Wall Street Journal: In Kentucky the protests have been about pensions, not pay, but the same Medicaid crowding out is taking place. The Bluegrass State was one of the first Medicaid expansion states under ObamaCare. Some 22% of residents—more than two million people—are enrolled. In 2008 Medicaid spending in Kentucky was $4.9 billion, but by … Continue reading K-12 Tax & Spending Climate: Pensions, Benefits, Teacher Salaries and Politics
Annys Johnson: The school board’s Committee on Accountability, Finance and Personnel will take up two other cost-saving proposals on Tuesday, including one to restructure employee health care benefits. According to the administration’s analysis, that proposal would save up to $17.4 million by: Eliminating coverage of spouses who have access to insurance elsewhere or charge employees … Continue reading Milwaukee schools braces for bruising budget battle; busing services, health care benefits could be pared
Matt Barnum: Others say the issue is one of priorities, pointing to big increases in nonteaching school staff, like aides, custodians, and counselors, and greater teacher retirement costs. Higher pay means teachers are more likely to stay in the classroom. That’s linked to increased student achievement. There’s a lot of variation in how much teachers … Continue reading On Teacher Compensation (Madison Spent 25% of its budget on benefits in 2014-2015)
Swinn: Premiums for employment-based health insurance this year will average about $6,400 for single coverage and $15,500 for family coverage, according to projections by the Congressional Budget Office (CBO) and the Joint Committee on Taxation. In a new report, the CBO says average premiums for individually purchased insurance are also high, although not quite as … Continue reading K-12 Tax And Spending Climate: Report Warns of Rising Health Insurance Premiums (25% Of Madison’s 2014-2015 Budget Spent On Benefits)
Daniel DiSalvo: This report argues that underfunded defined-benefit pension plans and other post-employment benefits (OPEB) are the hidden drivers of labor unrest in the public sector. As these legacy costs have risen, teacher salaries have flatlined or even declined in value. Policy recommendations: In the name of equity and affordability, states should move away from … Continue reading Teacher Strikes and Legacy K-12 (benefit) Costs
Chris Reed: In August 2009, at a seminar in Sacramento sponsored by the Public Retirement Journal, the chief actuary of the California Public Employees’ Retirement system — who thought he was at a closed event with no media present — made a grim, startling pronouncement that was unlike anything ever said publicly by his bosses … Continue reading Here’s how the L.A. teachers’ strike is part of California unions’ pension preservation plot
Walker Bragman: At the height of the conflict, O’Rourke publicly mused about disbanding the police union, calling it “out of control” and lamenting his colleagues’ unwillingness to stand up to the powerful political force. A year later, he was calling for “better checks on collective bargaining in the public sector.” The fight came at one … Continue reading The Union Fight That Defined Beto O’Rourke’s City Council Days
Mark Sommerhauser: Wisconsin school districts ratcheted up health care costs on teachers and other employees after the state’s Act 10 collective bargaining changes, with the average district now requiring teachers to pay about 12 percent of their health insurance premiums, newly released data show. Madison schools are near the low end of what districts now … Continue reading Wisconsin Act 10 Commentary: Madison schools are near the low end of what districts now require for teacher health insurance premium contributions, at 3 percent,
Ted Dabrowski and John Klingner: You’d be mistaken to think Harvey, Illinois has a unique pension crisis. It may be the first, and its problems may be the most severe, but the reality is the mess is everywhere, from East St. Louis to Rockford and from Quincy to Danville. A review of Illinois Department of … Continue reading K-12 Tax & Spending Climate: Harvey, the first domino in Illinois: Data shows 400 other pension funds could trigger garnishment
Pew Trusts: The dire financial condition of pension funds across the US has been a frequent topic here at The Sounding Line. At the core of the problem is a simple reality: pension funds have promised to pay out more in retirement benefits than they receive in funding. A new report from the Pew Charitable … Continue reading K-12 Tax & Spending Climate: The Average US State Pension Is 34% Under Funded
Sarah Kliff: On September 28, 2016, a 3-year-old girl named Elodie Fowler slid into an MRI machine at Lucile Packard Children’s Hospital in Palo Alto, California. Doctors wanted to better understand a rare genetic condition that was causing swelling along the right side of her body and problems processing regular food. The scan took about … Continue reading K-12 Tax & Spending climate: Opaque and sky high bills are breaking Americans — and our health care system.
Rutland Herald: Former Gov. Peter Shumlin sought to create the single-payer system, known as Green Mountain Care, but eventually walked away from the plan after determining it would cost too much. The attorney general’s office’s began the investigation into Gruber’s billing after receiving a referral by State Auditor Doug Hoffer. Donovan said Thursday his office … Continue reading K-12 Tax & spending climate: benefit costs and Dr. Jonathan Gruber
Molly Beck: The law, known as Act 10, required local governments who offer a state health insurance plan to their employees to pay no more than 88 percent of the average premiums. Walker’s 2017-19 state budget will now require the same of all school districts, regardless of which health insurance plans they offer. That spells … Continue reading Commentary on Redistributed State Tax Dollars and Madison’s $450M+ School Budget ($18k/student)
Tony Evers (PDF): 1. Why are you running for State Superintendent of Public Instruction? I’ve been an educator all my adult life. I grew up in small town Plymouth, WI. Worked at a canning factory in high school, put myself through college, and married my kindergarten sweetheart, Kathy-also a teacher. I taught and became a … Continue reading Wisconsin DPI Superintendent Tony Evers Responds to Madison Teachers’ Questions
Yevgeny Feyman, via a kind reader: Last year, as part of a contract deal with the teachers’ union, Mayor Bill de Blasio announced that he and the city’s unions had agreed to cut $3.4 billion in worker health-care costs over four years. Even with these “savings,” though, Gotham’s health-insurance spending is projected to grow 6 … Continue reading K-12 Tax & Spending Climate: New York City taxpayers are headed for a collision with the ACA’s Cadillac Tax on high-cost health plans.
The Neenah Superintendent wrote a letter to Madison School Board Member & Gubernatorial Candidate Mary Burke on 19 September. Ms. Burke recently apologized for her Act 10 remarks: Democratic gubernatorial candidate Mary Burke has apologized to the superintendent of the Neenah school district for comments she made on the campaign trail. Burke had been citing … Continue reading Madison School Board Member & Gubernatorial Candidate Mary Burke Apologizes to Neenah’s Superintendent over Act 10 Remarks
The Wall Street Journal: Labor unions like to promote their generous defined-benefit pensions. Yet when these benefits prove unsustainable, workers can lose their jobs and retirement savings. The kicker is that taxpayers may soon be tapped to perpetuate this double fraud. That’s the main take-away from a new report by the Pension Benefit Guaranty Corporation … Continue reading K-12 Tax & Spending Climate: Washington’s Next Big Bailout
In April there was a dust-up in the finance and education worlds when the American Federation of Teachers called out Dan Loeb, founder and CEO of a hedge fund, for simultaneously investing teacher pension fund assets while serving on the board of StudentsFirst’s chapter in New York, which advocates for pension reform, and advocating reform of teacher pensions himself. The whole episode was part of an enemies list exercise (pdf) by the AFT to put money mangers on notice if they deviated from the union’s line on pension reform. And it was, of course, easy fodder for one dimensional takes.
But as is often the case the reality was more complicated. For starters, because of multiple issues including irresponsible decisions by state legislators and unsustainable benefit schemes demanded by public employee unions (yes there is plenty of blame to go around) there is an enormous problem with financing pensions (pdf). But, for the most part, so far reforms have come at the expense of teachers, generally new teachers, rather than comprehensive efforts to reform how we finance retirement for educators. We need a richer conversation about how to simultaneously address the fiscal problems and modernize teacher retirement for today’s more mobile labor market. The choice facing policymakers is less a binary one between defined benefit pensions (those that pay participants a pre-defined benefit) and defined contribution plans (401k-style plans that provide benefits based on contributions and investment choices/performance) than it is about a subset of choices about employer and employee contributions, risk allocation, vesting rules, and issues like portability for participants. In some states Social Security participation is also an issue.
Gov. Andrew M. Cuomo, joining a parade of officials from across the country who are seeking to rein in spending by limiting public employees’ pensions, proposed Wednesday to broadly limit retirement benefits for new city and state workers in New York.
Mr. Cuomo said New York State and New York City simply could no longer afford to offer new employees the generous benefits their predecessors received.
Among the most significant changes the governor proposes is to raise the minimum retirement age to 65 from 62 for state workers, and to 65 from 57 for teachers.
“The numbers speak for themselves — the pension system as we know it is unsustainable,” the governor said in a statement. “This bill institutes common-sense reforms to bring government benefits more in line with the private sector while still serving our employees and protecting our retirees.”
Mr. Cuomo’s proposal escalates a battle between the first-term Democrat and a major Democratic Party constituency: public-sector labor unions.
New Jersey Gov. Chris Christie on Thursday called for public school teachers to be evaluated based equally on their classroom performance and student achievement and accused the state’s largest teachers union of being a group of “bullies and thugs.”
Christie laid out his proposal in a speech in New York sponsored by the Brookings Institute, a Washington think tank. A teachers union spokesman called the governor’s plan an “educational disaster.”
Since taking office last year, the Republican Christie has emerged as a popular figure among conservatives nationally for his willingness to confront public employee unions, including teachers, over their salaries and pensions. Several other governors have since followed suit, saying such benefits for public employees are unsustainable over time.
To be clear, I’m making an argument that’s different from “Government workers are overpaid.” I’m saying that they are paid in the wrong ways — in ways that make life easier on union leaders and elected officials, at least initially, but that eventually hurt both workers and taxpayers.
The best example is health insurance. Health plans for union workers and retirees are much more likely to require little or no co-payment, which leads to lots of medical treatments that don’t make people any healthier, and to huge costs. Ultimately, some of these plans will probably prove so expensive as to be unsustainable. Workers would have been better off accepting a less generous benefit package and slightly higher salaries.
The solution today is not to cut both the pay and the benefits of public workers, as would happen if workers in Wisconsin, Ohio and elsewhere lost their right to bargain. Remember, public workers don’t get especially generous salaries. The solution is to get rid of the deferred benefits that make no sense — the wasteful health plans, the pensions that start at age 55 and still let retirees draw a full salary elsewhere, the definitions of disability that treat herniated discs as incurable.
I have to at least give credit the WSJ for continuing to keep education front and center of their Sunday opinion section. This last Sunday, under the headline “Protect kids from cuts” the WSJ takes on the issue of closing the remaining Madison SD budget gap and editorializes for a pay freeze for teaching staff. Although the current budget situation probably makes reducing compensation for staff in one way or another inevitable, I don’t think that devaluing the teaching profession can be construed as “Protecting kids”. After all, the number one factor in educational outcomes is the placement of a highly qualified teacher in front of each class.
Attracting quality teachers means we have to be sure it is rewarding profession, so balancing the budget through reductions in teacher compensation is in the long term unsustainable. If the current situation was a one or two year problem then a freeze might serve as a bridge to recovery, and although I don’t know the Madison situation I’m pretty sure their problems are similar to ours: shortfalls that extend year after year for the foreseeable future. The article notes that the Madison teachers receive the “standard” 1% raise this year. This year that seems inappropriate, but the fact that the same 1% is the “standard” every year since 1993 is also a problem.
I don’t think that 1% annual raises have been “standard since 1993”. I would certainly like to see a substantive change in teacher compensation, replacing the current one size fits all approach.
Current Madison School Board Member Ed Hughes, noted in May, 2005 that:
Here is an excerpt from the article in this morning’s State Journal that deserves comment: Matthews said it was worth looking at whether layoffs can be avoided, but he was less optimistic about finding ways to achieve that.
He said MTI’s policy is that members have to have decent wages, even if it means some jobs are lost.
The last teachers contract provided a 1 percent increase in wage scales for each of the past two years. This year’s salary and benefits increase, including raises for seniority or advanced degrees, was projected at 4.9 percent, or $8.48 million. Teachers’ salaries range from $29,324 to $74,380.
“The young teachers are really hurting,” Matthews said, adding that the district is having difficulty attracting teachers because of its starting pay.
Mr. Matthews states that young teachers are really hurting. I assume by “young” he means “recently-hired.” On a state-wide basis, the starting salary for Madison’s teachers ranks lower, relatively speaking, than its salaries for more experienced teachers. Compared to other teacher pay scales in the state, Madison’s scale seems weighted relatively more toward the more-experienced teachers and less toward starting teachers. This has to be a consequence of the union’s bargaining strategy – the union must have bargained over the years for more money at the top and less at the bottom, again relatively speaking. The union is entitled to follow whatever strategy it wants, but it is disingenuous for Mr. Matthews to justify an apparent reluctance to consider different bargaining approaches on the basis of their possible impact on “young teachers.”
According to the article, Mr. Matthews also stated that “the district is having trouble attracting teachers because of its starting pay.” Can this possibly be true? Here’s an excerpt from Jason Shepard’s top-notch article in Isthmus last week, “Even with a UW degree, landing a job in Madison isn’t easy. For every hire made by the Madison district, five applicants are rejected. June Glennon, the district’s employment manager, says more than 1,200 people have applied for teaching jobs next year.”