and to have its members contribute greater amounts to the police retirement system. The retirement system changes alone are expected to save the city 100 million dollars over the next 25 years. The City has been able to offer raises steadily when revenues were increasing. In this cycle, however, the parties disagree over whether the City has done what it could to encourage recruitment and retention. Both sides agree recruitment and retention are important for the police department to remain effective. FOP asserts that City?s current proposal is an insufficient effort. However, a survey of salaries in 13 similarly?sized departments in the region does not confirm that; Sioux Falls police officers earn 1 less than the average (mean) salary, but 1 more than the median salary reported for those departments. Sioux Falls sergeants earn significantly more than either the average (10 or median (15 salaries in those departments. City asserts a competitive range for city salaries is 5 less or more than those comparative departments offer, and it has apparently achieved that. That is not to say the police department does not face significant challenges now or in the coming years with recruitment and retention. The department?s annual reports show Sioux Falls? population grew by roughly 40 from 1996-2015, calls for service increased about that same amount. (The department takes calls well in excess of those accepted nationally.) Property crimes, narcotics crimes, and crimes against persons grew by at least 25 each from 2010?2015. The number of officers actually taking calls, however, stayed roughly the same, and the number officers available per shift was the same. From June, 2013 to March, 2016, the number of applications for city police positions dropped over 30 and the number who actually took the written exam dropped by 25 Both sides acknowledge part of the difficulty is the increasing unattractiveness of police work; community attitudes about the police both locally and around the country are more negative, and police are in much greater danger than in the past. FOP asserts the gap between Sioux Falls police salaries and those in smaller communities in the region is narrowing, making work in a smaller, less dangerous, less workload?intensive community more desirable. The parties disagree whether Sioux Falls salaries have kept up with inflation, or whether police have gotten raises at some point. That appears to depend on whether an eight~year period or a ten-year period is used. According to the City, using the eight years from 2009-2016, changes in the cost of living averaged 1.9 whereas the FOP unit averaged 2.12 increases during that period, so the police salaries kept up with inflation and included raises. Using the ten years from 2007?2016, however, according to the FOP, the cost of living increased 3 whereas salaries only increased 2.01 so the police salaries neither kept up with inflation nor were raised. Apart from issues of fairness or competitiveness, the parties disagree whether the City has the ability to fund proposal. The City mainly funds salaries by using property tax and sales tax proceeds. Property tax revenue will not increase from previous levels, as that has been frozen on the state level. Projected sales tax revenues used in the budget, FOP asserts, are sufficient to finance the FOP proposal; revenues were expected to grow by over $2 million from 2015 to 2016, and another $2 million from 2016 to 2017. About $300,000 in additional funds would be needed to pay - for the difference between 1.5 and 3 The City admits, however, that these projections assumed a 6 increase in sales tax revenues; the actual numbers are more like 4 and decreasing steadily by the month to as low as 1 The City has a second penny sales tax available, but its ordinances require that to be used for capital improvements, not personnel. The City has also resolved to maintain a 25 annual emergency reserve, and it asserts funding additional increases for police salaries is not possible under those conditions (funding the 1.5 will be, according to them, a challenge.) A wage study is due to be conducted in 2018. The parties agree a two-year contract would be preferable, but appear committed to another look at the adequacy of wages after the study is finished. The Department recommends the City?s proposal. Dated this ?315/! "Hy-day of January, 2017"1f Ir.? .1: ail-a mes E. Marsh Director CERTIFICATE OF MAILING James E. Marsh, Director, Division of Labor and Management, South Dakota Department of Labor, hereby certifies that his ?Fact-Finder?s Report of Issues and Recommendations" was mailed to the parties below by first?class mail, postage prepaid. David A Pfeifle Sioux Falls City Attorney?s Office PO Box 7402 Sioux Falls SD 57117?7402 Sioux Falls Argus?Leader PO Box 5034 Sioux Falls SD 57117-5034 Thomas Wilka Hagen Wilka Archer LLP PO Box 964 Sioux Falls SD 57101?0964 This report was mailed to the City of Sioux Falls and Thomas Wilka on January 2017, and to the Sioux Falls Argus~Leader on January 2017. Dated this of January. 2017. J_j?rnes E. Marsh Director