Tuesday, December 26, 2006

Sacred Cows

I've attended many of the meetings which take place in our community when a school levy is scheduled to be placed on the ballot. Inevitably, someone from the public makes the claim that the School Board and the Administration is wasting money, and that we should be able to get by on much less. In every case I've observed, the individual makes that observation from ignorance - having not spent any time whatsoever trying to understand either the sources or uses of funds in our school system.

Because if they did, they would understand that there are a few key factors that drive everything:
  • New houses generate more cost for the district than they do revenue, by a factor of three;
  • In the Hilliard community, the funding has - in the past - come equally from three sources: a) residential property taxes; b) commercial property taxes; and, c) the State of Ohio. However, the burden is shifting steadily to homeowners, and it only gets worse as more houses are built.
  • A school system is a professional services organization. It's easy to see the all the beautiful buildings and imagine that this is where our money goes. But of the $137 million operating budget for FY2007, $120 million of that - 88% - will be used for salaries and benefits of the teachers, administration and staff (see Treasurer's Report to the Board 5/19/06)

The first two are addressed extensively in the companion website. But what about this issue of salaries?

Looking ahead on the Treasurer's report, in FY2010 the total operating expenditures are forecasted to increase $32 million to $169 million, or 23%. The salaries and benefits component will increase $30 million to $150 million. In other words, 94% of the total budget increase will be due to salaries and benefits.

The average teacher salary in Ohio is $47,791. The payscale in Hilliard ranges from $35,107 for a teacher with a Bachelor's degree and no experience to $82,695 for an individual with a Master's degree + 15 hours of study and 23 years of experience. The average teacher's salary in Hilliard is $52,932 for a workyear of 183 days of 7 hours (which includes a 30 min lunch). Teachers are also given 15 sick days per year (which can be accumulated to increase retirement benefits).

Our teachers enjoy excellent benefits as well. For a fulltime member of the teacher's union (the Hilliard Education Association), the District pays essentially all of the medical and dental insurance costs for members as long as annual premium increases are within the agreed upon amounts (see HEA Master Agreement). Teachers also have a choice of three kinds of retirement plans and can retire with 30 years service (young 50's) and receive 66% of their final average salary for the rest of the lives, plus health insurance coverage.

By comparison, in private industry, employees typically work 240 days per year (10 weeks more!), and will have 5 sick days. Increasingly, the only retirement benefits a worker in private industry will enjoy are their own money that they sock away in IRAs and 401(k) plans. Defined benefit pensions are all but gone in private industry, and most workers are on their own for health coverage after they retire.

The purpose of this article is not to criticize the compensation of our teachers. Indeed, one of my children is now a teacher, and I hope we can afford such programs when she is ready to retire. I have had the opportunity to host high school teachers from both Japan and Germany, and was intrigued to learn that teachers there are paid on the same order as engineers. That seems appropriate given that we entrust them with the education and safety of our kids.

Rather, I wish to remind the folks in our community that schools are a 'people business' and if we want a great school system, we'll need to be willing to continue to pay effective teachers enough to keep them from bailing out to other careers.

But teachers, if you want those of us in the community to be willing to pay such salaries and benefits, you need to understand that underperforming teachers need to be fired to make room for new stars. If the coach can cut the starting quarterback from the football team if he keeps fumbling, the administration needs to be able to terminate a teacher who can't teach effectively.

I once complained to a lawyer friend of mine that he and his colleagues were responsible for driving up the cost of health insurance. He rebuttal was interesting -- that if the American Medical Association did a better job of de-licensing bad doctors, there wouldn't be all that malpractice.

It's the same with the teacher's union -- don't hide bad teachers under your protective umbrella. Use some of your union dues to help failing teachers find a new career. Make it your responsibility to keep the quality of your membership high!

The current contract with the Hilliard teacher's union expires December 31, 2007. It comes at a time when our district may be facing gut-wrenching financial challenges. I hope the parties on both sides of the table find a solution that we all can live with.


  1. What percentage of health insurance do the administrators, including Mr. McVey pay? Yes, the teachers should pay some of their health insurance but by making them pay more a bigger percentage than the janitors and secretaries are we suggesting that the teachers are less important? If the principals and administrators pay nothing for health insurance and the support staff pay 2% why should the teachers be expected to accept the contract as is?

  2. I don't know what fraction of their health premiums the administrators pay. It's a valid question, and I'll try to find out.

    But have you read the new OAPSE contract? They will be paying 6% of their health premiums in 2008, 8% in 2009, and 10% in 2010. Has the Board asked the teachers to pay higher percentages than this?

    My understanding is that the Board has proposed exactly the same salary terms to the HEA as the OAPSE deal. If so, it means 7.27% increases for teachers with 15 or fewer years of service, and 3% for the rest.

    If that's the case, I don't understand why there's a disagreement.