Monday, November 11, 2013

Supplemental Materials for the November 13, 2010 School Board Meeting: New Teacher Contract

Here are the supplemental materials provided in preparation for the regular meeting of the School Board, to be held Monday November 13, 2013 at 5pm at the ILC Annex (formerly the Central Office Annex). Please note the change in time, adjusted so that a couple of our folks can make it to their childrens' school activities that evening.

Without a doubt, the most significant item on the agenda is F1, a resolution to accept the tentative collective bargaining agreement we have negotiated with the teachers' union, the Hilliard Education Association. In various shifts, all five members of the School Board participated in the negotiation of this agreement, and it is my expectation that the resolution will be adopted unanimously.

I'm not an expert in labor law - none of us on the School Board are. So we retain the services of Don Scriven, a partner in the law firm of Scott, Scriven and Wahoff, to advise us. Mr. Scriven has represented the School Board for a number of years.

Likewise, the teachers negotiate with the assistance of an attorney from the Ohio Education Association.

Rather than starting with a clean sheet of paper, labor agreements are negotiated via a process that begins with the parties exchanging proposals as to how they would like various articles in the existing agreement to be changed. One party says "we propose these changes to A, B, and C," and the other says, "we propose these changes to C, X and Y."  Then the negotiations would proceed on A, B, C, X and Y only - the rest of the contract is not brought into the dialog.

In the course of the negotiation, the parties might agree to take items B and Y off the table, leaving the negotiations to be about A, C and X only. Perhaps agreement on X is reached quickly, but A and C, which might be related, take more time. Eventually (hopefully), "tentative agreement" is reached on all items.

That tentative agreement is first presented to the union membership for their ratification. This step has been taken, and the teachers agreed to accept the tentative agreement. The last step is for the School Board to accept the tentative agreement, which is the purpose of item F1 on the agenda.

At this stage, the tentative agreement is not in final contract form. Rather it is a collection of markups of the prior agreement (which is the 2008-2010 agreement in this case), initialed by representatives of the two parties. If the School Board passes the resolution to accept this tentative agreement, the final contract will be drawn up, and the duly authorized representatives of each party will sign.

So the real question, what has changed in the new agreement?

Because the tentative agreement shows all the markups, I'll not address every change here - you can easily find them. But what most people will be interested in is what changed in regard to compensation and benefits, which represent 85% of the district's operating budget.

First, I would encourage you to read an article I wrote in 2010 to explain how teacher compensation works in our district, which is structurally identical to virtually every other district in Ohio, and is commonly used in similar form across the country (go here to examine the labor agreements for other public sector unions in Ohio). It is in essence a three-dimensional matrix which considers length of employment (steps), the level of education of the teacher, and a base salary number.

This contract resumes the 4.15% normal steps and 6% educational columns, although we need to remember that in the 2011-2013 agreement, one step was permanently skipped. This means that teachers with N years of experience are paid according to step N-1.

So the only change to the pay grid is the base salary. While the 2011-2013 agreement had no increases in the base pay for those three years, this new agreement has a 2% increase in the base pay in each of its three years.

Therefore teachers on steps 0 to 15, plus steps 20 and 23, will receive a 4.15% step increase and then a 2% base pay increase each of the three years of this contract (ie a combined 6.233%). The rest of the teachers will receive only the 2% base pay increase each year. Any teacher who reaches one of the target education levels will receive a 6% increase in addition.

However, in conjunction with these salary changes, the School Board requested changes to the design of the health insurance package to reduce the cost borne by the taxpayers to provide coverage to the teachers and their families.

Some may recall that prior to 2008, the employees of our district made no contribution to the cost of the premium we paid for our health insurance. In the 2008-2010 agreement, the School Board negotiated a change to this (and it was a difficult negotiation), increasing the employee's share of the premium from zero to 10% in 2010 (ie the taxpayers still paid 90% of the premium). In the 2011-2013 agreement, the employee share was increased to 15%, and it remains this in the tentative agreement.

You may also recall that in 2010, the School Board and employees agreed to convert to a self-insured system, meaning we now pay directly for all claims, albeit with stop-loss coverage to limit our risk. So rather than there being a premium per se, the Insurance Committee (on which I sit), examines the claims history each year as well as our insurance fund balance, and determines the employee contribution necessary to fund the plan for the coming year. Therefore the 15% refers to the percentage of this contribution, which is currently $1,605.93 per month for family coverage, making the employee share $240.88 per month.

What is less obvious are the parameters of the coverage. Up to now, the employees had neither a deductible nor any co-insurance liability. In other words, if an employee (or covered family member) had a $10,000 medical procedure, the cost to the employee was zero - we taxpayers covered it all.

In the new contract, the deductible will be $250 for 2014, stepping up to $500 for 2015-16, and the co-insurance amount will be 5% in 2014, becoming 10% in 2015-16. At the same time, a family "out-of-pocket" maximum has been implemented (which is unnecessary if there is no deductible or co-insurance) of $2,000 in 2014, $2,500 in 2015, and $3,000 in 2016.

Therefore in the event of a $10,000 medical procedure, the employee in 2014 would pay the $250 deductible, plus 5% of the remaining $9,750, or $488, for a total of $738. The school district would pay the remaining $9,262. If the same procedure were to take place in 2016 or later, the employee would pay the $500 deductible, plus $950 in coinsurance for a total of $1,450, leaving the school district with responsibility for $8,550.

This is still excellent coverage, at least compared to the medical insurance I have, which includes a $1,500 individual deductible, 20% co-insurance, and a $5,000 family out of pocket max. This $10,000 procedure would cost me $2,500. I suspect many of us in the community have plans similar to mine, although HSA/High-deductible plans are becoming much more prevalent.

The big question mark remains on what changes the Affordable Healthcare Act will cause, should it survive in something like its present form. We know there is a potential collision out there, when the so-called "Cadillac Tax" provision comes into play in 2018. Our health insurance consultant has projected that if no changes are made to our plan design, we could trigger this tax.

In future years, we need to discuss the merits of plans based on a different structure, such Health Savings Accounts with high-deductible coverage. It's always about the apportioning of risk between the employer, the employees as a group, and the employees as individuals.

The effect of this insurance plan change will be to offset some of the cost to taxpayers of the salary increases. How much we won't know for a while because when you change the plan parameters, you also change the behavior of the folks who are covered. 

We don't want folks to put off going to the doctor until they're really sick, so the plan design continues to encourage preventative care, which is further encouraged via our wellness programs. Nor do we want folks to suffer when they get hit with really big medical bills. But we want them to be wise consumers of medical care, and being exposed individually to a little more of the cost should foster that.

I feel this new collective bargaining agreement is a reasonable deal. Nothing about it changes our statement that no levy will be on the ballot before 2015, provided the General Assembly honors their current biennial budget. That doesn't mean we can stop looking for ways to moderate the rate of spending growth. I feel some tough conversations about the breadth of our programming, particularly at the high school level, are still needed.

Your feedback is welcome, but as always, I'll require that it be rational and respectful.


  1. Interesting..I'm somewhat surprised that a tentative agreement was reached so seemingly painlessly, without threat of strike.

    Got to love that step plan if you're a teacher. You get three ways to get raises: base, step or educational milestone (the latter striking me as particularly egregious). We reward teachers for longevity and abstruse degrees instead of, say, teaching effectiveness.

    And got to love that Cadillac medical plan. My private sector employer is phasing out anything but the HSA/high ded plans.

  2. Paul, I believe Brian Wilson was projecting 1.5% increases in the 5 yr plan; how does that reconcile with the 2% in the agreement? Are we expecting the makeup from the healthcare cost changes?

    1. Actually, the Five Year Forecast was developed using an assumption of 1% base pay increases. As I said, we'll need to have some experience with the new plan parameters to see how much that offsets the pay increase.

  3. Good luck with the next levy battle; I don't see any way it passes when employees are on 6.15% pay increases year after year.

    Yes, I know, it's not everyone. Just like its an aberration that some employees received 9.3% increases in CY 2013.

    But guess what; no one pays attention to the details in a levy campaign, it's about the headlines. And the headlines will be highly critical of the district come that time.

    You guys have had more than enough time to fix this problem and you continue to kick the can down the road. You are positioning yourselves for an endless string of levy failures based on this contract which does no one any good.

    It boggles the mind, it really does.

  4. Paul,

    You know the only thing I hate more than a levy is a new contract with pay increases. The 2%,2%,2% increase is about where it should be, maybe even a little low. The 6%+ is a little high, however not all will see that total.

    What will the average increase be over the next 3 years (not counting educational advancement) be ? I know that is a big question, but a fair one. I would like to know the average increase will be year 1,2,3.

    By showing the average increase it will not be 2% nor 6% and will be reflective of the whole set. That way we can say the average teacher got X% increase.


    1. Dave: Thanks for weighing in. Here's some data that I hope addresses your questions. This is based on data from last year, but will be pretty close to the current situation:

      There are 1,142 folks working under certified contracts. Not all are members of the HEA, but all work under the same contract as the HEA bargains for all certified employees.

      Of those, 772 or 68% are on steps, meaning they get the 6.233% increase. The average salary for this group is $62,847 meaning the average raise will be $3,917.

      For the 370 certified employees who are not on step, the average salary is $83,865, making the 2% increase equal $1,677.

      Combining both groups, the average increase will 4.6%.

      It is worth noting that because of the big growth spur our district had between 1999 and 2003, about 12% of our teachers were hired during that period, and are beginning to exit the part of the pay grid with annual steps. This will gradually lower the size of the average increase.

    2. >> Combining both groups, the average increase will 4.6%.

      And right there is your problem. That is not even remotely close to being in line with the kinds of increases taxpayers receive in their jobs.

      Seriously, if you guys can't recognize that fact, then perhaps we are already way past the point of being able to fix this problem...

      You simply cannot justify those kind of raises today, and that's the bottom line.

    3. I'm sure you've seen the recent post the new superintendent put on his blog in which he talks about the "f" word (finances). Noticeably absent in Dr. M's post is any mention of the impact of unbalanced residential/business development. If the problem can't be named, how can it be solved? Why can't our leaders (besides yourself) say politically incorrect things about why taxpayers are so overburdened?

      I'm voting down any levies until there's at the very least recognition of the root cause of the problem.

    4. Please consider the 2011-2013 contract in conjunction with this one. That contract had zero base pay increases, and caused one step to be permanently skipped. The effect is that between 2008 and 2016, the teachers on steps will get the equivalent of 5.17% annual increases, and those no longer on steps will get the equivalent of 1.49% annual increases.

      The imbalance between residential and commercial development is an issue that most in our community would not even know about had I not been preaching it for years. I'm glad others are recognizing the issue, but complaining about it here isn't going to help much.

      I don't live in the City of Hilliard - never have, but the Mayor and the Council Members all know how I feel about this. If you live in the City of Hilliard, I trust you are contacting Mayor Schonhardt and the City Council members to complain as well. Nothing on this will change until the voters in the City of Hilliard decide to make it their problem.

      If the way you express your displeasure with the City leaders is to vote against school levies, I'll suggest that it won't have much effect.

  5. wow, pretty good pay for 9 months of work. Annualized would be:

    62,847 --> 83,796
    83,865 --> 111,820
    I know teachers work extra sometimes, but that is not how they are paid. If they want credit for their off-time work make them a non-exempt salaried employee instead of paid by the hours/day as specified in the union contract. The teachers I know are not working the majority of the summer. May do some prep, but no way near full days of work.

    1. We Americans are funny about compensation matters. We think it's absolutely fair when our professions pay better than others, and have all kinds of rational reasons as to why it should be so. But if we get a sense that someone else is getting a better deal, it's not fair.

      In a market economy, what someone gets paid depends on their negotiating power. Supply and demand. NBA players make obscene amounts of money, as do movie stars, rappers, hedge fund managers and the British royals. Few of them could last a week in a 3rd grade classroom.

      I believe we negotiated a reasonable compensation deal. Now we have to dig into whether or not we have an affordable array of programming and services. I hope many of you will decide to engage in that dialog as well.

    2. Paul, I am disappointed in you. This isn't a reasonable deal in the slightest for those footing the bill.

      And please stop dredging up the last contract. Sure, teachers got cruddy raises from 2011-2013. Whoop-de-doo... taxpayers were taking pay cuts during that time.

      HCSD employees are still getting raises and increases far higher than the private sector and have done now since the 2000s.

      The worst part about this is that above you talk about supply and demand. There is a glut of teachers in the marketplace, yet we continue to grant excessive salary increases to our staff.

      And don't get me started on the 6% education increase. That's absolute garbage.

      And Paul, this isn't about fairness for teachers at all; it's about fairness to the kids yet to enter kindergarten who will get utterly shafted when we have to start taking a scythe to expenditures in the next few years.

      Just one more example of the whole "give it to me now, I don't care about the next generation" attitude that pervades this country today.

      Sad that our educators have fallen into the same mindset.

      Event sadder that the Board of Education fails to recognize this.

    3. Well we do vote and we voted no. Just because we are out voted doesn't mean we aren't still trying to get changes.

    4. M:

      I'm sorry that you're disappointed in me, but you have your opinion, and I have mine. As you see from Dave's comment above, not everyone agrees with you.

      Those who wanted to see teacher unions go away and step/lane pay grids eliminated lost that battle when SB5 was convincingly repealed in Nov 2011 via Issue 2 - by a 2 to 1 vote statewide. Within our own school district, 55% of the voter supported the repeal.

      Those who want radical change to the system need to quit making noise on talk radio and internet sites, and begin organizing the voters who share their beliefs

      >[note: I removed a line from this comment that my friend M found offensive, and I apologize for stepping over the very line I have drawn]

  6. I'm disappointed that today's press release from the school district regarding the new contract doesn't mention step increases, and have communicated that to Dr. Marschhausen and the rest of the School Board.

  7. I agree with M. This is way above private sector by far where 2to 3% is more the norm. At my company 5% is like unheard of for the same job same responsibilities. That is why taxpayers begrudge these step raises. Take out the steps and just give a % based on performance. SB5 failed because police and fire threatened not to respond if they didn't get their share. Doesn't mean people still agree with these inflated union contracts for teachers.

    1. John:

      I appreciate your feedback.

      It's interesting that folks seem to react to the percentage increase without giving much attention to the actual amounts of the salaries. For example, is that objectionable for a young teacher making $38,362 to get an annual raise of $2,391?

      Without question, the teachers at the top end of the scale ($95,893 in 2016) are well paid, and will get very nice pensions when they retire (if STRS survives).

      I've been trying for years to get the community to engage in this conversation. I'm encouraged by some of the ideas Dr. Marschhausen has about creating more opportunities for this to happen.

  8. What I don't understand is the indifference of superintendents past and present to the issue of development. It seems like something that so dramatically impacts the customer (i.e. the average tax payer) ought be something they might at least mention. I understand they want to maintain a good relationship with the city council & mayor, but it's pretty amazing to me that they refuse to lift a finger as far as helping inform taxpayers why the schools cost so much.

    1. Dr. Marschhausen has established a regular meeting with Mayor Schonhardt, and I expect residential vs commercial development will be a point of discussion.

  9. This contract sure *smells* like business as usual.