Tuesday, June 19, 2012

PCS: Salaries/Benefits for Teachers & CSEA - Part 7

Re. Teachers 

Teachers in the PCSD receive a range of salaries. Entry-level teachers receive about $35,600 - which is much lower than it is for teachers on or near the top steps -$72,400. (Extra earnings for coaching/advising can increase a base salary by approximately $12,000).  Base salary is determined by years of experience (Steps) and educational level (Lanes). For instance, when a teacher receives a Masters Degree, s(he) changes lanes (a raise) and for every year of seniority, s(he) moves up a step (which means a raise).

How are teachers salaries determined?
Teachers’ raises are divided into two categories:
Step Increases – which are given each year (even if a contract is not settled)
Additional Negotiated Raises – the raises negotiated via contacts settled between the union and the superintendent of schools and ratified by the BOE. (The union decides how this money is divided up. It is incorrect to think that each teacher gets an equal amount.)

Are teachers underpaid?
Many would agree that as a society, we do not pay effective teachers enough. Recently, a talented teacher told me that her daughter got her first job out of college - and the salary is more than her mother receives after decades in the profession.

In particular, the relatively low salaries for new teachers can make it difficult for the teaching profession to attract the most competitive students.  Most students and young professionals have to go into debt for many years to pay for their Bachelor’s Degrees and for their Master’s Degrees.  Student loan debt in the US now exceeds credit card debt – a disconcerting fact indeed. If our state (and country for that matter) revised its spending priorities, many believe spending on education should be given a higher priority. Having said that, increased rigor and relevance of teacher preparation programs must occur as well.
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Most CSEA employees are, inarguably, modestly paid. It is the high quality health insurance benefit available to them (and to all employees) that enables the district to attract competitive employees.  It is also the skyrocketing costs of benefits that prevent the district from giving these employees a fairer rate of pay. As long as huge sums are being spent on health insurance premiums and pension costs, little is left for the base salary. A few years ago, a PCSD Health Insurance Committee was formed to examine good alternatives to the current health insurance program. Significant savings could have been realized if the unions (CSEA, Teachers, Administrators) agreed to move to a very good alternate plan. At the time, the health insurance offered at SUNY Potsdam was discussed as an alternative. It would have saved the PCSD impressive sums that could then have been used to save jobs, offer better raises, and place the district in much better financial standing.  The move was refused because the plan was not identical to the current HI plan.  Again, the issue of benefits is central to the PCSD fiscal situation and to the CSEA's ability to negotiate better contracts for union members.
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Pertinent Questions

Will NYS funding of public schools increase any time soon?
By most accounts, not likely. New York State, like so many other states, is undergoing a financial meltdown that has resulted in large cuts to education funding.  The State's financial problems have trickled down to the local government level - counties, towns, schools.

Schools, as local taxing entities, have been forced to spend less (usually via job cuts) and increase taxes (though the tax cap has placed major limitations on taxation by schools).  It has been stated by many that the tax cap is an effort to ease the tax burden on the public while simultaneously forcing school consolidations and other cost savings efforts. NYS is in no position to do anything but cut aid to schools. State officials may try to level aid to schools for next year (promises made in an election year - as usual) but the fiscal problems in NYS (in the country and around the globe) are predicted to last for some time.

Are the financial problems facing public schools the sole result of cuts in state aid to schools?
No. Locally negotiated labor contracts (which guarantee costly benefits) are another major problem facing schools. The health insurance benefit was initially agreed to when health insurance was reasonably priced. Management did not foresee the healthcare crisis and the soaring growth in health insurance premiums that came with it. The millions being spent on premiums, along with  pension costs, are negatively impacting the school through lost jobs and cuts to programs.

The cost of health insurance for this year was $4.2 million - of which $1.9 million was for retirees. Health insurances for retirees is, for the most part, free.  Because of the anticipated scope of future retiree insurance costs, the government issued a compliance statement called GASB 45.

GASB 45 (Governmental Accounting Standards Board) "is an accounting and financial reporting provision requiring government employers to measure and report the liabilities associated with OPEB (Other than Pension post-Employment Benefits). Schools are required to comply with GASB 45 which was initiated in 2004 "because of the growing concern over the potential magnitude of government employer obligations for post-employment benefits." [Emphasis added.]

The largest OPEB contractually given to retirees by the Potsdam School District is health insurance. The current pay-as-you-go method does not provide useful information for schools to assess the demands on  the district's future cash flow. To read more about GASB 45 go to:


The other ever escalating cost is the required contribution to pension plans (approximately $1.4 million). When the value of the retirement funds drop, as they have in recent years due to investment losses caused by the Wall Street financial crisis (a self-inflicted crisis as we all now know),  the NYS Comptroller bills the schools in order to bring the funds up to a level he deems acceptable. This cost is passed on to local taxpayers. Some have reported that the Teachers' Pension Fund remains dangerously underfunded and have predicted that it could be insolvent in as little as ten years. They assert Mr. DiNapoli is overestimating the return on investments in the funds. If he agreed to a more realistic return (a lower one), then school districts would receive even higher bills to be paid to the pension funds. Some assert that Mr. DiNapoli is overestimating the returns on the pension funds because of pressure from unions who know negotiated raises might disappear if school districts receive even higher bills for the pension contributions. The available pool of revenues to run the school district is limited and health insurance and pensions are taking a disproportionate amount of the money.
 See "Public Pensions Faulted for Bets on Rosy Returns," by Mary Walsh and Danny Hakim in The NY Times.


Can the benefits, which are contractually owed to employees and retirees, bankrupt the school?

Yes. At the PCSD there is a benefit problem that is hindering better incomes and resulting in lost jobs. Actuaries, hired in compliance with GASB 45, have told PCSD officials that if they started funding the contractually-promised future health insurance premiums, the district would go bankrupt. (This is true for most public schools.) At this point, the government has not required schools to start funding these commitments in advance. The actuaries reported to the District their best estimate as to the cost of paying health insurance to its retirees (and future retirees) over a twenty-year period. (Twenty years being the actuarial estimation of the lifespan of an average retiree.)
This actuarial report is available via a FOIL request to the school district.

What can interested members of the public do?

~ Continue to lobby NYS for equitable funding for high and average needs schools.
~ Ask the BOE to discuss the potential magnitude of district obligations for post-employment benefits and take action to protect all members of the school community by not entering into unaffordable and unrealistic future financial obligations.
~ Encourage the BOE to hire an attorney to handle future contract negotiations. Expertise is needed.
~ Support Board members who do their homework,  ask hard questions, make tough decisions, demand transparency and accountability.
                                                                 ~ ~ ~

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