Education: What's Udacity?

Udacity and Khan Academy were recently mentioned on NPR. While many are familiar with Khan Academy, fewer may have heard of Udacity. It is an online educational startup developed by Sebastian Thrun - the Stanford University professor who had 160,000 students sign up for free computer science courses. More (and free) computer science courses are being offered online through Udacity. To find out more just read...

http://diyscholar.wordpress.com/2012/01/24/the-audacity-of-udacity/

http://diyscholar.wordpress.com/2011/12/06/enrollment-opens-for-14-new-free-stanford-courses/

While the masses will not be able to get a Stanford University degree, access to Ivy League courses is increasingly becoming available to the public.

PCS & The Hollisters: A Proposed Response

What should be the response by the Potsdam Central School community to two individuals who saved the taxpayers of the PCSD close to $392,000? How about, "Thank You"? (If someone made a $400K donation to the District, school officials would probably name a building in his/her honor.)

I first became acquainted with Richard and Jane Hollister when I was a very inexperienced member of the Board of Education (who had much to learn about school governance, education law, and institutional history) back in 1992.   Over the course of my many years on the PCSD Board of Education, the Hollisters were the only two people who consistently told Board members the truth. The Hollisters watched as individuals (some of whom who were paid by the public to provide the BOE with accurate and complete information) violated policies, regulations, and laws. Mr. and Mrs. Hollister responded by researching issues and bringing facts to the BOE...facts that often belied what the Board was being told. They also endured public insults and verbal attacks to their integrity. Ironic, huh? The liars attacking the truth-tellers. I believe it was Gandhi who said, “First they ignore you, then they laugh at you, then they fight you, then you win.”

Over the last twenty years, I have watched as the Hollisters have been ignored, laughed at, and fought with. Then I saw them win significant victories; one of which saved the District hundreds of thousands of dollars. They did this by alerting the then PCS superintendent to the fact that the existing contracts between the Day Care Center, the Village of Potsdam, and the PCSD made the district liable for any unpaid mortgage debt left over once the Day Care (Building Blocks) completed its second ten-year lease. School district attorneys concurred with the Hollisters and documents were crafted to take the huge liability off the backs of school taxpayers. The "Good Ol' Boys" were furious and still are. The uncovered truths exposed deception, incompetence, and malfeasance.

Well, here we are...just one year away from the expiration of the Day Care Center lease. If not for the efforts of Richard and Jane Hollister, the PCSD would owe approximately $400,000 - as of next May. Imagine how many teachers or CSEA employees would have lost jobs so that money could be repaid? Ponder the fact that it was unpaid citizens who did their homework and set things straight. Where, one might ask, were the school officials - some of whom were well-paid to protect the public's interest while other officials were elected to do likewise?

The mud that has been slung at the Hollisters has, to a certain degree, stuck. Nice people will say to me,
"Oh, the Hollisters...aren't they trouble-makers?"  They are only trouble for people who lie and deceive the public. For the rest of us, they are public advocates.

Note: Another "victory" by the Hollisters was their uncovering of the fact that approximately $1.5 million dollars had been illegally borrowed by the PCSD without Board of Education approval. These assets (loans) were recorded in the school district budget as revenues but were not listed as liabilities (i.e. loans that had to be paid back).  Thus, the true financial state of the school was purposely hidden from the BOE and the public. Mr. Kennedy, the newly hired superintendent, was approached (soon after he began the job) by the District's independent auditor and was told the actual and dismal state of the District's finances. Mr. Kennedy told me he felt he was hired under false pretenses. The impact of these improper borrowings was that the District overspent and had to get a loan from NYS to cover expenses. The District taxpayers had to pay the large interest on the loan as well as repay the loan. Had the BOE known the true state of the District's finances, they could have cut spending to stay within the District's means. All in all, Mr. Hollister was correct in saying that the books were cooked. In a nutshell, the PCSD was ENRONed. 

Board of Education Membership

There was an informative blog posting in the Watertown Times on July 6th by Bob Gorman.

http://www.blogger.com/blogger.g?blogID=4412789791903506184#editor/src=dashboard

Over the years, it was clear that when special interest groups employed by a school district elected their spouses and relatives to Boards of Education, that little good (for the public) came of it. This issue has been discussed time and time again at statewide conferences. Attorneys tell Board members that it is legal (i.e. not a conflict of interest) for spouses and close family of union members to serve on the Boards of Education where their family is employed.  Common sense tells us that this is not wise and not in the interest of good governance of school districts.  Why, then, is this legal in NYS? In a word...politics. NYS legislators could make it illegal but they have not done so. Is a spouse or close relative on a BOE going to negotiate in the best interest of the public or in the best interest of his/her family? Human nature being what it is, we all know the answer to that question.

What has been more difficult to explain is why it is not wise to have teachers who work in neighboring school districts serve on the Board of Education in the district where they live. The public should know that the contracts settled in one school district have a significant impact on contracts settled in other nearby districts. When negotiations are going on, one of the first things discussed is the contract settlements in neighboring districts. When impasse occurs during contract negotiations, the arbitrators - brought in to settle the dispute - immediately look to the contracts agreed to in neighboring school districts. Thus, a teacher board member knows that what occurs contractually in the district where he/she serves on a BOE can and will impact the district in which he/she works. While such members might purport to work in the interest of the public, self-interest is there whether such individuals acknowledge it or not.

Mr. Gorman writes..."We  have so many school districts that we can't find enough members of the public to serve on school boards. We solve the problem by electing the spouses of teachers and guidance counselors who, not surprisingly, wave through salary increases for teachers and guidance counselors. And when we can't find enough spouses we then elect teachers and guidance counselors from from neighboring school districts. In big letters they proclaim that there is no conflict of interest. But in the fine print there is this: when the union these teachers and guidance counselor belong to is seeking a new contact, the union will enter negotiations  using as a benchmark the contract its members helped approve in the neighboring school district."   


Will politicians change the law and make it impermissible for spouses (or immediate family members) of union members to serve on Boards of Education in that district? Will the public decide to vote in significant numbers in school board elections?  These are unknowns. What is known is that unions will continue to place spouses and relatives (and teachers from neighboring school districts) on Boards of Education as long as the public doesn't know what's going on.

Teacher Pension Fund Concerns

For those who have been paying attention, much has written and said about the New York State Teachers Retirement System (NYSTRS).  Is it underfunded? Will it face bankruptcy if things do not change? School district (i.e. taxpayer) contribution to the NYSTRS is predicted to continue to increase. Some predict the contribution rate could double by 2016. In the following article from Newsday

http://www.newsday.com/opinion/viewsday-1.3683911/why-teacher-pension-costs-will-keep-rising-1.3822627

the author writes, "While the tacher pension fund is comfortable predicting asset returns 40-50 years into the future, it refuses to provide employers with useful guidance on where their pensions costs might be headed within the next decade. As a result, school districts throughout the states are negotiating three to five-year teachers' contracts without knowing how much more pensions might cost three to five years down the line." 

Anyone concerned about the solvency of the TRS should be paying attention and writing to Comptroller DiNapoli insisting that he "recognize the real long-term cost of teacher pensions" and that he issue long-term projections of annual required contributions (by school districts).

Retirees, some of whom could live as long as 40 years in retirement, are counting on their pensions to get them through their post employment years; therefore, realistic projections must be made so the pension fund is properly supported and so schools can negotiate contracts that reflect likely future costs.

PCS: Mandate Relief & The Case for Hiring Legal Experts

The public hears, time and time again, the complaint that unfunded NYS mandates are a huge and unfair burden on public schools. At a pubic budget forum several months ago, the PCSD superintendent specifically mentioned the need to repeal the Triborough Amendment (to the Taylor Law).  NYSCOSS (the NYS Council of School Superintendents) and NYSSBA (the NYS School Boards Association) are among the most vocal opponents of the Triborough Amendment.

This 1982 mandate requires that all provisions in an expired labor agreement, including step increases (raises), must remain in effect until a new contract is agreed upon. Thus, expired contracts carry little incentive to bring labor to the table eager and motivated to settle a new contract. A timely settlement of contracts is beneficial to both management and labor.

"In the 1970's, the state Court of Appeals ruled that Triborough Doctrine did not require payment of automatic 'step' increases after expiration of a contract which is why public employee unions fought for the stronger law (the Triborough Amendment). They got it, in (not coincidentally) a statewide election year, over the strong objections of the state's local government and school board organizations, and against the advice of Hugh Carey's own Budget Divisions analysts."


The reason it is so important for Board members to study and learn about all facets of their jobs as local officials is that they would question whether the PCSD may have done something that contract attorneys have told Board members across NYS never to do. Never, they say, put provisions of the Triborough Amendment into local union contracts.

Why should this be avoided? Well, if the Triborough Amendment were ever to be repealed, school districts that included Triborough language in their contracts would still have to adhere to the provisions of that law, that mandate.

In Article II of the PCSD contract between the Teachers' Union and the Superintendent of Schools, the following is written: "It is understood that the terms and conditions of employment provided in this Agreement will remain in effect until altered by mutual agreement in writing between the two parties."


In my opinion, it appears that at the PCSD, the reprieve from the Triborough Amendment would only occur if:

1.  the law was repealed by legislators in Albany (highly unlikely) and then
2.  the superintendent could get the above-cited provision negotiated out of the local contract (even more unlikely).

Once again, the need for legal expertise is called for when agreeing to contracts that have long-term and far-reaching consequences.

PCS: A Financial Snapshot

It can be difficult to understand how NYS aid to schools impacts the costs. The following snapshot of the 2010-11 school year at the PCSD should help clarify the major areas of spending and the aid received.

For  2010-11 

        (approximately)

$10,400,000...................Salaries

$ 6,700,000....................Benefits

$ 1,500,000....................Special Ed. (The cost before NYS aid was $3.9 million.)

$       308,000.........................Debt Service (Cost before building aid was $3.4 million.)*

$       100,000.........................Transportation (Cost before aid was $1 million.)

$       311,000..........................Athletics

$        52,000...........................Extracurricular Activities

~ On the Special Education costs of $3.9 million, NYS reimbursed the PCSD $2.4 million.

~ On the Debt Service of $3.4 million, NYS reimbursed the district $3 million. (Aid was 91%) * The building aid received on debt service varies.

~ On the Transportation Costs of $1million, NYS paid $900,000. (Aid was 90%)

• Education is a people business. Thus, the major cost drivers are salaries (for employees) and benefits (for employees and retirees). 
• There have been significant decreases in NYS aid to schools (for the last several years).
•  There have been significant increases in the costs of contractual obligations (negotiated locally between the superintendent and the unions).
• The primary place to realize savings, unfortunately, lies in cutting jobs.
•  The causes of the financial problems at the PCSD are the result of both local contract agreements and State cuts in funding. 

What comprises the $6.7 million in benefit costs?

           (approximately)

1.  $4.3 million.......Health Insurance
2.  $ 849,000..........TRS (Teachers' Retirement System)
3.  $ 799,000..........Social Security
4.  $ 333,000..........ERS (Employee Retirement System for CSEA)
5.  $ 165,000..........Administration of Health Ins. Plan
6.  $ 100,000..........Unemployment Insurance
7.  $  86,000...........Workers' Compensation Ins.
8.  $  22,000...........Workers' Compensation Administration
9.  $   8,000............Flex Plan and 403b fees 

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.

~ ~ ~ 

Re. CSEA

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.

~ ~ ~

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:


http://www.gasb.org/st/summary/gstsm45.html

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.

http://www.nytimes.com/2012/05/28/nyregion/fragile-calculus-in-plans-to-fix-pension-systems.html?_r=1&p

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.
                                                                 ~ ~ ~