Considering Final Offer Arbitration to Resolve Public Sector Impasses in Times of Concession Bargaining

The U.S. recession which began in the fall of 2007 continues to severely affect many organizations in the private and public sectors. Many governmental entities and unions have been forced to negotiate during period of stagnant or declining tax revenues combined with continuously rising health insurance and pension costs. These economic realities have resulted in a substantial number of contract talks leading to impasse. In the public sector the laws providing for collective bargaining also often require certain forms of alternative dispute resolution to resolve impasse, primarily mediation and fact finding or advisory arbitration. Both of these methods however, contain major limitations – primarily no guaranteed settlement. Final-offer arbitration, also called “last, best offer” or “baseball” arbitration, has been used by some governments as an ADR method that guarantees a settlement. A new Indiana law covering public sector teachers and school employers contains some unique features that should be considered by public sector organizations seeking changes in their current impasse resolution method. This paper reviews the topic of public sector collective bargaining during the current recession, the new Indiana law, final-offer arbitration as a means of resolving impasse, and final-offer issues for consideration