Sunday, January 23, 2011

Senate File 0056 a necessary first step

The Minneapolis Star and Tribune carries an editorial today (Click Here) endorsing Senate File 0056, which calls for a two year temporary hard pay freeze for public education and charter schools. You can find the text of the bill by clicking here. The public debate surrounding this bill continues to center, wrongly, around whether public educators deserve the pay that they receive, or whether they have sacrificed already, or whether we should tax the rich, and so on.

I've supported Senate File 0056 as part of what I call the win-win legislative agenda. The win-win legislative agenda would include a hard pay freeze in public education, but it would also include an unwinding of some of the damage done in the last legislative session by increasing the unfunded mandate load heaped onto local school districts. It would require each party, democrats (i.e. Dayton) and republicans, to make painful concessions to their core principles, for the benefit of children. The win-win legislative agenda would put kids first, not just as a slogan, but in deed.

But it would be a grave mistake to support Senate File 0056, on the grounds that teachers are overpaid, because they are not. Teachers are on the front lines of the most important work that government has to do in Minnesota--to strengthen our economic future by assuring that the next generation is well educated. And that job is getting harder, not easier. It is getting harder, because the standards that they must comply with are getting more demanding. It is getting harder, because we have shifted to a two-earner culture, where parents have less time of their own to invest at home in meeting their traditional responsibilities towards education. It is getting harder, because more of our children live in poverty, more of them are coming to school not speaking English, more of them are coming to school without the fundamental school readiness skills, and at the same time, we need more of them to do better. So, anybody who claims that we need to freeze pay in public education because educators are overpaid, is well, out-to-lunch in my book.

No, the need to freeze our growth in compensation arises instead, from simple arithmetic. Minnesota faces catastrophic destruction in public education. In the last four years, the funding formula rose 2 percent, 1 percent, 0 percent and 0 percent respectively. After a brief respite, the special education deficit is on the rise. In our school district, that means that despite freezing special education for a number of years, the State will take $350,000 in revenues away from us, even though the State prohibits us from cutting spending by that amount, and another $350,000 next year, for a total of $700,000. In our District, state mandated TRA and PERA contributions will rise $250,000, per year for the next four years, to a total of $1 million per year, without a compensating increase in revenues.

At the same time that education revenues are stagnant, school districts all over the state – including school districts that have already engaged in massive program and staffing cuts, nonetheless agreed to settlements with their education professionals that will wreak another round of destruction. Again, this is not about underpayment or overpayment, it is about finance 101. Here are some examples of the total package cost of settlements as reported by MSBA. (The percentages reported by MSBA are lower than the actual percentage increase, because MSBA has adopted a formula for reporting increases that intentionally understates the increase, and the understatement is more significant for the higher percentages.) The true percentage increases in total compensation costs to the districts, ranges from one half to one plus percent.

Total Package Cost Increase (MSBA Understatement Method)
2009-2011 Settlements

Albany 3.3 percent
Alexandria 4 percent
Anoka-H 4.19 percent
Burnsville 5 percent
Hopkins 5 percent
Lakeville 5 percent
Little Falls 5.8 percent
Melrose 5.8 percent
Milaca 4.1 percent
Rochester 5 percent
Roseville 6.4 percent
Sauk Centre 4 percent
St. Cloud 2.4 percent
Stillwater 6 percent
Virginia 5.3 percent
Wayzata 6.8 percent

While some of these districts are taking money out of their reserves to fund these settlements, others have already implemented huge cuts that have already shocked their citizens. Even the Districts that have used reserves will discover, of course, that when you grant compensation increases out of reserves, the following years, huge cuts will follow. Under the current bargaining system and the current ethic in Minnesota’s educational governance and leadership, school boards have been unable to withstand the bargaining pressure that drives them to pay what they cannot afford.

Adoption of Senate File 0056 will inflict pain, it is true, but the truth of the matter is that while the pain is necessary to prevent the financial destruction of public education, it is only half of what needs to be done. Because finance 101 tells us that you need to put revenues and costs into balance. The last legislative session imposed significant new costs on public education without compensating revenues. The legislature needs to step up to the plate and pay for the increased costs.

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