PSEA

Sometimes Do Overs are possible …T/E School District Union Votes to Save Aides from Outsourcing!

What is the saying about no do-overs in life?  For approximately 25 non-instructional aides in the TE School District, they learned yesterday that do-overs are possible!

To the surprise of many, you may recall on April 30, members of the Tredyffrin Easttown Non-Instructional Group (TENIG) voted against including the small group of “non-instructional” TESD aides into their union.  The bid to create a subset group within the TENIG union for the District’s non-instructional aides failed with a vote of 23-21. Although there are approximately 170+ TENIG employees, only 44 members attended the meeting to vote.

In the aftermath of the April 30 vote, some members of TENIG rallied behind their fellow District employees and mounted a campaign for another vote; a vote that would include absentee votes. The collective bargaining rules require a simple majority — a vote of fifty percent plus one of the votes cast.  The election results are in and the TENIG vote count to include the 20+ District aides is 53 Yes – 13 No.  The results indicate an overwhelming majority of the TENIG union members want their fellow District employees!

With the District’s deadline of May 15 (tomorrow) to outsource the full-time aides and paraeducators to CCRES, this news for the non-instructional aides could not come at a better time.  The saga of the District’s full-time aides and paraeducators and the threat of outsourcing have gone on for the last two years.

Faced with offering health care benefits to all District employees under Affordable Care Act or paying penalties for non-compliance, the School Board had made the decision earlier this year to outsource. The 73 full-time aides and paraeducators were given the option of either working for the outsourcing company to keep their full-time hours or reducing their hours to part-time (27.5 hr. and below) and remain a District employee.  The District employees had until May 15 to make their decision.

Although the outsourcing of the District’s full-time aides and paraeducators would have avoided the cost of providing health care and PSERS, the Board’s plan has a new wrinkle.  The current 3-year TENIG contract (July 1, 2014 to June 30, 2017) provides for health care benefits for all employees working 25 hours or more per week and as District employees, they receive PSERS.  Approximately 25 of the District’s non-instructional aides destined for outsourcing now will have a new home in the TENIG and enjoy the benefits of a collective bargaining group, which includes health care!

Although some steps remain in the process to formally add the non-instructional aides in to TENIG, the hard work has been done.  Congratulations to John Brooks, TENIG president and to the many TENIG members, who supported their fellow District employees, appreciated their value and fought to save their District jobs!

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Call for Internal Investigation: Interference in Collective Bargaining Process of T/E Aides and Paraeducators … Was a Crime Committed?

Not all is equal.  In the T/E School District, some workers enjoy equitable treatment and benefits while others do not.  This is the story about the aides and paraeducators, the District’s lowest paid employees, their collective bargaining efforts and the questionable behavior of those trying to derail the process.

Most of you reading this post will have no idea what I am talking about or what has been going on with the District’s aides and paras since January of this year.  My association with the aides and paras began last year with the District’s outsourcing threat over the Affordable Care Act and has continued during the collective bargaining process of the last five months.

At the request of Ruthann Waldie, UniServe representative for PSEA (Pennsylvania State Educational Association), I have not written about this matter until today.  Early on, Ruthann told me that the collective bargaining process for the TE aides and paras was ‘fragile’ and if the effort were to succeed she suggested that I not write about it on Community Matters.  I trusted her experienced wisdom and complied. However, during the last 72 hours, circumstances have dramatically changed that make it no longer possible to remain silent.

Before explaining the recent actions in the collective bargaining process, it is important to understand the timeline and review the details.

In 2013, after a very loud public outcry, the jobs of the District aides and paraeducators were saved from outsourcing – however, for only one year, the 2013-14 school year.  At that time, there was talk among some of the aides and paras about forming a collective bargaining unit but once the school board agreed not to outsource (and to keep their hours intact), the discussion on the subject lessened.  However, things heated up again when these employees received a threatening, demeaning memo from Sue Tiede, (the former TESD Personnel Director), in January of this year. Her communication established the 7-minute check-in and check-out policy for the aides and paras, and detailed the progressive discipline measures for violation, including suspension.

Tiede’s message represented a continuing trend of disrespect and intimidation directed at the aides and paras.  Growing concern returned about possible outsourcing and … with that concern, a sense of urgency among the aides and paras developed. Unfortunately, many of the aides and paras continue to feel undervalued and unappreciated by the administration and references such as ‘disposable’ by at least one school board member have done little to improve their morale.

Without representation by a collective bargaining group, the District’s aides and paras are powerless; their continued employment is solely at the mercy of the T/E School District’s Superintendent and School Board.  As a result, a small group of determined, dedicated aides and paras came together in early February to discuss options and plot a course of action to improve their working conditions.

According to Ruthann Waldie, PSEA representative, the aides and paras could not join the District’s teachers union because they were not considered ‘instructional’ employees. Furthermore, Ruthann explained that due to a law change five years ago, the aides and paras were prohibited from forming their own ‘new’ union when a qualifying union already existed. As explained, TENIG (Tredyffrin Easttown Non-Instructional Group) the District’s qualifying union with non-instructional employees and therefore, the aides and paras would become part of that group.

Before the collective bargaining campaign was officially underway, I spoke with TENIG president, Mary Minicozzi to ask her opinion about adding the 176 District aides and paras to their union.  Her reaction was overwhelmingly supportive, stating that she was 110% in favor.  I invited her to attend the upcoming organizational meeting with all the District aides and paras and PSEA representatives. Mary confirmed that she would attend the meeting and that she would ask fellow TENIG members to also attend. However, something happened between that phone conversation and the organizational meeting a few days later. Mary did not attend the meeting nor did anyone else from TENIG attend. To my knowledge, she has had no further contact with any of the aides and paras since that point.

Over the course of the following four months, we learned through PSEA representatives, that Mary was no longer supporting the idea of the aides and paras joining TENIG, although it remained unclear as to why. However, the PSEA representatives continued to tell the aides and paras that it did not matter because the law required them to join TENIG.

The organizing campaign for the aides and paras continued to move forward. On February 21, the T/E School District and the School Board received official notification regarding the aides and paras interest in collective bargaining. Once notified of the organizing campaign, the PA Public Employee Relations Act 195 protected the aides and paras from any interference, threats, harassment, reprisals, etc. from the District during the process. (Or so we thought).

The T/E School Board hired solicitor Jeffrey Sultanik of Fox Rothschild, LLP to represent the District in the aides/paras collective bargaining process.  As an experienced labor relations attorney and school district contract negotiator, it is clear that Sultanik counseled school board members against interfering in any way with the aides and paras in the unionizing process. As their legal counsel, Sultanik would have explained the liability issues to the District if tampering occurred in the collective bargaining process.  Likewise, that same warning would have applied to all District administrators, including the superintendent.

Before the Pennsylvania Labor Relations Board (PLRB) in Harrisburg will schedule an election, there must be a suitable showing of interest by the employees in forming a union. PLRB requires a minimum of 30% of the effected bargaining unit employees to show interest by the signing of a ‘union assignment card’. The card does not indicate whether you would vote for or against a union – the signature simply signifies that you are in interested in moving the process forward and that you desire the appropriate local union (in this case the PSEA) to represent you for the purpose of collective bargaining. However, we learned that PSEA’s policy was to have at least 60% of the eligible employees sign the cards as an indicator of their commitment to the bargaining process.

As the campaign progressed, aides and paras from the eight District schools showed support for the collective bargaining process by signing the cards. (Due to years of intimidation and low morale issues in the District, the process however, was very slow.) In early May, after receiving 94 signed commitment cards, the PSEA representatives filed with the PA Labor Relations Board for an election for the aides and paras to join TENIG.

Upon approving the collective bargaining application, the PLRB was to set up a conference call between (1) the PSEA representatives, (2) the School District representatives and (3) the PA Labor Relations Board.  The purpose of the conference call determines all the rules and details around the election and sets the date for the actual election.

The aide and paras hoped that if the conference call occurred by early June, PLRB would schedule the election for before June 20, the last day of the 2013-14 school year. To vote in the election, you must be an eligible employee.  All 176 aides and paras are eligible to vote (whether they signed the commitment card or not). TENIG members are not eligible to vote. The PLRB requires that the union receive 50% + 1 votes of all employees who cast ballots. (Example: if only 10 eligible employees showed up to vote, the count needs to be six voting yes).

Unfortunately, the scheduled conference call between the Labor Relations Board, PSEA and the School District was delayed until June 18, which in turn pushed the election to September, after school starts. Although the aides and paras were disappointed to learn of the election delay, they had fought an uphill battle to come this far and remained committed to staying the course.

Then the unthinkable occurred this past Thursday, June 5 … the reason for this post.  A pre-selected group of 6-8 aides and paras received word in a PSEA conference call that their collective bargaining application would be withdrawn from the PA Labor Relations Board.  Why? Because Mary Minicozzi, president of TENIG, did not want the 176 aides and paras in her union. During the call, the PSEA representative further stated that the aides and paras would now need to start the campaign process all over again to form their ‘own’ union in the District.

By early Friday morning, as aides and paras learned the news, accusations of impropriety, collusion and tampering in the collective bargaining process began to surface. Interestingly, members of TENIG were also seeking answers.  Evidentially there was no official discussion with the TENIG members about the aides and the paras joining their union nor was a vote taken by the TENIG members. It would appear that the president of TENIG, Mary Minicozzi made this unilateral decision on her own to exclude the aides and paras from joining TENIG.  (Remember, this same individual personally told me four months before that she “110 percent supported” their inclusion!)

Many TENIG members have worked together with the aides and paras in the T/E School District for years.  The aides and the paras are their fellow District employees and TENIG workers know all too well, what it is like to be the target of the school districts’ outsourcing ax.  It seems highly unlikely that if the issue had come to a vote, that the TENIG members would have voted against including the aides and paras.  Why would they? Adding 176 more employees to TENIG would increase their collective bargaining group to over 300 members.

And let’s not forget that PSEA’s Ruthann Waldie told the aides and paras from the start that ‘legally’ they had to be in TENIG – as she explained, it was their only option.  She had further indicated that because it was the law, it did not matter whether TENIG wanted them or not.

The PA Labor Relations Board has already fielded calls from the District aides, paras and even TENIG members demanding answers – and some have already reached out to attorneys.

How is it possible that the TENIG president can control the future of 176 aides and paras in the T/E School District?   If Mary didn’t involve her fellow TENIG members in the decision-making process, exactly who was involved. I find it impossible to believe that she acted completely on her own.  It makes no sense — Why would you not include 176 additional workers in a union; adding the aides and paras would increase TENIG’s collective bargaining group to over 300 members strong!

We know that Mary’s decision was not based on an impending TENIG contract. If you recall, Mary signed a new TENIG contract in September 2013, 9 months before the existing contract was set to expire. The new 3-year TENIG contract begins July 1, 2014 and goes to June 30, 2017. I will not believe that Mary Minicozzi made this decision on her own – what did she have to gain? Was there a promise of something in exchange?

Why did Ruthann Waldie repeatedly tell the aides and paras that the law required them to join TENIG when this week the story changes and now are told they must form their own union? Things just don’t add up.  It reminds me of the line from Shakespeare’s Hamlet, “Somethings rotten in Denmark”.

Section 1201, Article XII, Unfair Practices of the Public Employee Relations Act states that public employers, their agents or representatives are prohibited from engaging in ‘unfair labor practices’. As defined by Public Employee Relations Act, unfair labor practices include a couple of relevant sections: (1) Interfering, restraining or coercing employees in the exercise of the rights under Act 195 and (2) Dominating or interfering with the formation, existence or administration of an employee organization.

We know that interference has occurred in the collective bargaining process of the aides and paraeducators of the TE School District. At the ninth hour, the collective bargaining process was derailed. Why would anyone risk the legal ramifications of tampering with the process?  Who is involved and why?  Did the president of TENIG act alone or was she coerced? Did the Superintendent, the School Board or the District Solicitor know what was going on?

For the record, as of Friday, June 6, an attorney at the PA Labor Relations Board reported that the aides and paras collective bargaining file remains open and their application active.  By exposing the interference in the collective bargaining process, maybe there is a chance that this situation can ‘right itself’ and continue to move forward with the June 18 conference call and a September election to join TENIG. The District aides and paras have earned this right.

The T/E School Board has a fiduciary responsibility to those who have elected them to serve as advocates and stewards of our school district. I do not want to believe that any member of the School Board was involved nor had any knowledge of the derailment of the collective bargaining process of the aides and paras.  With accusations of interference, tampering, collusion, misconduct, etc. swirling, the Board needs to act quickly.  I suggest an internal examination to figure out ‘who’ knew ‘what’ and ‘when’. The PA Labor Relations Board may deem there is sufficient evidence to conduct their own investigation and if I were T/E School Board directors, I would want to be out in front of such an investigation not behind it.

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PA School District’s Financial Problems … Taxpayers Draw the Short Straw

Pennsylvania State Education Association (PSEA) the state teachers union recently released a study, Sounding the Alarm, which looks at the financial crisis in school districts across the states.  The paper examines how districts are being forced to cut educational programming to meet the demands of school budgets because of the public schools financial crisis.

The PSEA report identifies the following five key problems that have combined to create a financial crisis in the public schools.

1. State Budget Cuts. Unprecedented state funding cuts and the elimination of key funding programs have compounded underlying, systemic problems, particularly for lower-wealth districts.

2. Charter School Payments. Charter and cyber charter school laws result in a net increase in costs to school districts.

3. Declining Tax Bases and Rate Limits. Declining local property values and caps on property tax increases have eroded school districts’ tax bases and curtailed their ability to raise much-needed revenues.

4. Underlying Fiscal Weakness.  School districts showing the greatest underlying financial weakness had fund balances averaging 1.27 percent of total expenditures. These districts tend to be relatively small, rely heavily on a single source of revenue, have a small amount of buffer within their budgets, and carry a heavy debt load. They range in type from urban school districts, to small districts in the coal regions and Monongahela Valley, to rural districts in the central and western parts of the state.

5. Pension Cost Increases. A decade-long “holiday” that allowed employers to avoid paying their share of retirement contributions, coupled with investment losses from 2008 and 2009, forced the current increase in employer payments.

In the Education section of today’s Philadelphia Inquirer, we learn that Philadelphia schools may not be opening in September due to a budget gap for 2012-13 of $218 million! The school district officials are hoping that the five unions operating in the Philadelphia public school system will ‘giveback’ $156 million to help next year’s budget.  There is discussion of privatizing the custodial services; officials think they can raise another $50 million from maintenance, transportation and custodial cutbacks.  Even if this wishful thinking translates into a reality for Philadelphia public schools, they figure they will still end up short by $94 million.

In the meantime, Mayor Nutter is trying to collect $90 million in taxes for the school district next year by shifting to AVI (Actual Value Initiative) system for property taxes.  Nutter claims that the new system will more accurately indicate the increase in market value of properties in the city but includes two tax hikes to Philadelphia’s properties owners.

Whether it’s PSEA or Mayor Nutter in the city, why is it that the solutions have one thing in common – the burden falls to the taxpayer with increased property taxes.  I’m really struggling to understand how taxpayers are going to survive the increases in the tax bills.  We all want the quality of the school districts like T/E maintained, we get that our property values are tied directly to the desirability of the educational program but … if the residents can no longer afford to live in these communities, than what difference does it make?

Layer the state funding cuts with the teacher’s pension and health care benefit cuts and add in the community’s demand for excellence in the schools and you are left wondering how are the school districts supposed to balance their budgets?  Answer seems simple … either decrease spending or increase revenue.  Problem is that the school boards are finding themselves left with few options short of jeopardizing the quality of education, as they discuss options to increase revenue.  One of the more unfavorable budget strategies left on the table is demotion of professional staff for economic reasons and increasing class size.  Of course, there was another revenue source but that option was not taken to the voters — the Earned Income Tax.  It was decided that it would not pass a voter referendum.  While that is probably correct and an EIT would not have passed, I wonder how the community is going to feel about increasing property taxes and possible decreasing property values.

Like many people in this community, I too feel the frustration as we sit on the sidelines of the District’s budget discussions and watch for updates from the teacher negotiation talks.  I have asked for transparency in the negotiation process but apparently, that is not to be … interesting to note however that in some parts of the country, teacher contract negotiations are held in the public.  For instance, in Idaho the state law allows public attendance at all labor discussions.

Below is a comment for Community Matters from a resident that shares his/her frustration:

Comment from ‘Damage Control’

T/E Budget Crisis Solved!

Move to Haiti. Yes, you’re reading this correctly— move to Haiti. Students, teachers, administrators, board and taxpayers – move to Haiti! … where they use rags as soccer balls, bicycle rims for basketball nets, parking not an issue. Teachers get paid $5,000 per school year, administrators reap $7,000 and yes, like all the other districts, the superintendent makes $10 worth of stogies (not stoga’s). Best of all, UNICEF and the Salvation Army “underwrites” the entire school system!

School board, what nerve you have in asking non-profit organizations to help with a bailout. I am not a teacher nor do I have children in attendance. I’m just an old taxpayer who sees the “writing on the wall” with this school board and this particular cost savings “strategy” is one of the reasons that prompted me to write this piece.

How dare you! How dare you ask non-profits for a handout when you have $30 million in reserve! You say this reserve money is set aside for rainy day issues, sick day payments, retirement, etc.—Total BS and I don’t mean in a masters or PhD degree sense! How dare you ask these non-profits when your net worth far exceeds any amount these local non-profits could attain even if they all pull together!

Aretha Franklin sang about RESPECT, Rodney Dangerfield got more. You, the board, gave NO respect to Ms. Whittaker, the TEEA president at the last school board meeting. Granted, you announced and stressed at the meeting that only TE residents could speak—a.k.a.—allowed to be heard. Excuse me? Is Dr. Waters a resident? He speaks at school board meetings and he commutes from a different time zone!!! And, by the way, who pays for his gas—TE resident tax payers do! A TE resident voiced that the TEEA president be heard—you board, denied that request. By denying Ms. Whittaker the 1st amendment right of every American, you fired the “first shot” deep into the bowels of the TEEA ship.

Am I just blowing smoke? Don’t think so. Threats of cutting family coverage without ability to purchase such coverage, demoting top educated and experienced teachers, over-crowded classrooms, etc. will only bring together teachers, students, parents and the many news cameras and media to every school in this top-notch and one of the richest school districts in America come this September. Lines drawn, let the battle begin—what a shame! There will be no winners.

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Expert Negotiators Named as TESD Teacher Contracts Talks Begin

Tredyffrin Easttown School District contract negotiation process with the teachers union, Tredyffrin Easttown Education Association (TEEA) is officially underway. The current 4-year collective bargaining agreement expires June 2012.  (Click here for current contract).

With a cooperative tone, both sides have issued their preliminary statements – the school board recognizing the quality and standard of the District’s teachers but reinforcing the severity of our economic times.  And the teachers union proudly applauding the school district as one of the best in the state and stating their desire to work together through the contract negotiations.  The TEEA however did voice concern that no school board director was part of the negotiating team.

Representing the school district for the teacher contract negotiations:

  • Dan Waters, TESD superintendent
  • Sue Tiede, TESD human resources director
  • Art McDonnell, TESD business manager
  • Jeffrey Sultanik, Fox Rothchild, Blue Bell*

* Sultanik’s law practice focuses on personnel and labor relations for municipal and school districts. He chairs his firm’s Education Law Group, which has provided legal services to more than 90 school districts throughout PA.  During his tenure as former president of the PA School Board Solicitors Association, Sultanik presented legislative testimony before the PA Senate Education Committee, May 2009.  Click here to read a copy of his testimony, ‘Public Hearing on Teacher’s Strikes in Pennsylvania and the Impact on Public Education’. 

Currently at the helm of the school district’s teacher union is TEEA president Laura Whittaker, a Conestoga HS social studies teacher.  Representing TEEA in the contract negotiations is Ruthann Waldie, a UniServe representative from the PA State Education Association.  Other members of the teacher negotiating team have not yet been announced.

As an aside, Waldie represented the Unionville Chadds Ford School District teachers union in their recent and very long (challenging) teacher contract negotiations. If you recall, the state intervened and assigned an outside arbitrator in the UCFSD negotiations.  Although the arbitrator was brought in to bring both sides together, there was a feeling from the UCFSD teachers union (a feeling that was shared by Waldie) that the arbitrator did not fairly represent the teacher’s side.  I share this information, to point out that neither Sultanik nor Waldie are novices to school district negotiations.

With two ‘A players’ (Sultanik and Waldie) in the school district/teacher union negotiating world representing the opposing sides, we’ll have to wait and see if the TESD contract process may put their skill and experience to a test.

Looking beyond T/E school district boundaries, did you see the suggestion of one Philadelphia City Council member to help fund the Philadelphia city school system?  With a larger than expected budget shortfall (nearly $80 million in the red!), Councilwoman Blondell Reynolds-Brown obviously supports the theory that difficult times require creative solutions.  Her proposed legislature would keep the city bars open an additional hour, until 3 AM.  This extra hour of liquor tax revenue would net the schools an extra $5 million.  I’m all for the ‘thinking outside the box’ ideas but somehow the use of  liquor and schools in the same sentence just seems wrong – isn’t there a better way?

Chester Upland School District has become the poster child for failing school districts in the state.  CUSD announced to the state in December that they would be out-of-money by early January and therefore, unable to meet their payroll, utilities, etc.  With the announcement, brought an offer from the CUSD teachers to work without pay, at least temporarily.  At the ninth hour, the federal court intervened, issuing a short reprieve and an order for the state to advance $3.2 million to the district. Although the state money has continued to keep the doors open and the teachers on the job, this band-aid solution was only worth a few weeks.

Come the beginning of February, Chester Upland School District will have used up their advance and once again, be out of money – CUSD needs approximately $20 million to finish out the school year. Gosh, don’t the kids in CUSD deserve to know that their schools will be open until the end of the year?

Finally, click here for a draft legislative proposal that several PA state legislators have recently made public.  Marked confidential, the draft proposal document is titled “Chester Upland Fiscal Distress” and dated November 4, 2011.  Interesting to note that this draft proposal was written prior to CUSD’s request to the state for financial help.  The proposal calls for the state to take over school districts in financial distress (starting with Chester Upland) and run the school district with the use of an oversight board – a ‘Special Board of Control’.

This special board would have the legal authority to cancel teacher contracts, turn district schools into charter schools, reassign or suspend staff and to close schools. To be clear, this is only a draft proposal and no formal legislation has yet been introduced – however, this draft would suggest that the ‘handwriting is the wall’  for the introduction of this, or similar legislation.

Looks like Chester Upland School District could become the model for all distressed school districts across the state. It is probably a fair assumption that how the state decides to handle the financial crisis in CUSD will be duplicated in every other failing school district in Pennsylvania.

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Underfunded Pennsylvania Pension Funds Need Real Reform

Pennsylvania is facing a multi-billion dollar public pension crisis – now is the time for pension reform in Harrisburg.  The Public School Employees Retirement System (PSERS) and the State Employees Retirement System (SERS), the two systems administering retirement accounts for state and public school employees, are severely underfunded and will become insolvent without an increase in taxpayer contributions.

In discussing the need for pension reform, in December 2010, I wrote . . .

“did you know that more than half the state’s municipal pension plans are less than 90 percent funded?  Calculated as the ratio of assets to liabilities, 644 municipal pension plans are labeled as “distressed” by the state’s Public Employee Retirement Commission (PERC).  Of those, 26 are less than 50 percent funded and branded as “severely distressed.”

I cannot speak for the accuracy of those numbers thirteen months later, but I have to believe that they have not improved.

One of the last bills signed into law as Gov. Rendell was leaving office was HB 2497, which became Act 120.  But instead of reforming the defined-benefit pension system, this legislation ‘kicked the pension can’ further down the road, by deferring pension payments and increasing the unfunded liability by billions of dollars in lost investments and interest – in essence, leaving the problem on the shoulders of our children and grandchildren.

In the old days, the nature of traditional pension coverage in the private and public sector was quite similar; the majority of all employees were covered by a defined benefit plan where the liability of the pension lies with the employer. However, there is a reason why in the last decade that the vast majority of private sector employees have turned away from defined benefit plans to some form of a 401(k) type plan – the challenge of keeping a defined-benefit plan, particularly in our unstable economic climate, has proven too great for most companies to bear.

Defined-benefit plans may provide the best financial safety net for employees, but most private sectors can no longer afford to maintain them – the strain on the company balance sheets has proved too large for firms to withstand.  And even in the case where a company struggled to keep a traditional defined-benefit plan in place, the economic downturn has prompted plan changes whether they were preferred or not.

Teachers and state workers should not be targeted as public enemies because of their benefit packages. However, I just do not see how their defined-benefit plan (in its present form) is sustainable for the future.  Clearly, pension reform should not affect any vested state employees or pensioners already in the system – changes should only affect future employees.

From the taxpayer side, we are angry because we have to make up the state’s pension fund losses as we watch our own 401(k) accounts depleting. The teachers argue they never took a vacation from paying into the system and that a pension is necessary to attract and keep good teachers.  Pennsylvania State Education Association (PSEA) the state’s largest teachers union is on record that will oppose any proposed changes to Act 120, such as a 401(k) type of defined contribution plan. This is a catch-22 situation; we want to maintain a high quality of teachers and state workers in Pennsylvania, but we cannot afford the current pension price tag.

During the last election cycle, there was much discussion from school board candidates about the District’s financial situation and possible solutions, including imposing an earned income tax.  Some candidates believed that because the financial problems were caused by Harrisburg, that it should be up to the state to find the solution, not the school districts (taxpayers).  Candidate and now re-elected school board president Karen Cruickshank called on the state to “fix your mess” and suggested that residents contact their legislators and the governor to push for pension reform.

State Rep Warren Kampf (R-157) has an editorial, “Change the pension system to help taxpayers” in today’s Phoenixville Patch. In the article, Kampf states that his pension reform legislation,

“will require all new state employees and those hired by school districts to participate in a defined contribution plan (like the 401k-style plan that is prevalent in the private sector) where the taxpayer would  be required only to match the employee’s contribution. This would be in lieu of the traditional defined benefit pension plan”. 

Under Kampf’s plan, state employees would have a system similar to the private sector where an employee owns their 401(k) plan and takes it with them if they leave the job.  In a Community Matters article from December 2010 (cited earlier) I wrote,

“. . . As another form of fiscal responsibility, Kampf announced that he would not be taking the state’s defined-benefit pension plan and will work on the creation of a defined 401K-type plan for legislators and state employees.” 

I have not agreed with all of Kampf’s votes since he took office, but to give credit where due . . .  Kampf’s promise to work on pension reform were made prior to his taking office in 2011, and today we learn that he plans to introduce his proposed reform legislation this spring.  (Click here to read the Phoenixville Patch editorial).

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Loss of $570K in T/E Real Estate Appeals & Outsourcing of Custodial Services Remains a Strategy Option for TESD

There was a T/E Finance Committee meeting last night and although the entire school board was present, the Finance Committee is Betsy Fadem (Chair), Kevin Buraks, Jim Bruce and Rich Brake.

There were several interesting discussion items for me – Ray Clarke’s notes follow mine.  There was much discussion about the school district’s decreasing real estate tax revenue. We learned that for 2011, there have been 147 successful residential real estate assessment appeals ($217K) and 41 successful commercial appeals ($352K) for a combined total of $570K in lost tax revenue.  The largest commercial appeal was by Vanguard who was successful in five separate appeals.  There was discussion about the school districting appealing the decisions on some of these successful commercial appeals.  The example of Mealey’s Furniture and Big Lots was used – where a commercial real estate owner could have appealed their tax assessment while their real estate was vacant, received a lower assessment and then the property is leased and its value goes back up (but the commercial owner remains at the lower assessed rate).  The case could be made by the school district that the assessed value of the commercial real estate has gone up and they should now pay more.

Appealing some of these commercial decisions could be a way to generate additional revenue for the school district.  However, what was unclear was the ‘cost’ of these appeals to the school district (financial and staff time).  In Harrisburg, there is discussion on requiring nonprofits organizations to pay real estate taxes.  This was not discussed at last night’s meeting, but should this change occur, there is some new tax revenue to the school district.  I wonder what kind of revenue could be generated from real estate owned by nonprofit organizations.

Another possibility for generating school district revenue was to shorten number of days on the school calendar.  Apparently, TESD’s current school year is 9 days longer than the state requirement.  For each non-teaching day, the district would save $200K in teacher and benefit costs.  Shortening the school year by 9 days would yield $1.8 million in district savings.  This is an interesting cost-savings approach and clearly the district cannot cut all 9 days.   Some of those extra days are in the calendar if snow days require their use.   But does it need to be 9 extra days —  the last few days of a school year are not productive so what about cutting those half-days at the end of the year from the calendar.

(Note: It is not entirely clear to Ray Clarke and myself re the 9 days. Ray understood that strategy had to do with the 9 in-service days of the teachers ‘only’ and decreasing those in-service teacher days versus my understanding that the strategy involved decreasing the number of calendar school days. Ray has a call in to the school district for clarification and I will update when the information is available.)

A ‘new’ budget strategy under review for FY2012-13 was listed as ‘reduce equipment budget’ – $300K.  I was clueless what ‘equipment’ this referred to – turns out the administration is suggesting reducing IT equipment purchases for the district.  This is confusing because computer equipment was on the chopping block for the FY2011-12  budget and then when Corbett returned funding to the school districts (TESD received $1.3 million) the T/E school board discussed the putting the computer equipment back into the budget.  Ultimately, the $1.3 million was added to the fund balance.  So now here we are again with another round with IT equipment and a strategy to reduce the budget by $300K.  Where is the school district’s long-range technology strategy?  Taking technology ‘on and off’ the budget each year is not a strategy!

The outsourcing of the custodial services carried over from last year’s budget strategies and at $950K remains the most significant line listing of possible savings.  The school district was able to save the in-house custodial services for the FY2011-12, helped greatly by the union members not taking raises for this year.  As reported last night, their members are working with the school board on ways they continue to lower costs.  More information should be available in January.

Ray Clarke’s comments from the Finance Committee Meeting:

At Monday’s meeting the TESD Finance Committee decided – I think – that it will recommend that the full Board on January 3rd 2012 not limit the 2012/13 tax increase to no more than the Act 1 Index increase of 1.7%. However, there seemed to be a sentiment that the tax increase in the Preliminary Budget (required therefore to be made available by January 5th) be capped at the Index plus Exceptions (a total of a 3.3% increase). Anything more would require a referendum.

A few observations:

  1. The property tax rate goes up as the base goes down. Successful appeals have cost over $0.5 million in revenue for 2012/13. The Index increase raises $1.5 million. The Committee did not pay much heed to the linkage.
  2. The Committee plans to raise property taxes through “Exceptions” that compensate for the increase in PSERS expenses just about dollar for dollar, while sitting on $15 million of taxpayer money in the Fund Balance earmarked for exactly that purpose and with no plan whatsoever as to when the money might be used.
  3. With the $3.3 million tax increase and visible budget strategies worth $0.7 million, the 2012/13 deficit is projected to be about $2.5 million. On top of the quantified strategies, there was a report of constructive discussions with TENIG (for savings at some percentage of the $950,000 out-sourcing estimate) and the option to cut up to nine teacher in-service days, worth $0.2 million per day. It appears that these numbers made the Committee comfortable that any gap after the 3.3% property tax increase could be covered from the Fund Balance.
  4. Notable that the largest expense decrease is $300,000 from reduced IT hardware spending. Is that the same line item that was last recommended for an increase to use of some of the $1.3 million state windfall? Is there an IT strategy at all??
  5. There was mention of a sentiment inHarrisburgto again reduce the social security match, and also to even reduce the PSERS match. Not quite the direction desired by the advocates of a state solution to the problem!
  6. The cost of the current benefit plan was mentioned in passing. $19,000 per year for family coverage. I have to think that a majority of union members would be willing to restructure the plan, if it meant more cash compensation and an overall benefit to the district. There was no discussion of any change to the status quo salary/benefits projection in the financial model.

It should be noted that this recommendation does not preclude the tax increase being lower than the Index plus Exceptions, but we know how that works!

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In a Show of Union Solidarity – Pennsylvania Teachers Unions Joining Forces with AFL-CIO

We have watched the Governor of Wisconsin, Scott Walker and his battles with state employees over legislation to take away collective bargaining rights. Walker’s actions  hit a cord across the country; public employees are drawing the battleground in Ohio, Florida, from coast to coast.  Now we see it in Pennsylvania.

The proposed $1 billion budget cut to public education by Gov. Tom Corbett has driven three teachers unions in the Lehigh Valley area to organize.  Because of school district budget deficits and state funding cuts, hundreds of teacher jobs are on the chopping block in the Lehigh Valley . . . the teacher unions are fighting back.  In a show of solidarity, 3,500 teachers in the Allentown, Bethlehem Area and Easton Area school districts have voted to unite with union members from the Lehigh Valley Labor Council and Pennsylvania AFL-CIO. The teachers are joining forces with their brothers and sisters in the manufacturing, building and service unions to fight Harrisburg.  The AFL-CIO membership in Pennsylvania has 900,000 union workers. Together, the unions believe they need to take a stand for the working middle class family in Pennsylvania.

With organized labor getting behind the teachers, one could guess that means additional financial support to help fight Harrisburg. Union members believing that Corbett’s budget is an attempt to balance the budgets on the backs of the working class, these 1.1 million voices are saying ‘no’ to the Governor and his proposed budget cuts for public education.  

Exactly what these ‘voices’ have in mind for Harrisburg is yet to be seen. And I wonder if the TESD teachers will decide on a similar path to the Lehigh Valley teachers as the school board works to balance the district budget and as the calendar moves closer to contract negotiations.

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Just In . . . State Teacher Union Encourages Local PSEA Members to Consider One-Year Pay Freeze

Seemingly to show support for the severity of the state’s economic situation, the Pennsylvania State Education Association (PSEA) is encouraging its local teacher union members to consider Gov. Corbett’s request for a one-year pay freeze in the following press release. 

Could this be the answer to school district problems?  Whether it is the possibility of furlough and school voucher legislation or the current anti-union sentiment that is sweeping the country, I think we should view this as a positive message from PSEA.  Do we know how much revenue would be saved by with a one-year pay freeze in TESD?

PSEA President responds to Governor’s call for a one-year pay freeze

PSEA President Jim Testerman released a March 16 statement responding to Gov. Tom Corbett’s call for school employees to consider a one-year pay freeze.

Testerman released the following statement:

“The education professionals in the Pennsylvania State Education Association have been willing to be good public partners and tackle tough issues before, and we’re willing to do it again.

“We hope to prevent a $1 billion cut in state education funding, but we also realize that tough economic times have hit many of our public school districts.

“We have serious concerns about some of Gov. Corbett’s proposals, but we want to do our part to ensure that our students’ education does not suffer as a result of the worst recession since the Depression.

“As part of his budget proposal, the governor requested that education employees accept a one-year pay freeze. The governor stated that this decision is ‘determined at a local level and arrived at by contract and collective bargaining.’ As president of the Pennsylvania State Education Association, I concur.

“I encourage PSEA members to seriously consider this request.

“Today, I sent a letter to the presidents of all PSEA locals.  I encouraged them to enter into discussions with their school boards about a pay freeze or other cost-saving measures to maintain class sizes and academic programs.  In some communities our members have recently agreed to economic concessions to maintain class sizes and academic programs. Their contribution must also be recognized.

“Such cooperation can help to preserve the academic gains made in Pennsylvania’s public schools over the last decade.

“Our scores on National Assessment of Educational Progress, the ‘Nation’s Report Card,’ are among the country’s best.  Our students showed progress in all academic subjects and grade levels.  And seven of 10 graduates are going on to higher education.

“We need public partners to join us in our effort to advocate for our public schools.  PSEA calls on parents, caregivers, and community leaders to ask legislators to prevent the cuts to school funding.  A pay freeze alone will not be enough to preserve the programs our students need to succeed in the future.

“Despite the difficult economy, we must remember that students only get one chance at a quality education.  Pennsylvanians must not permit this recession to rob our children of the opportunity public education provides to prepare them for a better future.

“Pennsylvania’s schools are among the best in the nation.  PSEA remains steadfast in its commitment to provide a quality education to the 1.8 million children who attend our public schools.”

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Teachers’ Unions Set ‘Blocking School Vouchers’ as Priority

Two sides to every coin . . . supporters call school vouchers a right; a matter of choice.  Opponents believe that the proposed voucher program is unconstitutional and will further erode the state’s lowest-performing schools.

The teacher union opposition to school vouchers became clearer this week when representatives from the two major unions brought their case to the state’s House Education Committee.  Representatives from Pennsylvania State Education Association (PSEA) and American Federation of Teachers of Pennsylvania (AFT-PA) told the Education Committee that the teacher unions were focusing on two major priorities for 2011 – budgetary assistance and blocking the proposed school voucher legislation.

Pennsylvania is loosing federal stimulus money, which will create a shortfall of $1 billion in education funding.  According to Gov. Corbett, the state is facing a $4 billion deficit in next year’s budget so education-spending cuts are expected. If you recall, Corbett and Democratic state senator Anthony Williams of Philadelphia (one of school voucher bill SB1 originators) supported school vouchers in their individual campaigns last year.  At this point, we do not know how steep the cuts in education spending will be and no one may know for sure until Corbett unveils his preliminary budget, which is expected to be delivered sometime in March.

Although the school voucher bill will have several hearings in the state House during the next couple of months, Corbett’s budget address in March may see the proposed legislation moving forward.  As the proposed SB1 now stands, it would direct over $50 million to the neediest families in the lowest-performing schools in the state.  The estimated cost of the program is less than 1% of the current education subsidy. 

Besides the school voucher program, the other major education issue that must be addressed by the state is the funding of the Public School Employee Retirement System (PSERS).  PSERS as currently designed is not sustainable and threatens to break the budget of school districts across the state.  Although the State Legislature recognized the significance of the PSERS funding problem last year, a long-term solution is needed.   

Anticipating a major battle ahead over the proposed school voucher legislation, the PSEA union, which represents 190,000+ teachers in Pennsylvania, has announced an 11% increase in dues for its members.

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