Teacher salaries are not 80% of the budget.
Last Monday’s presentation indicated that “salaries and benefits” constitute 80% of the budget. This does not mean that teacher costs constitute 80%. There are approximately 830 teachers and 1,850 employees, including our paraprofessionals, aides, custodial workers, bus drivers, food service workers, secretaries, etc. Total costs for teachers is between 52 and 56%, but when the business is teaching, that’s exactly where it should be, where the average is for the entire Island.
Our budget should not mirror that found in other businesses or sectors.
Each business’ revenues and expenses reflect the nature of what it does. A mom-and-pop print shop, for example, with two employees, should spend much more of its budget on paper and ink than staff-related expenses. A paving stone company will spend more on cement mix. Apple will spend more on Research & Development. We are a people industry. Our budget is spent on people. If you were an independent consultant offering counsel in people’s homes and didn’t maintain an office, equipment, etc., nearly 100% of your budget would be people.
HHH Teachers contribute more to their health insurance than any on the Island.
Not only do our teachers currently contribute more to their healthcare than our peers throughout the Island, but we have been doing so for six years. In truth, we are a decade ahead of the curve on contribution rates, which is something we do in working with the District to make the great program you have available to your children.
We are not the cause of ballooning property taxes.
Rapid growth. During the period between the mid 90s and today, our enrollment skyrocketed, producing the “bubble” below. Of course, this required an increase in hiring, facilities use, etc. The addition to Candlewood Middle School, for example, cost more than $20M. At $3M per year in savings and assuming no interest was charged on funding that project, it would take closing it for seven years just to recover what we invested in expanding it, let alone any other costs associated with the facility. Similar financial realities hold true for other expansions throughout the district. This period was characterized by incredible buying, building and hiring.
Increasing per-pupil costs. The State continues to pass mandates that drive up per-pupil costs. Under special education law, in particular, the per-pupil costs for educating a child with special needs can more than double the average per-pupil costs of non-classified students. We are proud to serve many students with special needs with one of the strongest programs in the country. Every child deserves access to the best education available, but the costs to create that opportunity are not equal for all children.
Loss of State aid. While the District was rapidly expanding during those years, the State abandoned its commitment to funding our schools, shrinking its aid to the District by $10M in the last few years.
The State’s funding formula. Even before the State decided to pull out of its investment in our schools, regional inequities placed greater burden on some taxpayers than others. Up to $5B in Long Island taxes are redistributed to other regions each year. Although downstate suburbs educate 27.4% of our state’s students, we only receive 17.7% of its aid. Even that 17.7%, of course, is not distributed evenly, and districts like ours receive far less than others, placing an increased burden on local taxpayers.
Budgeting habits. While all these forces converged, the District also increased its efforts to build up its reserves, in some cases, growing the “rainy day fund” by 240% in a 4-5 year window. At the end of the 2011-2012 school year, our district held the 14th largest balance of reserves in the state, out of 670 reporting districts.
During this time, no want was turned away. Even while other high performing districts accepted the reality that leadership does sometimes mean making choices and saying no. Our budgets, and the amount of funds requested of taxpayers, were designed with this in mind. As one example, there’s always room budgeted to add classes and hire teachers as students want classes to be available and sections to break. Budgets during this era did not leave room for one or even ten classes to “break,” but as much as 90! If a class was wanted, it was created, regardless of low enrollment in that class. Class sizes with low averages drive the budget up; they are less efficient than those running with average numbers. When 90 sections didn’t break, the leftover money was placed in reserves.
As part of conservative budgeting (in this sense, conservative meaning to ensure we have enough for anything we may want this year) practices, districts tend to overestimate their expenses and underestimate their revenue. Even through the financial challenges we’ve faced in the last few years, and the increasing scrutiny under which the budget is developed, the average sum of these practices leaves us with a remainder of more than $6M each year – roughly equivalent to the entire budget shortfall for next year after subtracting for positions lost due to declining enrollment.
The suggestion that we can, or should maintain everything we have through any financial crisis by expecting employees to give more is unrealistic, but it is a pattern in practice that has allowed our district to offer all that it does by paying its teachers at the 22nd percentile for Long Island when we produce near the 90th.
The sum of all these effects is what brings us to where we are today.
The state pension system is efficient, contributes to economic growth, and has been reformed to curb excessive costs.
Our retirement system is rated one of the best in the country, with a funded ratio of 96.7%, compared to the industry average of 75%.
90% of our pension system is funded by member contributions and earnings on its own investments. These investments include money spent investing in the economy, building things like offices and malls.
80% of all benefits paid remain in New York State, creating a ripple effect through the economy.
In volume like ours, investment fees in the pension system average approximately one-fourth of those associated with their 401(k) counterparts.
Teachers today will not earn the controversial pensions you sometimes hear about in discussions. There has been pension reform – not once or twice, but five times. Tiers 5 and 6 came only about two years from each other.
Attempts have been made in the past to regulate / stabilize contribution rates when they were below average. These efforts were thwarted, largely, because employers did not want to contribute 4% when the market only required 2%, as an example. The result is that we are subject to market fluctuations.
The tortoise was not a cheater.
Through all these ebbs and flows, teacher salaries move at a steady pace – yes, less subject to the fluctuations of the economy. In truth, when the economy is strong, the public does not seek to open existing contracts to increase salaries, but when it is weak, it seems, they actively seek ways to decrease it. Essentially, it’s like the hare accusing the tortoise of cheating.
Despite that, last year our teachers gave $3M back to the District through a salary freeze. This was part of an offer made by the District that included the salaries slated for next year. Dividing that giveback by the approximately 850 teachers working at the time, you’d find that each of us personally gave the District $3,500 in one year. As someone with a spouse who also works in the district, that, coupled with other extra-curricular reductions, meant that we gave back $8,500 in one year. To produce the same $3M in a community our size, it would cost each household approximately $15/month. We can not do that every year, but that does not mean that we don’t care.
For the current school year, most of the savings made, again, come from teachers. These were realized through teacher layoffs and attritions. In addition, the reduction of the Dean position, SBA Liaison positions and Psychologists and Social Worker positions in the district that were cited as “Administrative Savings” in the presentation actually come for our family of teachers as well.
Our teachers produce stellar results for modest compensation.
When looking at school district performance and compensation, the teachers in this district are by far, among the leanest and most efficient you can find across the entire Island.
Newsday consistently ranks our schools among the best on Long Island – a region already in a class all its own in the country. With more than 100 school districts in our two counties, Half Hollow Hills consistently ranks in the top 10 – most recently just under the 90th percentile.
Whether for right or wrong reasons, performance and pay tend to coincide in the LI education industry – more than people realize. By and large, the district performing at the 99th percentile, compensates at the 99th. That performing at the 98th pays at the 94th. That performing at the 96th pays at the 91st, etc. Despite the great prestige we have in ranking at the 89th percentile for the region, our teachers are compensated at the 22nd percentile – one of the largest (if not the largest) gaps on the Island. With an average gap between performance rank and compensation rank on LI at approximately 8 points, ours is 67.
Sometimes even good districts have to say no to things we want. Unfortunately, there are people who suggest that (a) nothing should ever have to be cut, and (b) no school should ever have to close. To suggest that if we have 3,000 fewer students, we should maintain the same facilities is completely unreasonable. To suggest that it can be made to appear reasonable by stripping away salaries and benefits of all employees is even more unreasonable.
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