Questions and Answers regarding the Bargaining Crisis in Public Education

This is the first in a series of attempts to answer some of the questions that I've been hearing about the bargaining deadlock facing our school district. This year school districts have been struggling with budgets probably more than ever before. Our struggle with budgets has led school boards to confront the question whether to fund compensation increases for teachers by cutting the size of the teaching force, and to use the savings for those increases. The crisis is not the fault of teachers nor is it the fault of school boards. The crisis arises from a long term persistent structural imbalance in the funding of school districts versus the compensation structures existing in public eduction. Some school boards are making cuts to fund increases, and some are not. The St. Cloud Board of Education has decided that it cannot justify cutting teacher positions to fund compensation increases. We're not critical of school boards who make a different decision. We've decided after careful thought that public education cannot remain economically and fiscally sustainable, if we keep implementing program cuts and staffing cuts to cut .

One of the things that we heard from the representatives of teachers is that many teachers wish they had more information about the financial condition of the school district and also that they had more meaningful involvement in the budget process -- the budget at their own schools and the budget at the District level. The Board invited teacher representatives to make a proposal for how we could do just that. We said that we would be interested in creating a process whereby the board could enhance the participation of teachers in the budgetary process, and that this would be something that we could envision doing as we develop our final budget document for next year. Public education is in jeopardy as a result of systemic structural problems in the way that it is addressing long term challenges in both revenues and costs. This problem has been brewing for more than a decade. In the last decade, all over the state, boards of education and teachers unions have grappled with these problems by wrangling over whether the financial problems are going to be resolved by slowing down the rate of compensation increase or by implementing program cuts, putting off long term expenditures, raising fees, and reducing staff, including teaching positions. The issue has been treated as if it were a two year problem that can somehow be solved at the local level by coming up with temporary expedients. When a board of education increases compensation faster than the legislature increases funding and makes program cuts to fund those increases, the board is not solving a problem for teachers, for kids, or for the public--it is kicking the can down the road for a few years and making the problem even worse.

I think it is critical that the public and educators get a better handle on reasons for the financial crisis that is facing public education. I've been trying to address some of those reasons on my blog post. In this post, and some upcoming posts, I'm going to try to answer some of the questions that I've been hearing in recent weeks.

Why did the School Board adopt Bargaining Principles: The state funding crisis has led the board to adopt bargaining principles which guide our approach to compensation issues and bargaining. You can look at those principles by clicking on this link: Bargaining Principles Link. Our bargaining principles call upon us to provide fair compensation within our means. They say that we are committed to providing the best possible compensation for our employees within the means provided by the State of Minnesota.. Our bargaining principles state that "increased compensation for employees depends upon increased revenues from the State. To that end, we regularly advocate for increased funding for public education."

Several facts have led us to adopt these principles. The first is that over the last decade, the rate of compensation cost increases in most school districts has regularly exceeded the rate of increase in the state funding formula. Here in St. Cloud, if you sum the total percentage increases for all settlements in the last decade, it comes to 48 percent, or 4.8 percent per year. That compares to a rate of increase in the funding formula of 25% in that same decade, or 2.5% per year. Now the formula increase is not a perfect indicator of the rate of growth of our funding, because special education funding plays a significant role in our financial situation. But obviously, these two trends cannot continue forever.

You could look at just about any school district and find the same trend. Compensation increases faster than state funding increases resulting in program cuts, staff layoffs, fee increases, reduction in textbook replacement, library replacement, and other cuts. At some point, compensation increases and state funding increases must be brought into balance. Our bargaining principles state that

Our commitment to maintaining quality programs and reasonable class sizes prohibits that we use budget cuts to fund increased compensation. We cannot and will not increase the total cost of compensation faster than the increases in state funding permits. Cutting programs, thereby hurting students and families, is not an acceptable or effective mechanism to accomplish the objective of funding settlements.

Does this mean that we think that teachers are overpaid? Absolutely not. People who use this funding crisis as an excuse to beat up on teachers, or argue that they don't work hard, or try to minimize the contribution of the teaching profession aren't doing us any favors. A community that honors its teachers and its professional educators and recognizes their tremendous value is likely to be a growing, well educated, vibrant community. A community that devalues its professional educators is on the road to ruin. People need to understand that employers can assign great value to their employees, but still find themselves unable to provide compensation increases.

The decision of the St. Cloud Board of Education to adopt sustainability principles is not anti-teacher. In fact, if we were to adopt the approach urged upon us by the teachers union, we would be cutting over ten percent of our existing teaching force. That's not going to seem very pro-teacher to the 70 to 100 teachers who lose their jobs. And, if we were to do that, the remaining teachers would have significant increases in class size, and that's not exactly a boon to those teacher either.

As we confront this choice here in our community--to keep all teachers employed or to implement position cuts to fund pay increases--a number of questions keep cropping up. Here are some of them:

What are the components of teacher compensation and how do they contribute to rising costs?

• Lanes When teachers earn a required number of post graduate credits, they move into a new "lane", and earn compensation for training. The estimated cost of lane improvement is about $190,000 per year. Teachers earn that lane improvement, and receive it, even when the new bargaining agreement has not yet been approved under the law of "continuing contract." Since the state has given us no new funding to cover this cost, we had to make cuts in this year's budget and next year's budget adjustments to fund them.
• Steps A teacher earns a step for an additional year of experience, but only It costs about $500,000 in any given year to fund steps. Its steps are the primary vehicle that allow teachers to move upward in pay during their career. Steps are, I think, a good thing, because they create some level of predictability and equity in teacher pay. The problem is that if the state freezes funding, there is no money to pay steps. This year, SCEA is asking us to pay steps retroactively for this year, and to pay them next year. That would increase our costs beyond this year's budget by $500,000 and next year's budget by $1,000,000 for a total unfunded increased cost of $1.5 million.
• TRA and FICA contributions. These are costs that don't seem all that real to the employee, because they are costs paid to the State of Minnesota to fund teacher retirement, or for unemployment compensation insurance, etc. We spend about 13 cents in increases in this category for every increase in pay.
• Health Insurance: This year, the District pays $586.00 per month for each teacher receiving individual health insurance coverage. Because this cost is "uncapped," it increases automatically when our premiums increase. And, Minnesota law prohibits us from changing the content of insurance coverage to adjust to increasing costs, unless we agree to that as part of our collective bargaining agreement. The insurance premium increases are difficult to predict and represent a major uncontrolled cost for our district. We budgeted about $300,000 this year to cover this increased cost, just for the single coverage increase, and we included the cost of a similar increase in our budget adjustments for next year. We received no money from the State of Minnesota to cover these increased costs. The district contributes $937.85 toward the insurance costs of teachers receiving family coverage, a figure that is capped--that is does not increase automatically. SCEA has sought an increase in our contribution in this category, and if we were to grant it, then we would have to make additional cuts to fund the increase.
• Other: SCEA has sought extra compensation for teachers who don't receive steps, because they are at a point in their career, when they wouldn't get steps. It has sought increased "longevity pay," which is a form of extra pay for teachers who are at the very top of the pay scale. Again, the State has not provided us with any funding to pay for these requests.
• Salary Schedule Improvement: Salary schedule improvement occurs when the entire pay scale goes up. Over the last ten years, according to Education Minnesota figures, the average salary schedule improvement across the state has been about 23 percent, and our salary schedule improvement has been just about the same. That's about 2.3 percent per year. The funding formula for public education has gone up 25% in this same time period, leaving nothing to cover the other items of compensation. Often, when compensation increases are reported in the news, you hear only the cost of salary schedule improvement, but school districts have to find funds to pay for all of these increases, whether they are reported or not.

Why is the Board offering Q Comp this year? Quality compensation is about the most cost effective way we have to provide additional pay to teachers. It is available on a two for one match by the State of Minnesota. In addition, it is the key to possible additional funding sources from the federal government. It provides the only possible method to provide additional funding for teachers pay without forcing teacher layoffs and other program cuts.

It is true that we lost quality compensation last year. I've heard people comment or claim that the District lost q comp because the District failed to comply with the State's requirements. If you believe that, then I have a bridge for sale out in Brooklyn for you. The District lost quality compensation, because the SCEA refused to consent to implement changes in Q Comp required by State law. We could not implement these changes, under the Q comp law, without consent of the SCEA, and we did not receive that consent. I sat in a room with the representatives of teachers myself, when they refused to make these changes. Any suggestion to the contrary is simply untrue. We have once again offered the opportunity to implement Q Comp so that teachers can receive an additional $2,000, per year, plus or minus, provided that SCEA will agree to comply with the minimum requirements of the Q Comp law. Nobody is trying to make them do it. Its a choice between two alternatives. We've just said, look, here is a way to improve your compensation. You don't have to take it, of course. But don't tell us that complying with q comp is more onerous than increasing class size, cutting programs, laying off teachers, and doing all of the other harmful things that are required by trying to manufacture pay increases out of nothing.

What can you tell us about the so-called language issues that are as yet unresolved? "Language issues" involve changes in the work rules for teachers. They deal with the length of the duty day; the amount of prep time that teachers receive, and so on. I'll talk about those issues in a future post. Stay tuned.

I want to close by repeating one more time. When an employer freezes pay during a fiscal crisis, so that the employer can keep all employees working, the employer is not saying that the employees are not valuable. In fact, in many cases, the employer who makes an effort to keep all employees on board values employees at least as much or more than the employer who sends its employees out in a high unemployment job market. People do a grave disservice to the issues confronting us to see this as a question of whether teachers earn the pay they receive, or whether they deserve a raise. We have an exceptional teaching staff in St.Cloud. They are dedicated to learning, and they earn their pay. We are lucky to have them here, and as a community we are enriched by their presence.

The issue here is entirely different. Compensation increases need to be funded by the State of Minnesota. We cannot sustain public education over the long haul by adopting a strategy that school boards are going to cut programs, raise fees, delay long term acquisitions of library and textbooks, and reduce teaching staff