Thursday, March 29, 2007

The Contract Defies Common Sense

The Oakland Press ran an editorial on the contract approved on Monday. I don't know what I can add; they echoed many of the same concerns I voiced at the meeting.

Oakland Press: Rochester School Board's deal... is fiscally reckless (03/29/07)

Rochester School Board’s deal with teachers is fiscally reckless

It appears the Rochester School Board was not looking to the future when it approved a new, three-year contract with the teachers. In fact, from a fiscal standpoint, the trustees who voted for it were very reckless.

The agreement stipulates a 1 percent raise for 2006-07, a 2 percent increase the next year and a 0.5 percent increase in the final year unless a wage and benefit reopener produces an alternative agreement in 2008-09.

Teachers will see increased co-pays for office visits, chiropractic care and name-brand drugs, but will not be asked to contribute 5 percent toward their health care premiums, as some negotiators had proposed.

At first glance, the contract almost seems reasonable. But, when you do the math, things just don’t add up.

First, let’s look at health care, which has been crippling budgets in every company throughout the state.

The average cost of family health insurance is $12,000 a year in southeast Michigan, and the average private sector employee pays 24 percent of those premiums, or about $3,000.

In the Rochester schools package, the average cost of family health insurance is $15,000 a year and teachers don’t have to pay a cent. That is almost indecent.

Like everyone else, teachers should pay at least some of the cost of their insurance — the proposed 5 percent was a bargain. It also was in line with four of the seven bargaining units in the school system, whose members currently pay 5 percent of their health care premiums.

In reference to the budget, the contract will increase it from $82.7 million to $88 million just next year. The $5.3 million increase represents a 6.4 percent hike. Yes, that also includes “step system” raises that teachers would have received even if no pay increase were authorized in the new agreement. The step system is complicated and probably merits a full discussion on another day. Basically, teachers, depending upon their years of service, get guaranteed yearly raises based on an incremental or step schedule.

The $5.3 million increase is a concern for several reasons. First, it equates to about a $357-per-pupil increase based on the district’s 14,800 students. However, Gov. Jennifer Granholm, under the best of circumstances, has indicated schools would receive only an extra $187 per pupil next year. So, we are already seeing an unbalanced budget.

Further, school officials, after approving the teacher contract, reviewed the budget for the next two years. Rough estimates indicate a $5 million budget deficit in 2007-08 and a $10 million deficit in 2008-09.

To balance the budget, they could dip into the district’s $30 million fund reserve. It doesn’t take a math expert to see that the fund would be depleted in just a few years.

This leaves the unpleasant options of program cuts, layoffs and larger class sizes.

In addition to creating future budget problems, the new contract sets a horrible, unrealistic precedent for other school districts and unions.

If trustees were spending their own money, then it would be their business. But because trustees are spending taxpayer funds, it is everybody’s business. People should be upset that their dollars are not being spent wisely. The contract defies common sense.

The board did make a wise decision when it moved its annual school elections to November. The terms of Darlene Janulis and Steven Kovacs are expiring.

At that time, voters might want to take a close look at which candidates are going to be most fiscally responsible if elected or re-elected.

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