With $32 Million in Fund Balance, How Can TESD Consider Demotion?

Here’s the question for the day:

Why is it that Tredyffrin Easttown School District has the largest fund balance in the state ($32 million) and is the only school district giving serious discussion to ‘demotion of professional staff’ to fund the $1.5 million budget deficit?

There are those that suggest that the idea of demotion is not a serious consideration but simply a contract-negotiating tactic to use against the teachers union.  If I understand the tactic, the school district keeps the teacher demotion idea afloat in hopes that the teachers union (TEEA) will offer reduction in health care benefits in exchange for no demotion.  Looking at the calendar, here is what I do not understand — The School Board has to vote on the 2012-13 budget at the June 11th school board meeting but … the teachers’ contract does not expire until June 30th.  Presumably, based on the calendar, our school board members will need to make the demotion decision prior to knowing the contents of TEEA’s contract offer.

I don’t claim to know what ‘magic’ amount our school district should have in reserve, but it would appear that with $32 million of taxpayer dollars, the District could afford to use $1.5 million to fund the budget gap.  As I said in a comment on Community Matters, Haverford School District voted to use $1.3 million from their fund balance to fund next year’s budget gap – but unlike TESD, they only had $2.6 million on which to draw!  Their school board decided to take 50 percent of their reserves to fund the budget shortfall.  The Haverford School Board choose this approach to funding the gap versus demotion of teachers.  I know, I know, some will say that TESD is being fiscally responsible by preserving the $32 million fund balance, and yes, I realize that the District’s pension obligation grows significantly in the years to come, but still … ?

Regardless of motives, is the ‘demotion talk’ from the School Board, the right direction the discussion should be going? According to the agenda for Monday’s Finance Committee, the two big ticket items that still remain as budget strategies are $640K for demotion of professional staff for economic reasons and $345K for increasing class size one at each level.  My guess is that there will be a decision at this meeting whether or not to recommend these strategies to the entire School Board.

The Finance Committee agenda defines demotion as a “reassignment to a position which has less authority, prestige or salary.” (PA School Code).  “Demotions are permitted by the School Code for economic necessity.  Seniority provisions do not apply to demotions for economic necessity.  The right to demote employees is an inherent management right and does not need to be bargained.  The TEEA contract is silent on demotion.”  Under ‘considerations’ of demotion, the agenda lists “retention of existing trained staff could become more challenging, and (2) “Introduces a competitive disadvantage to the recruitment and hiring process.”

This afternoon, I received the latest communication from TEEA – titled, “Demotions Will Harm T/E Students, Community; Residents Asked To Share Voice”.  Although some reading Community Matters may suggest that demotion of professional staff is nothing more than a negotiating ploy on the part of the union, it certainly appears that the teachers are taking  the demotion strategy seriously, stating in their latest press release “ … any minimal and short-term economic benefits produced will be offset by greater and more serious long-term costs. If the Board decides to follow through on teacher demotions, we ask—what is the true price? How will these demotions affect our students, our schools, and the T/E community?…”  TEEA echoes my question in regards to other school districts, declaring that “… T/E is currently the only district in the Main Line area considering teacher demotion as a cost-effective strategy…”  I have spoken with several District teachers and they are concerned and consider ‘demotion’ a serious District strategy, not just a negotiating ploy.  It will be very curious to see if the Finance Committee is met with a similar audience of teachers, parents, students, taxpayers were at the last school board meeting.

For the record, I absolutely believe that members of TEEA understand that their health care benefits cannot remain at the same level and, further I think that their contract offer will be reflective of that understanding. On the topic of health care benefits, I do have a question that maybe someone can answer.  The administration is not part of TEEA but I have never heard their health care benefits discussed.  Do they have the same insurance plan as the teachers?  And if so, will the administrators health care benefits change when presumably, the teacher’s plan changes?  Anyone know the answer?

I found the following comment for Community Matters apropos to this post.   Rather than see the comment, I think the commenter’s sentiments are reflective of what many in the community are feeling:

From bluedog1776:

I would rather procrastinate with using a small amount of reserve money than decimate our teaching staff.

I would rather use a small amount of reserve fund money than lay off our most experienced teachers.

I would rather use the taxpayer’s money: THE RESERVE FUND, than ask our non-profits to chip in.

I would rather use some of the reserve fund than cavalierly dismiss employees who have worked for the District for many, many years.

I would rather do what Haverford School District is doing or what our School District has done in the past, which is to use some of the Reserve Fund, some tax increases, and some employee give backs, than make a rash ridiculous decision that is really about destroying the teacher’s union than about great fiscal principles.

The same five people on this blog hash over the same tired arguments over and over again. Would love to hear from more people. But I guess they are reluctant to contribute because they just don’t have the same level of experience/knowledge/brilliance as you.

The problem with many of the postings on this blog is the groupthink that persists. It would be interesting to have a real debate with real analysis.

The District has done a heckuva job (great job Sultanik PR firm) convincing most of the public that they don’t have a nickel in the bank. If we had a real newspaper asking real questions; if we had more community members come out and ask more questions; the truth would come out.

It is an absolutely unbelievable that a District with $32 million in the bank has convinced the public that we are Chester Upland. Since when? It is demeaning to this community that the powers that be have made TE out to be broke and near bankruptcy. Since when?

The board has done a good job cutting expenses, and the teachers need to pay more for health care; but we should NOT destroy this school district because we have a few people who want to take an ideological stand on not using the fund balance.

I don’t want my property values to plummet because TE schools go down the tubes as we cut, cut, cut, cut, cut, cut.

I watched the school board meeting on TV and saw the woman at the end who revealed that it is not that the school district CAN’T use the fund balance; they have CHOSEN not to use the fund balance by passing a policy to put it in a lock box.

UNLOCK THE BOX! Stop this nonsense! Stop attacking the teachers! Work with the teachers!

I agree with Pattye. I elected YOU school board members, to represent me. DO YOUR JOB! Get to the table. Settle this contract. Stop making the teachers the enemy.

54 Comments

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  1. Question for Andrea,

    Are you actually saying that the board is using the demotion strategy as a threat? If so, what does that convey?

    Yes Pattye, the teachers are really concerned because its been beaten into them that this board can do anything they want in regards to demotion and it’s obvious they mean business by defining demotions for May 7 mtg.

    But why is this board so firm in their belief that this strategy can occur without regards to seniority when the firm they hired to represent them for negotiations indicated on their website that current School Code law mandates a last in – first out process of staff reduction? I can only imagine the future litigation costs for this district . . . Cha Ching$$

    See: http://educationlaw.foxrothschild.com/tags/furlough/

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  2. wow what a pot of gold for the teachers.. Business as usual, unless there are structural problems that cannot be remedied nor should be by this (wagging tongue) windfall.

    Got to be kidding me.

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  3. Why does it seem like the discussions are just going around in circles.

    Lots of talk, not real solutions. No real compromise.

    Someone can confirm, but I do not I believe that all of the fund balance tax payer money. I think it contains bonds.

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  4. Monie,
    .
    The article you use was testimony on a bill relating to furloughs for economic reasons and focused mostly on furloughs. There are two district methods of reducing the number of employees – 1) furloughs and 2) demotions. The use of demotions was not addressed in detail in Fitzgerald’s testimony, but case law has determined that seniority is not a factor when using demotions.
    .
    Furloughs are covered under Section 1124 of the Public School Code.
    .
    Section 1151 of the School Code provides for the demotion of professional employees and makes no mention of seniority.
    .
    See: http://www.bucknell.edu/x9388.xml

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  5. KKnauss,

    Case law equates to higher litigation expenses down the pike. Fitzgerald’s March 2011 testimony reflected that, furlough, suspension and demotion = staff reduction. And, current law for staff reduction according to article, mandates a last in–first out provision.

    Can you site a more recent case than Katruska (2001)? The school district in this case demoted Katruska from principal to teacher because of unsatisfactory performance. Do administrators even have seniority? Imagine sending an unsatisfactory administrator back to the rank and file to teach our students!

    These cases cited in your link are more than 10 years old. Wouldn’t you think that if demotion without regards to seniority was an “easy way out” that more school districts would have gone this route since 2001? Like I said earlier, case law=higher litigation expense. And I feel the Fitzgerald group knows this.

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  6. KKnauss,

    Oh, I forgot something–If section 1151 of School Code provides for the demotion of professional employees and makes no mention of seniority, then why does those “old” case laws in your link referencing demotion under section 1151 seem to reflect back to mandates (i.e.seniority) contained under section 1125.1 and other in regards to proving these cases? I feel using section 1151, as the way this board wants to do, will indeed further increase litigation expenses.

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    Keith Knauss Reply:

    Monie,
    .
    You have some good questions. I’m not a lawyer, so don’t take my word on whether TE can demote staff to save many thousand of dollars. Clearly, Mr. Sultanik thinks the planned demotions are legal. If the planned demotions were illegal and subject to seniority don’t you think the PSEA attorneys would be reassuring every teacher of that fact? Wouldn’t the union have issued a public statement many weeks ago?

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    TE Observer Reply:

    Make no mistake, demotion will still follow the furlough process in terms of how teachers are let go, or demoted – it has to be by seniority. Pretending it to be otherwise is silly and unproductive. We can demote all we want, but it will have to be from the bottom up (not salary, but seniority). I suppose we could try to set precedent ourselves and challenge the validity of that law, but that seems to be a pretty costly thing to pursue to overturn existing law. If we go the demotion route, we just can’t cherrypick who we demote – it’s going to be based on seniority.

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    Keith Knauss Reply:

    TE Observer,
    .
    You state, “We can demote all we want, but it will have to be from the bottom up (not salary, but seniority)“.
    .
    This is in direct contradiction of the written information being presented by the Board tonight which states:
    Demotions are permitted by the School Code for
    economic necessity. Seniority provisions do not
    apply to demotions for economic necessity.

    Page 60, http://www.tesd.net/cms/lib/PA01001259/Centricity/Domain/56/050712%20Finance%20Agenda.pdf
    .
    It could be that the Board is telling a fib or has not consulted their legal advisers, but I bet they know more about what’s permissible under the Law than either of us.

    TE Observer Reply:

    Demotions of positions are legal and would pass the muster. If TE wants to cut the music department, then people in the music department could be demoted. But even then, if they are multi-certified, they can bump other less senior teachers in other, non-cut programs. But there’s nothing in the case law that would permit an arbitrary selection of say, the top 15 wage earners and demoting them. Heck, the case law specifically speaks against arbitrary matters. Obviously school boards would like the idea of being able to cherrypick who to demote, and base it on salary, but that’s just not how the law works today. Maybe T/E really thinks they can do this and are willing to go to court and fight for the right to do it, but they would be the first to do so and they would have to explain how an economic problem years in the future is just cause to do something now. Of course, if you take that to it’s logical conclusion, T/E could’ve started demoting teachers arbitrarily the moment the last contract was signed. And since that is clearly not the case, the logic starts to fall apart. To me, it sounds like the Board is grandstanding on something they won’t be able to do but want to say they considered it. Seniority, for better or for worse, will and still is the law today until it gets changed, no matter how much some just want to ignore it.

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  7. bluedog1776–you almost have it nailed—but let me give you a little help.

    This board and administration has gone beyond equating our beloved district to Chester Upland in economic deprivation. They have put TE on par with Bankruptadelphia.

    You are correct about the reserve fund being OUR money. That ever-growing reserve fund is a result of us being overtaxed by a group of people whom we have elected to represent us. Unfortunately their forecasting for TE’s needs has not been any better than Punxsutawney Phil.

    You are spot on as how they (you know who I’m speaking about) keep cutting and cutting and cutting. . . Soon we will have no district. Then where will they stick that enormous fund balance? I know it won’t fit there but Tom from Harrisburg will mandate us to share our golden egg with Chester Upland, Bankruptadelphia and others and then we will be null and void.

    Finally, Bluedog, those 5 people who have “clogged” this blog aren’t really 5, just 3:

    • former board member
    • former board member
    • former board member

    Do you think past and present board members have an “axe” to grind?

    I’m on BOARD with you bluedog but I suspect that both of us will get seasick on the way to Haiti!

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    kevin Grewell Reply:

    Damage Control –

    Former board members have an axe to grind, but you do not? It seems to me that this blog has been dominated lately not by board memebers but by hysterical pro-PSEA polemics (Haiti? Really?).

    Look, this is about negotiating a new contract that is sustainable in light of current and forseeable economic conditions. Sure, we could use the fund balance to bridge the gap this year – but it is not just about this year. It is about next year, and the year after that, and the years beyond. The ecomomy could improve, with transfer taxes and assessment appeals reversing direction. The state could do something about PSERS. But how likely is either of those developments in the next 2, 3, 4 years? Would it be wise to count on them?

    The fund balance is not that big when compared to projected liabilities such as PSERS. Use it as you suggest, and that will only kick the can down the road and result in cuts later.

    I have aske this question before – I too would like to hear from more people – I would like to hear from rank and file teachers – what are they willing to put on the table to avoid cuts to the program, to class size, etc?

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  8. WOW! Seems like this board doesn’t want to take advise from their “hot shot” attorney group either! This board wants to keep defining demotions the old TE board way—it’s my way or the highway!

    Does this board need to tell us community the “considerations” of demotions in their financial presentation?

    1. Retention of existing trained staff could become more
    challenging—DUH.

    2. Introduces a competitive disadvantage to the recruitment and hiring process—DUH.

    This board only speaks above in terms of retention and recruiting challenges. Is it so difficult to speak on how the “removal” of experienced and highly educated teachers would affect the students? The community? The TE name? Try it; you may like how you sound.

    What about the TEACHERS who are doing a GREAT job? Don’t kick them in the pants then boot them out the door! They are human—not puppets! Our teachers are resilient—how often and for how long do you plan to beat them up because they are INTELLIGENT?

    Board, don’t table this strategy until next year—BURY it!

    You should have realized during the first round of discussions that demotion of our TOP teachers was a lousy idea. This should not have been a strategy in the first place. What a waste of productive time and money! Then again, us taxpayer is paying the bill, so who cares.

    I am asking you to please use some of the fund balance—it’s our money and not entirely yours!!!!

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    Township Reader Reply:

    “the old TE board way—it’s my way or the highway! ”

    This comment is straight from the PSEA playbook. WHEN in your life has the “board” ever had its way with the teachers? In the past 30 years, each and every contract has resulted not just in an annual increase, but in an increase to basically every step on the salary schedule. In years where the “increase” was minimized, in fact they added “working days” (not student contact days) at about 1/2 percent increase per day. Each year when the cost of health care goes up $1M, no one even knows they got a raise…but you paid for one.

    And the demotion is not of our TOP teachers…it’s of our Level 7 teachers. On the negotiating committee, there are two Step 16 teachers — one is level 7 and the other is level 2. The salary difference is $15,000. ($110K vs. $95K) One teaches German and the other is listed as a member of the Visual/ Performing Arts department. I believe he teaches graphic design and digital art. So the teachers negotiating fully understand the implications of a PhD — and the contributions made by every level of teaching expertise.

    I have said elsewhere: TEEA can stop taking shots at this strategy and offer one OF THEIR OWN. Why do so few question the lack of direction from the teachers’ union? Problems need solutions, not just scrutiny. Ask them for a way to pay for this besides looking for another pocket to dig into. The teachers are not the enemy — the economy is. We cannot afford status quo.

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    Doesn't Add Up Reply:

    The economy is NOT the enemy. Even if we did allow this crazy personification of the “economy”, it is absurd to cast blame because the economy wasnt able to keep pace with a comp package with such inflated growth assumptions….

    [Reply]

    Township Reader Reply:

    It’s the economy as opposed to the demonization of the teachers. But you are correct — the increases over the past four years, whatever justification they put on them (catching up to Lower Merion?) have been unsustainabble, which is why the TEEA can solve this problem by making a concrete proposal to get real.

    Doesn't Add Up Reply:

    “what about the teachers that are doing a great job?”

    Well, by the teachers choice, there is no mechanism to dismiss, demote, or compensate based upon merit. So until the teachers doing a great job step up and change the system they will be in the same risk as the crappy ones.

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    flyersfan Reply:

    DAU.. great point! Merit works both ways..

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  9. today i was able to read Neil Colligan’s opinion piece in the Suburban. Very well thought out and I would recommend reading it. There seems to be a need for structural change in the way teachers are compensated.

    You are afraid of teachers leaving, or not being able to recruit new young blood to educate our kids. I am willing to take that chance. There are plenty of new recruits, shut out by an openings shortage that would jump at the opportunity to teach here in TE. I think our teachers do a great job, most of them. And I think they should understand the fix we are in. Im not afraid of the threat you mention about them leaving. Maybe some of them should.

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  10. Hi Folks,

    A $32 Million Fund Balance by any standard for a public entity is excessive to say the least. The standard for is about 8 percent of budget or about $8 Million for TE.

    This is taxpayer money and any unrestricted balance should be refunded to the taxpayers in form of a tax rate reduction. It does not belong to any employee group including our dedicated teachers.

    That said, given the current economy, consideration for a salary increase for any employee group should be fully justified based on market conditions to replace employees, etc, It should NOT BE BASED ON AVAILABILITY OF FUND BALANCE.

    In fact a fund balance of $5-6 Million is ample. Return the money to the rightful owners–the taxpayer!

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  11. Early on, I commented that this strategy seemed insane, but the more hysteria that gets whipped up, the more I’m inclined to agree with Polonius that there’s method in’t.

    In any other enterprise (even a non-profit!), it is management’s fiduciary duty to see that resources are fully utilized. It so happens that this is one degree of freedom that is also open to school districts. Should we not at least hear the details? Monday’s agenda materials suggest that there is some science behind the notion. I only hope that there’s a chance for the administration to explain the plan fully before the audience takes over with endless emotional repetition of the real and perceived issues.

    [Revenue] is limited to index increases
    [Expense] = [Revenue]
    [Expense] = [Price] times [Quantity]
    If either [Price] or [Quantity] goes up more than the limit, the other must go down.

    Unless of course, the equation is balanced in the short term by use of the Fund Balance.

    The community absolutely deserves a thorough professional analysis of the Balance, its current designations and other options for its use. To stand by the myth that a large part is for PSERS (for which they can, do and plan to tax) invites claims that the Balance can be used for operating expenses.

    Maybe short term use could be part of a, say, five year plan, though. If the district is able to control [Price] (a big if!) and the community makes it clear that it does not want to cut [Quantity], then maybe use a portion of the fund balance for a couple of years until you can pay down some debt and cut interest operating expense to offset the deficit. If that’s not enough saving, then you have to think about that $3 million we can get back through an EIT, because the drip, drip, drip of those 3-4% property tax increases will eventually drive us really insane.

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  12. Let me just add here, the elephant in the room which no one seems to see. The only way that the state will even let the Board use the demotion strategy is for economic hardship. There is no possible way that TE will be able to show economic hardship with a 32M fund balance. So, this demotion strategy is moot. The Board knows it and, guess what, the teachers know it too.

    [Reply]

    TESD Taxpayer Reply:

    Does TE school board have to get approval from the state to use demotion — any idea how that approval process works? Can the school board use the escalating PSERS contribution as an economic hardship? Thanks.

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  13. Can someone explain to me how TESD has money for Land Acquistion $400,000 ( 2011-12) and 2.7 million for Phase 1 &2 Maintenance and Storage buildings(2012-13) but they run out of bond money for the 2014-15 projects. This info comes from the Capital Sources & Uses 7 YR Plan.

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  14. The “demotion” is a strategy. It is fully explained. It will generate $640,000 in savings.

    The teachers can offer an alternative and take it off the table. Right now. That’s how negotiations work.

    The board says “we want this” and the union says “well, how about this?” In the past, the process was totally one-sided. The board said “we’ll pay you this much more if you do that” and the bidding went on…

    But now the board doesn’t have any play money to put on the table. That’s also public information. They want to take money out of the existing operations. So – they propose demotions and class size adjustments. The law doesn’t allow much if anything else. They are putting $1M in cuts on the table. If the union doesn’t agree that those cuts are good ways for the district to proceed, the union can and should offer an alternative. They are silent on alternatives except another way to get at more money.

    The union is pushing the notion that we already have the money to pay them – we just won’t use it. See the clever rephrasing? In fact, the budget “gap” is hypothetical – because it only happens if we go status quo. Pattye’s observation that the budget has to be completed before the current contract expires is correct – but negotiations have already begun. The union typically doesn’t wait until after the expiration to settle. The reason the talks start early is that the goal is to have a new plan in place before the current contract expires. So the board has budgets to meet, but lots of options between now and June 30 to figure it out. IF they just go ahead and say “use the fund balance” they have done little more than the problem that PSERS is in…they kick the problem down the road, and they take the energy from this negotiation and defer it to a time when the negotiations are either done or in a major stalemate. It was at budget time last year that they got concessions from the custodial staff – which allowed them to save their jobs. (Something the TEEA/TENIG would not allow the bus drivers to do in the 90s).

    People complain about the rise in taxes, but in fact, it has not followed the rise in costs. HAD we raised taxes each time we raised expenses, our taxes would be higher — but at least we would be paying our bills with current revenues. The board needs to keep expenditures at the act 1 limit, not just the millage increase. The $15M bond two years ago (?) was not used to build anything….it was the equivalent of a home equity loan. So we can pay teachers with that money, or we can ask the teachers to step up and get it done. It is their call. Instead of complaining that this is a poor solution, the TEEA can and should offer one of their own. That’s just not the way the PSEA works. The assurance that the TEEA understand they have to pay more for health care is hollow – they can step up right now and say how much they will pay towards health care – and take the talk of demotion or class size out of the headlines and off the table.

    Taking my lead from Damage Control’s expertise: I’ll head back to the sidelines. I stopped attending meetings because this Board won’t respond to my questions, so don’t think I have their back. Here’s my opinion: I think they are WRONG to have 3 administrators at the table. They may well be damaging the district with that philosophy alone. Waters and Tiede need to work alongside these teachers — not be their adversaries.

    Beyond opinion, I do know how the PSEA schools its membership – and I wonder when you can expect a solution and not just “we understand” from their side.

    But what do I know? Only what I can learn.

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  15. TESD:
    436 professional FTES.
    No demotions, no class size changes requires contributions.
    $1,000,000 would mean $2300 from each.

    In other words, instead of paying $1,000 for a $20,000 health care plan, pay $3,500 for a $20,000 plan, or find a $16,000 plan.

    The wage freeze offers no savings going forward, as the budget presumes no raises. Status quo also offers no health care savings.
    Starting with the first year of this 4 year contract, July 1, 2008, salaries for the 7 members of the negotiating committee were $493,000. (or less — depending on what level of educaiton they were on — my numbers presume no education increases…this is based on their current level). As of June 30, 2012 (the last day of this contract), those same 7 people have salaries totalling $612,000. Individually, their raises over that time have been a low of 3.8% to 40.2% . The total increase was 24% for these 7. That is for 3 years of working. July 1, 2012 they will either get a new salary (at least a step increase) or a freeze (status quo) based on negotiations.

    This is the information you can read about on TESD.net under Success and Sustainability.

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  16. Does no one understand that Fund Balance is being used in the budget projects to cover the even LARGER deficits that occur next year and the year after that and so on, because of PSERs pension expenses? Ok go ahead and spend it this year on the teachers contract, what are you going to do in future years? You can’t tax more – Act 1 and a referendum no one will vote for. So TESD should go belly up sooner and turn ourselves over to the state control? Boy love to hear the unions when TESD has nothing left to pay pensions. TEEA needs an accountant (or at least a business teacher) to explain to them how a fund balance and financial statement works.

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    kevin Grewell Reply:

    TE Parent – I made the same point in a reply (to “Damage Control” above – awaiting moderation as I write this)

    To be fair, PSERS is one of the exceptions to the Act 1 inflation index for which the board could tax above the Act 1 cap. However, taxing to cover PSERS means that the board would be taxing people more during a recession so that the teachers can keep their current beneifts package – a benefits package that the taxpayers who work in the private sector do not have – i.e., a $1000 per year contribution towards a $20,000 per year health plan. Putting aside for a moment the question of whether that is right or wrong, I submit that it would be politically unsustainable – any board that did that for long would soon be replaced by anti-tax candidates. I suspect that the parents and teachers (all of whom care about programs, class size, etc.) would be very unhappy with the newly constituted board.

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    papadick Reply:

    Kevin – two things
    First – you suggest that teachers should foot the increases in PSERS contributions WHEN in fact the homeowners got the benefit of reduced contributions rates for 10 years. Seems to me that those that got the benefit from reduced taxes for ten years have to look in the mirror and face the music. You also mix the PSERS problems with healthcare costs which is like mixing apples and onions together… makes no sense.
    Second, you have introduced politics into the decision process when you say “I submit that it would be politically unsustainable” to do anything that might address the issue. Being an elected representative SHOULD mean that you do the right thing for the District and sometimes make decisions that based on the consequences as a whole and not based on being re-elected.

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    kevin Grewell Reply:

    Papadick –
    I am not suggesting that teachers foot the PSERS bill. The taxpayers should – and are – with use of the fund balance to pay PSERS. The fund balance IS after all, taxpayer money – they were taxed to create the balance so they are footing the bill for any use of that balance.

    I was talking about using the fund blance to cover PSERS as opposed to taxing above or in addition to the Act 1 inflation cap to fund PSERS – so as to avoid using the fund blance to bridge current budget gaps as many on this thread have suggested. I think the gist of the argument here – clearly implied in many of the comments on this thread – was to use fund balance in order to avoid asking the teachers for significant contract concessions. My comment was in response to that line of reasoning. Believe me, I am not anti-teacher. But some of the benefits are out of line with current economic conditions. Since the pension system is state controlled, there is nothing anyone can do about that. So the focus is on health care. (By the way, when all is said and done I don’t think anyone will be demoted or forced to go without even an option to buy family coverage).

    Now, as for politics – if you want to get elected and stay elected long enough to get anything done (including as you suggest things you believe are right but that may be unpopular) you have to be realistic about the political dimension. I don’t like it one bit – any more than you do.

    I think any board that consistently taxes above the Act 1 cap for PSERS (or anything else) will inevitably face an anti-tax backlash. If that were to happen, I think a board dominated by anti-tax candidates is possible. That kind of board would be very unpopular with parents and teachers who care about preserving the program for the kids. If you don’t like the cuts so far, just wait and see what you will get if you hand the board over to an anti-tax majority.

    I agree with you that there are times you have to do what you think is right even if that means not getting re-elected. However, in this situation, I think the right thing to do is not hand the board over to anti-tax reactionaries. I sense those folks are motivated and are looking for an opportunity.

    That is the essence of my argument, and I stand by it.

    Township Reader Reply:

    Because of Act 120 of 2010, even these ridiculously high PSERS rates are inadequate, so PPD — no one got any benefit of reduced contribution rates except the teacher contract. Otherwise, these financial issues would have created this problem 5 years ago. The rates are astronomical and are artifically being held back now. (we keep saying the state should do something — without Act 120, next year it would be closer to 30% and not 12%)

    Introduced politics — what else IS this about? This community elects people to represent them, but rarely bother to vet the candidates on their opinions. And yes — incumbents get beaten. Not often, because no one wants these jobs, but occasionally, someone who has attended a few meetings or knows someone on the Dem or Rep committee thinks they can solve the problems and run against an incumbent. Then they find out you cannot take prayer out of schools (Several years ago, Owen J. Roberts turned over a whole board trying to put prayer back in schools). If the electorate was not so lazy, and others were willing to do the job, there are plenty of incumbents who get re-elected because they have nice signs and articulate the continuing promise “:I’ll work towards providing a great education for kids at a cost reasonable to taxpayers. We’ll achieve fiscal discipline and educational excellence.” (When it is an incumbent, often the phrase “I’ll continue to provide” is never even challenged. )

    Only one thing never chagnes — the voting public doesn’t pay attention until it gets very, very loud — and then it’s not just a day late, it’s more than a lot of dollars short. This sitting board has several incumbents who were successful this past time around, even though the consensus here is that the 2008 contract is what buried us.

    Keith Knauss Reply:

    papadick said, “homeowners got the benefit of reduced [PSERS] contributions rates for 10 years.”
    .
    He might want to make himself familiar with the mechanics of a defined benefit retirement program. The employer bears all the risk, upside and downside, depending on market returns. In some years it is expected that the employer contribution rate will be low; in other years, high according to market returns.
    .
    He might be interested to know that over the last 30 years the taxpayer has contributed far more than the teachers – an average of 11% of salary to the fund; the teachers 6%. Over the last 20 years 8.2% vs. 6.3%.
    Over the next 10 years 23.5% vs. 7.5%!!!
    http://www.psers.state.pa.us/content/pfr/resources/ERC%20and%20EE%201955%20TO%202010%20REVISED.pdf
    .
    I’m hope I don’t hear the PSEA phrase, “they haven’t paid their fair share”.

  17. This beyond absurd.

    1. The $32m extra? Pensions. Any questions?

    2. This is now a basic Math problem.

    3. The usual scare tactics won’t work.

    4. Even if the parents got on board, it doesn’t matter because #2 cannot by the laws of physics and mathematics, change.

    5. I am sorry to be the one who has to state this so directly.

    6. Grow up. Don’t cry about lack of transparency and then offer no transparency in return.

    7. Identify yourselves honestly. Guys, you are way beyong obvious at this point.

    8. Your health insurance benefits are going to be altered. Again, see #2.

    9. Demotions are possible but this should also apply to administration as well.

    10. You can fight it and offer up some of your colleauges for firing. See #2.

    [Reply]

  18. The most recent email from the TEEA asks:

    “How can we encourage our students to go to college and pursue advanced studies when the District demotes the teachers who have done just that? What kind of message does it send to our students about the value of their education when the District demotes its best teachers?”

    I have been troubled by these same questions. It seems to me an incredible betrayal of those professionals who’ve worked the hardest and achieved the highest level of education – and brought that knowledge d expertise back to T/E classrooms – that they should be targeted as “disposable” now.

    If this demotion strategy is merely a negotiating tactic, it’s shameful. If the SB actually finds this method of cost cutting acceptable, I seriously question their collective judgment..

    However…

    As angry and demoralized as the District’s teachers must be at this point, I hope they will agree to make a good faith offer to contribute more to their healthcare and/or agree to a more modest healthcare package more in line with private industry. I realize this amounts to a cut in pay, and it stinks, but it is fair and necessary.

    I can understand the teachers’ view that instead T/E’s sizable fund balance should be tapped to close the budget gap.

    Except that it seems clear that every penny in that fund will be needed to cover future PSERS obligations that will exceed the District’s taxing authority in the coming years. (What other SD’s will do with their more limited resources is not our challenge.) I believe that preparing for a worst case scenario of flat property tax revenue and little transfer tax revenue in the next few years is the prudent thing to do.

    Though there are many affluent families living in T/E, there are more that are getting by – meeting their expenses while saving or paying for college, retirement etc. Our school taxes have increased 3-5% a year. A referendum to go beyond the Act 1 limit (plus exceptions) will not pass here. Neither will an EIT – at least any time soon.

    Even with few options left and flat revenues projected,T/E’s teachers deserve our abiding respect and consideration. No one can deny that the best and the brightest have contributed significantly to our district’s high standards. Our teachers were encouraged to earn advanced degrees. Now we want to pull the rug out from under them and essentially offer them part-time jobs?

    I hope this entire issue is tabled tonight – for good. No school district can aspire to excellence and treat its teachers this way.

    [Reply]

  19. Pattye. We had a presentation by Kevin Buracks and Karen Cruikshank at our recent Panhandle Civic Association meeting. I am speaking for myself, not as President of the Panhandle. There are designated future costs out of the 32 mil. So the 32 may not be an accurate as an open money fund.

    Although teaching is a noble profession, they are not immune from the same financial woes that the citizens are facing. Sympathies seem to be going with the teachers. I think their salary figures should be published for working a portion of the year and their benefits packages added on with a true value number on their retirement package.

    As a sole proprietor, I do not have anyone paying for my retirement and health package and I have to work hard not only to maintain a client base but to try and deal with some diminishing returns based on the economy. I am paying a heavy school tax bill with my children out of T/E for 20 years.

    Unless the overall financial problem is addressed both locally and legislatively, T/E will go thru their fund by 2015 – 2016. It means that our Board over the years has overtaxed us. It also means that we will run out of money like everyone else, but it will take longer. And then what, we will be taxed more to make-up for this mess and keep afloat. That is assuming the Board will not figure out a way to implement more than a 3% tax rise per year – which incidentally will allow another 15% to be added to your tax bill as we go broke.

    I did not create this problem. I really do not want to hear about the woes of the teachers and especially about the Teacher’s Union. I also do not want to hear how the legislatively programs cannot be changed. The Board should get off their rears and start a legal suit against the legislature for conflict of interest and reduce services further to get this mess in reasonable order. I went to fine schools with over 30 in the classrooms. It has not detracted from my presence in this community.

    [Reply]

  20. Excuse me. You request moderation. Moderation for what? The Board has been aware of this problem for several years. They have mainly cut educational services. They have not faced the overall problem. Noone on the Board has offered a solution except present demotions. I am waiting.

    [Reply]

  21. One final thought. How many incumbents were voted off the board? If these feelings were truly prevalent wouldn’t that have happened?

    [Reply]

  22. Keith Knaus
    Having spent over 15 years managing the Employee Benefit Department for The Philadelphia National Bank I am quite familiar with defined benefit plans and the funding requirements associated with them. If you would go back and re-read my comments over the past 2 years you will see that I have been one to point out the past 10-12 years as having a negative effect on the funding of PSER’s and the very positive effect this period has had for the property taxpayers across the state.
    PSER’S is a contributory defined benefit plan – meaning that each covered employee must share in the funding of the plan. Normally the employer contributes a larger share of the funding than does the employee – as was the case before 2001. (see your attachment).
    Two things occurred in early 2000 that has caused a shortfall in the Plans ability to pay out the required benefits. Neither of these two things is the result of the local union or the state union organization but rather is the result of legislation from the state houses in Harrisburg. First, they raised the benefit calculation from 2% of average compensation for the last 3 years of service times number of years of service to 2.5% An increase of 25% passed by elected officials not only for teachers but for all state workers (ie, PENNDOT). So how to pay for these increases? These chaps were so bright that rather than increasing or even maintaining the status quo for the employer contribution rate — they lowered the contribution rate for the employer portion. For school districts this meant lower contribution amounts – there by either maintaining or lowering property taxes.
    Using your attachment – for the period 2000 thru 2011 and a conservative teacher salary of 50,000. per year we see that the teacher contributed 41,395 while the district contributed 25,125. for a difference of 16,270 per employee. If we use the FTE number passed out at the last Board meeting of 436 we see a difference of 7,093,720 in funding – or said another way — a 7+ million savings on property taxes over this period of time.
    What I am trying to point out is that a lot of discussion and frustration has been flung at the teachers and their contract, If that is to continue and to be fair to all I suggest that the PSER’S dilemma be funded from the reserve account and cutout from from the bargaining table. The union nor the teachers had anything to do with the actions in Harrisburg and we as taxpayers did in fact benefit for the past 10 years in lower taxes (or protecting ourselves by creating a reserve to take care of this situation).
    I am also an advocate of going to a defined contribution plan (ie, 401K) for all new state employees (including teachers) BUT that will not eliminate the current shortfalls or liabilities.

    [Reply]

    Keith Knauss Reply:

    Papa,
    .
    Many of your points are valid. I agree that the teacher are not responsible for the large PSERS contributions, but neither are the taxpayers. Yet, you want the taxpayers to shoulder all the additional burden.
    .
    You cast the blame on the legislators and they deserve some of the blame. But even PSEA only ascribes about 20% of the underfunding problem on the legislative events of 2001. Even if the legislature had not modified the benefit calculations in 2001 we’d still have the PSERS mess. The real culprit was the market downturns of 2003 and 2007.
    .
    Your financial and negotiations logic escapes me.
    .
    You see a “7+ million savings on property taxes over this period of time” from “the lowered contribution rate”.
    .
    That might be true if there is no interaction between PSERS contributions and salary at the bargaining table. Don’t you think that the union negotiators during the 2000 to 2011 period said, “your PSERS contribution rates are low so you’ll be able to afford higher salary increases”? Don’t you think that’s, in part, why the last contract had 5%+ salary increases each year for 4 years? I see no $7M savings.
    .
    You suggestion that the “PSER’S dilemma be funded from the reserve account and cutout from from the bargaining table” is problematic on two accounts. First, there is not enough money in the reserve account to put more than a minor dent in the required PSERS funding over the next 2 decades. Second, why would anyone want to remove the second largest item (behind salary) comprising employee compensation from the bargaining table. Maybe next you’ll suggest we remove health care benefits, too, from the bargaining table because its costs are going up too fast. You’ve concocted a recipe for skyrocket employee compensation requiring large program cuts to balance the budget.

    [Reply]

    papadick Reply:

    Mr Knaus
    You go on about PSER’S being on the table during negotiations yet you open by saying the teachers are not responsible for the contribution levels or in fact the retirement benefits at all. Can you calmly explain how the current, or future, negotiations can have any impact on the PSER’s situation – since you acknowledge that it is LEGISLATIVE issue and not a item that can be negotiated.
    Since it is not an item that can be negotiated then I find it to be an item that is on the table only to deflect the issues or stir up the taxpayers against teachers over an item they can not control.
    As to the 7+ million reduction in the amounts paid by the District — the question is — who received the benefit of the reduction? To me it is obvious — taxpayers got the benefit — of which I am one. I might see your position only if it was the teachers that had the 7 million dollar reduction rather than the District.
    I suppose if we all follow your position and logic what we will see is that the CHILDREN will end up paying the bill by salary reductions, increasing class sizes, eliminating cultural programs like Art and Music, eliminating after school tutoring programs….

    [Reply]

    Keith Knauss Reply:

    PSERS contributions should be included at the bargaining table and included in the cost of compensation along with salary, health care, disability, unemployment compensation and FICA. I’m not saying that the Board has any ability to change the contribution rates or the plan design. What I am saying is that when PSERS contribution rates are high, most likely, salary raises will be small. In TE’s case there may need to be a salary decrease.
    .
    We’ll agree to disagree on if there was a $7M reduction or who got it. Obviously, the contribution rates were lower than the historical average, but again that is expected if market returns dictate the plan is above 100% funded as it was in 2001. For argument sake, let’s assume there was a $7M reduction. If so, then the teachers, not the taxpayers, got the benefit through larger than normal salary increases. Is it your position that the 5%+ salary increases (8%+ compensation increases) over the last 4 years were reasonable??
    .
    As for preserving the quality of education at TE, with my limited knowledge, I support the board’s position of requesting salary and health care concessions so all TE teachers can keep their jobs. Any other pathway leads to furloughs/demotions in the short term or, if the fund balance is used, after a few years.

  23. Thank you for the truth Mr. Knaus. Certainly not the fault of the hard working teachers and staff of the school district.

    [Reply]

  24. After reading a few posts on here about average teacher salary, raises, the salaries of the negotiators, cost of benefits, yearly revenue, etc….I decided to look into the salaries of our administrators Everyone has the right to view the salaries of public employees, and I found this site to use:

    http://php.app.com/PAteachers10/search.php

    Here is what I found:

    Administrative Salaries as of 2010 (This does NOT include benefits).

    TEAO Building:
    Dr. Waters – $224,515
    Dr. Gusick – $140,000
    N. Adams – $128.116
    Dr. Parker – 107,695
    W. Towle – $126,872
    R. McConnell – $166,003
    Dr. Dinkins – 148,455
    A. McDonnell – $152,781
    S. Tiede – $162,324
    C. Groppe – $122,507
    N. Roy – $120,126
    Dr. Chipego – $137,132
    P. Littlewood – Not Found
    C. Connolly – Not Found
    J. Curtis – Not Found

    Principals:
    Cataldi – $135,889
    Gibson – $139,454
    Meisinger – $140,400
    Demming – $140,606
    Tobin – $152,070
    Cohle – $143,352
    Whyte – $142,329
    Wills – $127,555

    Assistant Principals:
    Boyle – $120,375
    Capuano – $114,966
    Fagan – $121,129
    Hickey – $110,760
    Torres – $124,260
    Hoffman – $113,015
    Mull – $114,637
    Phillips – $112,966

    [Reply]

    Squeeze Reply:

    Interesting. I honestly never thought about how much they made. I certainly did not think it would be as much as it is.

    [Reply]

    Keith Knauss Reply:

    Equally interesting is the number of teachers earning above $100K.
    .
    26 – $100,900
    22.6 – $101,900
    9 – $103,000
    39 – $106, 200
    5 – $110,900
    .
    A teacher’s work year is 191 days. An administrator’s work year ranges somewhere around 220 and 240 days. As has been noted on the CM web site before, the top step of the teacher’s salary matrix is normally the bottom range on the Act 93 (administrators) salary agreement. How else would the district attract teachers into the administrative ranks?

    [Reply]

    Monie Reply:

    Board should concentrate their efforts to reduce costs in administration. I can only imagine what updated administrator salaries with benefits look like!

    And, after reading the current TEEA update on board’s proposal, my advice to board is “don’t reinvent the School Code on the backs of our teachers” you’ll lose.

    [Reply]

    Keith Knauss Reply:

    Monie,
    Your advice to concentrate on “efforts to reduce costs in administration” makes little sense. The administration has agreed to a salary freeze for the last 2 years and one for the next year. Further, why concentrate your cost reduction efforts on a minor portion of the expenditure “pie”? Teacher compensation is 50% of the budget; administrator compensation is 5% of the budget.
    .
    Your advice of “don’t reinvent the School Code on the backs of our teachers” is, likewise, nonsensical. The School Code can only be modified by the legislators in Harrisburg.

    [Reply]

    Monie Reply:

    Keith. . .nonsensical? Maybe the reason why the board is losing all these grievances is because they broke the laws created by those legislators.

    How many teachers are included in your 50% of the budget? How many administrators are included in your 5% of the budget? Once you make the comparison, you will find that we may be getting more bang for our buck with teachers!

    And, have the administrators been asked by the board to take a cut in base salary before that salary freeze? Are they asked to do more than their assignment requires?–You’ll say yes to that one. Have they given up family health coverage? Or, demoted to part-time because of the economy? Every little bit helps–right?

    Keith Knauss Reply:

    Monie,
    You mention that “Maybe the reason why the board is losing all these grievances is because they broke the laws created by those legislators.” First, I’m aware of only one grievance that has been decided in favor of the union. Seconds, a grievance has nothing to do with breaking the law – it’s a disagreement on how to interpret the terms of a contract.
    .
    I’m uncertain how you could determine “bang for our buck” knowing there are 436.3 teachers and 31 administrators, but I’m willing to listen to a logical argument.
    .
    Please realize that administrators were experiencing a two year salary freeze while teachers were enjoying salary increases during those years. I think the administrators have given their fair share. I think it’s reasonable to now shift our attention to the teachers.
    .

    Monie Reply:

    Keith, I’ll try to brief .  . .

    1st: The majority of teacher contract sections/language is reflective of the PA School Code. So if grievances are filed due to employer actions or language  interpretation the course of action is to revert back to the School Code to see if there was a violation. This is where the Board gets screwed. 

    Here’s some section examples from Code to compare:
    Section 1123 pertains to evaluations
    Section 1125.1 & 1151 pertains to demotions, suspensions, furloughs, etc.
    Section 1142 Salary schedule development–yes, born from the School Code
    Section 1147 Increase/decrease # of periods per day (this is where the board will most likely fail again)

    2nd: “getting more bang for the buck” with teachers

    Ok, you have 28 adm (salaries) making up 5% of the budget but, there’s 43.63 teacher (salaries) making up 5% of the 50% portion of the pie. Therefore, more staff for the 5% relationship. Wouldn’t you rather buy a 43.63 oz soda for 5 bucks, rather than a 28 oz soda for 5 bucks?

    Keith Knauss Reply:

    Yes, I understand that many aspects of a district’s operation is subject to school code. What I don’t understand is your statement, “This is where the Board gets screwed.” I’ve glanced through several of the PLRB proposed and final orders. I haven’t kept score, but I bet the decisions are split 50% board; 50% union. Rather than either side getting “screwed” it might be appropriate to say, “This is where the PLRB provides guidance and interpretation when applying the school code.”
    .
    I’m surprised by the analogy used to justify more “bang for the buck”. You compare the average salary of a teacher to the average salary of an administrator and come to the conclusion that we’re “getting more bang for the buck” with teachers. You’re comparing apples to oranges. A more apt question might be – Wouldn’t you rather buy a 43.63 oz soda for 5 bucks, rather than a 28 oz bottle of wine for 5 bucks? The answer is not obvious. For me it depends on the brand of soda and the vintage of the wine.

  25. This is all part of the same system. Teacher first, then additional experience and course work and go to administration for more money and a lot more time in the office. Dr. Gusick was a history teacher at the high school. Dr. Dinkins was an English teacher at the high school and then a principal at two different schools. For the principals, I know that Dr. Tobin, Dr. Demming and Dr. Meisinger all have PhDs…not sure of the others. Can you update us on their experience level and educational background? I’m pretty sure every single one of them was a teacher first, many came from our district and moved to administration (and worked summers and nights)…so they are still tenured employees and can return to the classroom anytime. If we didn’t want them, they would bump someone out of their classroom job.
    And if you want the up to date information, it’s simple to ask for it. Go on the district website and click on the right to know link.
    I have the step, level and salary of every teacher. If there is a way to share the information in a pdf, I’d be happy to do it.

    [Reply]

  26. Monie
    Every single Administrator Compensation discussion starts with a presentation from the administrators of what teachers with comparable education and experience make. THEN they compare the work year and the benefits typically track the teachers benefits.

    SO — people move into administration when they have the credentials AND with an additional bump to their pay. Otherwise, why would they do it? Much longer work year and work day. 191 7 1/2 hour days vs. a 52 week year with vacation time — no hours in their clock. Just responsibilities.
    I believe we have been very fortunate in TESD that so many of our admins come from within our teaching ranks, because they not only know the teachers, they came from the culture of high expectations. They don’t ask for anything of teachers they didn’t do themselves.

    So stop with the “bang for our buck.” Teachers cannot easily change districts, but the market sets prices for admins, as they are sought by other districts. Mucher smaller pool qualified to be in charge.

    IF they would decide that we didn’t need them here, they would indeed have the right to return to the classroom — they do not give up tenure when they become administrators. And they have only a “meet and discuss” option in their contracts…no negotiations.

    [Reply]

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