Sunday, May 19, 2013

Potsdam Central: Blowing Up The Budget

Since I am one of four candidates for the Potsdam Central Board of Education, I have been contemplating some important questions about the district's fiscal and educational situation.

Will the PCSD really have to solve its problems locally?
By nearly all accounts, the problems facing Potsdam Central (and most North Country schools) will have to be handled locally. Albany has already done what it will do. The state budget is set. Now it is up to us. Lobbying did little to convince legislators to deal with soaring health insurance costs and pension costs. Albany refused any serious mandate relief. They wouldn't look at amending the Triborough Amendment. Many believe the Governor is trying to force North Country schools to merge. The bottom line is - we're on our own to deal with some serious problems facing our schools .

Why is the PCSD on the verge of educational and fiscal insolvency? 

STATE AID CUTS: The budget crisis in NYS resulted in state aid cuts to schools so the state could deal with its deficits.

PENSIONS: The pension bills to the school have drastically increased. Why? The Great Recession of 2008 hit the Teachers' Pension Fund (TRS) and the Employee Pension Fund (ERS) hard. The ERS (overseen by Comptroller DiNapoli as the sole trustee) lost $40 billion or 1/4th of its value in 2008-09. The way the comptroller gets the fund back up is to simply send out larger bills to schools. The TRS (run by a group of trustees) did likewise to get the teachers' pension fund up to what they deem an acceptable level. School districts cannot control this cost. It is determined in Albany (and is based on the total teacher payroll).

HEALTH INSURANCE: This is a local issue. Health insurance benefits are negotiated between superintendents and unions (and BOE's vote on ratification). Health insurance premiums at PCS were increasing by 20%/year in much of the 1990's. The increases over the last ten years have been soaring. Family coverage is now about $21,000/year. The district has reported that benefits will soon cost more than salaries.  

The CPH president recently characterized Potsdam Central's fiscal problems in a speech at SLU. He said, "The heart of the problem is the uncontrolled health care spending that is blowing up Pat Brady's budget..."

The major cost drivers at PCS are listed in documents available on the district's website. They are:

1. Salaries: $7.1 million
2. Health Insurance Benefit: $5.4 million
3. Special Education: $3.8 million
4. Debt Service: $3.1 million
5. Miscellaneous Benefits: $2.8 million (retirement, social security, unemployment, workers' comp.)

However, the total numbers can be confusing to much of the public. Items #3 and #4 above (Special Ed. and Debt Service) are aidable from NYS (which means that NYS pays a percentage). The Special Ed. local cost is likely to be around $1.3 million and the Debt Service is likely to be about $300,000 after aid from NYS. Therefore, it is much more informative to tell the public the following as a list of cost drivers:

1. Salaries: $7.1 million
2. Health Insurance Benefit: $5.4 million
3. Miscellaneous Benefits: $2.8 million
4. Special Education: $1.3 million (after aid)
5. Debt Service: $300,000 (After aid, this doesn't actually look like a cost driver.)

If health insurance costs are "blowing up" Potsdam Central's Budget, then I believe this is the central topic for discussion. Health insurance premiums are 20% of the $27M budget and growing. By comparison, athletics is about .01% of the budget.

 I do not want to see the school have to merge due to HI costs. A merger will cost even more people their jobs! Teachers, CSEA employees, and student programs are being cut while health insurance costs are burying the district. Let's deal with the real cost driver. If this is not addressed soon and in a substantive way, the district will continue to have its extremely expensive health insurance premiums, will continue laying off employees, and will continue losing educational programs.

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