Settlement criteria in public sector interest arbitration must be realistic but also acceptable to the parties. That balance may be difficult to achieve in the public sector, where salaries have lagged behind the private sector and there is significant debate over the inability and unwillingness to pay in the public sector. While the inequity between compensation packages for comparable private and public sector jobs can be remedied by arbitral award, it is suggested that the arbitrator recommend where, in the budget , can be found the necessary funds. The mediator/fact finder combination and its success in effecting a settlement are discussed.