School districts across the state are scrambling to plug projected budget gaps stemming from deep cuts in state funding and TESD is no different. The use of “shared sacrifice” has become a common and oft-repeated phrase in today’s political discourse. As school district budget deadlines loom, we are see that teachers (fairly or unfairly) are finding themselves of in the limelight on this topic. In my view, we do need to boldly address our deficit crisis, but we need to do it in a way that is fair.
Last night’s TESD Finance Committee meeting had a very different tone than the last school board meeting. As the school board and administration discussed the few remaining available budget strategies, I had a sense that the school board was digging in its heels, expecting a ‘pay increase waiver’ versus a ‘salary freeze’, which the teachers union previously offered. Although the T/E teachers union (TEEA) states the value of their salary freeze offer is $2.5 million, the school board counters that the freeze does nothing more than extend the teacher contract by a year and ultimately costs the district more money. Encouraging the teachers union in the path of shared sacrifice, the school board prefers the teachers consider a pay increase waiver which, if I understand correctly, requires opening their current contract.
Credit needs to be extended to TEEA for their offer of a salary freeze to the school district. For some teachers, they believe that by offering a salary freeze, they are sharing the sacrifice. Let’s remember that Gov. Corbett suggested that teacher unions offer a salary freeze to their school districts to help with budget deficits. (I don’t recall his using the words, ‘pay increase waiver’.) Yes, there is a budget crisis in school districts across the state; but I admit that I have difficulty with the breaking of a contract, which was negotiated in good faith by the teachers. If contracts mean nothing then should we all go home and break our car purchase contract, our mortgage contract, and every other contract we signed in good faith where we expect both parties to be honorable. What about ‘negotiating’ after the contract is fulfilled . . . ?
Looking at discussion from the other side, the school board is struggling with the remaining budget shortfall. So . . . what do they do? In their minds, they believe that the teachers should help with a ‘pay increase waiver’ (shared sacrifice) which according to their calculations could net $3 million. At the meeting I had a sense that the school board is listening to the public and are interested in keeping the process transparent. They offered that they have heard from TENIG, the non-instructional union, and are reviewing the offer. Keeping the community ‘in the loop’ will prove a win-win for the school board, the teachers, and ultimately the taxpayers.
Setting aside the timeline debate of the April 14th TEEA teacher union offer letter of a salary freeze, and the rejection of the offer by the school board, last night the Finance Committee presented their side of the argument in favor of a pay increase waiver. According to their analysis, the school district budget projection for 2011-12 is as follows:
- Budget Projection as of May 2, 2011: $3,170,509
- Budget Projection (TEEA and TENIG Pay Increase Waiver: $170,510
- Budget Projection (TEEA Proposal Letter): $946,122
- Budget Projection (Custodial Outsourcing): $2,370,438
Following the Finance Meeting, I asked Pete DePiano, president of the teachers union for his thoughts. Here is his response,
“The 450+ members of the Tredyffrin/Easttown Education Association will stay true to their integrity in attempting to come up with a final cost savings offer for the district’s consideration.”
DePiano’s response tells us that the teachers are continuing to work on possible solutions to help with the budget crisis. Open and honest communication between the teachers union and the school board will aid greatly in the ongoing budget discussions. I want to believe that both sides can work together for the sake of the kids and the community.
Ray Clarke kindly offers his comments on the Finance Committee meeting below:
- The TEEA proposal is judged to be worse on a 5-year time horizon than the status quo, because the projected $2.05 million of savings in 2011/12 is offset by salaries in the following years that are $0.5 million higher than they would otherwise be, due to two years of step movement rather than one. The higher salaries also trigger proportionate benefit cost increases, but there appear to be no fundamental differences between benefit programs, premium contributions, etc. in either scenario.
- The salary “waiver” has the greatest impact on the district because the saving occurs every year. Although the model was presented without tax increases, it looks to me that, under this scenario, very modest increases in taxes (property or EIT) and gradual use of the “PSERS stabilization” fund balance could allow the district to fund the retirement fund beyond the five-year time horizon.
- The Board did appeal again to the community to make their voice heard with legislators regarding the PSERS problem, and our frequent academic economist commenter also reminded us once again of the fundamentally bankrupt public pension plans. A couple of data points: the recent “fix” assumes an 8% investment return, and provides retiring career teachers with my estimate of an equivalent $1.25 million annuity. Just to keep this simple, here are the options:
1. Reduce the liability by undoing the multiplier increase for all, not just new hires (the decrease needs a change in the state constitution, unlike the increase…)
2. Increase taxes:
a) statewide (Marcellus gas, personal income, corporate income, etc.), or
b) locally (property, income)
3. Redirect spending from somewhere else. Like where? Pick your poison! What would Dinniman and Kampf propose?
- There was a very unsatisfying discussion of a possible Activity Fee, punting it along to next week’s board meeting. Needless complications about different bases for charging. The bottom line: salaries and transportation for (non-mandated) extra-curricular activities cost the district $1.14 million a year. 80-85% of students participate in at least one. Nobody is making any argument that these activities are not totally worthwhile. A universal charge could be simply administered. So the issue is straightforward: do these continue to be funded by all taxpayers, or do families with high school and maybe middle school students bear a little more of the cost? Hopefully the full Board can have a discussion along these lines next week.
- The timeline for an EIT study seems very compressed. The Board is considering appointing a study group; they need to get on that right away. If an EIT makes enough sense to put to a referendum, there’s a November 16th deadline for notifying the townships of that intent.