Tuesday, September 28, 2010

Teacher Contract Extension

If you have not already done so, I recommend reading an earlier article I posted titled "Teacher Salary History," to help understand some of the terms and concepts used in this article.

At the Board of Education meeting held Monday, September 27, 2010, the Board passed unanimously a resolution authorizing President Andy Teater and Superintendent Dale McVey to sign an extension to the Master Agreement between the Board of Education and the teachers' union, the Hilliard Education Foundation (HEA). The terms of this extension are straightforward:
  1. The current base salary of $38,362 will remain in effect through December 31, 2011, an extension of one year.
  2. While HEA members have already received their step increases for the 2010-2011 school year, the step increases for the 2011-2012 school year will be delayed six months – until December 31, 2011.
  3. All other provisions of the 2008-2010 Master Agreement remain in effect.
As is obvious with the vote being unanimous, I voted in favor of this contract extension, reading the following into the record:
I would like to say thanks to the members of the Hilliard Education Association for agreeing to this one year contract extension at no base pay increase and a delay in the next step increase.

It has taken many years of hard work and community support to build one of the finest school systems in our State. Hard work on the part of the teachers, students, parents, staff and administrators, and financial support from all those – homeowners and businesses alike – who have continued to generously fund the mission of this district.

This is a time of great uncertainty for our school district, our community, our State and our Country. I suspect that nearly all of us know a neighbor who has lost their job and is struggling to avoid losing their home as well, often at the expense of their already-battered retirement savings. Many more have seen their pay reduced – enough to force unpleasant changes to their lifestyle.

And we have a state government that is seemingly clueless as to how they will deal with a mismatch between revenue and spending that is reportedly on the order of $8 BILLION over the next two years. Balancing the state budget will require spending cuts of a magnitude that are not easily comprehensible.

Without question, the State will solve some of its problems by decreasing its funding to districts like ours – districts which most members of the General Assembly view as having more than enough local financial resources to cover any reduction in state funding. I'm sure we all took note when at the dedication of Bradley High School, Governor Strickland thanked us for constructing that building without benefit of state money. The people who run our State think there is more money where that came from.

The state budget situation is going to hurt us in the wallet – we just don't know how badly yet. While we wait to see what happens after the November elections, I appreciate that the HEA understands the situation, and is willing to stand by until the funding picture becomes clearer.

A year from now, we'll be right back at the table with the HEA, trying to decide whether to tack on another year of extension to the 2008-2010 contract, or whether it is time to dig deeper into the relationship and negotiate a new master agreement. What will we know then that we don't know now?

For one thing, we'll know the outcome of this November's elections. Will Governor Strickland be reelected, or will John Kasich be our new Governor? Regardless of who is elected, they'll have the same immediate budget crisis to fix. No matter what strategy the next Governor might have for generating new revenue, I have little doubt that the Governor and General Assembly will have to implement drastic spending cuts. Forecasting revenue gains is an exercise in speculation; spending cuts are definite and immediate.

What will happen at the Federal level?

Hilliard City School is slated to receive a one-time shot of $1,856,748 from the Education Jobs Fund legislation passed by Congress in August 2010. If the Democrats hold power in Washington, will there be more of this kind of funding coming down the pike? If the Republicans take the majority in either or both of the houses, will it be the end of such Federal largess?

I'm assuming what some will call the worst case – that neither the State nor Federal governments will be sending any money our way in excess of our current funding. In fact, I'm relatively confident that our State funding will continue to decrease in the next few years.

This will bring great financial pressure to our school district, and will force us to strip away all the ancillary conversations and deal with the central equation:

The amount we must pay in local property taxes is directly determined by the compensation and benefits negotiated into the contracts with our teachers, staff and administrators.

The next big issue we all must deal with is balancing our own budget for the school district. While FY2011 looks to be generally okay, the Five Year Forecast paints a picture every bit as scary as of the State's budget. As it stands, the Forecast shows an accumulated deficit of $55 million by the end of FY2014 (the year ending June 30, 2014).

To cover that solely with new local taxes, and with no reductions in forecasted spending, would require a levy on the order of 7.6 mills to be passed in May 2011 in order to end FY2014 with zero money in the bank. To restore a 10% cash reserve, as is Board policy, the levy would need to be 10 mills.

Even if we held spending to FY2011 levels (the year we're in right now), we would still need approximately 1.75 mills just to run out of money at the end of FY2014. To end FY2014 with a 10% cash reserve requires a 4 mill levy this May – if we were to hold spending at FY2011 levels for the next three years. This is because we are already spending more than we take in – to the tune of $5 million this year.

The implications of that statement are clear: for there not to be a levy on the ballot in May, we would have to cut annual spending by at least $5 million – more if we think funding from the State is going to diminish, and I do.

I accept that there will be a levy on the May ballot. The question is how large it will be.

This is where you come in. You have to participate in the discussion of what this school district is going to look like in the coming years, and how much we are collectively willing to pay to make it so. Central to this will be the parameters of the collective bargain agreements with the unions representing the teachers and staff of the district, as well as the administrative contracts.

Sitting at home fuming over newspaper and blog articles won't help. Bitching about things with your neighbors doesn't cut it. Comments made on this blog article are helpful, but we frankly don't hear from enough folks – a small fraction of the total number of readers.

You need to come to Board meetings and speak during the time for public participation, write letters to the Board, submit letters to the editors of our weekly newspapers, and rally your neighbors to do the same. Your elected representatives serve you best when we understand what you want.

Democracy is not a spectator sport...


  1. This story is exactly what I am talking about. The Governor is playing accounting games because there just isn't enough money to meet all the obligations.

    If he can do this to the colleges of our state, how long before the local school districts get the same treatment?

  2. Paul, a very interesting accounting gimmick.

    The 8 billion dollar shortfall is a scary proposition. I expect Mr Kasich to prevail, and I would fully expect him to cut, and cut and........ His Tax Cuts that he will champion
    will actually be a TAX SHIFT to the local property owner. Many of us are struggling.

    I think two areas will have to be cut short term. The number of supplemental contracts and people employed. A new assistant cross country coach for $2500 with NO coaching experience. There are more in the budget. Not sure why we need an assistant cc. coach. and after all I ran cross country in college with
    NO assistant, and they still dont have one.

    Also some of the classroom offerings based on participation that are electives should be looked at. It by no means solves the entire picture, but a million is a million.

    Hopefully the economy improves by May, and many of us working part time, will be work ing full time.

    As Steve Stivers did to us when he was in the State Senate, he stated that he would not commit to voting for unfunded mandates on the schools, ( I know because I asked him) and he voted for tax cuts that resulted in less state monies, AND more mandates that were nothing more than a TAX SHIFT. I hope everyone realizes that the upcoming tax cuts that everyone is on the bandwagon about, will result in more property taxes for us.

    I think another wild card , are the new assessments that are due January 1. Testa got away with freezing assessments last time when in fact that our property values declined.
    The schools, as well as other entities will feel this effect.

    I would feel better about a November levy to see how the economy has recovered in about one year.

    I would also agree with you that no matter how you feel, this is the time to speak up with specific ideas on how to cut spending or increase revenue. We all have a responsibility

  3. I tip my hat to the HEA and the teachers, as well as the Board, for this agreement, but I do so with bated breath. I just hope that a year from now, when the issue is re-visited, they don't come back with what just happened in Westerville - "we took a freeze last year and now it is time to make up for it".

    And, I am still worried about any levy passing in May - I know many who simply can't afford any more hits to their pocketbook and am not all that optimistic that their situation will improve by then. I know that in my business, things have been much better this year, but we are still in the situation of paying down debt accrued during the really bad times of the last three years, and we are still needing to watch every penny, including compensation. Many people are in the same situation with their personal finances. I think the board has their work cut out for them in finding every possible savings opportunity, and people are going to have to realize that the schools cannot offer their students every opportunity without those taking advantage of those opportunities helping to pay for it. This includes supplementals as well as some of the pure elective classes. The normal "budget" must be devoted to the core curriculum - many other things must fall under the "pay to play" scenario. And we had better be paying attention to the cost of benefits - without getting too political here, ObamaCare is going to drastically affect health insurance rates and that is a large chunk of the compensation budget.
    We must avoid the current federal mentality that shows me that we have a spending problem, not a revenue problem. That doesn't cut in the schools, nor in the state or city budgets, as we can't just "borrow" or print more money - we HAVE to live within the budget. I will support a levy in May if I see that the Board has accomplished budget reductions - I won't support it if the 5 year forecast remains as dismal as it looks currently as that is shortsighted.
    Once again though, kudos to all for the current contract extension and the delay in the step raises. It is nice to see that they are finally "getting it"!

  4. Indeed. This is just a time-out while we all wait to see what happens next year. And clearly it will be helpful when a levy is next on the ballot - almostly surely May 2011.

    I'm not a fan of pay-to-play, as I wrote earlier. Either we're a public school system or we're not. I'd have to be convinced that not a single kid is denied the opportunity to take a class or participate in an activity because of cost. Right now, I know it's the case that some kids are excluded from some activities due to the cost (e.g. the annual 6th grade trips to Washington DC). And we all know that many kids will just say they're not interested in something rather than admit to their friends that their family can't afford it.

    Can you be clearer in what you would find acceptable in regard to expenses over the next few years? The current Five Year Forecast has expenses going up $6m (3.7%) in FY12, $7m (4.3%) in FY13, and $8m (4.8%) in FY14. Of course, around 90% of all new dollars spent are forecasted to go to compensation and benefits. And this is with Treasurer Brian Wilson dialing in 0% base pay increases for the next three years (however, this forecast assumes full steps increases).

    For the expense growth to be less than this, it would require even more aggressive compensation/benefits trimming - perhaps a permanent adjustment of step raises and/or contribution to health coverage costs.

    What sounds fair to you? I very much value your thinking on this.

  5. By the way, when you answer that question, I'll load it into my levy modeler and see what kind of numbers pop out (ie trading off size vs interval to the next levy).

    Of course, the big unknown is what's going to happen with State funding. That's the reason we should have been keeping the 10% operating buffer in the bank - to buy us time in case the State really sticks it to us.

  6. Of course, I'd very much like to hear from everyone on this - chime in!

  7. Paul, I'm no budget expert, especially when it comes to something the size of the HCSD budget. My point is only that the 5 year forecast must be based on reality, not on what Mr Wilson would like to see. 0% base increases for three years? Not going to happen. Historical revenues from the state? Likewise. As Rick pointed out, lower property valuations, resulting in less property tax revenue? Possibly, although I can speak from personal experience that that is a tough battle, even with great comps to use as reasoning. So that is the revenue side, and it doesn't look very bright. As far as the expense side, I'll try to spend some time analyzing the forecast and get back to you and the others. I do have one question - how much of a particular schools budget is in the hands of the buildings principal?
    Hillirdite (Can't log in for some reason tonight)

  8. Paul - I think it would be interesting to see the HSD reflect that which is occurring within the community. I, for one, have been on a decreasing salary for a decade. I have not had a salary increase of any sort since the increase received in 2001 for the work performed in 2000. In 2002, the company I joined offered me a salary which I accepted. It was thought the firm would do well. In fact, it did not make it. Result, a fixed salary for 6 years. Following that company going bust in 2008, I was forced to accept an hourly position to allow our family to survive. That take home was at one-third of the prior six year salary. The salary I now receive with a new firm is about 75% of the CY2000 salary; (and about 85% of the six year salary). It is livable. There are no, and have not been, automatic step increases. There have actually been more health insurance premiums to pay. There are certainly more property taxes to pay. So I would propose that the HSD have about a six to eight year moratorium on any sort of salary increase, while having to pay increasingly more share of the health benefit. That would be reflective of the professional community in the Columbus area. (I would state that none of the companies not making it were not a direct reflection of my work, and work ethic. It was simply a matter of the respective company having the wrong product at the wrong time). Sorry to sound “bitter”, but I am able to point to many individuals who are able to share similar stories. I have had as much, or more education when I came from college to the workplace as teachers are required. I have had on the job training as well as required formal training over the years, just as is required of teachers. However, the HSD teachers have fared much better than most of the technology sector surrounding Columbus when it comes to salary and benefits. Maybe it is time to place a hold on HSD spending for an extended period of time?

  9. Thanks for the comment. I understand your situation - our retirement income has gone to about zero as our federal government drives interest rates in the toilet to bail out those who became overly reliant on debt.

    You're asking for exactly the same thing as me - a recalibration of the teacher/staff/admin pay scale to align with what's going on in the private sector.

    It's one thing to 'share the wealth' with times are good. But times are not good right now, and money paid for increases is not a sharing of the wealth, but rather a transfer of wealth.

  10. I dunno Paul, over budget and in debt is so in vogue right now...

    There certainly aren't any easy answers.

    But this is an extremely political issue, just like the big boys do it. The elephants and donkeys line up opposed on anything that is emotional: lying, taxation, scandal, economy, morality and so on. This issue has our taxes versus do teachers get paid enough, and nothing is more emotional than our kids.

    I certainly can't say how much step or degree raises should be for our teachers. Neither can I point to a place where there's waste. It'd sure be great to have a plan past the next levy though.

    Until that happens my best advice is to look to cut everything a little bit. Cut some classes (pardon the pun), some teachers, some transportation, some sports and some other extra curriculars.

    Don't we HAVE to balance the budget one way or the other? ...I know it isn't in vogue.

  11. CE: Yes, it is against the law as I understand it for the school district to begin a school year knowing that there isn't enough cash to fund operations. That's subtly different than requiring a balanced budget in that we can, in any given year, spend more than is taken in. This is actually a normal state of affairs during the levy cycle.

    After a levy passes, revenue will (should!) exceed spending for a period of time - hopefully a few years. During that time, the cash balance builds up. Then at some point, spending will likely start to exceed revenue, and the cash balance will start being drawn down. The trick is to increase the revenue flow before you run out of cash.

    There are only a couple of big knobs to play with: a) the rate in which spending is projected to grow, which is largely determined by the labor contracts; b) the size and timing of the next levy; and, c) how long the district leadership plans to wait before putting another levy on the ballot.

    If spending stays constant (ie zero growth), then as long as the revenue remains greater than or equal to the spending, no levy is needed.

    But if the plan is to grow spending, then a levy will be needed. In general, the larger the levy, the longer the interval until the next one is needed.

    So if one's thinking is that the public will be asked to pass as large a levy as they will stomach, then the dependent variables are how much spending will be allowed to grow, and how long the interval between levies will be. The greater the spending growth rate, the most frequent the levies. If the rate in spending growth slows, then the levy can be 'stretched,' which is to say delayed.

    I'm trying to get people to think of these numbers in a different way. Rather than assuming some levy amount, and then playing the levy size and interval to the next levy against one another, how about if we start with a maxmimum spending growth rate (which is the same thing as saying a maximum salary/benefit growth rate), and a desire to have at least three years elapse before the next levy, and see what millage falls out?

  12. Paul, I agree with you on determining a maximum spending growth rate. Many of us have talked about getting to that denominator for some time.

    I note that the recent contract adjustments are a positive thing, but lets not forget the huge increases over the last decade. Those need to be factored in for the next contract as well, as it relates to our growth rate.

    I think one area to address are elective classes, supplemental contracts, and a hiatus in capital spending as it relates to new projects. Capital spending will have to be addressed in a bond issue, and I all for maintaining our infrastructure. However I dont see us being able to maintain constant new premuim facilities when we can shave some cost.
    I think Bradley could have been built slightly cheaper and saved some capital dollars.

    I know we are used to having multiple support systems in place with personnel, but we seem to have supplemental contracts that really have no
    focus or ryhme or certainly reason.

    We have a sport that has assistant coaches, making 2500 for no experience, when in this same sport, colleges and universities dont have assistants for this sport. to avoid the personal
    part, I am not naming the sport as that would be unfair, but these things need to be looked at given our financial forecast.

    If we have a new governor, I see some cuts to the education budget, and if you are looking across the board, any good business should address one of its biggest expenditures.

    A 3.5 to 4 mill stop gap would be a smart play
    to get some funding stabilization. Over that
    unless the economy really picks up there are just too many people cutting things close financially at home. The schools should be no different. Anything over 5 mills is a stretch for sure, and certainly something near double digits invites an organized opposition

    Line by line, we must address each expenditure

  13. Rick:

    Thanks for the specific numbers. That's where we need to get to in this dialog - not just generalities.

  14. Paul, I believe that our school district suffers from a lack if identity. Regardless of our state rating, we are not comparable to Dublin, UA, Bexley, or New Albany. Nor should we be trying. Our niche is that of a "value" district. We have gotten away from that. I believe that current revenues are sufficient to keep us highly competitive in this regard. I will be voting no on a levy of any size.

  15. Paul, can I get your thoughts on something else, as well? It seems as if the pay scale (ie based on years of experience), certification requirements, and hiring practices keep the teachers insulated from competition by other professionals seeking to make a career change. However, since (at least in Hilliard) you can only transfer 10 years of experience in from another district, it also limits the mobility of the veteran teachers. What incentive do we have to give anyone with 10+ years experience a raise?

  16. Thomas:

    I'm not quite tracking your first comment. Are you saying our community should be willing to accept lower ratings on the state report card because we're going to spend less money running our schools? That's my connotation of "value" - accepting less than top quality for a lesser price.

    It probably goes to what you think a school district needs to deliver quality. For me, the first measurement in the State Report Card, as flawed as that process may be. Without question, it costs us something to be rated Excellent with Distinction - mostly in various kinds of intervention teachers, psychologists, tutors and the like to help prevent kids from falling through the cracks. If we have to tighten our belts, I'd like to preserve this capability. Just spend some time in our classrooms as I do each week, and you'll see how great the need.

    Other things we spend money on are more about lifestyle - athletics and performing arts in particular. These are good things - but a notch back on the importance scale from academics. There are plenty of examples of schools with high academic standing and mediocre extracurricular programming. I sure wouldn't want it to be the other way.

    So yes, part of what our voters need to decide whenever there is a levy on a ballot is whether the breadth and depth of our programming should continue to be funded at the level it currently is. Just as is the challenge with city, state and federal budgets, each program has its vocal supporters who are happy to see the budget balanced as long as it isn't their favorite program that gets cut.

    But the other dimension is the pay philosophy: how much do we want to pay the teachers, staff and administrators of our district, and how much do we want to spend on benefits? At what rate do we want compensation to increase? How about benefits cost?

    I'll have more to say on this in about a week, after the Board discusses the new Five Year Forecast.

    As to your second comment: it's really a question of how ugly we want union negotiations to be. As you've heard me say many times, there is no way to truly test the supply/demand curve without risking a strike. Not just the threat of a strike, which happens every time the negotiations get tought, but rather a real strike in which teachers walk off the job, and the schools have to close, or be run by temp teachers.

    I doubt that you'll find our school board willing to push things that far without the clear and overwhelming support of the community. That certainly isn't present right now.

    There are three critical events that will occur in the next year:

    1. The decision by the Board regarding the size of the levy that will be placed on the ballot in May.

    2. The decision by the voters whether or not to pass the levy

    3. The next round of negotiations with the unions, which will take place a year from now.

    The ideal situation would be for there to be sufficient dialog over the next couple of months such that: a) the Board comes to understand the wishes of the community in regard to revenue and spending and puts a commensurate levy on the ballot; b) the community passes the levy because it has already participated in the process of determining the levy size; and, c) the unions are willing to negotiate contracts which can be fully funded by the levy which is passed.

    I'm not sure any of these three conditions are present right now.

  17. Paul,

    I would be pleasantly surprised if any of those conditions are met.

    Parents must oftentimes take a course of action that is in their child's best interest, even if it means being the perceived as the "bad guy".

    I believe the Board has a similar responsibility.

    Generally, the district's stakeholders are misinformed and selfish. Any attempt to achieve concensus in such a population is bound to fail or arrive at poor conclusions.

    The Board needs to consider whose opinion is relevant. I would suggest they listen to informed members of the community whose children will be using the school system for many years to come.

    They could start by allotting more than 2 minutes per person for public participation during school board meetings.

  18. In regards to my first comment:

    I am suggesting that before we spend any MORE money, we should see how far we can stretch what we already spend.

    I think we might find that money to be quite elastic.

  19. The two wild cards that no one can properly reflect on is 1. The economy, and 2, how much of a cut will education get in the state budget.

    Two very important perimeters to deal with, and locally we have zero control. And with the conservative wave, be ready for those tax cutters to heap even more taxes on us locally IT IS CALLED A TAX SHIFT which I have talked about now for 10 years. Steve Stivers is a master at this one, and Kilroy is too. Not much choice there.

    At some point the remediation rate has to be compared also with the RATINGS ! And we do have some educators even at the AP level are not up to speed.

    Until we come to grips with the fact that we short term are going to have to make some more cuts, adjust the offerings, and take a hard look at supplementals, and "nice to haves" instead of threatning to cut busing, we risk contentious outcomes.

    The you dont get it crap of the past will blow up in the districts face due to the economy and its effect on local homeowners. When the district residents start hearing the "you should give up your eating out, cell phones, cable, etc. crap, that many have allready given up, no levy can pass. Lets not make too big of a deal on the concession part in the contracts as the past 3 have certainly been at a premium level, and the benefits plan is far superior to the public sector

    That said a levy increase of about 4 mills still provides ADDITIONAL money to the district
    An increase of 5 million dollars is no walk in the park.

    Paul, do you know which board meeting the new forecast will be presented at. District residents should be at that meeting and perhaps an extra press release, and an email on the daily published announcements to parents would be a good idea especially with some advance notice

  20. Rick: The new forecast will be presented to the Board at the next meeting, 10/25 7pm at Brown Elementary.

  21. Thanks Paul, cannot make that one, I will have to get access to a copy, perhaps they will put it on line or you can post it hear for us. Perhaps another person on the blog here who will be there will be able to give us a recap as well. And Paul we also like to hear your side of the story.

  22. The bottom line is that the country as a whole is broke. Tougher times are on the way and everyone is going to have to scale back on their spending and lifestyles. Households are being stretched to the limit. I have three children in the district and I always try to support the schools as best I can, but having my taxes raised every few years because of a levy has to stop. I'm not trying to be negative, but I'm just trying to be a realist and prepare myself for harder times. Paul, I really appreciate your website and the facts that you have enlightened me with. Keep up the hard work.

  23. Thanks for the feedback. It would be great if you and other who feel similarly would make that known to the Board as a whole. It could be via speaking at a Board meeting, writing a letter, or sending an email (the email addresses of the Board members are posted on the district website).

  24. Here is the Five Year Forecast which will be brought to the Board for approval on 10/25.