Pride and Pragmatism

 

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Pride and Pragmatism: Providing a Thorough and Efficient Public Education System for the SCASD and Taxpayers  Article III, Section 14 of the PA Constitution Constitution1 

The State College Area School District is the largest public operations budget in Centre County (approaching $120 million in 2012). The budget is larger than the Centre County budget -- $82 million; larger than the total of all six municipalities in the school district -$65 million; add the Centre Region Council of Governments, $15 million, to total $80 million. The SCASD property tax is the largest property tax in the county. Unlike most Pennsylvania school districts, the SCASD budget is funded 85 percent by local taxes. The largest component of the SCASD budget is employee compensation (73 percent of  budget). The district employs about 1,300 employees (about half full time) to educate about 7,000 students. That’s a ratio of 1 employee to 5.4 students. Enrollment is declining not increasing the past ten years. The data discussed below was provided in November, 2011 by the SCASD responding to Right-to-Know and Open Records requests and other sources cited. A year later the data remains generally accurate since a new teacher contract has not yet been approved positions. as of August, 2012. Some staff left, new staff arrived, some changed Teachers’ Contract

the Big Impact

The 2006 to 2011 Teachers 5-year Contract with the State College Area Education  Association (SCAEA) is in effect today as the district enters its second year of “status quo.” The 06-11 contract was negotiated by the 2006 school board, not the present board, and was signed just after Act 1, the Pennsylvania Taxpayer’s Relief Act was implemented into law and salary caps imposed. The contract provided average salary increases of  7.4 percent each year (2.9% step plus 4.5% cost-of-living). (37 percent total over five years; that is 43 percent compounded over five years). years). That is a significant increase! Some teachers received 10 percent increases in a single year. These increases occurred during the worst recession, reportedly, since WW WW II. The average teacher salary $64,211, benefits are $15,233, for a total annual average teacher compensation of $79,445. See: Pennsylvania Department of Education (2012).  (2012).  "Investing in Pennsylvania Students". Students" .  http://www.education.state.pa.us/portal/server.pt/community/newsroom/7234/p/1100265 Hard to believe when you read elsewhere about average salaries between $46,898 and $53,000? Those salaries include part time w workers. orkers. During this period the Bureau of Labor Statistics reports inflation increased 11.5 percent (compounded) http://www.bls.gov/data/inflation_calculator.htm/. Just the Facts

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www.statecollegewatchdog.com Over the five-year period of the previous contract (from 06-07 to 10-11): - The salary of a starting teacher (step 2 in 06-07) increased 42 percent  - The salary of a mid-career teacher (step 10, 8 years of service, in 06-07) increased 37 percent - The salary of a late-career teacher (step 17, 19 years of service in 06-07) increased 24 percent - Many teachers earn an additional 5 to 8 percent above salary sa lary for extra work (committees, activities, etc.) beyond the 7-hour school day. In contrast: - The CPI increased by 11.5 percent over five years. - School property taxes increased by 19 percent. (This includes the outlier 06-07 year  when the board decreased taxes due to over collection for the failed high school project; excluding this year makes the total much higher). Every aspect of the SCASD teacher salary and property tax impact exceeds the 5-year  Consumer Price Index (11.5 percent).  In 2009-10 the school board requested a 1 percent give back of a single year  7.4 percent increase to help prevent employee furloughs. Teachers voted unanimously –  NO. Instead, programs w were ere reduced and some employees were resultantly and reluctantly furloughed. The present school board requested a wage freeze for 2011-2012. The teachers’ union so far refused to accept it. The teacher s’ s’ contract is being negotiated at this time (August 2012). If they did not want more, much more, it would not take this long.  Act 1 (2006) the Taxpayer’s Relief Act imposes a 1.7 percent real estate tax increase cap for the SCASD in 2012-13. Allowable exceptions to the 1.7 percent cap do not include salary increases. Other school employee unions in the SCASD accepted 2 percent increases for 2012. Pennsylvania Public School Employees' Retirement System called PSERS  

PSERS is already short of money by more than $26 bill billion ion statewide. The SCASD share exceeds $250 million. million. PSERS Pension managers are selling assets just to meet expenses – akin to selling selling your plumbing fixtures to make your mortgage payment. This nitwittery is based on audacious assumptions that pension fund investments earn more than 7.5% per year and salaries increase by no more than 5.5% per year. Neither  assumption is correct. Experts say so. The additional shortfall – tens to hundreds of  millions of dollars for the SCASD - is carried “off balance” sheet.   It’s a time bomb ready to explode with consequences for every aspect of education funding. The PSERS defined benefit pension is out of control. In 2012 the district paid 6 percent of budget for pension. The district wi willll soon be pay close to 14 percent or more of total budget for pension only. Some forecasts suggest 30 percent of budget. By

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www.statecollegewatchdog.com contrast, local municipalities pay about 2 percent generally unchanged for the past five years and for five-year forecasts. SCASD School Board Director Jim Pawelczyk explained: Sensible Salary Growth. Other than a hard freeze, the most effective w way ay to control pension costs is to slow the rate of salary growth. We need to do better. Over the duration of the SCASD’s last contract with the State College Area Education Association, salaries for union members with less than 20 years of experience increased by an average of 7.4% per  year. That’s well above what PSERS expects. Assumptions for annual salary increases were recently reduced from 6% to 5.5% per year; even so, they are still among the highest in the nation. While that decision shrunk the apparent size of the unfunded liability, it could have the more damaging effect of moving even more debt “off ledger” unless school boards and unions follow suit with more fiscally responsible collective bargaining agreements.  At a minimum, bargaining groups n need eed to understand that the economic ramifications of generous contracts extend long beyond their expiration date.unfunded By drivingliability. up salaries faster than anticipated, they unwittingly grow the Alternatively , perhaps it’s time to consider  legislative caps on salary increases so that they better reflect actuarial expectations. 2  Not only taxpayers in general but also teachers and parents in particular need to understand this problem if we are to control it. Health Care Plan. (present contract) Depending on employee only, employee and partner, or employee and family, the employee monthly cost ranges from $20 to $55; annual cost from $240 to $660 respectively. The SCASD total cost for school year  2011-12 is about $15,000 per employee, a total cost of $14.8 million. Most teachers pay 4.5 percent of health care costs with a comparatively small deductible. Taxpayers pick

up the other 95 percent. Lower L ower paid employees pay less. It is golden.  Average employee cost for corporate health insurance plans including Penn State is 22 to 26 percent with an average of $2,000 deductible. The Excel spreadsheet: SCASD Employee Compensation Data 2011-12 found on the Documents Page of this website provides details. What is a Fair Salary?

The PSEA argues, using a fair wage calculator, that only 5 percent of Centre County school employees receive a living wage ($40,300). Are they nuts? No. They derive their  duplicitous conclusion by including all employees including about half of whom work part time, often only two to three hours a day. As one example, the PSEA includes a $318 cost per month for health care in their living wage. The SCASD employee cost is 3

 

www.statecollegewatchdog.com about $55 a month not $318. It is important to understand the PSEA’s assumptions embedded in their calculator before befor e giving much heed to their pleas. http://www.psea.org/apps/livingwage/default.aspx?MID=644  

 Applying the same calculator to teacher wages shows that all full time SCASD teachers exceed the living wage criteria of $40,300 annually ($53,300 annualized) established by the PSEA and NEA (See the PSEA article -- Living Wage: How much is NOT  enough?  On the website’s Websites and Calculators page.) What is an annualized salary?

The US Department of Labor Statistics (DLS) defines an annualized salary based on the standard commercial work year of 2,080 hours (40-hour workweeks or 260 workdays). The SCASD teacher contracts require 1,330 annual work hours (35-hour  workweeks -- 190 workdays). The difference is 27 percent. An annualized salary is calculated by DLS by adding 27 percent to the 190-day salary for comparison to a standard commercial work year of 260 days. A $64,211 average teacher’s salary compares to a $81,548 physician assistant or pharmacist salary. The PSEA explains that teachers, whoper typically fuday ll time teach hours perhours day an and d plan, administer, or grade three hours 7-hourfull also workfour many more after  school and hence there is no hours worked gap. See the article, How many hours do  public school teachers really work?  By Andrew G. Biggs debunks the PSEA spin masters. http://www.aei.org/article/education/k-12/how-many-hours-do-public-school-teachers-reallywork/ (See the Documents Page for a document summary.)  Below is salary by group for the 544 highest paid, full time, professionals (job categories, titles, and data are found in The Excel spreadsheet: SCASD Employee Compensation Data 2011-12 found on this website’s Documents Page. In addition to annualized salaries, many teachers earn e arn additional income for extra work (committee meetings, supervising student activi activities, ties, special assignments, etc.) When comparing teacher salaries (upon which the SCASD reports average salaries) to actual IRS Form W2 for federal, state, and local wages, in many cases an additional 5 to 8 percent additional earned income is reported. (Information obtained from the district by an open records request.) As one exceptional example, a teacher earning $92,000 salary earned income of $104,000 earned income and coincidentally the year before retirement. Conversely, some teachers earn zero extra duty income. [Please see salary charts on following page.]

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SCASD Salaries by Salary Group Professional Category Line

1 2 3 4 5 6 7 8 9 10 11 12 12 14 15

Salary

$45,000 $50,001 to to $50,000 $55,000 $55,001 to $60,000 $60,001 to $65,000 $65,001 to $70,000 $70,001 to $75,000 $75,001 to $80,000 $80,001 to $85,000 $85,001 to $90,000 $90,001 to $95,000 $95,001 to $100,000 $100,001 to $125,000 $125,001 to $150,000 >$150,000 Total

Total #

122 77 75 83 71 40 62 104 3 6 5 17 0 1 666

Admin #

Profs Only #

1 0 0 0 0 0 0 5 2 4 5 17 0 1 35

121 77 75 83 71 40 62 99 1 2 0 0 0 0 631

Professional employees earning less than $50,000 are not full time.

Number of professional Employees by Category  Administration Elementary Teachers Secondary (High School) Teachers Special Education, Speech, Hearing, Therapists Nurses, Dental Hygienist’s, Other  Therapists, Psychologists

Guidance Counselors Instructional Technology Librarians Total

38 226 272 76 18 20 5 11 666

The district also employs an additional 650 employees who earn less than $50,000 per  year. Most are also less than full time employees. That data is available on the salary spreadsheet previously cited. It is well to keep these numbers at hand when the t eachers’ union bargains for 7 percent annual salary increases or manipulates other forms of compensation to achieve an overall 7 percent increase in salary, benefits, or work day modifications. Contrary to the PSEA and NEA calculators and allegations, SCASD teachers are doing very well.

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www.statecollegewatchdog.com Collective bargaining is no longer reasonable. It has become a greed machine fueled by the largest union (public service or trades based) in Pennsylvania. It contributes more campaign funds than any other PAC in Pennsylvania and applies that leverage to prevent pension reform. Teachers are entitled to a fair wage and a nd collective bargaining. Similarly, taxpayer  collective bargaining is called Act 1. the estate caps section of theon law. Encourage the school board to Specifically adhere to th those osereal caps eachtax year, they are based federal and state wage scale indices indices and may not be excepted. But they are by using slick cross-charging techniques. [The base Act 1 index is calculated by averaging the percent increases in the Pennsylvania statewide average weekly wage and the Federal employment cost index for elementary/secondary schools.  Additionally, for school districts with a market value/personal incom income e aid ratio (MV/PI AR) greater than 0.4000, the value of their index is adjusted upward by multiplying the base index by the sum of 0 .75 and their MV/PI AR. For example, if the base index is 1.7% and the school district's MV/PI AR is 0.6000, the school district's adjusted index is 1.7% x (0.75 + 0.6000) = 2.3%.]

In practice, the upward adjustment never applies to the SCASD because the district’s MV/PI of 0.1664, which is considered an indication of affluence, is one of the lowest in the state (highest community wealth). Not explained by proponents of higher property taxes is that the equalized mill calculation includes the exceptional value of commercial property in the district, which greatly increases “community wealth.” Consequently the district is required to pay a larger portion of its budget from local taxes (85 percent) than do 86 percent of other school districts. Further commercial and agricultural assessment includes many tax reduction advantages and reassessment ploys not available to residential property owners (including the measly homestead reduction). The real estate tax burden (70 percent of SCASD funding) falls disproportionately on residential real estate not on Wal-Mart, Nittany Mall, or the Village at Penn State (as only a few examples).

"The Act 1 index is the average of the Employer Cost Index (published by the US Bureau of Labor andofStatistics) the Statewide Average Weekly Wage in (published the PA Department Labor andand Industry). It reflects the actual changes cost of  by employing elementary and secondary education teachers in the public sector." The attached figure (page below) shows the history of these indices. indices. They have fallen dramatically, but they still run much higher than inflation. The graph also shows that SCASD salaries have increased at about two to three times higher than the Act 1 index after implemented in 2006.

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"History of the Act 1 Index." 5.0

4.4 4.1 3.9 4.0

3.4 2.9 3.0

1.7

2.0 Base index

1.0

1.4

SAWW ECI

0.0

Base Index = Average of the SAWW and ECI indices SAWW = Statewide Average Weekly Wage Index ECI = Bureau of Labor Statistics Employment Cost Index for Elementary and Secondary School Employees  

School boards have the ability to “beat the index” by requesting permission from the state to exceed the Act 1 annual index for costs beyond their control such as PSERS and some special education. The law is very clear on this issue: “the revenue generated by increasing the rate of a tax by more than the index will be used to pay ONLY for expenses related to certain forms of electoral debt, special education costs, or retirement costs that exceed the index”. In practice, the state never checks that the money is used for its int intended ended purpose. Many school boards simply disregard this constraint as well. The issue is brought to the attention of the SCASD several times.

What can you do?

Encourage the school board to respect these caps each year. Ask your state legislator  to create a statewide accountability system to insure that exceptions are used sparingly and 1correctly  Act caps. and that school employee compensation increases do not exceed the 7

 

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Help take the education-funding burden off the property tax – 70 percent is far too much. Look at proposed Senate Bill 1400 which again advocates eliminating the real school estate tax and replacing it with an increase in the state sales tax from 6 to 7 percent and no categories more and with very$16 few billion taxable exemptions. Pennsylvania 124 exemptions 20 totaling every year. (The (T he state deficit allows last year was $4 billion.)in SB 1400 proposes continued exemptions for medical and some food such as WIC eligible (Women, Infants, and Children) but not for potato chips, dry cleaning, and $180 running shoes. If you agree tell te ll your legislator, you can count on the PSEA to talk to them regularly. Commonwealth Foundation https://spreadsheets.google.com/pub?key=tp9LtCs7BNcfbM7J2x0Slkw&output=html  

Fini

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Article III,  Section 14 of the Constitution of the Commonwealth of Pennsylvania states that, "The   Article

General Assembly shall provide for the maintenance and support of a thorough and efficient system of  public education to serve the needs of the Commonwealth." My goal is to make sure that we can continue to do so.   2 A School Finance Challenge for the Decade http://www.scribd.com/doc/100533184/A-School-Finance-Challenge-for-the-Decade#download

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