There is a simple law in economics. Resources are limited, so when more resources are spent on this, there will be less for everything else. Due to some bad decisions, rising costs as well as the business cycle, the school district was (and still is to a degree) in a financial squeeze. This limited the ability to give teachers pay raises every year.
Teachers were regularly given pay raises each year, but weren’t given a raise in 2011 and 2012. In the years that followed the discussion was those pay raises needed to be added back.
When looking to solve a problem, the first thing to do is to figure out how the problem came about. There were four main reasons. Some the district brought on itself and some were beyond the district’s control.
Financial Squeeze – Building Program:
In 2005 the district administration introduced a building program of $158 million. In late 2006 a $315 million plan was passed and in the end, the program grew to $387 million, adding 800,000 sqf of space. This was more than even the most liberal board members hoped for. Naturally, something was going to have to give and in the end it was employee pay.
County property tax rates were raised from 128 mills to 167 mills to fund the building program. So if the district’s resources were limited before, they were more limited after that huge tax hike, because no one but unelected administrative leaders and the most liberal trustees had an appetite for more tax hikes.
The district’s bond cost rose $18 million a year. The cost to clean, run and repair the buildings on a day to day basis rose $3 million. The cost of scheduled capital replacements like roofs and HVACs is about $5 million a year. That’s $26 million more in building costs per year, or equal to 26 annual teacher pay increases.
Financial Squeeze – Great Recession:
The second thing was the Great Recession of 2008-09. During that time revenue to the general fund and special revenue accounts fell from $113.8 million in 2008-09 to $107.7 million in 2011-12. During that period most other districts continued to give annual pay raises, but paid for those raises by eliminating classroom teaching positions. They hurt the students and paid themselves.
Our school board led by myself, Judy Edwards, Ben Trotter, and Jimmy Gillespie resisted putting more students in the classroom and instead froze pay two years in 2011 and 2012. In sum, our teacher pay was a bit lower than surrounding counties, but our class sizes were smaller too.
Financial Squeeze – Obama Care:
Rising medical costs for employees also took a bite out of salary increases. The cost of a family plan rose by $2,784 from 2011 to 2015. The school district passed only $144 or 5% of that increase on to employees and the school district paid the other $2,640. That’s equal to 3 annual teacher pay increases that instead went to funding the teachers’ rising medical costs. (Overall Group Health/ medical costs rose from $8.95 million to $12.36 million in the 2010 to 2014 period.)
Financial Squeeze – Retirement Costs:
The state’s pension fund is woefully underfunded. To shore it up, annually the state has been raising the employee and employer contributions to the plan. As a result, retirement costs paid by the school district on the behalf of employees rose from $10.63 million to $13.07 million in the 2010 to 2014 period. Instead of 2 extra pay raises, that money went to fund rising employee retirement costs.
The Response -- A Fourth Option:
Recently our external financial auditor gave our school board and district leaders a presentation. His general theme was all school districts are dealing with rising costs and deficits and districts need to make adjustments in order to balance their budgets over the long-run. I asked when districts have faced deficits, what have most done in response? He said overwhelmingly districts have eliminated classroom teaching positions, followed by spending savings and raising tax rates.
Honestly this is what our school district typically did in the face of economic recessions or rising costs. During and just after the recession of 2000-01, taxes were raised year after year and savings were run down. At the start of the 2008-09 recession, the board eliminated 30 classroom teaching positions and spent all its savings. In October 2010 the district had to borrow money to meet payroll.
The next year the district was facing a deficit and the administration proposed eliminating another 22 classroom teaching positions to plug the deficit. In November 2010, the board led by myself, Edwards, Trotter and Gillespie said “No”. Instead a fourth option was pursued to deal with deficits. Taxes weren’t raised. Teaching positions were not eliminated. And there were no more savings left to be spent. Instead, the board froze employee pay two years and cut non-classroom expenditures to balance the budget.
As the economy rebounded, we then added back the 30 teaching positions eliminated and added positions ending combinations classes, adding Ignite Classes and fully funding 4K classes. I believe this focus on keeping class sizes smaller above everything else was the reason academic performance improved in the years that followed.
As the economy rebounded, there was also a call to add back those two pay raises that weren’t given in 2011 and 2012. The argument was teacher morale was low, teachers were fleeing to other districts for higher pay and teachers deserved to have those two missed pay raises restored. For various different reasons, we agreed teacher pay needed to be raised so the board looked closely at the issue.
Pay, Morale and Turnover:
When it came to pay, on average our teacher pay was an average of $1,955 lower than surrounding counties. Our district was $750 behind Anderson 2 and $2,800 below Oconee.
We examined data on teacher morale. The report cards require each school to do a teacher survey on the learning environment at the school, the social and physical environment at the school, and school-home relations. On average 93.1% of teachers are satisfied with those three conditions. That is the highest it has been and up 2 full points since 2009.
While pay was a bit lower, evidently teachers are happy with new buildings, smaller class sizes, the position eliminations and bumping had ended, budgets were growing again, and teachers know their principals well because our district promoted from within.
I’ve learned whenever someone in the system wants something, they say morale is low or the worst it has been, but they never provide data. The data stated morale is high and rising.
See Instruction Committee Report
3-23-15
Next we looked at the teacher turnover rates. Our teacher turnover rate fell 3 of the previous 4 years. Crunching the numbers, our turnover rate of 7.6% was lower than the average of 8.8% for Anderson, Greenville and Oconee. Oconee has the lowest turnover rate of 6.8% and Anderson District 4 has the highest at 14.2%. Again, the data didn’t support their claim that teachers were fleeing the district.
By the way, I think Oconee has a unique advantage because it doesn’t have competition to its West and its North. If a teacher goes to Georgia or North Carolina, I would imagine they lose their South Carolina pension. I suspect those teachers living in Northwestern Oconee have close to a 0% turnover rate because they don’t want to drive across Oconee to Pickens or across Oconee to Anderson. That is probably the main reason Oconee’s turnover rate is 0.8% lower.
Why Take So Long:
As the economy recovered, as I mentioned above there was a call to make-up those lost teacher pay raises of 2011 and 2012. The board had an eye on narrowing the teacher pay gap with surrounding districts, but funding and the inflexibility of the system prohibited anything but an all or nothing solution. Let me explain.
Teachers receive pay rises in a variety of ways. One way is when they improve their educational degree. Another is if they get a national certification. Another can be from a state cost of living increase. Another is what is called a step increase or additional pay for each additional year of service.
Whenever boosting teacher pay was brought up, the administration insisted one or both of the step increases missed in 2011 and 2012 had to be added back. The cost of each additional step increase was about $1.1 million.
So we’d start a budget process, the state would require we give teachers a step increase for the upcoming year. That would cost $1.1 million. And if we were going to make up the 2011 step, let’s say, that would require another $1.1 million on top of that. Revenue was growing, but after covering mandated costs like retirement and medical benefits, there wasn’t enough money left over to cover an additional step increase.
Looking back at the budgets of 2013, 2014 and 2015, the district had an extra $599,000 in 2013, $500,000 in 2014 and $500,000 in 2015. That was never enough to cover even one of the lost pay raises of $1.1 million. Given the alternative presented by the administration (extra full step increase or nothing), nothing was done each of those three years and narrowing the teacher pay gap was passed over each year. That extra money was then spent on something of a lower priority.
The inflexibility of the system greatly contributed to nothing being done on teacher pay in 2013, 2014 and 2015.
Another Approach Needed:
At the start of the 2015-16 budget process, it was clear the administration’s full step or nothing approach to boosting teacher pay hadn’t worked. After three years of having a surplus, but none of that money making it to teacher pay, it was clear the administration didn’t have the ability to come up with any other alternative but this all or nothing option. In response, the board sent the issue to the Instruction Committee made up of Henry Wilson, Judy Edwards and myself to take a crack at the problem.
The first thing I did was explain to the rest of the board what I just explained to above. Most agreed the system was too inflexible in trying to solve the problem, and an opportunity to narrow the teacher pay gap was missed in the past. I also said whatever we anticipate the budget surplus to be for 2016, beit $250,000, $500,000, whatever, if it is not enough to pay for an additional step increase, find another way to put that money into the teacher pay scale by that amount.
I suggested an alternative of raising local teacher pay supplement which would allow the school district to raise teacher pay by as little as one dollar to an unlimited amount, depending on how much extra money was available in the upcoming budget. My alternative added flexibility to an otherwise inflexible situation.
Henry Wilson and I also examined the teacher pay scale and noticed about three-quarters of the scale is paid 10.4% above the state minimum pay scale, but more than one-quarter of the scale is only 5% or 6% above the state pay scale. That is, about one-quarter of the teachers are purposely under-paid. The scale was not uniform, but the pay scales of surrounding counties are uniform, so that was causing bigger gaps in pay in some places on the scale. To make our scale uniform was going to cost $328,000.
The Instruction Committee of Wilson, Judy Edwards and myself presented to the board two alternatives. If there was an extra $1.1 million or more, the committee recommended paying teachers one of the missed pay raises of 2011 or 2012. If the surplus was less than $1.1 million, allocate $328,000 to fixing the teacher pay scale and narrowing the pay gap with surrounding counties that way. Then the next year, take another swipe at narrowing the gap. In time, it the gap would be closed.
Tax Increase?
Upon hearing this, administration leadership was insistent on either a full step increase or nothing. Their inability to move from the approach that got us nowhere on the issue was shocking to me. It further convinced me the leadership and system as a whole is way too rigid for the changing education, financial and social environment the district is in, and as a result the system is slowly being eaten up by the changing environment.
When pressed, their response was if it requires $1.1 million to make-up one of those missed pay raises, and the district has less that that, don’t try something new like fixing the pay scale, but just raise tax rates to get the extra money and give teachers an extra step increase. This was the administration’s initial proposal, raising taxes 1.7 mills for each of the next five years.
My response was tax rates for the building program were raised from 128 mills in 2007 to 165.2 mills today (just shy of the record high). Property taxes have been raised enough. It is not the public’s fault most all the money was spent on a too-much-at-one-time and too-big building program.
I also said while our teachers were given raises eight of the past 10 years, many taxpayers went two, three or four years without pay raises. Many business owners made little money in the 2009 to 2012 period. Even Social Security recipients didn’t receive pay raises two years. No one is coming back, giving them money to make up their missed pay raises. It wasn’t fair to say to those workers, business owners and Social Security recipients that the school board is now going to tax you more so it can give its employees the two missed pay raises.
My Alternative Vs. The Adminstration’s:
As the weeks went by and the state revenue figures became clear, revenue was up, but as has been the case the last few years most of the new revenue was sucked up by rising medical costs and retirement costs and the mandated pay raise for the 2015-16 year. There was enough extra money to fix the pay scale as I suggested, and in a prudent budget, that is what should have been done. It would have narrowed the pay gap about 30% in one year, no classroom teaching positions would have been eliminated, taxes would not have been raised and the budget would have stayed in balanced.
Some excess and waste could have been cut too. I put forth the ideas of reducing retirement bonuses and the mileage allocation and more, and those savings too could have been diverted to teacher pay, further narrowing the pay gap. Then next year we could have taken another bite out of the problem with revenue growth and more shifting of resources. The following year when the extra TIF money comes it, it could have been used to close the teacher pay gap with surrounding counties. That was the conservative approach that I supported and put forth.
The administration and the majority of board members opposed doing anything other than at least one full step increase here and now. The majority also didn’t support cutting any waste and excess. So what they did was slash a bunch of teaching positions to fund making up one of the extra pay raises.
New Trend Of Eliminating Teaching Positions:
As mentioned above, in 2011 there was 30 classroom teaching positions eliminated in order to balance the budget. In 2012 the administration proposed eliminating another 22 teaching positions to plug that year’s budget deficit, but the board said, “No” and no classroom teaching positions were eliminated that year. Then revenue started to grow and the next year or so 30 classroom teaching positions were added back, and additional positions were added.
Here is the number of classroom teachers according to the report card: 2008: 1,111; 2009: 1,105; 2010: 1,059; 2011: 1,020; 2012: 1,027; 2013: 1,039 and 2014: 1,058. You can see the district cut the number of classroom teaching positions until 2011, and then we started to add them back.
You don’t see it in the data, because this data lags, but thereafter the administration got back to its old ways and eliminated about 30 more classroom teaching positions by switching some classroom teachers to instructional coaches or absorbing graduation coaches, ignite teachers and reading interventionists into the overall teacher FTE allocations.
Like I said, in the 2015-16 budget more teaching positions were eliminated to fund additional teacher pay.
The Details On That:
In the first and second reading of the 2015-16 budget, the administration presented a plan to the school board, giving teachers their 2015-16 raise, plus giving them a second raise as well to make up for the 2011 lost pay raise.
When I looked at the numbers in the administration’s proposal, I knew something was missing. Total salaries were up $1.6 million, but the proposal handed out $2.4 million in pay raises. The presentation didn’t give any explanation of how they were funding the difference. There was a lot of talk about growing revenue, so on the surface it looked like growing revenue was paying for it. It wasn’t.
The Greenville News uncovered what was going on, writing this story after the meeting. From their May 2015 article: “But in order to cover the cost of those step increases, the district teaching force would shrink by about 15 positions under the proposal, according to Clark Webb, the district’s finance director. Those would be jobs left unfilled after teachers retire or leave the district, and the loss won’t have a significant effect on the overall student-teacher ratio, he said.”
Eliminating classroom teachers and using the saving to provide teachers with an extra raise… I asked, is it good public policy to eliminate classroom teaching positions, put more students in a classroom, take the savings and give yourself an extra pay raise? Few were moved by my point of view, but I hoped the board would see cutting teaching positions wasn’t the solution, and they’d reconsider my more prudent alternative. Boy was I wrong.
Final Budget:
The board and the administration moved further to the left when Phil Bowers proposed and the administration endorsed adding back both the 2011 and 2012 missed pay raises, so teachers would get three annual pay raises in 2015-16. There wasn’t enough money to fund the one extra pay raise, surely there wasn’t enough to fund the other one.
While giving teachers three annual pay raises was admireable, doing it all at one time was financially wreckless. They paid for the third teacher pay raise with savings of $1.2 million. That is, the budget funds a recurring expense with one-time money. That’s a financial no-no and next year the general fund budget will start in deficit. When I asked how they were going to plug the future deficit, they responded by eliminating 15 to 18 more classroom teaching positions. In sum, more than 70 classroom teaching positions will be eliminated over three years.
The final budget passed 5 to 1, with me voting against.
My Reasoning:
The new administration and board majority is moving in a direction I don’t support (larger class sizes and over-spending), so naturally I didn’t vote for this budget which did both of those things.
Because of improved budget management the past few years, each year we’ve started the budget process in surplus. Gone where the days of running down savings or cutting positions to balance the budget. All was done without tax increases.
What kills me about the 2016-17 budget, is there was plenty of revenue to meet the basic needs of the district and more, yet the administration and board majority spent even more, having to plug this year’s deficit with savings. Additionally, next year’s budget will start off in deficit for the first time in five years. All supported narrowing and then closing the teacher pay gap. As I detailed above that could have been done over three years without raising tax rates, without putting the budget in deficit and without cutting more classroom teachers.
How does this new trend of eliminating classroom teaching positions benefit students? It doesn’t. It harms them. Each student gets less individual time. Many of the students at the bottom are coming from families where they don’t get individual time at home. They need more in our classrooms, not less.
Larger class sizes make the classroom less manageable because the larger the class the greater the number of disruptive stu¬dents. Over time our school district is going to get more competition. Our competition is likely to sell a smaller learning environment. Parents prefer that. Rising class size will put our district at a competitive disadvantage.