Saturday, June 30, 2007

Teacher Salaries: A Primer

For the past couple of years, the focus of attention in our community has been getting the levy passed for the construction of the third high school. We can all grasp that this is a commitment of tens of millions of our tax dollars. The final cost of construction for Bradley High School is still a developing number, by the way. It will be interesting to see how close it comes to the estimates given us when the bond levy was passed.

The collective bargaining agreement of the union representing Hilliard Teachers, known as the Hilliard Education Association, will expire December 31, 2007. The impact of this will be much greater than the construction cost of the high school. While the final price tag on the school might end up being $40 million or more, this is a one time cost. But we pay our team every year.

According to the Five Year Forecast submitted by Treasurer Brian Wilson to the Ohio Department of Education, in 2006 we paid $85.7 million in salaries and $28.5 million of retirement and insurance benefits, for a total of $114.2 million. Total expenditures for the district was $131.7 million, meaning that salaries and benefits represent 87% of all expenditures.

The teacher's contract includes a built-in 4.15% across the board annual salary increase. So for starters, this means the $85.7 million goes up $3.6 million, to $89.3 million if nothing else changes in the new contract.

The Westerville teachers' union just signed a new agreement with their school system. A key provision is a 2.65% increase of the scale for each of the next two years. Note that this is different than saying teachers are getting a 2.65% increase, and for once The Columbus Dispatch was sharp enough to pick up on this angle. Here's what it really means:

Let take the example of a teacher with a Masters degree and ten years of service. According to today's contract, that teacher would have a base salary of $59,050. If nothing changes in the contract whatsoever, next year that same teacher is now one with a Masters degree and eleven years of service. Simply because of that one year's additional service, this teacher's new salary will be $61,500 -- the 4.15% annual increase built into the contract.

However, if the entire pay scale is also bumped 2.65%, as was won by the Westerville teachers, the salary for a teacher with a Masters and 11 years would be $63,130, for a total increase of 6.9%.

The Westerville agreement calls for the scale to be bumped another 2.65% the following year. Without this second increase, our example teacher, who would now have 12 years of service, would be paid $65,750 (it would have been $64,053 under the current contract). However, with the second bump to the pay scale, this teacher would get paid $67,493. Over these two years, the teacher's salary would have increased from $59,050 to $67,493, which is the same thing as a 6.9% annual increase (you are invited to check the math).

Okay, so in 2006 we paid $85.7 million in salaries (let's ignore benefits for the moment). Given the built-in 4.15% increase in the payscale, the salaries for 2007 should be about $$89.3 million. If our teachers negotiate the same deal as the Westerville teachers, the 2008 salaries will increase by both the 4% years-of-service step and the 2.65% across-the-board increase of the payscale. Collectively, those two increases will add $6.2 million to total salaries, to $94.5 million.

The following year, both increases would happen again. The effect would be to add another $6.6 million to total salaries, to $102 million.

So, without adding a single teacher, the annual salary cost would increase from $85.7 million to $102 million, a change of $16.3 million, or 19%. On top of that would be added the increase in benefits costs, which includes the school district's share of the teacher's retirement contribution, currently 14% of base salaries, adding an estimated $2 million to the current expense.

This means that the additional money spent on salaries in 2008 and 2009 could be on the order of $35 million, or about the same as the projected cost of the new high school.

The point here is not to say that our teachers are overpaid. It takes a special person to walk into a classroom every day and face a couple dozen kids who are expecting something meaningful from you. I couldn't do it. Blessings on those who can.

Yet, somehow we've gotten into this mode around here where this kind of financial information is placed behind a fog of obscurity -- and I think it's on purpose. I bet the Westerville teachers told the public they were asking for a 2.65% increase for the next two years, and the Board concurred. Most would say, "gee, that's pretty small - what a good deal for the community!"

But we have to dig past these kinds of numbers to the truth. In this case, we need to remember that whatever percentage the overall payscale is lifted, there is also a built-in annual increase associated with the length of service step-up. The teacher's request might not seem so small to folks once it is realized that two are combined. In this example, it's really a 6.9% increase.

Lest we forget, none of this takes into account the cost of opening Washington Elementary and Bradley High School. Add another chunk for that. The aforementioned Five Year Forecast estimates that overall salaries and benefits will increase $14 million in one year, from 2009 to 2010, the year Bradley opens.

By 2o11, salaries and benefits are projected to total $163 million, a whopping $50 million per year more than now. That's over $600 additional per year for every man, woman and child in the District.

Why doesn't our Board, or the Citizen's Finance Committee talk to us about this?

Thursday, June 28, 2007

Dispatch on Growth

The Columbus Dispatch today published an interesting article about suburban growth.

Note especially the part that says that in Pickerington, the mayor and a city council member were elected by the public specifically to get control of residential growth. They "limited housing starts, toughened building standards, and levied impact fees" in that effort.

In Hilliard, on the other hand, we have a pro-residential-development mayor (running unopposed) who has now recruited Dan Nichter, the former Director of Development for Franklin County, to run for City Council. Mayor Schonhardt has craftily maneuvered the School Board into spending over $800,000 for the water line to the new high school so that Homewood Homes can put hundreds of additional homes in our school district. I can't wait to see what kind of deal is struck for the sewer line.

There is a chance that the School Board has struck a good deal. Maybe the school district is paying for the water line, and Homewood is paying for the sewer line, with both parties getting free tap rights. But don't you think that if such an inventive deal were crafted, they would be bragging about it to the community? My suspicion is that all of us will end up paying for Homewood's sewer line as well.

Wednesday, June 27, 2007

A new contributor!

I'm pleased to announce that my friend Amelia McCarty will begin writing articles for this blog in the near future. Amelia is a fellow resident of the Hilliard School District, and a corporate attorney. She and her husband Bill are parents to three beautiful young girls.

My concentration will continue to be the financial, business and political concerns of the school district; Amelia will be writing about the educational experience. I'll let her tell you her story.

Welcome to the team Amelia!


Monday, June 18, 2007

Dispatch on the School Funding Amendment, Part II

The Columbus Dispatch offered an editorial this past Sunday which makes much the same arguments against the proposed amendment as were made in this blog nearly two months ago. I'm glad to see the Dispatch take this stance -- the more people who see this reasoning the better.