Binding Arbitration Requires Manager To Include Costs Of Award In Proposed Budget

Law enforcement officers in Montgomery County, Maryland are represented by Lodge 35 of the Fraternal Order of Police. The County negotiates under a local collective bargaining ordinance that contains “final offer” binding interest arbitration as the last step in the bargaining process. In 2011, an arbitrator awarded Lodge 35’s final offer in the negotiations. A provision in the County’s bargaining law requires that “a ratified agreement shall be binding on the employer and the certified representative, and shall be reduced to writing and executed by both parties. In each proposed annual operating budget, the County Executive shall describe any collective bargaining agreement or amendment to an agreement that is scheduled to take effect in the next fiscal year and estimate the cost of implementing that agreement. Any term or condition of a collective bargaining agreement which requires an appropriation of funds or enactment, repeal or modification of a County law shall be timely submitted to the County Council.” Notwithstanding the ordinance, the County Executive submitted a proposed operating budget for Fiscal Year 2012 to the Council, and did not include the costs of the arbitrated contract, but instead submitted the final offer that he had presented to the Arbitrator. Lodge 35 filed a prohibited labor practice charge against the County Executive, who admitted that he failed to submit the Final Agreement in the FY 2012 Budget but argued that his actions were permitted by the County’s charter.

An appeals court upheld Lodge 35’s position. The Court reasoned that “the Charter requires binding arbitration. The bargaining ordinance requires that the parties execute any agreement negotiated between them or imposed through impasse procedures. The entirety of the law directs the County Executive to submit any contract, along with the cost of implementing that agreement and the proposed legislation required to implement it.

“Our precedent is clear; we are to read the collective bargaining statutory scheme as a whole to discern the Council’s intent. The County’s laws clearly express the Council’s intention – that the County Executive is to include the funding necessary to implement any CBA in the proposed budget so that the Council can then review it. This is consistent with a provision in the law that requires the Council to ‘indicate by resolution its intention to appropriate funds for or otherwise implement the agreement or its intention not to do so’ and if the intention is not to fund, to return to negotiations with FOP 35 and the County Executive. Interpreting the law to mean that the County Executive is not required to include any contract in the proposed budget with sufficient funding to implement it would frustrate the purpose of the law and render it out of harmony with the most recent collective bargaining statute. Such an interpretation is illogical.”

Fraternal Order of Police Montgomery County Lodge 35 v. Montgomery County Executive, 62 A.3d 238 (Md. App. 2013).