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United States of America


In the Matter of )









and ) Case No. 91 FSIP 200







Following a Notice of Hearing in the above-referenced case, Staff Associate H. Joseph Schimansky conducted a factfinding hearing on September 16 and 17, 1991, on the extent to which the Employer should pay the health insurance premiums of its nonappropriated-fund (NAF) employees. At the hearing a stenographic record was made, testimony and argument were presented, and documentary evidence was submitted. The parties filed posthearing briefs. The factfinder's report, without recommendations, was submitted to the Panel, which has now considered the entire record developed by the parties in the case.


The proposals and positions of the parties regarding the above-stated issue at impasse are set forth in the attached Factfinder's Report.


1. Employer's Contribution to Health Insurance Premiums

We shall turn first to the jurisdictional argument raised by the Employer: The Union's proposal interferes with its right to determine its budget, because it would lead to significant and unavoidable increased costs that would not be offset by compensating benefits.l In such circumstances, the Panel is lSee Factfinder's Report at 5.

guided by the Federal Labor Relations Authority's (FLRA) decision

in Commander. Carswell Federation of Government Force Base, Texas and American .________ __ _ _ Employees, Local 1364, 31 FLRA 620 (1988) (Carswell), where the FLRA determined that the Panel may apply existing case law to resolve an impasse where a duty-to-bargain issue arises. In this regard, the FLRA rejected the same argument raised by a different employer in connection with a

substantively identical proposal involving NAF in American Federation of Government Employees and U.S. Department of Defense. Arms and Air Force Exchange Service. Dallas. Texas, 38 FLRA 282 (1990)(AAFES), and found the proposal to be negotiable. Applying the FLRA's ruling in AAFES to the circumstances of this case, we conclude the Employer's argument is without merit, and that the Union's proposal is properly before the Panel.

Having carefully examined the evidence and arguments submitted by the parties regarding the amount the Employer should contribute toward the costs of employees' health insurance premiums, we conclude that neither side's final offer would appropriately resolve the dispute. On the one hand, the Union's proposal that the Employer be required to pay 70 percent of the premiums appears excessive, and is unsupported by any of the comparability data in the record. The Employer's proposal that the status quo be maintained, however, would perpetuate the disparity in treatment between these NAF employees and appropriated-fund employees, who on average have 60 percent of the costs of their health insurance premiums paid by the Employer.2 This also appears unwarranted in view of the relatively low wages these employees receive, and the increasing public interest in providing affordable health care. We shall, therefore, order the adoption of compromise wording requiring the Employer to pay 60 percent of the costs of the bargaining-unit employees' health insurance premiums.

In reaching this conclusion, we are not persuaded that a 10-percent increase in the Employer's contribution necessarily would have an adverse impact on its mission, as it contends. In this regard, we find the Union's unrefuted estimate that such an increase would cost about $9 per employee per pay period to be more credible than the Employer' 5 inflated figures, which were consistently based upon worst-case scenarios .3 Under the more reasonable assumption that a 60-percent Employer contribution is likely to increase participation in the health insurance program among regular full-time and part-time employees only slightly, and given that as a result of this Decision and Order, intermittent and temporary employees will continue to be excluded from coverage, the actual costs would probably be closer to $36,000 in Fiscal Year

2See Factfinder's Report at 6.

3See Factfinder's Report at 4 and 7.

1992.4 This does not appear extravagant in view of the fact that the combined revenues of NAF activities at Fort Eustis and Fort Monroe in Fiscal Year 1991 were close to $12 million.

We are particularly mindful of the Employer's contention that

any increase in the costs of its health insurance program could necessitate a reduction in the morale, welfare, and recreation (MWR) programs and services offered to military personnel and their

dependents. While the Employer may choose this course as one way of offsetting the cost increases it will experience, because there are a number of other options at its disposal, at this point the contention appears merely speculative. Moreover, the record indicates that the parties' collective-bargaining agreement is due to expire in June 1993. This should give the Employer an opportunity to gather evidence concerning the effects of our decision on its mission, and to attempt to change its share of contributions through further negotiations if the situation so warrants.

2. Participation of Temporary and Intermittent Employees in the

Health Insurance Program

Finally, on the related issue of whether temporary and intermittent employees should be permitted to participate in the Employer's health insurance program, we note that there is very little evidence in the record supporting their inclusion. In our view, the rate of participation of such employees is unlikely to be very high because, if uninterrupted coverage is to be maintained, they would have to pay the entire cost of their premiums during periods when they are not on the Employer's payroll. Under these circumstances, we believe that the administrative burdens which would be created by extending coverage to such employees outweigh the benefits to the relatively few employees who may actually participate. Thus, in the absence of a demonstrated need to change the parties' current practice, we shall order the Union to withdraw its proposal.

The record indicates that as of September 1991 approximately 154

regular full-time and part-time bargaining-unit employees participated in the health insurance program (see Factfinder's Report at 2). Our estimate of the actual cost of a 10-percent increase in Employer contributions is derived by multiplying 26 pay periods per year times $9 per pay period times 154 currently enrolled employees (26 x $9 x 154 = $36,036). 5Total revenue figures are listed in Employer Exhibits 9, 19, 28 and 38.


Pursuant to the authority vested in it by the Federal Service

Labor-Management Relations Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of proceedings instituted under the Panel's regulations, 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel under § 2471.11(a) of its regulations hereby orders the following:

1. Employer's Contribution to Health Insurance Premiums

The Employer shall pay 60 percent of the costs of employees' health insurance premiums.

2. Participation of Temporary and Intermittent Employees in the Health Insurance Program

The Union shall withdraw its proposal.

By direction of the Panel.

February 11, 1992

Washington, D.C.

Linda A. Lafferty

Executive Director