An Act 111 interest arbitration panel recently issued a landmark firefighter contract award that provides the City of Reading with significant and wide-ranging fiscal relief, enables the City to address future fiscal and operational needs, and restores management rights.

Reading, deemed to be fiscally distressed under Act 47 in November 2009, approved a financial recovery plan in the summer of 2010. The arbitration award tracks the recovery plan almost in its entirety, including significant changes in areas of wages, health care, and retiree benefits.

Although the City’s Act 47 status and recovery plan were a significant impetus for this award, it exemplifies how all Pennsylvania municipalities should approach Act 111 interest arbitration. Reading highlighted serious financial concerns, developed proposals targeted to address those concerns, and presented evidence supporting each issue. The award was the result of months of hard work by Reading Mayor Thomas McMahon and his staff, along with Ballard Spahr attorneys representing the City, and confirms that preparation and well-reasoned and targeted proposals are the key to success in Act 111 interest arbitration.

Highlights of the award include a three-year wage freeze; reduced starting-wage rates; a freeze on longevity and step-pay increases for the duration of the recovery plan; elimination of post-retirement health care benefits for new hires; the implementation of significant employee cost sharing for health care, which also applies to retiree health care; the elimination of a pension DROP for new hires; the implementation of a pension contribution for current and future DROP participants; the elimination of four paid holidays; reductions in sick leave and vacation leave; and a significant reduction in staffing. The award became effective on April 1, 2011, just three months after the previous collective bargaining agreement expired, which allows the City to begin reaping the cost savings almost immediately.

Although your municipality may not be at the level of Act 47 fiscally distressed communities, this Reading award acts as a compelling example of structural, contractual changes that are needed to put municipalities back on the road to fiscal stability. Please contact any member of Ballard Spahr’s Labor and Employment Group to discuss your contract bargaining strategy and contractual changes that can not only bring needed fiscal relief but also prevent your municipality from traveling the road to Act 47 distressed status.


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