                NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-3111-13T2
                                       APPROVED FOR PUBLICATION
IN THE MATTER OF
STATE OF NEW JERSEY and                   January 15, 2016
NEW JERSEY LAW ENFORCEMENT
SUPERVISORS ASSOCIATION.                 APPELLATE DIVISION
______________________________

         Argued September 21, 2015 – Decided January 15, 2016

         Before   Judges    Messano,     Simonelli      and
         Carroll.

         On appeal from the New Jersey Public
         Employment Relations Commission, PERC Docket
         No. IA-2014-003.

         Frank M. Crivelli argued the cause for
         appellant   New   Jersey   Law   Enforcement
         Supervisors Association (Crivelli & Barbati,
         LLC, attorneys; Mr. Crivelli and Donald C.
         Barbati, on the brief).

         Jeffrey J. Corradino argued the cause for
         respondent State of New Jersey (Jackson
         Lewis P.C., attorneys; Mr. Corradino, of
         counsel   and   on  the   brief; James J.
         Gillespie, on the brief).

         Don   Horowitz,   Acting   General  Counsel,
         attorney for respondent New Jersey Public
         Employment Relations Commission (Mary E.
         Hennessy-Shotter, Deputy General Counsel, on
         the statement in lieu of brief).

    The opinion of the court was delivered by

SIMONELLI, J.A.D.
       Appellant    New      Jersey         Law      Enforcement      Supervisors

Association (NJLESA) appeals from that part of the March 10,

2014 final decision of respondent Public Employment Relations

Commission      (PERC),     which     affirmed        a     compulsory     interest

arbitration salary award rendered pursuant to the Police and

Fire   Public    Interest    Arbitration          Reform    Act   (Act),   N.J.S.A.

34:13A-14 to -21.     On appeal, NJLESA contends that PERC erred in

affirming    the   arbitrator's      acceptance       of    the   scattergram    and

methodology offered by respondent State of New Jersey (State) to

calculate    the   salary    award    within       the     confines   of   N.J.S.A.

34:13A-16.7(b), commonly known as "the 2% salary cap." 1                   For the

following reasons, we affirm.

       We begin with a review of the pertinent authority.                   At the

time of the arbitration in this matter, the Act prohibited an

interest arbitrator from rendering a salary award

            which, on an annual basis, increases base
            salary items by more than 2.0 percent of the
            aggregate amount expended by the public
            employer on base salary items for the
            members    of    the     affected   employee
            organization    in    the    twelve   months

1
   We decline to address NJLESA's additional contention, raised
for the first time on appeal, that PERC's and the arbitrator's
failure to consider its unique status as an intermediary,
transitional bargaining unit led to an improper determination of
the amount of monies available for distribution in a salary
award rendered under the 2% salary cap.    See Bryan v. Dep't of
Corr., 258 N.J. Super. 546, 548 (App. Div. 1992) (citing Nieder
v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)).



                                        2                                  A-3111-13T2
           immediately preceding the expiration of the
           collective negotiation agreement subject to
           arbitration; provided, however, the parties
           may agree, or the arbitrator may decide, to
           distribute the aggregate monetary value of
           the award over the term of the collective
           negotiation agreement in unequal annual
           percentages.

           [N.J.S.A. 34:13A-16.7(b).2]

In rendering an award, the arbitrator must provide a reasoned

explanation   for   the   award,   state    which   factors    in   N.J.S.A.

34:13A-16(g) were relevant, satisfactorily explain why the other

factors   were   not   relevant,   and   provide    an   analysis    of   the

evidence on each relevant factor.           Hillsdale PBA Local 207 v.

Borough of Hillsdale, 137 N.J. 71, 83-84 (1994).              An arbitrator

need not rely on all factors in fashioning the award, but must

consider the evidence on each.      Ibid.

    In cases where the 2% salary cap applies, "the arbitrator

must state what the total base salary was for the last year of

the expired contract and show the methodology as to how base

salary was calculated."      Borough of New Milford and PBA Local

83, P.E.R.C. No. 2012-53, 38 N.J.P.E.R. ¶340, 2012 N.J. PERC

LEXIS 18 at 13 (2012).        Where the parties dispute the actual

base salary amount, "the arbitrator must make the determination


2
   N.J.S.A. 34:13A-16.7(b) was amended, effective June 24, 2014,
retroactive to April 2, 2014.     P.L. 2014, c. 11, § 2.     The
amendment does not apply in this case.



                                    3                               A-3111-13T2
and explain what was included based on the evidence submitted by

the parties."        Ibid.      The arbitrator must then "calculate the

costs of the award to establish that the award will not increase

the    employer's       base   salary   costs      in   excess    of     6%   in    the

aggregate."       Ibid.        In calculating the award, the arbitrator

must

              review    the    scattergram   of   the
              employees' placement on the guide to
              determine the incremental costs in
              addition to the across-the-board raises
              awarded.     The arbitrator must then
              determine   the   costs  of  any  other
              economic benefit to the employees that
              was included in base salary, but at a
              minimum this calculation must include a
              determination of the employer's cost of
              longevity.

              [Ibid.]

"Once these calculations are made, the arbitrator must make a

final       calculation    that   the   total      economic      award    does      not

increase the employer's costs for base salary by more than 2%

per contract year[.]"          Id. at 13-14.

       In    reviewing    an    interest       arbitration    award,     PERC      must

determine whether: (1) the arbitrator failed to give due weight

to the N.J.S.A. 34:13A-16(g) factors he deemed relevant to the

resolution of the specific dispute; (2) the arbitrator violated

the standards in N.J.S.A. 2A:24-8 and -9; or (3) the award is

not supported by substantial credible evidence in the record as




                                           4                                  A-3111-13T2
a whole.     Hillsdale, supra, 137 N.J. at 82.              In cases where the

2% salary cap applies, PERC must also determine whether the

award does not increase the employer's costs for base salary by

more than 2% per contract year or, in this case, 8% in the

aggregate.    New     Milford,     supra,       P.E.R.C.       No.    2012-53,       38

N.J.P.E.R. ¶340, 2012 N.J. PERC LEXIS 18 at 13-14.

     "Judicial scrutiny in public interest arbitration is more

stringent than in general arbitration . . . [because it] is

statutorily-mandated and public funds are at stake."                       Hillsdale,

supra, 137 N.J. at 82.        Accordingly, the "scope of our review of

PERC's     decisions        reviewing         arbitration       is        'sensitive,

circumspect, and circumscribed.'"               In re City of Camden and the

Int'l Ass'n of Firefighters, Local 788, 429 N.J. Super. 309, 327

(App. Div.) (quoting Twp. of Teaneck v. Teaneck Firemen's Mut.

Benevolent Ass'n Local No. 42, 353 N.J. Super. 289, 300 (App.

Div. 2002)), certif. denied, 215 N.J. 485 (2013).                         We defer to

PERC's decisions because of its expertise and will only reverse

if   the   decision    is    clearly      demonstrated         to    be    arbitrary,

capricious, or unreasonable.         In re Hunterdon Cty. Bd. of Chosen

Freeholders, 116 N.J. 322, 328 (1989).

     The record in this case reveals that NJLESA represents 665

primary-level law enforcement supervisors in several negotiation

units.     NJLESA     and   the   State       were   parties    to    a    collective




                                          5                                  A-3111-13T2
negotiations          agreement       (CNA)    that          expired   on    June   30,    2011.

Following unsuccessful negotiations and mediation, on September

16, 2013, NJLESA filed a petition with PERC seeking compulsory

interest arbitration pursuant to the Act.

       Regarding the salary award, the arbitrator first determined

that    $56,945,856.70          was    total       base-year       salary      in   the    final

twelve months of the CNA.                 The arbitrator then multiplied two

percent of the total base-year salary ($1,138,917) by four and

determined that $4,555,668 was the amount of money available

under the 2% salary cap for the four-year successor CNA.                                       The

arbitrator next determined the amount the State would expend

during the successor CNA based on each NJLESA member being moved

through the salary schedule over the four years by achieving

annual    step    movement,       or     annual          increments,        pursuant    to     the

salary    schedule       regardless           of       whether    they      continued     to    be

employed beyond the date the monies were projected to be spent.

Using    the    State's     scattergram,               the    arbitrator     determined        the

cost of the step movement alone to be $3,734,295 or 6.56% of the

original       base    salary     amount.              The    arbitrator     concluded       that

$821,373 remained to be awarded under the 2% salary cap, and

ultimately granted a total salary award of $757,833, which was

within the 2% salary cap.                 The arbitrator found that although




                                                   6                                    A-3111-13T2
$821,373 was available to be awarded, there was "no basis for

the expenditure or that requires any additional amounts."

       NJLESA did not claim that the arbitrator failed to comply

with N.J.S.A. 34:13A-16(g) or violated the standards in N.J.S.A.

2A:24-8 and -9, and agreed that $56,945,856.70 was the total

base-year      salary     in    the    final     twelve    months    of    the     CNA.

Instead, NJLESA challenged the arbitrator's acceptance of the

State's scattergram and methodology to calculate the costs of

the salary award to establish that the award would not violate

the    2%   salary      cap.      NJLESA     asserted     that   its      scattergram

provided a more accurate "cost out" of the salary award because

it contained the actual salary expenditures for fiscal years

2012 and 2013, the first two years of the successor CNA, which

reflected savings the State realized in those fiscal years from

retirements and attrition.             In contrast, the State's scattergram

contained projected salary figures for fiscal years 2012 and

2013, and moved all NJLESA members through the salary guide

regardless of whether they retired after fiscal year 2011 or new

members joined the unit.

       PERC    determined       that   the   arbitrator's      acceptance     of   the

State's       scattergram       was    consistent     with     New   Milford,       and

rejected NJLESA's argument that the savings the State realized

in    fiscal    years    2012    and    2013     should   be   credited.         Citing




                                             7                               A-3111-13T2
Borough of Ramsey and Ramsey PBA Local No. 155, P.E.R.C. No.

2012-60, 39 N.J.P.E.R. ¶17 (2012), PERC held that "[w]hether

speculative     or   known,   .    .       .    any     changes   in    financial

circumstances        benefitting       the           employer     or     majority

representative [were] not contemplated by the statute or to be

considered by the arbitrator."         This appeal followed.

    On appeal, NJLESA argues that the arbitrator's decision to

accept   the   State's   scattergram           and    methodology,     and    PERC's

affirmance of that decision, contravened PERC's prior decisions

in New Milford, supra, and City of Atlantic City and Atlantic

City PBA Local 24, P.E.R.C. No. 2013-82, 39 N.J.P.E.R. ¶161,

2013 N.J. PERC LEXIS 38 (2013), which compelled the arbitrator

to adopt NJLESA's scattergram and methodology.                    In particular,

NJLESA emphasizes a passage in New Milford, where PERC said:

                Since an arbitrator, under the new law,
           is required to project costs for the
           entirety of the duration of the award,
           calculation of purported savings resulting
           from anticipated retirements, and for that
           matter added costs due to replacement by
           hiring new staff or promoting existing staff
           are all too speculative to be calculated at
           the time of the award.       The Commission
           believes that the better model to achieve
           compliance with P.L. 2010 c. 105 is to
           utilize the scattergram demonstrating the
           placement on the guide of all of the
           employees in the bargaining unit as of the
           end of the year preceding the initiation of
           the new contract, and to simply move those
           employees forward through the newly awarded
           salary scales and longevity entitlements.



                                       8                                     A-3111-13T2
             Thus, both reductions in costs resulting
             from retirements or otherwise, as well as
             any   increases   in  costs   stemming  from
             promotions or additional new hires would not
             effect [sic] the costing out of the award
             required by the new amendments to the
             Interest Arbitration Reform Act.

             [New Milford, supra, P.E.R.C. No. 2012-53,
             38 N.J.P.E.R. ¶340, 2012 N.J. PERC LEXIS 18
             at 15.]

NJLESA    argues   that   this      passage    prevents    an    arbitrator   from

adopting a scattergram that contains "speculative" figures.

       NJLESA also points to a passage in City of Atlantic City,

where PERC said:

             We   further    clarify   that    the  above
             information must be included for officers
             who retire in the last year of the expired
             agreement.    For    such    officers,   the
             information should be prorated for what was
             actually paid for the base salary items.
             Our guidance in New Milford for avoiding
             speculation for retirements was applicable
             to future retirements only.

             [City of Atlantic City, supra, P.E.R.C. No.
             2013-82, 39 N.J.P.E.R. ¶161, 2013 N.J. PERC
             LEXIS 38 at 10.]

NJLESA argues that this passage requires an arbitrator to use

actual paid salary when that data is available.                       NJLESA notes

that   the   retirements       in   fiscal     years    2012    and   2013,   which

enabled    the   State    to   realize       savings,   were    not    speculative

because they actually occurred.               NJLESA, thus, argues that the

arbitrator should have used its scattergram, which reflected the




                                         9                                A-3111-13T2
State's savings from those retirements, and thus showed more

salary available for distribution to NJLESA members under the 2%

salary cap.

    NJLESA's   argument   fails   for   two    reasons.   First,   PERC

specifically rejected it:

         We note that the cap on salary awards in the
         new legislation does not provide for the PBA
         to be credited with savings that the Borough
         receives from retirements or any other
         legislation that may reduce the employer's
         costs.    It is an affirmative calculation
         based on the total 2011 base salary costs
         regardless of any changes in 2012. Likewise,
         the PBA will not be debited for any
         increased costs the employer assumes for
         promotions or other costs associated with
         maintaining its workforce.

         [New Milford, supra, P.E.R.C. No. 2012-53,
         38 N.J.P.E.R. ¶340, 2012 N.J. PERC LEXIS 18
         at 16 (emphasis added).]

Since New Milford, PERC has consistently maintained that the

State's savings on salary expenditures may not be considered

when calculating a salary award under the 2% salary cap, and

PERC has never suggested otherwise.           For example, immediately

after New Milford, PERC explained that

         [t]he statute does not provide for a
         majority representative to be credited with
         savings that a public employer receives from
         any reduction in costs, nor does it provide
         for   the  majority   representative  to  be
         debited for any increased costs the public
         employer assumes for promotions or other
         costs   associated   with   maintaining  its
         workforce.



                                  10                          A-3111-13T2
            [Borough of Ramsey, supra, P.E.R.C. No.
            2012-60, 39 N.J.P.E.R. ¶17 at 9 (emphasis
            added).]

    More recently, PERC reiterated its guidance in New Milford,

and rejected essentially the same argument advanced by NJLESA:

                 Additionally, the [union] asserts that
            the arbitrator miscalculated longevity in
            2014 because she failed to deduct the
            "offsetting decreased cost in longevity from
            employees who left the bargaining unit due
            to retirements, promotions and terminations
            from the base year 2013."       We squarely
            addressed this issue in New Milford wherein
            we stated as follows:

                  . . . .

                 Based on the clear guidance we provided
            in New Milford, we reject the union's
            argument that the arbitrator miscalculated
            longevity for 2014 because she did not
            offset costs resulting from retirements.

            [City of Camden and IAFF Local 788, P.E.R.C.
            No. 2014-95 (2014) at 8-9 (emphasis added).]

    A   fair     reading    of   Atlantic     City   does   not   change   the

analysis.    That case involved a dispute over the base salary

calculation for the twelve months preceding the expiration of

the collective bargain agreement.            City of Atlantic City, supra,

P.E.R.C. No. 2013-82, 39 N.J.P.E.R. ¶161, 2013 N.J. PERC LEXIS

38 at 2.    It did not purport to change the New Milford analysis,

but instead reiterated it. Id. at 6-7.                 Accordingly, PERC's

decision    in   this   case     was   not    arbitrary,    capricious,      or

unreasonable because it conformed to New Milford and subsequent



                                       11                            A-3111-13T2
decisions       by    refusing         to    credit    NJLESA       with    savings      from

retirements or attrition.

    Second, NJLESA misreads N.J.S.A. 34:13A-16.7(b) and ignores

our standard of review.                     The language of the 2% salary cap

provision      prohibits         an    interest      arbitrator      from    rendering     an

award that "increases base salary items by more than 2.0 percent

of the aggregate amount expended by the public employer on base

salary     items          for    the    members       of     the    affected       employee

organization         in    the    twelve     months        immediately      preceding     the

expiration of the collective negotiation agreement subject to

arbitration."             N.J.S.A.      34:13A-16.7(b).            The   statute    sets    a

maximum salary award, but does not require the arbitrator to

award    any    specified        amount      or     prescribe      the   methodology      for

calculating      the        salary     award.         As    PERC    recognized      in    New

Milford:

                    Arriving at an economic award is not a
               precise mathematical process.    Given that
               the statute sets forth general criteria
               rather than a formula, except as set forth
               [in the two percent salary cap provision,
               N.J.S.A. 34:13A-16.7(b),] the treatment of
               the parties' proposals involves judgment and
               discretion and an arbitrator will rarely be
               able to demonstrate that an award is the
               only "correct" one.

               [New Milford, supra, P.E.R.C. No. 2012-53,
               38 N.J.P.E.R. ¶340, 2012 N.J. PERC LEXIS 18
               at 11.]




                                               12                                  A-3111-13T2
       Thus, except for failure to comply with the 2% salary cap

provision, we will not set aside an interest arbitration award

for failure to apply a specific methodology.                   However, NJLESA

does not suggest that the arbitrator's salary award exceeded the

2% salary cap.        Instead, it argues that the arbitrator should

have used its methodology and awarded a credit for the State's

savings from retirements and attrition in fiscal years 2012 and

2013.    NJLESA cites to no authority that required the arbitrator

or PERC to do so.       Rather, the relevant authority requires us to

defer to PERC's decision to affirm the arbitrator's exercise of

discretion, which was based on his special expertise in labor

relations.       See State v. Prof'l Ass'n of N.J. Dep't of Educ., 64

N.J.    231,   259    (1974).      Stated    differently,     the    deferential

standard    of    review    for   interest   arbitration      awards    does   not

permit us to substitute our judgment for PERC's judgment by

requiring the arbitrator to adopt NJLESA's methodology.

       In sum, contrary to NJLESA's argument, PERC's decision was

not arbitrary, capricious or unreasonable.              The decision fully

comported      with   New   Milford   and    its   progeny,    and     the   award

complied with the 2% salary cap provision.

       Affirmed.




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