kitchen table math, the sequel: no exit

Wednesday, February 29, 2012

no exit

Unless I'm mistaken, and I don't think I am, my school district finds itself in the position of being contractually obligated to fund annual above-inflation salary increases forever.*

And since raises are figured as a percentage of current salary (I think - must fact-check), the 'miracle of compounding' is in play as well.

What's strange about this state of affairs is that:

a) smart, capable people (past school boards) created this situation without understanding that they were creating it
b) smart, capable people (voters) supported the creation of this situation without understanding what was being created
c) virtually no one, today, understands what the situation actually is

I don't understand it well myself, and I know only one person who does. (That would be the person who explained it to me.)

I'm wondering whether there's research on people's ability to comprehend trend lines over the long term. I'm sure there is.

* Well, forever assuming the Fed continues to target 2% inflation.
Posted by at

17 comments:

lgm said...

I wouldn't agree with a). Those people knew exactly what they were doing. Here it is illustrative to draw the family trees.. vendors that want b.o.e. business, union members' extended families - all have their interests represented on the b.o.e. Some of the comments we hear are that the income of the residents has been studied, and there is an assumption as to how much is wanted from the pockets. Those that cannot pony up need to move on.

For b), I dont' know about you, but in my district there is no line item vote by the people and there is no light on the union contracts either before or after the negotiations. People stood up at the budget meetings and objected to compensation well above private industry and against line item 10% salary raises for the ones that were spelled out rather than hidden up in the union contract. The answer every time was a smug smile and 'We have a contract', with some words to the effect that those employees not under a union agreement have had their wages frozen. Meanwhile, seethroughny.com has the facts. In retirement, my kids' teachers are in six figures between the base salary and the part-time work, not without including the other bennies. Nice work, if you can get it.

March 1, 2012 at 5:12 AM
Luke Holzmann said...

If I'm following, we had a similar measure on our latest local ballot. It had to do with a "increase by so much forever" budget as well... and I just assumed that because it was "education" and "for the childrens" that people voted on it without stopping to think about the numbers. But I'm cynical that way...

~Luke

March 1, 2012 at 6:13 AM
Catherine Johnson said...

lgm is right about citizens (in fact, I'm going to put a link to your comment inside the post)

I'm pretty sure that our school board members had no idea they were creating permanent above-inflation salary increases, though. They 'negotiated' a very rich contract during boom times when taxpayer salaries & home prices were going up, too.

I doubt any of them projected anything out 10 or 20 years.

Six figures in retirement - absolutely. Six figures in retirement AND 100% payment for all medical care with 100% choice in physicians.

Forever.

March 1, 2012 at 6:48 AM
Catherine Johnson said...

I talked to a guy the other day who told me about his friend in Yonkers, a librarian who took an early retirement incentive at age 53 or 54. She receives $70K/year (with increases, presumably) forever. And medical care.

She's in her early 50s, in good health, and taxpayers are paying her a very good salary not to work. In fact, we paid her a bonus to stop working.

March 1, 2012 at 6:49 AM
Catherine Johnson said...

there is no light on the union contracts either before or after the negotiations

Ditto that.

It's all top secret, a condition agreed to up front with the union.

March 1, 2012 at 6:50 AM
Catherine Johnson said...

line item 10% salary raises for the ones that were spelled out rather than hidden up in the union contract

Back when things were really heating up here in my district (and it has been bloody), I FOILed district compensation. This data had been top secret; no one had ever seen it as far as I know.

When Ed and I went over it we were stunned: we were seeing, in one year, 8% salary increases. (Can't remember if the increases ever went as high as 10%.)

These salary increases didn't happen **every** year, BUT they happened often enough. Teachers were getting 8% increases in years when they had two raises: one for the annual built-in you've-had-a-birthday increase and another because they'd just moved up a step.

As I recall, there were something like 17 steps in a teacher's career, so teachers were getting step increases close to every other year. After that, when they maxed out the step increases, they got longevity increases.

I can't remember, now, how much above inflation the salary increases were averaging out to....I'm thinking that, on average, overall wage increase each year may have been around 4% (and I assume it's at 4% or perhaps higher now).

Inflation was running 2%.

March 1, 2012 at 6:55 AM
Catherine Johnson said...

btw, one reason I say I'm certain people had no idea they were locking us into above-inflation annual increases FOREVER is that I myself didn't understand the implications of what had happened at all -- and nor did people I talked to who really 'got' numbers in a way I didn't. (And I'm no slouch with numbers --- not compared to everyone else I talk to --- )

I remember one friend, a man who has worked in purchasing for his entire life and who LOVES arithmetic (he does arithmetic as a hobby) telling me that he hadn't seen pay increases at that level since the 1980s.

Well, what was going on in the 1980s?

Very high inflation, that's what.

But neither of us made the connection, I don't think.

We both had a kind of "Wow! That's a long time ago! That's a lot of money!" reaction.

Of course, at the time neither of us knew that the Triborough Amendment existed, either.

March 1, 2012 at 6:59 AM
Catherine Johnson said...

It had to do with a "increase by so much forever" budget as well...

What was the measure?

We definitely never voted on any such thing - and the Triborough Amendment was voted in back in 1982.

I had never heard of the Triborough Amendment until two years ago when I discovered that the expired union contract hadn't actually expired.

March 1, 2012 at 7:01 AM
Catherine Johnson said...

Triborough Amendment (Short & good)

March 1, 2012 at 7:18 AM
Luke Holzmann said...

You can see it here and the results here.

These phrases really bothered me, and I'm surprised more than half the voters weren't bothered by them:

TAXES [shall] BE INCREASED $750,000 IN 2012 AND BY $1,500,000 BEGINNING IN 2013 AND ANNUALLY THEREAFTER

SHALL DISTRICT TAXES BE INCREASED UP TO $5,380,000 ANNUALLY

Every year? Forever? More than 50% of voters agreed that was a good idea. [shakes head]

If I'm reading that wrong, maybe I don't have as much to be worried about. But I don't know why anyone would vote to increase taxes by close to $6 million dollars every single year. $4M in taxes this year. $10M next year. $16M in taxes the year after that. $22M...

~Luke

March 1, 2012 at 2:49 PM
SteveH said...

Another issue (at least in our area) is that amateur local school committees compete against professional union contract negotiators. Some committee members have made a few comments about that weakness. On top of that, committee members want to do what's best for kids, and many people think that more money means a better education. We never have discussions about good and bad education methods. It's all about more or less money. The people who want more money are for better education, and the people who argue for less money only care about money. When the schools are required to trim from their budgets, you can be sure they will select things that everyone wants. Our high school now has a big argument (law suit) over who decides what to trim; the school, the school committee, or the town council.


"Teachers were getting 8% increases in years when they had two raises: one for the annual built-in you've-had-a-birthday increase and another because they'd just moved up a step."

I saw this before. They split raises into two parts - one as as yearly raise and one as a sort of promotional raise. Then there are the jumps based on extra courses and degrees you get. This double jump happens much more than with jobs out in industry.


In the real world, people might get 4 or 5 promotional raises over their careers. You're lucky if you can separate it from your yearly raise because you might get a little extra. Also, your raise percent goes down as your salary goes up, and promotion opportunities are few and far between. Then, as you get older, nobody is offering you early retirement deals. They might, however, offer you a pink slip. The biggest salary jumps happen when you change jobs. Lately, those jumps can go either way.

For NY, I saw this about a top salary.

"... to $74,796 (bachelor’s
degree, master’s degree plus 30 credits, 7.5+ years teaching experience)."

That's equivalent to a six figure salary based on a full year job, and you can get that after 7.5 years. That's basically what my sister-in-law was pushing to my son at Thanksgiving. Start teaching as soon as you get your bachelor's degree and then get your master's degree as soon as possible on the side. Many of those other credits are very easy to get. Not bad by the time you are 30. Compare that with PhD students getting paid very little while doing postdoc work at that age. I mentioned to someone the other day that you shouldn't go into a field where the really smart people are.

March 2, 2012 at 6:59 AM
ChemProf said...

For the record, postdoc salaries vary a lot. An academic postdoc pays around 35K, which isn't great for a job requiring a PhD. However, postdocs in the national labs pay 70-90K. I actually took a pay cut going from a national lab postdoc to an assistant professorship.

March 2, 2012 at 8:46 AM
SteveH said...

That's true. I've seen some postdoc engineers getting in that range, but it was for a full year. At some state universities, you can search for staff and professor salaries. My old advisor makes $195K, but that's after 40 years at a research university. The PhD staff researcher I work with makes $100K, so there is an upside to college over high school if you are in the right area. Then again, our contract is suffering from incredible bureaucratic issues. No money - no pay.

So what is the advantage of being a professor versus a staff researcher? Security & prestige, perhaps, and potentially higher pay?

March 2, 2012 at 9:49 AM
ChemProf said...

Professors typically have tenure, so can't be laid off unless the department is eliminated. Staff researchers at a national lab or a university are typically "soft money" positions, so can be let go if the grant money runs out. If a prof can't get funding, they can't hire students, but they will still get paid.

The downside of being a prof is that you are expected to teach (and some research faculty really don't like doing that unlike us weirdos at undergraduate institutions).

You can look up faculty salaries by school at
http://chronicle.com/stats/aaup/

However, these are what is happening now. It isn't clear how faculty salaries will play out in the future.

March 2, 2012 at 2:45 PM
North of 49th said...

I find that whole situation hard to fathom. It seems to all hinge on what happens if the contract expires. We have a similar situation in that the current contract, without any increases, stays in effect until a new one is negotiated; it is not unusual for the negotiations to still be going on when the old contract expires. But no *new* raises or increases take place.Both sides are motivated to get a resolution, because if they don't, after a certain point, and I'm not sure how long this period of time is -- up to 18 months perhaps? they go to binding arbitration or final offer selection.

Neither side wants this to happen. But the possibility of percentage raises in perpetuity never looms.

I think our pay and working conditions are reasonably good but they are much less generous than what Catherine reports as current in her jurisdiction. Our top elementary salary is 92K, extracurriculars and leadership positions do not get any pay increase, and you pay for your own medical plan when you retire. I've compared notes with teachers in some other eastern U.S. districts and their contracts were similar to mine (also had to pay for their own medical plan on retirement).

How common is something like the situation Catherine describes?

Would a solution be to impose a time limit on how long a contract could remain expired without forcing a mediated settlement or final offer selection?

March 2, 2012 at 2:57 PM
Catherine Johnson said...

In the real world, people might get 4 or 5 promotional raises over their careers.

We have, I believe, 18 steps in the new contract.

With a "step," teachers (and administrators & other personnel) get an automatic raise because they've been here longer.

After everyone maxes out at 18 steps, longevity increases kick in.

We are in huge trouble ---

The contract (which runs for the next 5 years) exceeds inflation. No one has the exact figure, but it probably guarantees overall spending increases of 4% every year. Tax cap is 2% or inflation, whichever is lower. Fed targets inflation at 2%.

I think it was Glen who pointed out that the big rise in college tuition coincided with a big rise in home values -- that rise in home values was what made the rise in tuition possible. (The tuition increase also tracked increase in median salary for a while there.)

But after the housing crash, and after wages stopped rising, tuition kept right on rising.

That's the situation here.

We've had a crash; people's incomes have stopped rising (or have fallen); home values have fallen.

But employee salaries and benefits keep right on rising.

Meanwhile the politics of the situation are crazy. All union negotiations are done in secrecy; plus the various union grievances that have been filed are secret. No one even knows that our union files grievances.

SO when budget time comes around, and all of a sudden the board is going to cut foreign language instruction, all of the anger is focused on the board.

For many, many years most parents weren't even aware that we HAVE a union (in fact, we have 3).

The name of the district is Irvington Union Free School District.

March 7, 2012 at 12:59 PM
Catherine Johnson said...

Apparently, we are stuck with the "Union Free" moniker.

I've forgotten the exact meaning; it has to do with the fact that the district is separate, not unified with a larger district.

I think this is yet another element of our situation that is mandated by state law...

March 7, 2012 at 1:00 PM

Post a Comment

Subscribe to: Post Comments (Atom)