Look before you leap: a good rule for public budget making?

The Madison School District owes strong support to its administrators, especially our building principals. Without the hard work and long hours of our administrators, we could not serve our children as well as we do. Nonetheless, in tough financial times, the School Board must not approve wage and benefit increases for administrators until it carefully considers the impact of the increases on future budgets. On May 17, the Madison Board violated this principle of good stewardship.

On May 17, the Association of Madison School District Administrators (AMSDA) made a short presentation to the School Board regarding wages and benefits for administrators for the next two years. For the first time in my experience, there was no prior presentation to the Human Resources Committee. There was no executive session for the Board to consider the implications of the proposal, which we received only hours before the meeting. This was the first two-year proposal. The superintendent and his staff did not analyze the proposal or draw our attention to its long-term financial impact.
In less than fifteen minutes, the Board passed the AMSDA proposal with Carol Carstensen, Bill Clingan, Bill Keys, Juan Lopez, and Shwaw Vang voting yes and Johnny Winston Jr. and I voting no. We then spent the next several hours debating amendments to the superintendent’s $308M budget. After much discussion, the Board voted to increase fees for students, raid the contingency reserve for 2004-05 and otherwise revise about $500,000 of spending—leaving more than 99.9% of the superintendent’s recommendations unaltered.
Year One of the two-year commitment to administrators works as follows. The Board granted administrators a wage and benefits increase of 3.72% for 2004-05, roughly .56% less than teachers will receive next year under our contract with Madison Teachers, Inc. This administrative package will generate a savings of $88,017 for next year. The savings does not significantly reduce our cost for administrators. The superintendent had set aside $16,515,677 for our 149 administrators. He still needs $16, 427,660 because the compensation package has gone up $589,841 over a zero increase.
Year Two is when the significant financial impact of this quick decision becomes apparent. The Board agreed to give administrators in 2005-06 the same increase that teachers will receive in 2004-05. Teachers are slated for a 4.9% increase. Therefore, the increase approved on Monday will push the cost of the administrative package to $17,232,615 in 2005-06. That’s an increase of 8.8% in two years. The overall administrative compensation cost will go from $15,837,819 in 2003-04 to $17,232,615 in 2005-06, an increase of $1,394,796. The wage and benefit package for an MMSD administrator rises from $106,300 to $115,600 per administrator annually.
And there are bigger budget implications to come. State law prohibits the district from providing administrators a compensation package that exceeds the package for teachers. In just a few minutes on May 17, the Board locked itself into a compensation package that will become the floor for negotiations with the teachers’ union for 2005-07. That is the impact of changing our practice from granting administrative increases after teacher negotiations to granting a compensation package that runs for two years and overlaps the next round of teacher negotiations.
Here’s how teacher negotiations for 2005-07 are likely to begin. In 2004-05 teachers as a group will cost the district approximately $180M. If the Board had not committed to a 4.9% increase for administrators, $180M would be the floor for the next round of negotiations. However, the effect of the 4.9% increase for administrators is to commit the district to the same percentage increase for teachers. Adding 4.9% to costs for next year will mean starting at $188M with the teachers. Anything less would violate the legal prohibition against offering a compensation increase to teachers that is less than the package granted to administrators.
As a Board member, I am very concerned about the majority’s rush to grant administrative increases for two years into the future without full discussion of the financial impacts over the two years. I tried unsuccessfully to table the increases until we had completed the budget amendment process and thank Board member Johnny Winston Jr. for his support on that motion.