No EIT for Tredyffrin Easttown School District in 2012!

Based on Ray Clarke’s notes below from the Finance Committee and the School Board meeting on the Earned Income Tax, sounds like it was quite a night!  First off, the big news to report — there will be no EIT voter referendum question on the April primary election ballot.  The same two people, Kevin Mahoney and Anne Crowley, favored taking the EIT to the voters as they voted similarly in October 2010.  Please read Ray’s comments and I would like to hear from others who attended the meeting last night.

A couple of fascinating school district meetings last night. Bottom Line: a motion to advise the townships of a possible intent to put an EIT on next year’s ballot was defeated 7:2 (Mahoney, Crowley).

My own take, but watch the action for yourselves….

The usual arguments were rehearsed by both Board members and audience, but the ones that I felt carried the day were that “now is not the time” and “we’re going to try really really hard to get Harrisburg to find another of your pockets to take the employee pensions from”. Dr Brake had a well-reasoned position that also made the point that the current political climate would not allow a thoughtful debate and the Board could avoid “roiling the community” further by not putting it to referendum now.

But that was not what kept this audience member awake. Just about every board member (campaigning or not) berated the political machine for the campaign tactics.

Dr Brake contrasted legitimate “contrast pieces” with “offensive” “making stuff up”. Then Republican operative Tom Colman launched a defense of the election tactics, and acknowledged that he had orchestrated a personal campaign against the Act 1 tax in 2007. That brought up Jenny Wessels to state that she had been miss-represented in the campaign and to commend the Board for their non-partisan approach. Then followed Debbie Bookstaber, in a long soliloquy berating her colleagues for their political statements.  Must see TV!

A few interesting audience comments:

Ed Sweeney: strongly against an EIT and wants the tax policy to attract the “right people” (high income earners?)

Melody Price: a thoughtful appeal for a balanced approach that considers all potential solutions.

Unknown audience member: “three words – Taxed Enough Already” (that was helpful!)

Barbara Morosse: There is more expense for the district to cut, including through teacher salary structure changes.

Notable board member comments:

Rich Brake: wants to completely recalibrate the teachers’ contract, do away with the matrix.

Kevin Mahoney: a) lest anyone thinks that companies are not interested in property taxes, consider the multi-million dollar GSK assessment appeals, b) maybe school districts should be freed up from rules that limit investment options to be able to earn returns like UPenn endowment’s 15%

Betsy Fadem: Don’t think we can use the Fund Balance to balance the budget because the School Board has committed it….

Which brings me to the evening’s opening act, the Finance Committee. Four things to remark:

[1] The minutes that Pattye had puzzled over were corrected: the administration proposals for the $1.3 million funding restoration were not authorized by the last Finance Committee but referred back to the Education Committee.

[2] A discussion of the Fund Balance commitments, which include $7.6 million of “vested employee services”, along of course with $15.4 million of “future retirement plan stabilization”. The accounting is much different to the GAAP I’m used to, but here’s my takeaway:

  • These amounts are based on arbitrary board policies
  • The PSERS commitment is based on the next five years, the employee services on almost but not quite the full lifetime liability
  • They are only commitments to the extent that it takes a Board vote to change them
  • Few if any other school districts have a commitment for vested employee services, and pay as they go.

So, “vested employee services” appears to be another way to sit on taxpayer money without fully revealing what the actual liability is, what the additions and payouts are from year-to-year, and where the funding for the liability comes from. And, in general, the PSERS liability is going straight up for the next 5 years, holds flat for the next 10, and then starts to decline. So would the policy mean that the district sequesters say $25 million of taxpayer money until that decline starts in 2025 or so?

I think that Mahoney committed the next Finance Committee to review the policy. At the very least it would be good to know exactly how all this works, and why it is that TE policies need to be different from other school districts.

[3] Groundwork laid for the ongoing property tax-to-the-max strategy: next year’s Act 1 Index estimated at 1.7%, Exceptions for PSERS and special education 1.7%, total property tax increase 3.4%, $2.9 million.

[4] The fourth thing was …… err ……. ooops …… oh yes:

The Finance Committee approved a contract with a marketing agency for selling promotional space on district property. The net annual revenue to the district is projected to be $160,000. The agency was the only one that responded to the district RFP. The contract states that the District has to approve all content, sponsors, advertisements; in the meeting it was stated that the Board approval is required.

If I think of any else, I’ll add it as a comment.

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48 Comments

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  1. The result is not surprising after the campaign. I am glad that the board confronted the “machine” on the dishonest campaign tactics. The TTRC should be held accountable for that. As far as I am concerned, they have lost all credibility and will not regain it absent a public retraction and apology. Regardless of the merits (or lack of merit) for an EIT, this is no way to conduct a community discussion on a serious issue. Also sets a very bad example for our kids. Is it any wonder so many of them grow up cynical and apathetic regarding politics?

    Extreme partisans think they are doing the right thing, but in their zeal they sometimes forget that it matters HOW you do the right thing. If those in a position of power believe that the ends justify the means, we are in serious trouble.

    [Reply]

    Version Reply:

    Very well said!!!!

    [Reply]

  2. In fact most board members said nothing about the recent campaign tactics. Only (Motel & Brake) raised frustrated concern but most said nothing. Bookstaber made reference only as a reaction to the previous two. Politics is not for the weak of heart. Enter at your own risk.

    No plan or discussion was made to try and change the law such that if an EIT is passed at a later time 100% would go to the school district. Currently townships would have the right to take up to 50% of EIT revenue. Seems like some homework could be done now to prepare to revisit this in the future. Townships don’t need this money for providing essential services.

    If laws can be changed to provide more investing options of the fund balance, more investment revenue would be available as a revenue source. The Board is limited by state mandate. This, among other things, needs to be changed at the structural level in Harrisburg.

    It’s time to come together and demand action in Harrisburg to fix this problem. EIT doesn’t scratch the surface of what lies ahead. I commend the Study Group and the Board for their thoughtful analysis of this issue.

    [Reply]

    Ray Clarke Reply:

    Other Board member comments I noted: Betsy Fadem regretted that that this had been made a partisan issue. Kevin Mahoney was in favor of free speech provided it is accurate.

    I’m just a little nervous about freeing up school districts to take risks with taxpayer money. Penn has a pretty stable endowment, manages it for income, and can take a long view and hire professionals to invest in Oregon timber, say. It is not in the charter of a School District to run a fund balance as an income source.

    We should not forget that Harrisburg (that’s the pocket with our state taxes in it) pays 50% of the pension liability as it is. And recent program cuts have been made not so much to fund PSERS, but to pay for teacher salaries and adjust to declining revenues. Obviously PSERS becomes a larger issue going forward.

    We’ve talked here about the long odds on this before, but should there not be a way to adjust down the multiplier just as easily as it was adjusted up? If it takes a change in the state constitution, maybe that should have a serious discussion? Mr Harris told us last night (not sure of his sources on this) that the alternative is an 11% state income tax.

    [Reply]

    Carla Williams Reply:

    To extend your thought, Mr. Clarke, I’m a LOT nervous with the school district investing our reserves. This is not an endowment, on which the TESD will simply withdraw earnings on the principal. These reserves (the principal) may need to be drawn to balance the budget – and when the reserves are needed might be exactly the wrong time from the standpoint of market timing and liquidity – by their nature, the District could not take the “long view”.

    Further, let’s not forget that one cause of the current PSERS issue is less than expected investment returns on the plan assets over the past ten years or so.

    [Reply]

  3. Now that the EIT seems to be dead for the foreseeable future, perhaps we can look at what is really facing the Board.

    For this entire election season, too many people made this seem like an “all or nothing” situation with the EIT — either we have it or we cut programs for kids. That, however, is far from the truth.

    The school district has multiple options to face the challenges ahead, many of which can be used in combination with the others.

    1) Control school district spending. While the “easy” savings have been taken, as discussed last Spring there are other cost reduction strategies in the Administration and non-instructional areas that won’t impact educational programs, for example custodial outsourcing. In addition, the school district continues to evaluate the existing educational program and its effectiveness, and has made changes/reductions in resources as a result (like FLES.) There is also, of couse, the upcoming teacher contract that offers massive opportunities for changing our cost structure.

    2) Increasing revenue – For example, in 2011-12 there was an increase in the student parking fee, a benefit that has no bearing on education, isn’t a right and should be provided for a fee. A student activity fee was another option and, as Pattye noted above, advertising.

    3) Using a balanced portion of the fund balance – this is $25 million+ in money, paid by TESD taxpayers and accumulated over the years, to be held for a “rainy day”.

    4) Tax increases up to the state established Index. Since 2006, the Index has ranged between 1.4% and 4.4%. Option two: raising taxes above the index by putting such an increase on the ballot and selling it to residents/taxpayers — in essence, asking for further support.

    5) Tax increases beyond the index based on “Act 25 exceptions” – the exceptions are Special Education, debt and pensions. If the school district needs to increase property taxes beyond the Index to meet its pension obligations and Special Education costs, the law permits them to do that.

    6) A referendum on the budget can be put to the voters for their approval to raise taxes beyond the index. In essence, the District would “sell” its proposal by presenting the educational program and its value to the community, and asking the voters for additional support.

    Again, a number of options that can be used alone or in combination to address the challenges we face.

    These options are, of course, just what is available to the TESD now and do not include any changes made by the state to address other issues that drive up costs for the school district.

    [Reply]

    Kevin Grewell Reply:

    Very thoughtful analysis. However, with respect to #6 – a voter referendum to raise taxes above the inflation index – I don’t see how that is ever going to pass in TE. We just witnessed one party’s willingness to do anything – say ANYTHING – to avoid taxes, and the other party capitulating to that pressure. With that kind of behavior, how in the world are we ever going to have a factual, rational, civil discussion about the value of the school district to the community? The TTRC will throw a hissy fit about even putting that on the ballot for people to decide for themselves. I despair . . . . . . .

    [Reply]

    Heather Reply:

    Mr. Coleman, the “operative” in Ray’s words, was the most eloquent spokesman of the night. He favored a tax that was shared by all, not a proposed EIT which would be absorbed by only 40% of township residents. Everyone benefits from having quality schools, not just those actively earning income. That was hardly a TRCC position of tax avoidance at any cost.

    I have both retied parents in the district as well as 2 school age children. I see both sides. Elementary schools no longer provide spelling books and 2 guidance counselors manage an entire middle school of adolescent issues. The situation is not good already. I have parents on a fixed income. There is no easy answer, but it seems like a local, long term solution will be tough on many families. We need to band together to put pressure on Harrisburg and stop polarizing the local community over lost elections. That was a very clear message last night and I hope it is better communicated as these meetings are highlighted to the community at large.

    [Reply]

    Township Reader Reply:

    Well said Heather. The reality is that truly long term residents still have a great deal of equity in their homes — and if they choose to stay in them, they will no doubt be forced to consider tapping that equity, which for a post-depression generation is very difficult to consider. After all, my own parents had a mortgage burning party, whereas someone on this site just today said they had bought a home in 2005 or 6 and just refinanced and took money out. So younger families are more liquid, but they are also more willing to tap their local investment (their home) to finance educations.
    I hear you about the cuts — very hard to fathom — and maybe FTW is right that we should have a budget that goes to the voters. That’s putting more trust in the voters than I have at this point — but our taxes lag comparable districts, and we would need approval from voters to even catch up.

    Ray Clarke Reply:

    What? Are you kidding?

    Did you listen to Dr Brake? To Kevin Mahoney?

    Where did those statistics come from? Only 40% residents have an earned income? Data provided to the TSG showed 19,082 nonzero 2008 income tax returns from a population of 39,482, including 10,021 children!

    What a shame that all the TSG data and analysis just continues to be ignored and misrepresented.

    What percentage of “residents” pay a property tax? In Tredyffrin, 16% or properties make up 50% of the assessed value.

    And where on earth did that $400 property tax = $1,600 EIT come from? Let’s assume 1% EIT, that implies an income of $160,000. A 1% EIT raises say $15 million. That would also be raised by a property tax increase of 3 mills. $400 divided by .003 equals an assessed value of $133,000. So the example is someone with an above median income living in a below median house. Come on!

    Ray Clarke Reply:

    It was noted that the Finance Committee discussed the available property tax increases for 2012/13 that total 3.4%. It seems that the rate increases can just about outpace the assessment declines, but reliance on a deflating tax base doesn’t seem like much of a way to run a railroad, or a school district.

    FTW seems to be mirroring the suggestions of the R committee people that spoke last night, So I wouldn’t be too sure about the TTRC hissy fit.

    Any why exactly would we put a property tax increase to a referendum, but not an EIT? Because Tom Colman doesn’t like it?

    [Reply]

    Independent Woman Reply:

    Bravo to the TESB members for decrying the questionable politics leading up to the recent elections.

    But does this mean that the newly elected Rep SB members will use this as a screen to also decry the mailers and then support increased property taxes after being elected on the promise of no new taxes? Hmmm.

    Tom Colman is on a personal campaign to stop the EIT? Is this the same guy who led the original tax study for the School District? Was he as unbiased then? Is he the same guy who led Tredyffrin Township’s budget group (BAWG) and recommended taking a $50K “bribe” from St. David’s in exchange for St. David’s not fulfilling their land development obligations? (For the record: No proof of any request from St. David’s was ever presented and Colman refused to identify his sources. But the “offer” was in the BAWG report.) Was this guy behind the Rep mailers and signs filled with lies? Sheesh!

    Okay, so it looks like property taxes are rising over 10% to support the townships and the schools this year. Let’s hear it for our Rep dominated SB and Township! Great news after the elections and all that campaign rhetoric of no new tax increases. Well played.

    [Reply]

    From the West Reply:

    We would put a property tax increase up to a vote b/c then residents will actually be voting on concrete dollars and cents as well as how they will be spent.

    The vague nature of the EIT — more money to be spent how? — versus “here is the budget and what it is for” are very different beasts.

    In fact, putting the actual budget on the ballot would force those who support and those who oppose to talk about real facts: we need more for X or we don’t need more to spend on Y. If they don’t, they will be bludgeoned by the facts that disprove their argument.

    This is not unheard of — in New Jersey they vote on school budgets every year and people vote “Yes” to property tax increases all the time, and sometimes say no if they believe it is too big or unnecessary.

    Also, on an entirely different note: I did not see on one website or in one campaign mailer where the Dems or the Reps said “no tax increases.” None. Any claim you make to the contrary is partisan drivel.

    [Reply]

    Independent Woman Reply:

    FTW
    See my comments in response to Township Reader with quotes from Republican (SB) mailers indicating ‘no tax increases’. I think they supplied the partisan drivel.

    My school property taxes have increased more than 50% in the past 12 years and I had no opportunity to vote for or against this increase. I also had no vote over how the additional money was spent. (Altho the SB always considers resident input.)

    I agree that the uncertainty with an EIT would be whether the Townships claim 50%. The focus should be on getting binding agreements from the Townships to forgo this right before any referendum goes to the voters to decide.

    So, you (who exactly are ‘we’?) are planning on putting a large property tax increase on the ballot? Why wasn’t this discussed during the election? You just scared voters about an EIT without giving them the facts or explaining that your alternative is a large property tax increase?

    We need an open and honest discussion of all the options available to meet TESD’s financial challenges. I don’t believe the electorate will pass any serious tax increases without understanding the needs and options. The TSG’s mission was to examine the pro’s and con’s of an EIT in a vacuum. The next logical step is to compare/contrast the EIT with other options. Educate the voters and let them decide on cuts, large property tax increases, EIT, etc.. or a mix.
    The SB and Admin always welcome input on how the money should be spent. Residents who care attend the committee meetings and get involved.

    Mad Anthony Reply:

    Dont know where IW lives, but my prop taxes from 2011 all in are “only” 35% higher than what I paid in 2001. That includes school and township and county. Nobody likes to pay higher taxes, but the schools in Tredyffrin/Easttown SD are a bargain in my humble opinion. Have 3 grown children who went through Conestoga, none left in schools. But if prop tax for schools went on the ballot, I would probably vote yes. There is room for making some economies I guess but I dont see the school board going hogwild with expenditures. I recall the decision not to build a pool when conestoga was expanded, clearly not what you would call suburban largesse there. Can understand retirees on fixed income who have issues with these 4 pct annual increases having a different perspective.

    Independent Woman Reply:

    MA,
    I agree — TESD is a bargain – we get great value for relatively low property taxes and less per student spending. FTW suggested putting a school property tax increase to vote and that this was somehow less vague than putting an EIT on the ballot. I was just pointing out to FTW that our school property taxes have increased without a vote and have inched up every year. Most people seem unaware of what they have been and are paying.

    The numbers I used were supplied to the TSG and used in their presentation. TE School tax millage is actually 55% higher in 2011 than 2000. (18.6474 vs. 12.03) Easttown’s millage is 86.6% higher, Tredyffrin’s millage is 18.6% higher, and Chester County’s is 31.55% higher. Obviously each % increase is based on a different millage so the actual $’s paid is greater for an increase in school taxes vs. an increase in township taxes. (Beware, the presentation’s 12 year total is additive vs. cumulative impact.)

    Before any referendum for a significant tax increase – either property tax (as suggested by FTW) or EIT we must be honest about the alternatives, what the ‘non-votable’ tax increases have been and if the new taxes would halt the annual incremental creep or not.

    This just shows how much discussion/education is necessary before anything gets put on a ballot. The TSG was beginning the process of gathering the facts and education – not to push an EIT on the residents.

  4. The only tax people opposed was an EIT, there was never a claim of no tax increases.

    The tax BASE is shrinking. Every home that gets reassessed produces a reduction in the income that the current millage produces. There are NO massive gains coming from the next contract — regardless of what is negotiated — because you cannot take away or reduce compensation in PA by constitution. Everyone wants the SB to get tough, but the first mention of a strike and every working parent will realize “who will watch my kids” is a question that has a cost.

    TE can decry the pension problem all they want, but every single contracted person that works for TESD is a beneficiary of that system — and the state sets the rules. The PSERS system is run by a board and they are tasked with producing income to fund pensions — and the rate of contribution is to ensure that stays solvent.

    I agree with Ray and not Kevin Mahoney that the district should be able to invest differently. Mr. Mahoney made it sound like it was a windfall — but 15% on the fund balance would be less than $5M, and that “revenue” would come with some significant risk. TE is NOT too big to fail.

    The fear that we cannot go back to larger class sizes and reduce other programs is based on a belief that the economy will rebound. I’m not a cynic typically, but I don’t believe for a minute that this district understands just how long a “recovery” might take to materialize. Kevin says no referendum to raise taxes would succeed — and I agree — but if you cannot get public support for the costs of running the district we expect, then you will have to accept that we only have fixed opportunities for revenue — and spend accordingly.

    [Reply]

    Independent Woman Reply:

    The Rep mailers I received clearly suggest that the R’s do not support increasing taxes and that the Dem’s do. The Rep mailers state that: “They (Dem candidates) believe that more money is the answer, instead of spending what we have wisely.” These mailers also said: “Tredyffrin’s Republican Team knows we can build on T/E School District’s outstanding reputation and world-class education not by spending more, but by spending what we have more wisely..” This clearly suggests no tax increases.

    Oh silly me, I didn’t realize that the Rep’s define “what we have” to include continuously increasing property taxes.

    I’m okay with an educated person deciding against an EIT. But those scare tactics and closing off discussion of any of our options was totally irresponsible. Also, stating that everyone will pay more with an EIT is a blatant lie. Retirees, the unemployed, and those already paying an EIT (about 26% of those with earnings) would not pay more.

    The TESD faces challenging times and we must honestly investigate all opportunities for balancing the budget – cuts, advertising, student fees, taxes (EIT and property), demanding changes from Harrisburg, etc… and conduct an honest education of the residents.

    [Reply]

  5. Ray,

    You said, “t was noted that the Finance Committee discussed the available property tax increases for 2012/13 that total 3.4%. It seems that the rate increases can just about outpace the assessment declines, but reliance on a deflating tax base doesn’t seem like much of a way to run a railroad, or a school district.”
    .
    I’m looking at the change in assessed property values from the fiscal years 2010-11 to 2011-12. The assessment base changed from $4.877B to $4.874B or a decrease of less than 0.1%.
    .
    Why do you say, “the rate increases can just about outpace the assessment declines”? It looks like a 3.4% millage increase will bring in about a 3.4% revenue increase. Did the assessment base decrease precipitously this year?

    [Reply]

    Ray Clarke Reply:

    The 2009/10 assessed value was $4.922 bn, so there are now two consecutive years of decline. I don’t know about 2012/13, but the projection model assumes that the assessment is flat. However, from what I see of the number of residential properties for sale and the slow rate of those sales, and the reports we hear of successful commercial appeals in Tredyffrin and in neighboring districts, I’m not too hopeful that we can avoid a third straight year of decline.

    [Reply]

  6. I just finished watching the meeting on TV. Great dialogue and rationale from the school board members. They made the right call on the EIT. It is an unfair tax that would put a lot more financial pressure on working families with no promise of property tax relief. The state pension crisis is not just affecting T/E – we need Harrisburg to fix this statewide problem that they created, not tax our working families to fix it. And we need a fair, yet economically realistic, collective bargaining agreement next year.

    [Reply]

  7. The sad news on all this:

    unless the pension issue is repealed, we will all still pay an EIT, it will just be a higher state income tax.

    Better get your letter to Harrisburg!

    [Reply]

  8. The Unions and Community must work together to pressure Harrisburg on the Pension issue. It is in our children’s best interest to resolve this issue if we want to protect the excellence of our schools.

    [Reply]

  9. What’s interesting here is that the past couple of days have flushed the Rs and the real story out into the open.

    They are willing to mis-state and distort the facts to suppress informed discussion. The objective is to maintain reliance on a regressive tax system that favors the highest income earners.

    I’m ready to move on to Tredyffrin budget shenanigans.

    (But PS: Corporations are people too! If you [tax] them do they not bleed? If you wrong them, shall they not revenge?)

    [Reply]

  10. I’m surprised the people are still pointing to the pension issue (PSERS) and unfunded mandates (special education) as the cause of TE’s budget problems. The Rev. says we “must work together to pressure Harrisburg on the Pension issue.” TE Parent says, “we need Harrisburg to fix this statewide problem that they created.”
    .
    The PSERS pension issue is a minor problem ($1M) and one that has an easy solution. The district’s contribution rate is going from about 8% of salaries to 12% next year, but remember that the state pays half. Also, of importance – The Act 1 exception allows the district to raise taxes above the Index to fully cover, dollar for dollar, the $1M PSERS increase.
    .
    The district’s special education expenditures (the biggest unfunded mandate) is a minor problem at $1M and has an easy solution. The Act 1 exception allows the district to raise taxes above the Index to fully cover, dollar for dollar, the $1M special education increase.
    .
    So, what is the cause of the budget problem? Why are painful cuts being made? It’s the union contract that promises 6% increases each year. You just can’t balance the budget with 6% salary increases when the Index is in the 1% to 2% range (1.7% next year).

    [Reply]

    Carla Williams Reply:

    Very well said, Mr. Knauss.

    Reiterates 5) in From the West’s post on 11/15/11 at 4:04pm, above.

    [Reply]

    Independent Woman Reply:

    Mr. Knaus,
    You are right in pointing out the cost impacts of the union contracts. Everyone is talking about challenging negotiations – we will see what actually occurs. Will the unions be reasonable, will they be flexible, will the parents accept a strike, how much more will the taxpayers pay???

    The financial impact of these negotiations wasn’t even included in the financial models since they are unknown. But any increase in union costs will have to be met with increased taxes – or program cuts.

    The PSERS issue will soon be significant – $13.3 M total ($6.6M net) by 2015. Add on the decline in the revenue base
    and TESD faces challenges beyond its control. I applaud the TESB for inviting discussion and examining all options to deal with this – before we hit the wall.

    [Reply]

    TE Parent Reply:

    I do agree with you Keith. The school district can no longer afford the salary increases built into the union contract.

    [Reply]

    Kevin Grewell Reply:

    Keith,

    Not sure where you get 6%. Here is some data which was posted on Pete Motel’s web site, regarding teacher contracts:

    Cost of Two Teacher’s contracts
    Actual Expenditures:

    2004 -05 $29,208,750 FTEs 491.4
    2005-06 $29,295,965 $87,215 increase FTE 489.5
    2006-07 $30,766,203 $1,470,238 incr. FTE 503.4
    2007-08 $31,393,023 $626,820 incr. FTE 499.9
    2008-09 $33,208,779 $1,815,756 incr. FTE 496
    2009-10 $33,712,486 $503,707 incr. FTE 486.4
    2010-11 $34,252,665 $540,197 incr. FTE 457.2
    2011-12 $36,010,000 $1,757,335 incr. FTE 436.3

    This chart shows the cahnge in total teacher’s salaries over the last two contracts. These ran from 2004 to 2008 and from 2008 to 20012.

    2004 – 2008 contract:
    Total actual increase over 4 years:
    $2,185,000
    This is 7.4% over 4 years
    or 1.85% per year

    2008 to 20012 contract:
    Total actual increase over 4 years:
    $4,617,000
    This is 14.7% over 4 years
    or 3.6% per year

    There is a lot of other interesting information posted there, such as taxs vs. inflation, per student spending and debt vs. other districts, etc. (to put all the fuss into context, in 1970 the averat TE home pair $814 in school tax. Adjusted for inflation in 2008-9, that equals $4,517. In 2008-9 the average TE home paid $4,331 in school tax)

    [Reply]

    Keith Knauss Reply:

    Hi Kevin,
    .
    Thanks for the detailed data. I had not known of Motel’s web site. Your 3.6% number for the cost increase due to the TEEA contract is problematic. You’ve calculated the total teacher salary burden by multiplying two variables:
    – the cost of the contract in the form of average teacher salary
    – the number of FTEs (full time equivalent employees)
    .
    Please realize your calculation could be a zero percent increase or even a decease if the board fired more teachers.
    .
    Let’s do some math to determine the cost of the contract by computing the average teacher salary each year.
    .
    Year………. Cost…………..FTE……… Avg Salary…..%increase
    2004-05 $29,208,750 491.4 $59,439.87
    2005-06 $29,295,965 489.5 $59,848.75 0.7%
    2006-07 $30,766,203 503.4 $61,116.81 2.1%
    2007-08 $31,393,023 499.9 $62,798.61 2.8%
    2008-09 $33,208,779 496.0 $66,953.18 6.6%
    2009-10 $33,712,486 486.4 $69,310.21 3.5%
    2010-11 $34,252,665 457.2 $74,918.34 8.1%
    2011-12 $36,010,000 436.3 $82,534.95 10.2%

    My 6% number was conservative. The cost of the contract should really be in the 8% to 10% range.
    .
    It’s interesting to note that the school board was forced to fire TEEA employees each year to get the total salary burden down to a barely [un]manageable 3.6% figure because the average teacher was getting an increase of about 6%. As further proof, the finance committee listed the average teacher salary in 2009-10 as $74.5K and $78.5K in 2010-11. (5.4%)
    .
    page 16 http://www.tesd.net/cms/lib/PA01001259/Centricity/Domain/1/BdgtWkshpPres_3_28_11.pdf
    .
    .

    [Reply]

    Ray Clarke Reply:

    On no,sorry, I said I was done here, but this is important in the light of the upcoming contract:

    2007/8 cost per FTE: $62,799
    2011/12 cost per FTE: $82,535

    4 year increase: 31.4%
    Compound annual increase: 7.1%

    Lots of things going on here of course: increases in the matrix itself, people moving down and across the matrix, retirements, new employees, etc.

    This was important data to post. Thanks.

    [Reply]

    Kevin Grewell Reply:

    Ray and Keith,

    Your examples are not relevant, and distort the true cost of the 2008-12 contract. Ray, you make it look like a 31% increase over 4 years, when in fact, as I said, it is 14.7% over four years, or an average of 3.6% per year.
    What the taxpayers are paying for is the total salary and the annual year over year increase in total salary. I gave ACTUAL NUMBERS FOT TOTAL PAID. It is 3.6% per year. Anyone reading this can do the math, and the numbers can be verified by contacting the TESD and asking for this information.

    What you and Keith have done is divide total salary paid by number of FTEs to show that the percentage increase year to year is much higher. Of course dividing the total by a smaller number of FTEs results in a larger %. But that is not a valid analysis. By your logic, if we could “fire” all but one super teacher (who could teach all subjects and handle unlimited class size) his or her compensation would jump to over 30 million in one year – a percentage increase of bubba-zillion percent! Does that mean the taxpayers are paying bubba-zillion percent more than last year? No. The actual numbers I gave answer that question – they are paying 3.6% more year over year. The lucky teacher made one helluva matrix jump, but the taxpayers are still paying the total salray agreed to in the contract.

    And Keith – you make it sound like the district “fires” people to artificially lower the percieved compensation increase. That is not accurate – the district cannot legally fire teachers – at least not for economic reasons. The reduction in FTEs reflects attrition such as retirement.

    Ray Clarke Reply:

    Keith, I think that you are out on a very fragile limb with your perspective. The reason that the district is only paying 15% more is that they have 13% fewer teachers with which to teach more or less the same number of students. It’s not our logic that leads us to the super teacher, but yours!

    One example: If the average teacher compensation were not up 7% a year, then we could have taken the teachers working that ineffective FLES program and turned it into a really worthwhile Foreign Language program that many on CM have been advocating.

    The contract does not specify total compensation, rather the price to be paid for wages and benefits, for quantities (numbers of teachers at each level of the matrix, amount of healthcare utilized) over which there is limited control. That’s not to say that it wouldn’t be a good idea (albeit a pipedream) to identify the amount that taxpayers can afford, and set that cap and define performance measures that determine how it is allocated to individuals. Then allow the union to pick the split between wages and benefits.

    Keith Knauss Reply:

    Ray,
    .
    May I assume you were addressing your comments to Kevin in your message above rather than Keith?

    Ray Clarke Reply:

    Yes, Keith, Sorry. Trying to get other stuff done and these alert emails keep popping up and I don’t focus well on either!

    Kevin Grewell Reply:

    Ray,

    See my comment of Nov. 17th 9:06 (below) (a reply to Keith and also to you – I don’t know if you saw it).

    I was making ammends for the tone of my last comment to you.

  11. The more experienced and educated a teacher, the more expensive the teacher. Each year the exact same staff costs more money. I challenge this school board to really dig into the legal claim that you cannot reduce prospective compensation. In other words, each contract builds on the previous contract (See: NBA). Because status quo was labor peace, each contract has continued to take the previous contract and build on it.
    This need to redo the compensation is obvious — but maybe not possible. You lawyers out there — please explain to us the state constitutional protections on compensation for labor.
    Thanks.

    [Reply]

  12. Hi Kevin,

    Your point about my misuse of the word “fire” is correct. Reductions, I believe were made, as you say, by attrition.
    .
    However, your example of “one super teacher” is incorrect. If the district were to fire all but one super teacher (let’s assume the super teacher is an average paid teacher) that teacher’s salary increase would be exactly 5.4%; not “bubba-zillion”.
    .
    I agree that your total salary numbers are accurate and the taxpayers are paying a total teacher salary increase of 3.6% per year over the last 4 years. But this was only possible because the district had to make unwanted cuts to the teacher workforce to the tune of 3.2% per year (63 teachers) to compensate for the average increase in salaries of 7.9%.

    [Reply]

    Kevin Grewell Reply:

    Keith – and Ray –

    I wanted to reach out to you two to apologize for the tone of my last comment. I don’t ordinarily resort to lampoon or sarcasm, and you guys certainly did not deserve that. My original point – and the reason I got into the contract issue to begin with – was that I do not believe it is fair to blame the last contract for our troubles. I can’t say too much about how it came to pass since I was off the board when it was negotiated. Say what you will about the contract (and I’m sure there are many things to criticize) it was sustainable when entered into and we would not be in this mess but for the bad economy. Also, I do thnk PSERS is the major budget buster. I hope that people can focus on pressuring Harrisburg for some relief instead of blaming the board. True, the next contract will have to be more advantageous to the taxpayers and less so for the teachers, but we will never solve the emtire problem on the backs of the teachers, and we will still need relief from PSERS to survive this crisis without deep cuts.

    As you can probably tell, I am very frustrated with the situation. We already had a bad economy and an unhelpful legislature, now we add a local political machine bent on sending a torpedo into the guts of any factual discussion of our options.

    I am not endorsing the EIT – I have may own concerns about it and I may very well vote against it – but before I make my final decision I would like to have all of the facts developed – including the consequences of NOT having an EIT. But I am afraid that the climate for such a thoughtful public debate has been seriously compromised. Hence my frustration. Again, sorry I took that out on you two.

    Regards,

    Kevin

    [Reply]

    Keith Knauss Reply:

    Hi Kevin,

    No offense was taken.
    .
    We’ll agree to disagree on whether the PSERS situation or the contract situation is the major budget problem for the TE community.
    .
    You opined, “Say what you will about the contract …. it was sustainable when entered into and we would not be in this mess but for the bad economy.”
    .
    I heard my representative use the same excuse when explaining his PSERS vote in 2001!! I hope our current elected officials have memory that goes back further than 5 years so they can remember that our economy has dips as well as peaks.

    [Reply]

    Kevin Grewell Reply:

    Thanks.

    Ray Clarke Reply:

    Kevin: no problem at all on my end, either. Nothing wrong with your tone, especially in the context of other blog commentary here and elsewhere!

    The important thing is that we end up seeing the complete picture, and helping the community and our representatives draw the right conclusions.

    I’ve thought for a long time that all TESD constituencies would be much better off long term had the unions shown meaningful flexibility early on in the four year contract. Now there’s going to be quite a dislocation as we adjust in one step to what the community can afford. Let’s hope that all parties, not just the elected officials that Keith mentions, are prepared to entertain a new kind of contract.

    The unions have been completely happy with a lower multiplier for new employees, but are quite silent on dealing with the windfall for current employees. At the very least it can be argued that they are valuing future compensation more than current (since there is only so much wealth that the community can transfer to its teachers), so our representatives have no reason to move any higher than the current baseline.

    [Reply]

    Township Reader Reply:

    Ray
    That’s the mystery — there are continuing claims in negotiations that the current salary schedule cannot be reduced. Maybe you have the energy or resources to research that — there have always been lower multipliers at the beginning but when you do not add steps, and you cannot reduce compensation, the increments get bigger every year becuase the “final step” gets higher….and the distance from the start to the finish gets bigger. Remember that the PSEA’s goal is for a 10 step schedule — from start to Max in 10 years. That’s their negotiating goal. Read their website for their explanations about the process. I don’t believe a “restart” is possible — and am not sure it’s legal.

  13. Ray
    You hit on a very important distinction about costs in your comment — the uncontrollable nature of benefits because of the way we contract for them. The approach has been to chase a co-pay, but that does nothing to control costs. Until our staff is involved with the cost of benefits, all we ever can do is try to get them to pay more — but more of what? They negotiate the details of a plan, and then the district must purchase that plan on their behalf. We need to get to the time where each employee only gets a specific amount TOWARDS their benefit, and they must choose the plan that for them is most cost effective. The US Government has great health care benefits, but the way the employees sign up is quite different from our approach. They are told what each plan will cost them — period. They have no clue how much the government puts towards it. The government subsidizes some portion — a fixed amount. I watched my son determine to spend as little as possible for a major deductible — money in his pocket — because he bought INSURANCE — he didn’t get free health care.

    [Reply]

  14. Township. BINGO! Insurance is for catastrophic loss prevention. First dollar coverage is expensive and unnecessary. High deductible less expensive major medical plans are the way to go, especially if there are HSA’s that help defray the cost of some or all of the deductible. But this goes to the heart of our nations health care debate. Freer markets, etc, What exactly does my doctor’s office visit cost? I pay 20 bucks copay (no deductible for that in my plan) , you pay 30, Dr accepts a contracted balance from insurance company. Some subsidizing others, etc. But I reallize I am getting off on a tangent. “Give” a certain amount as a benefit to buy insurance from a menu of plans.. Good idea.

    [Reply]

    Township Reader Reply:

    Teachers won’t even touch that idea — that’s why it’s not negotiations. It’s the board bidding against itself to see what they will take. Look at the NBA — does these guys have the first clue how many people work in arenas that are going without income while they fight to get more than a 51% split. It’s not give and take — it’s take until they give from the Union side. And teachers haven’t the first CLUE what the real world is about, which is why they negotiate by minute (7:35 minute day, grieving teaching 6 periods which is 300 minutes out of that 455 minutes — want to go back to 250 minutes).

    [Reply]

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