Pattye Benson

Community Matters

outsourcing

Rising healthcare costs … the explanation for outsourcing strategies?

March 17, 2013
36 Comments

Economic times and tight school budgets have school districts scrambling to find ways to cut costs, and the ‘outsourcing’ chopping block continues as a major target. Proclaiming cost-savings for cash strapped schools is the driver behind school district outsourcing decisions – and there appears to be an outside company available for virtually every classified service.

There’s nothing wrong with researching the outsourcing idea; otherwise how will the School Board know if they are getting the best services at the best prices. That said, I do object that the notification letter from the District was mailed to TENIG without any mention at a School Board meeting. It struck me odd that the president of the teachers union rather than the president of the School Board disclosed this information. Don’t misunderstand, I am grateful that TEEA president Laura Whittaker brought the public up to speed on the outsourcing process. But I don’t think it should be her job to keep ‘us’ in the loop. It’s important that the public be in the loop during the Board’s ‘discovery’ process as it relates to the outsourcing bids, but also to important that the Board list to resident input on the topic.

The fact is that all the school districts are in a tough situation and that some form of outsourcing has become an avenue for some districts to save money. Over in Pennsbury School District, members of their support staff, PESPA (Pennsbury Educational Support Professional Association) have taken their cause to the community. With prominently displayed yellow lawn signs, PESPA are delivering strong words to their School Board, ‘STOP Pennsbury from Outsourcing’. Well-organized, the union is fighting back through a website dedicated to outsourcing, www.pennsburystudentcare.org which includes an online petition with over 1200 signatures.

According Bucks Local News, Pennsbury’s business manager Dan Rogers (equivalent to our Art McDonnell) is claiming that they could save about $21 million over the next 5 years by outsourcing custodial services, maintenance workers, paraprofessionals, IT support technicians and instructional aides. An additional $4 million could be added through the sale of buses and equipment. PESPA represents about 600 support staff members – they continue to work under the terms of their old contract, which expired in 2011. Fascinating to note that the chief negotiator for the Pennsbury school board is Jeffrey Sultanik (remember he was the negotiator for T/E School Board with our teachers union).

Sultanik is quoted at a School Board meeting saying, “ …the only way the Board would not consider subcontracting is if the union is willing to make significant salary and benefit concessions.”

Bucks County’s Quakertown School District support staff, Quakertown Education Support Professionals Association (QESPA) fighting back against the privatizing threat of 100 custodians and cafeteria workers. Armed with 1,500 signed petitions from community residents, QUESPA members want their Board to know that taxpayers do not the high quality of services provided to the children to be given away to an outside private company that will bring strangers into the schools. QUESPA’s current contract expires the end of June but Board is underway in their solicitation of proposals from private outside vendors – believing that it could help save money on food and retirement benefits.

In southern Chester County, the driving force behind Brandywine Heights Area School Board’s decision to authorize an RFP to outsource paraprofessionals is the Affordable Health Act that will take effect in 2014. Currently, in the Brandywine Heights district, the paraprofessionals work 6 days a week, 30 hours a week and are considered part-time. However, under the Affordable Health Act, all workers who work 30 hours or more are eligible for benefits.

Kennett Consolidated School District (KCSD) is slightly ahead of TESD in the process. Having already sent RFPs out for outsourcing custodial staff, they are now reviewing the bid received from Servicemaster, a worldwide provider of custodial services. According to data provided, outsourcing of custodial services would save KCSD approximately $400K in 2014, with higher projected savings in years ahead. KCSD is set to make a decision this month on privatizing custodial services and are planning a similar review of outsourcing proposals of instructional and teaching assistant staff in the next few months.

I thank Keith Knauss, School Board director for Unionville Chadds Ford School District (UCFSD) for supplying the following background information for discussion:

” … As background, in 2009-10 TE had 312 full-time support personnel and 78 part-time support personnel. That’s the most recent year available from PA Department of Education.

Those 312 full time support personnel are entitled to salary and benefits defined in the current TENIG contract.
http://www.tesd.net/cms/lib/PA01001259/Centricity/Domain/42/TENIG09july.pdf

Let’s examine the district’s cost to employ a hypothetical 10 month, 190 day, 8 hour per day, Clerk Typist for this year and next.

2012-13 2013-14
Salary $31,981 $33,410 $21.04 to $21.98 per hr (4.5%)
FICA @7.62% $1,218 $1,273 7.62% half reimbursed by the state
PSERS $1,976 $2,835 12.36% to 16.97% half reimbursed by the state
Healthcare $18,700 $20,196 est. family coverage, 8% inflation
Holidays, Sick Leave $3,703 $3,868 10 paid holidays, 10 sick days, 2 personal days
Total $57,579 $61,582
% incr 7.0%

There are two factors that might lead school directors to investigate outsourcing.

First, the cost increase from this year to next is estimated to be 7%. This a problem when the district’s revenue is constrained by the Act 1 Index that is estimated to be 2.2% next year.

Second, the cost of benefits is far higher than in the private sector. The PSERS retirement plan and associated cost has been under discussion several times in this blog. What hasn’t been discussed is the cost of healthcare. According to the Kaiser Foundation, the national average family plan costs $15,745. The employer pays $11,429, the employee pays $4,316. This is compared to TESD where the family plan is estimated to be $19,000. The TESD pays $18,700, the support staff employee pays $300. The district’s cost of healthcare for support employees is estimated to be $7,000 above the national average.
http://ehbs.kff.org/pdf/2012/8345.pdf

As always, I try to be thorough and accurate. I have purposely not advocated for any solution or made any determination as to what is fair. Constructive criticism is welcome….”

Thank you Keith for this information. Accepting that the District’s ‘hands are tied’ re PSERS costs (at least for the short-term), clearly the focus needs to be redirected towards healthcare costs, where the opportunity for change does exist. I have been vocal in my support of TENIG, but as was the case with the teacher contract negotiations, healthcare costs are negatively affecting the budget bottom line. The teachers provided healthcare concessions in their latest contract and I am hopeful that given the opportunity, the TENIG members may do likewise.

Outsourcing ‘Chopping Block’: A real possibility for custodians, secretaries, maintenance workers, kitchen staff, security personnel, aids and paraeducators in T/E

March 6, 2013
46 Comments

In my last blog post, I indicated there would be a follow-up post on TENIG and discussion of outsourcing. TENIG President Dave Fillippo delivered an emotional statement at Monday night’s TESD Budget Workshop on the eve of his TESD retirement this Friday. His statement, in its entirety, follows this post.

Much troubles me about the idea of outsourcing of the non-instructional employees of the District, especially at this time. Excluding the District’s administrators and teachers, TENIG members are the secretaries, custodians, maintenance workers, kitchen staff and security personnel. Although aides and paraeducators are not members of TENIG, their jobs are also on the outsourcing ‘chopping block’ as budget impact items under consideration.

The Budget Workshop presentation only included two budget impact items for the Board to consider – (1) the outsourcing of TENIG staff and (2) the outsourcing of aides and paraeducators. The Board has given the required 120-day written notice of their intention to issue an RFP to seek outsourcing bids for TENIG and the aides and paraeducators.

In the wake of the Sandy Hook tragedy, we know that the Board has increased the District budget for safety. They approved $250K for ‘district security enhancements’ and hired former Tredyffrin Township police chief Andy Chambers as a security expert, in an effort to make the school buildings more secure and to protect the students and staff. From a security standpoint, how then can it possibly make sense to dismiss long-serving members of the T/E school district community in lieu of strangers that do not know our schools or our children?

Those employees whose jobs are under consideration for outsourcing, are highly trained, dedicated and caring professionals with roots in our community; the majority live in the T/E School District. These are the people who the community knows and trusts. How could it make sense to replace them with high turnover, sub-standard inexperienced workers? There is no doubt in my mind that the quality of workers (and probably the productivity) will diminish with the largest percentage of new workers coming from outside the District. Should outsourcing occur, the District will not only lose local, dedicated employees, but we also lose the community pride and spirit that comes with people working in the schools that ‘they’ attended, and that their children attended.

In these tight budget times, the custodians, secretaries, maintenance workers, kitchen staff and aides all become a target for outsourcing. By privatizing the jobs, the District hands over important public service jobs to huge, private corporations who pay their employees lower wages. When private companies take over, they do away with as many full-time positions as they can and hire part-time workers at the lowest wages possible, so that do not have to offer basic health care benefits.

Outsourcing is not non-profit. Outsourcing companies only exist for one reason – to make money. The profit margin is key to the success of outsourcing companies and they will always act in their own self-interest. As a result, our students, their parents and our community will come ‘second’ to the financial driver of outsourcing companies … profit. Saving the District money may be the endgame of outsourcing, but with that decision should be the acceptance that our children are nothing more than a “commodity for profit” to an outsourcing company.

The budget of Tredyffrin Easttown School District should not be balanced on the backs of the lowest paid public service employees. It is remarkable to me that the Board could bury administrator raises in a consent agenda and then just a few weeks later notify TENIG members of the impending outsourcing RFP. As I said in an earlier post, “Where’s the fairness?”

Beyond this discussion of outsourcing, something else occurred on Monday night that troubled me. At the end of the meeting, there was opportunity for resident comment. It was at this point that Dave Fillippo delivered his emotional statement (see below). As President of TENIG, Dave was speaking out on behalf of the union against outsourcing of the members’ jobs. However, his statement was also his “swansong’, his good-bye to the Board and to the staff. Having served the District for 32 years, Dave retires this Friday – as a result, his words delivered with emotion and pride for a community and a career that he loves. Upon finishing his statement, I found it incredulous that Board President Kevin Buraks offered no words of appreciation or thank you for a “job well done’ to Mr. Fillippo. Sure, for those 32 years, Dave was ‘doing his job’ for the District, but does that make him any less deserving of gratitude for doing it. Acknowledging years of service is important, not only to the one retiring but also to show that the Board and administration cares about its staff.

I know I am on my soapbox on this one, but saying thank you to people and letting them know that they are appreciated is important. If we do not acknowledge our thanks, I think we lose a human moment, a human connection. So, in what I hope was an oversight on Mr. Buraks and the School Board’s part, I want to wish Dave Fillippo all the best as he begins a new chapter in his life. And to thank Dave for his 32 years of dedicated service to the Tredyffrin Easttown School District and for the contributions he made to the community. Thank You!

Dave Fillippo’s statement read at the TESD Budget Workshop, March 4, 2013

Community and friends, Dr. Waters, Sue Tiede, members of the Board, principals, teachers and colleagues that have made my career here at TE so special. My association with this school district started at kindergarten at Paoli Elementary School through graduation at Conestoga, and eventually employment in the maintenance department in 1980. I have never lived a day of my 60-plus years outside of residence in Tredyffrin Township. TE is my home and always will be.

I have loved working here in the community, no regrets, even though I was mocked at times, by friends and contractors who made millions while I, in comparison worked for a meager hourly wage. Today, I have a deep concern that in the future, others like myself, that are gifted with a servants heart will not be able to earn a sustainable wage here, in our community.

For the last two years, I have listened to the “Success and Sustainability” speeches here from the Board. A campaign destined in part on devaluing the employees of TENIG. Knowing that indeed the members of TENIG in fact are much of the reason for this District’s success and sustainability.

TENIG harbors a wonderful culture that provides security and safety to our children, maintenance of our schools and communities infrastructure, far beyond that of any contract service. TENIG offers the District workers who are members of the community, who have a stake in the community. ‘True Community’ one may say.

My vision of TENIG is one of servant leadership, employees who have a stake in the growth of our community, who are approachable, willing to make sacrifices as we have done, time and time again. Question is why then would you [the Board] want to turn the services overs to profiteers? Knowing that TENIG has always been responsible and yielding to the financial circumstances of the times. Are we to be the scapegoats to remedy the mistakes of previous Board decisions? TENIG is not at fault here. We have been here doing our job and wish to continue to do so.

Our custodians have conceded more than anyone, with the wavering of wage increases for 2 years, and taking a 10 percent wage cut. Secretaries work an unpaid lunch while sitting at their desks, often coming in early, clocking in at their scheduled tie, clocking out at quitting time, only to return back to work to finish their day; unpaid for the extra hours. Yielding to the workload that has evolved with the condensing of assigned duties. Yet, I seldom hear them complain, they are here for the kids, our teachers and community.

Our food service cooks, preparers, servers and cashiers provide quality lunches to our students and staff at affordable prices and in fact pay for their own operation and show a profit. Maintenance has answered every emergency in a timely fashion, once again to provide safety to our students and residents, even with the disruption of moving from our original facility, then to ESC, to scattered closets and storage spaces, and now to the old transportation garage. We did not allow the constant changes to break our commitment and spirit of service.

TENIG is here to serve its community; we offer outstanding in-house service, with responsibility to the children, parents, and taxpayers of Tredyffrin and Easttown Townships. You will not find this dedication in a for-profit contract service.

In retirement, as of this coming Friday, I will not be going anywhere. I intend to be a vital part of the negotiations with the Board and community along with new TENIG President Mary Minicozzi, Vice President John Brooks, Treasurer Gwen Durante and Secretary Jen Doyle. TENIG has an excellent leadership staff here that is sensitive to the needs and concerns of our District and is eager to share our ideas with those members of the School Board assigned to the negotiations.

A look at Enrollment, Projected Staffing, Real Estate Assessment Appeals and Economic Impact in T/E School District for 2013-14 Budget

March 5, 2013
6 Comments

I attended last night’s TESD Budget Workshop for the development of 2013-14 budget. Sue Tiede, Director of Personnel presented enrollment history and trends, projected staffing needs and changes for the District.

In the review of staffing changes from 2008 to 2013, it was interesting to note that full-time teachers during this period has decreased by 48 teachers, compared to an enrollment increase of 355 students during the same period. The total enrollment in 2008-09 was 6,132 increasing to 6,487 in 2012-13, which indicates a 5.8% increase or 355 students.

An enrollment history chart dating from 1975 to 2012, indicated that in 1975 the District enrollment at 6,497 students. From that point, 37 years ago, the District’s enrollment steadily decreased for 15 years to its lowest point in 1989 of 3,990 students. Starting in 1990, the District’s enrollment began to increase yearly to 6,487 students in 2012, which marked the highest enrollment since 1975, when there were 6,497 students. We know that there are currently 48 teachers fewer than in 2008, but the chart did not indicate what the staffing was in 1975, when the enrollment was within 10 students of where it is today.

The projected requirement for 2013-14 indicates additional staffing needs of 7.6 educators. Included in the 7.6 staffing number is the addition of one special education, one technology and three mental health specialists. The special education professional is for autistic support.

The District’s Business Manager Art McDonnell presented updates on property tax revenue lost from reassessments and economic impact on other local revenues (interest income, transfer tax, delinquent tax, and interim tax) and provided a revenue variance analysis and 2013-14 budget summary. In 2006-07, the annual property tax revenue lost to the District in reassessments was $256,561.

As presented by McDonnell, annually since 2006-07, residents and commercial property owners have continued to appeal their property taxes. The annual loss to the District in property tax revenue due to reassessments is as follows: 2006-07: $256,561; 2007-08: $244,236; 2008-09: $417,041; 2009-10: $975,994; 2010-11: $826,923; 2011-12: $595,072; and 2012-13: $411,051. However, these numbers do not paint the total picture. There is a cumulative loss as the new reassessment revenue loss is compounded each year. The accurate property tax revenue lost to the District from assessment appeals based on the cumulative effect is as follows: 2006-07: $256,561; 2007-08: $512,000; 2008-09: $44,126; 2009-10: $1,947,142; 2010-11: $2,847,464; 2011-12: $3,536,508; and 2012-13: $3,946,559. The District’s budget for 2012-13 is nearly $4 Million less due to property tax revenue lost from assessment appeals. And by the way, the $4 Million may go up as Vanguard’s assessment appeal remains an open issue; scheduled court date is April.

McDonnell presented the economic impact on other local revenues (interest income, transfer tax, delinquent tax and interim tax). Although we all know that the interest income rates at the banks is nearly nonexistent these days, it is certainly evident when reviewing the District’s financials. In 2006-07, the District earned about $3 Million in interest income versus $109K in 2011-12. However, there was some encouraging news – the District’s interest income for 2012-13 is projected to nearly double from last year, $200K. The transfer tax revenue is also indicating projected growth, from approx. $1.7 Million last year to projected $1.8 Million for 2012-13. Looking at the total revenues from interest income, transfer tax, delinquent tax and interim tax, the District is projecting $3,227,647 for 2012-13, down from last year’s $3,981,314 – indicating an approx. $750K loss in revenue. However, when you look at interest income, transfer tax, delinquent tax and interim tax in 2006-07, the total revenues to the District was $7,542,466 – approximately $4.3 million more dollars than projected for 2012.13.

McDonnell was able to provide some possible good news. Under Governor Corbett’s 2013-14 proposed budget, the state subsidy revenue for TESD is basic education funding increase of $92,016 and special education funding decrease of $11,024 – providing a net increase of $80,992 in state subsidy revenue. This is cautionary news as Corbett’s budget is the preliminary stage.

The impact items included in the District’s 2013-14 budget: $200K for administrator salary increases, $250K for District safety enhancements and $125K for support staff for network upgrade. Open budget impact items under consideration including the outsourcing of TENIG staff and outsourcing of aides and paraeducators. The President of TENIG, Dave Fillippo, read a statement in regards to outsourcing, which will be presented in a separate post.

Where’s the Fairness? T/E Administrators Receive Bonuses But Outsourcing Remains Possibility for TENIG Employees

February 26, 2013
49 Comments

Laura Whittaker, President of T/E teachers union (TEEA) delivered a status update and message of support at Monday’s school board meeting for members of TENIG (Tredyffrin Easttown Non-Instructional Group) based on the District’s possible outsourcing. (TENIG members include the custodians, maintenance workers, kitchen staff and secretaries.) Whittaker disclosed that members of TENIG’s bargaining union have received notice of their potential layoffs from the District.

The School Board is required to give TENIG a written notice of their intention to issue an RFP to seek outsourcing bids at least 120-days in advance. If you recall, when faced with a similar situation in the previous year, TENIG came back to the Board with a ‘give-back’ arrangement — employees took a 10% pay cut and waived their contracted raises for this year. In addition to saving the District considerable money, TENIG’s offer ultimately saved their jobs from outsourcing.

I do find it curious that the TEEA president is the one offering the public updates on TENIG and the District’s possible outsourcing rather than the School Board providing this information. Why?

I have heard outsourcing savings to the District estimated at $1 Million – $1.5 Million but I am not sure where these numbers come from — to my knowledge, past outsourcing bids were never released to the public. Without the details of the bids, how does one substantiate the accuracy of possible cost-saving benefits.

If the Board only looks at the bottom line, perhaps there is cost-savings. However, there are other issues to consider. As the President of TEEA, Laura Whittaker so aptly stated last night, “T/E is not about numbers and budgets. It is the people who make this District what it is.” Many of the TENIG members are local residents with a personal connection to the District – many graduated from Conestoga and/or have children in T/E schools. Can outsourcing provide the same level of productivity and quality of job performance as the current employees? I am of the opinion that privatizing these services will not mean “better labor,” but will negatively affect the lives of long-time employees and their families.

I worry that safety of the children may be compromised by outsourcing. Who is responsible for the background checks – will custodial companies that come cheap more likely to compromise safety? Background checks are expensive and a cost factor to private companies – can the District be certain that an outsourced company will actually do background checks on employees. If the District’s custodial services are privatized to save some money, what’s the old adage, ‘you get what you pay for’ is going to apply. Privatizing may mean less reliable employees in the schools, at a greater cost, over whom the District will have no direct control.

As the Board once again looks at outsourcing of TENIG jobs to save the District money, I am reminded how quickly, they approved (7-2) administrator raises last month. If you recall, the administrator bonuses were buried in a consent agenda at the January 28 School Board meeting. No public discussion was permitted until after the consent agenda vote was taken.

What about fairness? I am aware that the District administrators had not received raises in 3 years, but I still find it curious that not one word was mentioned about the District’s economic situation, prior to the approval of the consent agenda in January (giving bonuses to the administrators). Please understand that I am not comparing the work of District administrators to that of TENIG workers, but … I am struggling with the issue of fairness. The highest paid in the District, the administrators, are rewarded with bonuses (without any discussion) yet the lowest paid TENIG employees, who took a 10% pay cut and waived their raises to save the District money, are facing potential layoffs. Again, I ask, where’s the fairness in this picture?

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Note: There is a scheduled School Board Budget Workshop I Meeting for Monday, March 4, 7:30 PM. I hope that the Board will be more forthcoming in regards to the outsourcing potential and what cost-savings can be expected. I would also like to hear from TENIG President Dave Fillipo on behalf of the TENIG employees in regards to the possible layoffs.

Outsourcing of Custodial Services . . . Scapegoat for TESD Budget Woes or a Way to Save Educational Programming

March 21, 2011
4 Comments

I have mixed feelings on the issue of outsourcing of TESD’s custodial services. If you simply look at the bottom line, there is a cost savings of almost $1 million to the school district if the custodial services is outsourced. The school district is facing a major budget deficit and the contracting of support services not related to curriculum delivery is one option under consideration by school board members.

Several custodial members of TENIG (Tredyffrin Easttown Non-Instructional Group) union spoke at the last TEDS Finance Committee, and there are other issues to consider in making an outsourcing decision. Custodial employees number under 30% of the total membership in the TENIG union — 49 custodians. As we heard at the Finance Meeting, many of these custodian union members are long-standing district employees. Many of the custodial employees are local residents and there is growing concern whether or not they could find another job, should their work be outsourced. How will they support their families? As neighbors in the community, should this be a concern? Should school board members show compassion for the custodial employees when deciding whether to outsource the service?

I get the sense among some of the TENIG custodians that they feel they have become the target in the school district’s budget woes. We understand that privatization is seen as a way to preserve the classroom and its programming, but it does come with a human toll.

Outsourcing services that historically have been in-house functions with long-time employees is a major shift in institutional culture — despite the cost savings that could be realized. Probably the biggest and most difficult obstacle to outsourcing the custodial support service is the ability of staff and community to accept the change, or even the consideration, in spite of the current budget pressures and economic realities.

Can outsourcing provide the same level of productivity and quality of job performance as the current union employees? One could argue that the current custodians have developed a connection with the schools and the students. As a result, these employees may argue that they will do a better job than an outsourced company who does not share that same level of ‘ownership’ in the school system.

The RFP for outsourcing of services was issued by the school board with a deadline for bids in early April. Once the outsourced service provider bids are returned, it will be interesting to see if TENIG’s custodial employees are prepared to match the outsourcing proposals.

Bottom line . . . the school district is faced with financial challenges in the budget. If outsourcing of the custodial services can save the district $950K, should privatization take priority over education and programming cuts? On the other hand, if TENIG is prepared to make a concession and meet the district somewhere in the middle, can we agree that is acceptable? This is only the beginning . . . TENIG is the precursor to the teacher union negotiations; setting the stage for what is to come.

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Reminder: Tonight is the TESD School Board meeting. The location has been changed to Conestoga High School, 7:30 PM. Click here for the School Board agenda.

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