Splitting the difference doesn't always make sense. Sometimes elected officials must hold the line in labor negotiations, rejecting salary and benefit demands to protect a government agency's long-term finances.

Unfortunately, so-called "fact-finders," called in to resolve disputes under a young law affecting municipal collective bargaining, don't get that. Concord was an early victim of these lawyers who lack financial acumen. Now, it's Hayward.

A bill Gov. Jerry Brown signed in 2011 gives labor the right, when negotiations break down, to demand a nonbinding fact-finding inquiry before most local governments can impose terms.

In theory, a neutral party approved by both sides evaluates competing positions. In practice, the fact-finders, professional mediators and arbitrators, lack objectivity because they cannot alienate unions if they want to receive business elsewhere.


In Concord last year, attorney Carol Vendrillo concluded that the city, already facing a $5.5 million structural deficit, should raid revenues from a temporary sales tax increase to fund permanent salary and benefit increases of 12.3 percent.


Vendrillo ignored that voters had been told the tax money would be used only to protect core services, cover the city's structural deficit and rebuild badly depleted city reserves.

She revealed her bias as she warned that "employees' expectations, labor peace, and a positive labor/management relationship, while difficult to measure in monetary terms, must weigh heavily in the (City) Council's response" to her recommendation.

Vendrillo reported that several city workers observed the five-day fact-finding hearing, leaving her with "a very tangible feeling of their commitment to the city and their earnest desire to make a contribution to the city's future well-being." Perhaps true, but irrelevant.

Hayward's recent experience was similar. Maintenance and clerical employees had worked without a contract since May 2013. Impasse was declared in July, mediation was unsuccessful and the union demanded fact-finding.

The city's police and firefighters had already made significant concessions. The city was seeking the same from other workers. With good reason: Hayward's declining general fund reserves will run dry by 2018.

Even with significant concessions from all workers, the city would spend more than its revenues each year, with the structural deficit expected to reach $13.6 million annually by 2018. Meanwhile, city retirement plans, about $372 million underfunded, have only about 60 percent of assets they should now. That shortfall works out to roughly five years of city payroll.

Yet, using tortured logic, fact-finder Katherine J. Thomson concluded in February that "the city does not claim an inability to pay higher wages, but argues that it is facing deficits over the long-term that will result in negative general fund balances beginning in FY 2018." In other words, the city doesn't claim it can't pay, it just claims it doesn't have the money.

Thomson recommended raises in two of the next three years, partially offset by reduced benefit costs. City officials estimated the net cost of that at $1.5 million over three years, worsening Hayward's already-horrible bottom line.

The new law requires fact-finders to consider not only a city's financial health but also compensation at other comparable public agencies. That puts emphasis on "market average," creating a Lake Wobegon effect in which, as Garrison Keillor says, "all the children are above average."

Of course, by definition, all wages cannot be at or above average. Striving to attain that creates an upward wage push even when, as in Hayward's case, it's unaffordable and employee retention is strong.

The council rejected Thomson's recommendation and imposed one-year terms requiring employee concessions. The eight-month delay since impasse was declared cost the city about $800,000 in lost savings.

Officially, the fact-finder led a three-member panel that included a city and a union representative who, of course, canceled each other out. In her stinging dissent to Thomson's report, Hayward's representative, Assistant City Manager Kelly McAdoo, notes that Hayward employees received richer benefit packages than surrounding jurisdictions.

Moreover, she says, Thomson ignores financial reality: "Ultimately, the city of Hayward is a public service agency and not a public employment agency."
