In the matter of a final offer selection between the University of Waterloo and the Faculty Association of the University of Waterloo
Selector: Stanley M. Beck
Appearances:
For the University: Harry H. Panjer
For the Association: Mohamed Elmasry
Hearing: May 3, 2000
This interest arbitration was to determine the wage increase for the Faculty Association of the University of Waterloo for the period May 1, 2000, to April 30, 2001. Under Article 10.8.1 of the Memorandum of Agreement between the University and the Association, the role of the arbitrator is to select between the final positions of the Parties. Thus, this is what is known as a Final Offer Selection arbitration. Each side submits an offer which covers all the outstanding issues and the role of the arbitrator is simply to choose one of the two offers which then becomes the terms of the settlement.
In Final Offer Selection, as Arbitrator Kenneth Swan pointed out in The Haldimand Board of Education and The Ontario Secondary School Teachers' Federation, District 53 (Swan, April 14, 1997), the function of the arbitrator is, in effect, to decide against the party that advocates the less reasonable offer. It is a mechanism in which no discretion is given to the decision-maker to reach the compromise that the parties could not or would not effectuate at the table.
This arbitration is relatively straightforward in that there was only one issue outstanding between the parties: What should the scale increase be for the period May 1, 2000 to April 30, 2001? The Association is asking for a 2% increase. The university is offering 1.1% on scale plus other increments which bring its all-in offer to 1.35% (I have excluded the offered extension to April 30, 2006, of the option to exchange one week of vacation allowance for a 2% increase in salary for a period of up to three years immediately prior to retirement, as I do not think that offered extension is relevant to the salary increase-for the 2000-2001 period).
The Association's position
The Association argues for a 2% scale increase. Its argument is based on three essential factors:
- The inflation rate (CPI) for 1999 is 1.8% for Canada and 1.9% for Ontario. The consensus for the year 2000 indicates that the rate will be over 2%. In short, the Association's position is simply keeping pace with the rate of inflation in Ontario and might even be slightly behind in the current year. At the least, a salary increase should hold the Faculty's position constant in real dollars.
- The Association, and the University, has always compared itself with the University of Toronto in terms of the excellence of its faculties in the areas, primarily in Engineering and the Sciences, where there are roughly equivalent offerings. Accordingly, in terms of attracting and holding faculty, it is important that the University not continue to fall behind the rates offered at Toronto. The 2000-2001 salary scale increase at Toronto is 2%. Moreover, the Association submits that the age-adjusted salary gap between Toronto and Waterloo has grown from 3% in 1995-96 to 7.4% in 1998-99, and is estimated to have widened to some 8% in 1999-2000. Thus, a 2% scale, increase is vitally important just to keep pace with Toronto and not to fall further behind.
- By agreement between the University and the Association, seven Ontario universities are used for salary settlement comparison purposes. The seven are Toronto, Carleton, Queen's, McMaster, York and Ottawa. Taking the base scale increases for 2000-2001, the comparison group (excluding Ottawa and Western which have not yet settled) showed an average increase of either 1.91% or 2.03%. The variation is because the settlement at Queen's is still in arbitration, with the University offering 2.05% and the Association asking for 2.95%. It should also be noted that the average scale increase of 1.9/2.03% is with the inclusion of a 0.50 settlement at McMaster, which is clearly anomalous and which clearly points to other factors in the settlement, as the Association submitted.
The Association noted that the cost difference between its offer and the University's offer is $390,000, which is less than 0.2% of the University's 2000-2001 operating budget. Thus, it was argued, the Association's position is clearly an affordable one.
The University's position
The University offer is a scale increase of 1.1%. In addition, there would be a salary anomalies pool of $150,000 "to address salary adjustments that need to be made in individual salaries of present faculty members as a result of salary levels of recent hires". The anomalies pool is equivalent to an ongoing cost of 0.25% scale. Thus, the University's all-in offer is 1.35%. The University also noted, although it is not part of its offer, that there are ongoing salary costs such as Progress Through the Ranks (PTR) that is the equivalent of some 2.3% of faculty salary each year. Among the points raised by the University were the following:
- The University, in common with its sister Universities in Ontario, has recently come through a time of stringent funding. operating grants were frozen in 1997 and 1998 and increased by about 1% in 1999. While it is true that the operating grant is expected to increase by some $2.4 million (2.3%) in 2000-2001, the major part of this, approximately $2.3 million, is from the Province's Performance Fund which is based on a number of indicators. This Fund will be re-allocated in 2001-2002 and therefore cannot be considered an ongoing increase to the base grant. The total operating income will increase by about $6.4 million (3.2%); however, when earmarked money and allocated increases to some student services are excluded, operating income is increased by $3.7 million (1.9%).
- When the salary levels at Waterloo are compared, on an age-adjusted basis, with all Ontario universities, Waterloo is near the top, with the exception of Toronto. However, Toronto has always been considered a special case due to its higher cost of living and that University's stronger financial base, including significant endowment funds. Waterloo's position as being well ahead of other universities in the comparator group, except Toronto, will be maintained with implementation of the University's offer.
- The most significant source of revenue for operating expenses is tuition. Waterloo has implemented the maximum allowed in each year. However, the Government requires that 30% of such revenues be directed to student aid, and a significant portion be allocated to program improvement, which is monitored. Thus, the discretionary remainder is not large.
Selection
I am of the opinion that the Association's position is the more reasonable one in all of the circumstances and its final offer of a 2% scale increase is chosen. There are a number of reasons for this. First, the 1999 CPI IS 1.8%, and 1.9% in Ontario. For the 2000-2001 period, the projected CPI of 2% may edge close to 2.3-5%. There is no reason why the Faculty should see an erosion in its real wages. In this context, I would note that the University's Policy 11, "Faculty Salaries", states that the joint Faculty Salary Committee shall use the annual change in the CPI as the starting point for discussing scale adjustment (emphasis added). Secondly, when one looks at the comparator group, using the OCUFA figures presented by the Association, which I do not understand to be disputed by the University, the base scale change for 2000-20001 was 1.91% or 2.03%, depending on the Queen's settlement. Again it is worth noting that the Administration at Queen's is offering 2.05% and the Faculty is asking 2.95%. Finally, the difference between the Association's offer and the University's offer is $390,000, which is well affordable in an overall university budget of some $208 million.
Accordingly, the Association's final offer of a 2% scale increase is awarded.
Dated at Toronto this 19th day of May, 2000.
Stanley M. Beck, Selector