Archives for category: Budget

Note: the school board tells me 19.3% is wrong, so I have to figure that out. The figures in the table are all drawn from the superintendent’s Powerpoint of 4/19/2016.

In the past 6 years, with the economy stagnant and inflation extremely low (this year’s inflation cap was 0.12%), IUFSD taxes have risen 19.3%.

For a 19.3% increase to be sustainable, we need taxpayers whose incomes are also rising at that rate.

That’s the issue: not the salaries and benefits we pay, but the rate of increase in those salaries. 

YEAR……. BUDGET % BUDGET INCREASE YEAR-TO-YEAR TAX RATE PER MILLION ($ PER MILLION) % INCREASE IN TAX RATE
2011-12 $50,324,892 0.91% $592.19 3.54%
2012-13 $51,156,000 1.65% $613.84 3.66%
2013-14 $54,070,000 5.70% $645.81 5.21%
2014-15 $56,294,000 4.11% $665.35 3.03%
2015-16 $57,664,000 2.43% $690.14 3.73%
2016-17 $58,688,325 1.15% $698.78 1.25%
 
TOTAL % INCREASE IN TAX RATE: 18.0%

SOURCE: 04 19 16 2016-17 Budget Development Presentation Budget Adoption v4 final

AND SEE: Schools’ property-tax cap for coming year: 0.12% by Joseph Spector, Albany Bureau Chief 5:09 p.m. EST January 20, 2016

Percent increase in spending across the years 

From Patrick Gilmartin’s analysis of retiree health benefits:

At July 1, 2012, the Irvington School District had 255 active employees. There were then 162 retirees receiving District-provided health benefits, plus 80 spouses, for a total of 242 persons entitled to such benefits for life. Just under half of the retired employees were under age 70. Of the spouses, 49 were under 70.

A District employee can retire at age 55. Of the 255 active employees, 39 were 55 or older with vested rights to receive lifetime health benefits. Another 32 were in the 50-54 age bracket, 10 of whom had 15 or more years of service.

For a person 70 years of age, the average life expectancy is 14.2 years for a male and 16.5 years for a female. For 55 year olds, the average life expectancies are 25.3 and 28.7 years.

The 2012 Actuarial Report calculated the annual net cost to the District of providing health care to a retired employee and spouse to be $15,534.40 for each year they are both under 65, and $12,120.95 for each year they are both 65 or over.

2010 – 2014

2010: 135 retirees
2014: 157 retirees

UPDATE of a post from 5/29/2013 The “fund balance” is the budget surplus, sometimes called a “rainy day” fund. By definition, it is money listed in the budget that is not designated to pay for programs. Districts have been advised to use the fund balance to stay within the tax cap, and in the May 2013 election 97% of NY districts did so. IUFSD chose to break the cap in order to keep its fund balance at the maximum allowable under the law — while borrowing $3.5 million to pay tax certs.

Year Fund  balance (budget surplus) Percent of budget
2008-2009 $1,949,375 3.85%
2009-2010 $2,040,362 4%
2010-2011 $1,994,787 4%
2011-2012 $2,012,995 4%
2012-2013 $2,046,240 4%
2013-2014 $2,162,800 4%
2014-2015 $2,251,761 4%
Amount by which 2013-2014 budget overrode tax cap $1,277,756

Sources:

AND SEE: Singapore math explains the budget

Facilities Improvement Recommendations – March 13, 2014

AND SEE:

Under current laws and contracts, most of New York’s 1.3 million state and local government employees can look forward to receiving taxpayer-subsidized health coverage for the rest of their lives. This amounts to a mammoth wealth transfer from future taxpayers to current employees.

…New York’s state and local governments have promised more than $205 billion in post-retirement health care coverage that they have set aside no money to pay for.

Iceberg Ahead: The Hidden Cost of Public-Sector Retiree Health Care Benefits by E.J. McMahon | Empire Center | 2012 Update

UPDATE 11/9/2013: MK says the problem is much larger than this. AND SEE: Liabilities for the Town of Greenburgh, Irvington, and IUFSD. Our district pays health-care costs for retirees and their spouses for life. This chart shows a 64.82% increase in what we will owe in the future over the past two years’ time, a period of record-low inflation (and record-low wage increases). The term for post-retirement health care paid for by the district is “Other Post Employment Benefits” or OPEB. The increase in future obligations as of June 30, 2013:

 YEAR  OPEB* Obligation  2-year % increase Core PCE year-on-year (Inflation) August 2013**
 June 30, 2011 $16,857,318
 June 30, 2012 $22,056,552 30.84%
 June 30, 2013 $27,784,130 25.97% 64.82%  1.2%

*OPEB = Other Post Employment Benefits *Core PCE = Personal Consumption Expenditure: prices excluding food and energy. Core PCE is the measure of inflation used by the Federal Reserve. Complete analysis and explanation here: Retiree Health Benefits

AND SEE:

UPDATE 11/9/2013:
Mike Kolesar says the problem is much larger than this.
AND SEE: Liabilities for the Town of Greenburgh, Irvington, and IUFSD.

From Patrick Gilmartin (and see: Retiree health benefits at a glance):

The details of the School District’s unfunded health costs are given on on pages 37 and 38 of its Audited Financial Statements as of June 30, 2013 of its Audited Financial Statements as of June 30, 2013. The audited statements are available on the District’s website

If the children knew the amount of debt that their elders have piled up for them to pay, they would — or should — be appalled. The facts:

The District provides health insurance coverage for retired employees “and their survivors” for life. “Substantially all the District’s employees may become eligible for this benefit if they reach age 55 and retire with 10-20 years of service to the District.” There are about 98 retired employees currently eligible to receive benefits. “…there are no assets legally segregated for the sole purpose of paying benefits under the plan.”

At June 30, in each of the years 2011, 2012, 2013, the amount actuarially determined in accordance with generally accepted accounting principles that the District was contractually obligated to pay for the future health benefits of retired employees was as follows:

June 30, 2011 $16,857,318.
June 30, 2012 $22,056,552, an increase of 30.84% in one year
June 30, 2013 $27,784,130, an increase of 25.97% in one year and 64.82% in two years.

As noted, as these benefits accrue there is no money set aside to pay them when they become due. All the District does is pay current health care obligations. The annual expense of what has been promised retirees was $7,558,928 for the year ended June 30, 2013. Of this amount, the District also actually paid only $1,831,350, the costs actually incurred during the year by retired employees and/or survivors. The difference of over $5.7 million was added to the unfunded liabilities of the District.Another note in the Audited Financial Statements, while not totally clear as to its methodology, says that the total unfunded liability of the District’s health care plan at July 1, 2012 was 319% of the payroll for its covered employees.

Did I hear somebody mention Detroit?

Patrick Gilmartin

CLICK IMAGE TO ENLARGE:  
www.osc.state.ny.us_localgov_realprop_pdf_growthfactors.pdf
Source:
Property Tax Cap Fiscal Years Beginning 2014 | Thomas P. DiNapoli

From The Torch:

Under the law passed in 2011, the cap on tax levies is set at the lesser of 2 percent or the rate of the growth in an “inflation factor,” calculated as the average monthly change in the Consumer Price Index (CPI) for the 12-month period ending six months before the start of the fiscal year.

The actual cap will differ by locality, depending primarily on the amount of allowable exclusions for growth in the local property values. Localities also will be able to exclude the amount by which the change in pension contributions exceeds two percentage points. DiNapoli will be announcing 2014-15 contribution rates any day now.

[snip]

The cap is more difficult for school districts to exceed, since school budgets (outside the “big five” cities) are subject to approval in a public referendum. Their cap is based on the average of 12 months ending in December — a number that won’t be known until mid-January. Based on current inflation trends, however, schools should also be ready to deal with a starting-point cap of less than 2 percent next year. This time around, their pension exclusion won’t kick in, so the average effective school tax levy cap will be much closer to 2 percent than it was in 2013-14.

Local tax cap drops to 1.66% for 2014 | E.J. McMahon | The Torch | August 16, 2013

IUFSD taxpayers are spending roughly $49K for each student passing at least one AP exam by graduation.

Adlai Stevenson High School in Lincolnshire, IL, which has a culture of continuous improvement, spends roughly $29K.

2012-2013
Enrollment Budget  Per pupil
spending
% Students
Passing AP
# Students
Passing AP
Budget
High School 
Est. Spending
Per Each 
AP Test Passed**
Adlai Stevenson 3,881 $88,398,949 $24,144 77.0% 2,988 $88,398,949 $29,585
Irvington Estimate:
581*
$51,156,000 $28,404 58.20% 0.338 $16,502,724
(581 x $28,404)
$48,825

* I.H.S. enrollment for 2011-12. I will update when I have the 2012-2013
figures.

* Total high school budget ÷ Number of students passing at least 1 exam
by graduation

School
Year
Budget % Budget
Increase
Enrollment Per pupil
spending
2004-05 $38,543,225
(calculated)
1,998 $19,290
2005-06 $42,154,726
(calculated)
9.37% 1,959 $21,518
2006-07 $45,691,508
(calculated)
8.39% 1,961 $23,300
2007-08 $48,432,999
(calculated)
6.00% 1,942 $24,939
2008-09 $50,583,424 4.44% 1,888 $26,792
2009-10 $51,009,065 0.84% 1,799 $28,354
2010-11 $49,896,676 -2.23% 1,798 $27,751
2011-12 $50,324,892 0.91% 1,747 $28,806
2012-13 $51,156,000 1.65% 1,801
1,799 (5/10/2013)
$28,435
2013-14 $54,070,000 5.70% 1,801
(estimate)
1783
$30,325
2014-15 $56,294,000 4.1% 1,795 $31,361.56
2015-16 $57,664,000 2.4% 1,760 $32,763.64
  • Average percent increase past 9 years 2004-2005 to 2012-2013: 3.9%
  • Total percent increase in per pupil spending across 10 years’ time: 55.7%
  • Total percent increase in CPI inflation across the same 10 years’ time: 20.2%
  • If spending had risen at the rate of CPI inflation, next year’s budget would be $46,342,246.80
  • Percent decline in students: 9.86%

Student achievement did not rise with spending.

Curriculum quality fell.

Sources (2004-2005 to 2012-2013):

UPDATE 4/23/2016

AND SEE:

NOTE: “Calculated” budget numbers are based in percent-change figures drawn from Budget to Budget Percent Increases/Decreases | 2005-06 thru 2010-11 | page 36 from IUFSD Proposed Budget  March 1, 2011

Enrollment as of 6/10/2013: 1801

The “fund balance” is the budget surplus, sometimes called a “rainy day” fund. By definition, it is money listed in the budget that is not designated to pay for programs. Districts have been advised to use the fund balance to stay within the tax cap, and in the May 2013 election 97% of NY districts did so. IUFSD chose to break the cap in order to keep its fund balance at the maximum allowable under the law — while borrowing $3.5 million to pay tax certs.

Year Fund  balance (budget surplus) Percent of budget
2008-2009 $1,949,375 3.85%
2009-2010 $2,040,362 4%
2011-2012 $2,012,995 4%
2012-2013 $2,046,240 4%
2013-2014 $2,162,800 4%
Amount by which 2013-2014 budget overrides tax cap $1,277,756

Sources:

AND SEE:

If the budget does not pass on the first vote, the district will put up the same budget, with a smaller “fund balance” (surplus), and we will vote again. The second budget will use the surplus to stay within the cap.

Here’s a picture: Singapore Math explains the budget.

If that budget fails, then, yes, we go to a 0% budget-to-budget increase.

Tuesday’s vote is on the size of the surplus, nothing more. We are voting on whether we want to run a $2.1 million surplus.


From the BOCES explainer posted on the district’s website:

If a proposed budget is defeated by voters, a school district—as in the past—has the option of putting the same or a revised budget up for a revote, or adopting a contingent budget. If a proposed budget is defeated twice by voters, a district must adopt a contingent budget. Certain existing contingent budget requirements remain in effect that prohibit spending in specific areas including community use of buildings, certain salary increases and new equipment purchases.

More significantly, under the new law, a district that adopts a contingent budget may not increase its current tax levy by any amount—which would impose, in effect, a zero percent cap. As of this writing, it is unclear if exemptions will apply.

President Obama signed the sequester bill in March, so there is no uncertainty about whether we will or will not receive our annual federal funding for special education. That issue has been settled.

Even if we were waiting in suspense, the  amount we would be in suspense over would be somewhere in the neighborhood of $35K.

Click to enlarge
SPED funding & sequestration
Source:
IDEA Money Watch – New York

UPDATE 5/28/2013
NYSSBA’s March 7, 2013 estimate was $21,419

And see:
What Is Sequestration and How It Affects Special Education
IDEA Money Watch

The most recent special-education enrollment figure I have is 2011-2012:

In-district Out-of-district John Cardinal
O’Connor
Total
155 31 60 264
$27,745 $5,549 $2,760 $36,063

Special Education Enrollment | 2010-2011 and 2011-2012 | Page from 2011-12 Proposed Budget IUFSD

UPDATE:
Sequester cut: $21,419

SALARY SCHEDULES | 2009-2010 THRU 2005-2016

Irvington teachers receive four types of raises: “step,” “lane,” “salary schedule,”  and–after step increases have ended–“career increments” awarded at years 20, 25, and 30. (See: Column raises for teachers | 11/5/2010)

Step and lane raises are protected by the Triborough Amendment. The district is required by law to continue paying step-and-lane raises when the contract expires, and that is what we have done.

For the district to reduce step-and-lane raises, the union would have to make a concession.

Salary-schedule raises are not protected by the Triborough Amendment: salary-schedule raises expire when the contract expires.

For the union to continue to receive salary-schedule raises in addition to step, lane, and career-increment raises, the district must make a concession.

The district made this concession in negotiating the most recent contract. Salary-schedule raises begin again next school year.

We don’t have to pay this third type of raise at all. Nothing in the law compels us to do so, and nowhere in the private sector do employees receive three four different guaranteed raises regardless of performance or the state of the economy.

The simple truth is that IUFSD contracts break the cap, and “wages” have never been frozen. Salary-schedule raises expired; and in 2012-2013 step and lane raises were frozen but all staff members were given a “non-recurring payment of $2,750” to make up for it.

Each year since the crash, total compensation has continued to rise at a rate far above inflation. The increase in total compensation to teachers from 2011-2012 to 2012-2013 was 3.93%.

The union has indeed made some concessions. But the Board of Education has made more.


The chart below is a useful illustration of the fact that salary-schedule raises are only one of three raises teachers receive. When the salary schedule is frozen, compensation continues to rise at a rapid clip.

Click to enlarge
Teacher Climbs the Pay Scale
Source: Triborough Trouble

PRESS RELEASE – UNION CONTRACT – 1.18.2012 – Joint Press Release

AND SEE:
Irvington teachers have not had a “salary freeze”

Over the next 5 years:

  • K-5 enrollments “may likely decrease” by up to 60 students
  • 6-8 enrollments “may likely decrease” by up to 30 pupils
  • 9-12 enrollments “may likely decrease” by up to 85 pupils

TOTAL: 175 students

CURRENT ENROLLMENT (3/4/2013): 1,794
PROJECTED ENROLLMENT IN 5 YEARS: 1,619
PERCENT DECREASE: 9.8%

Source:
Page 13 | Enrollment Decline
Kindergarten through Grade 12 Program Delivery Study

Press release and study:
Kindergarten through Grade 12 Program Delivery Study

AND SEE:
Enrollment back to 1999-2000
16 new houses, not 50

Click to enlarge
Enrollment Projection 2.2013

Proposed budget: $54,070,000
Current enrollment as of 5/10/2013: 1,799
Per pupil spending: $30,056
Source:
3.5.2013 – Superintendent’s Proposed Budget – (Powerpoint)

2012-2013 Budget: $51,156,000
Enrollment as of 5/10/2013: 1,799
Per pupil spending: $28,436

Percent increase in per pupil spending: 5.7%
Core PCE inflation as of 6/9/2013: 1.13%

US Core PCE Inflation Rate Chart

US Core PCE Inflation Rate data by YCharts

AND SEE:
Enrollment back to 1977-1978
NOTE: Enrollment as of 3/4/2013: 1,794

Click to enlarge
Taxable Assessments 3.5.2013
source: Superintendent’s Proposed Budget March 5, 2013 | page 39

  • Roughly a 1% increase in taxable assessments.
  • Proposed budget increase, excluding $3.5 million borrowed to pay tax certs: 5.7%.

Click to enlarge
2013-14_Property_Tax_Report_Card___HIGHLIGHTED-3 SKITCH
Source: 2013-14 Property Tax Report Card

The district is increasing spending by 5.7% with PCE inflation of only 1.26%.

School pension costs are set to increase 37 percent next school year, the state Teacher’s Retirement System quietly noted in a bulletin to districts this month. [up from 11.84% this year]

The increase is slightly less than the high end of the range estimated by the $80 billion fund in October. In October, the fund predicted that pension costs for the 2013-14 school year, which starts July 1, would grow to between 15.5% and 16.5% of payroll.

The actual rate, which was set this month, is 16.25%, the bulletin said.

School pension costs have soared in recent years because of the decline of Wall Street investments. A decade ago, schools paid nearly nothing into the fund, which has about 425,000 members and retirees.

[snip]

Like Comptroller Thomas DiNapoli, who is the sole trustee of the $150 billion pension fund for state and local workers, the Teacher’s Retirement System is reviewing whether to support Gov. Andrew Cuomo’s pension-smoothing proposal. It would let schools and local governments pay a flat rate of 12.5 percent of payroll for pensions for the next 25 years, rather than deal with the annual ebb and flow.

School pension costs to rise 37 percent next year
Posted by Joseph Spector • February 13, 2013 • 9:41 am
Pension Contribution – 2013-2014 (pdf file)

Under New York’s Triborough Amendment, the only law of its kind in the country, union contracts negotiated during good times cannot be re-negotiated during bad times. Not unless the union agrees.

That is our situation in Irvington today. We are saddled with a legacy contract negotiated during the boom, and nearly all of the provisions agreed to by the board when home prices were rising 10% a year live on in the new contract. Meanwhile the district reports that taxable assessments are down 10%, and the data I’ve seen suggest that individual homes have lost 20% of their value since the crash. Some residents have lost jobs, and wage growth across the country slowed radically after 2007, which means wage growth slowed radically for many here as well.

But Triborough, the single largest mandate imposed upon school districts by the state, has meant that the district must continue to fund roughly 4% increases for school employees each year. Funding 4% annual increases when your own compensation is not rising — and your home value has dropped — is pretty much the definition of “unsustainable,” and that is why the tax cap passed.

In truth, it’s the contracts that need to be capped. Not the budgets. But since Albany does not have the wherewithal to repeal Triborough, the problem has been left to voters to address inside the privacy of the voting booth.

Worker pay 2011 and 2012 (CLICK TO ENLARGE)

Worker Wages 2011 & 2012
“Most Americans are still far from the income they had before the crisis, and many of the new jobs are not particularly stable or high paying.”
After Cashing In on Job Cuts, Wall St. Looks to Worker Upturn
By NATHANIEL POPPER
Published: March 10, 2013

Sticky wages in 2011 (CLICK TO ENLARGE)
Not your Father's bell curve - sticky wages

The tall bar in the middle represents workers who had a wage increase of $0 in 2011
People to the right of the bar had pay raises
People to the left of the bar had pay cuts
Why Has Wage Growth Stayed Strong?
By Mary Daly, Bart Hobijn, and Brian Lucking

IUFSD taxable assessments (CLICK TO ENLARGE)

3.5.2013 Taxable Assessments
source:
Superintendent’s Proposed Budget
March 5, 2013

New York State School Board Association opposes Triborough, and Irvington’s BOE has voted to approve NYSSBA’s position.

AND SEE:
Per pupil spending $28,517
ELA scores 12.18.2012
13 million jobs gap
Irvington Parents Forum at Yahoo
Irvington Union Free School District

2012-2013 Budget: $51,156,000
Enrollment as of 5/10/2013: 1,799
Per pupil spending: $28,436

UPDATE 5/11/2013
Proposed budget: $54,070,000
Enrollment as of 5/10/2013: 1,799
Per pupil spending: $30,056
Source:
3.5.2013 – Superintendent’s Proposed Budget – (Powerpoint)

Percent increase in per pupil spending: 5.7%

AND SEE:
Enrollment back to 1977-1978
NOTE: Enrollment as of 3/4/2013: 1,794

To meet school payroll and other expenses without layoffs or a cap on raises, we will arguably need something in the neighborhood of a 5% tax increase each year.

Unfortunately, very few people are experiencing 5% annual increases in household income.

Over time, that’s a problem.

Take a family earning $150,000 in 2012 paying $15,000 in school taxes. Assume property taxes increase by 5% each year, while household income increases by the national average of 2%.

Here’s what happens in 10 years time:

Year Household 
Increases
2%/year
Total
%
Change 
School Taxes
Increase
5%/year
Total
%
Change
 % of
Income to
School 

Taxes
 Year 1  $150,000  $15,000 10%
 Year 10  $182,849  22%  $24,433  63% 13%

In Year 1, this family spends 10% of income on school taxes. Over the next decade taxes rise by a total of 63% while income rises by only 22%, so now this family is spending 13% of household income on school taxes (and their children are taking out loans to pay for college).

When people talk about school spending and taxes being “unsustainable,” this is what they mean. The only way to fund Irvington schools at the level we are funding them is to gentrify: the “big rich” will have to move in, and the “little rich” will have to move out. It seems to me that this process has been taking place for some time now.

The “big poor,” a term coined by my friend D., need to move to Connecticut.

Or Riverdale. #SENDOUT

compound calculator
percent change
division calculator

AND SEE:
What people who do not have children in the schools pay
to educate the children of people who do

How we got here
4 is not 2
Budget vote
Core Knowledge: curriculum & property values

I’ve just asked our Assistant Superintendent for number of employees:

We have a total of 310 employees, including 180 teachers.

2011-12 enrollment = 1756
2012-13 projected enrollment = 1740 (as presented at BOE meeting)

One employee for every 6 students.

AND SEE:
projected enrollment
16 new houses, not 50

It seems that the share of our economy devoted to information technology is plunging, whereas the share devoted to primary metals production is soaring.  In 2000 IT was 2 1/2 times larger than primary metals.  Now primary metals is far bigger.  We desperately need to retrain Silicon Valley engineers on how to dig up copper in the Arizona desert; otherwise Silicon Valley will soon look like Detroit.
The Money Illusion


source: Modeled Behavior

In public education, it is an article of faith that 21st century students need 21st century skills, and 21st century skills are the skills you need to invent Facebook: “technology.”

Students need to learn “technology,” and to learn “technology,” students need to attend schools that buy lots of “technology.”

Maybe not.

AND SEE:
what people who do not have children in the schools pay to educate the children of people who do
how we got here
4 is not 2
budget vote
Core Knowledge: curriculum & property values

  VOTES, VOTERS, AND BULLET VOTES
  ROBYN KERNER  797
  MARIA KASHKIN  732
  ROBYNE CAMP  705
  JOHN DAWSON  391
  DELLA LENZ  320
 TOTAL  2945
 TOTAL # INDIVIDUAL VOTERS  1578
 TOTAL # POTENTIAL VOTES FOR 2 SEATS (2 X 1578)  3156
 TOTAL # (possible) BULLET VOTES (3156 – 2945)   211

People hate to bullet vote.


AND SEE:
what people who do not have children in the schools pay to educate the children of people who do
how we got here
4 is not 2
budget vote
Core Knowledge: curriculum & property values

 2011-2012 – school taxes for a current BOE member w/2 children
 SCHOOL TAXES $14,859.08*
 BUDGET $50,324,892.00
 ENROLLMENT  1756
 COST PER PUPIL  $28,658.82
 COST FOR 2 CHILDREN IN IUFSD  $57,317.65
WHAT PEOPLE W/O CHILDREN CURRENTLY IN IUFSD SCHOOLS PAY TO EDUCATE 1 BOARD MEMBER’S CHILDREN  $42,458.56

The essence of public school funding is that people who do not have children in the schools subsidize people who do. That is why people who do not have children in the schools are the moral – and legal – equal of “school parents.” People who do not have children in the schools enjoy (or should enjoy) precisely the same right to express their views on any and all matters pertaining to their schools, to be listened to, to influence policy and curriculum, to run for school board, and to serve on the school board. Public means public. source: Greenburgh Information System

AND SEE:
PW: mothers on the school board
PW: meaningful ideology (mothers on the school board)
A woman without children serving on the school board
Bob Grados: skin in the game
Skin in the game: audacity
Peter Meyer: skin in the game
Fathers on the board
Projected school spending and enrollment 2012-2013
#SENDOUT

 BUDGET
 YES   904  57%
 NO   425  27%
 ABSTAIN   249  16%
 TOTAL  1578

Election: May 15, 2012

The folks in the press can quote me. We will need to go over the tax cap next year.
– BOE member Bob Grados
meeting of the Board of Education
March 6, 2012
Tape #5
20:53:55


AND SEE:
What people who do not have children in the schools pay
to educate the children of people who do

How we got here
4 is not 2
Budget vote
Core Knowledge: curriculum & property values

2011-12 enrollment = 1,756
2012-13 projected enrollment = 1,740 (as presented at BOE meeting)

source: Assistant Superintendent for Business IUFSD

Next year’s budget: $51,156,000
Per pupil spending: $29,400


WHITE LINE BREAK
UPDATE 6/9/2013
Enrollment as of Friday 5/10/2013: 1,799
Per pupil spending: $28,436

AND SEE:
What people who do not have children in the schools pay
to educate the children of people who do
How we got here
Enrollment back to 1977-1978
4 is not 2
Budget vote
Core Knowledge: curriculum & property values
16 new houses, not 50
Enrollment back to 1977-1978

The basic issue we face is simple arithmetic:

Taxes are capped at two percent, but the contract promises 4.

According to an estimate provided by the Assistant Superintendent, under the new contract the average teacher in Irvington will receive roughly a 4% increase in compensation each year until June 2016 next school year.*

Four is not two. That is the problem.

Although “four is not two” is obvious, percent change is not. With percent change, a number that sounds “small” can actually be “large” if it represents a large percent change (and vice versa).

Here is the way I’ve started to think of it:

Under the Irvington contract, if you pay a teacher $100K this year, you have to pay him or her $104K next year, on average.

That is a 4% increase, but we are capped at 2, so you have to find $2K in cuts to ‘pay’ for the raise.

Hence: layoffs. Some teachers are laid off so that other teachers can have 4% raises.

But if you paid a teacher $1.00 — just one dollar — for an entire year’s work, you would still have the same problem. The contract would require that he or she be paid $1.04 next year, and you would have to find two cents in cuts to pay for the 4-cent raise. Four isn’t two, and four never becomes two no matter how “small” the numbers you’re dealing with.

In short, the absolute dollar amount doesn’t matter; it’s the percent change that counts. So the problem isn’t that Irvington teachers are earning “too much;” the problem is that the yearly increase in their compensation is twice the tax cap. The increases are increasing too fast. 

THAT is the issue, and we can’t ‘cut’ our way out of it.

Yes, we can close Main Street School and potentially save a great deal of money. But in terms of the tax cap, closing Main Street School is a one-time deal. We wouldn’t need layoffs the year we closed Main Street, but the very next year we’d be back to square one because teachers are still getting 4% increases, and four isn’t two. To my knowledge, there’s no provision in the law allowing districts to ‘bank’ big savings in one school year to apply against the tax cap the next year. **

Yes, we can raise class size and save money, but that, too, is a one-time bonus to the budget. We would avoid layoffs that year, but the next year we’d be back to cutting.

Yes, we can cut electives. Again: a one-time bonus.

In each of these cases, cuts reduce spending, but they don’t fix the rate of increase. As long as we have a union contract in place that guarantees average annual increases of 4%, we can’t meet the tax cap without layoffs. The contract is funded by layoffs.

The logic of percent change also means that encouraging older teachers to retire so we can hire much less costly young teachers actually makes the problem worse because new teachers receive Step increases every year (usually 3%), while older teachers don’t.

We have only two possible solutions:

  • Persuade the union to agree to cap raises at 2%
  • Raise taxes by roughly 5 to 6% every year (a 4% budget increase is a 5 to 6% tax increase because of tax certs.)

It’s conceivable there is a third option: generate enough revenue outside of the tax levy to make up the shortfall. Perhaps parents could fund raise as they do in California (where property taxes are much lower and must be shared with all schools in the state – very different situation) or the district could rent out Main Street School and increase the rent enough each year to make up the shortfall —- ?

* update 5/26/2012: Looking at the terms of the contract again, I’m wondering whether 4% is too low an estimate for the year after next, when the one-year freeze on “increments” (steps) comes to an end.

** Apparently you can “bank” a savings from year to year up to 1.5% (of the budget you would have been allowed under the cap? Not sure; I’ll look it up. I don’t know how the sale of property applies to the budget.) The principle remains the same, however. If you bank a savings, you must use it to pay 4% compensation increases the next year, and the problem begins anew.


AND SEE:
What people who do not have children in the schools pay
to educate the children of people who do
How we got here
4 is not 2
Budget vote
Core Knowledge: curriculum & property values

Info from July 1, 2010 (most recent year analyzed in district actuarial report):

  • The district has 271 active employees and 135 retirees. Figures do not included spouses.
  • Average age of IUFSD employees is 44 for men, 46 for women.
  • Of active employees, 43 are currently eligible to retire.
  • As of July 2010, all employees, retirees and their spouses receive free healthcare benefits for life (no co-pay, no deductible).
  • Present value of all benefits (other than pension) is $100,000,000.

I am still learning the meaning of “present value.”

In a nutshell, “present value” means that to cover these future costs, which we have promised to pay, we would need to put $100,000,000 in a bank account today at an interest rate of 4%.

NOTE, however, that state law does not allow us to do this: state law does not allow us to fund (save money for) the benefits we’ll be paying.

By law, we are required to pay-as-we-go, which means that future parents and non-parents alike will have to pay out that $100,000,000 (and the figure will be higher when residents pay it, of course, because future taxpayers won’t have the 4% compounding interest they would have had if the money had been saved and invested).

I’m going to fact-check this post and come back to it.

AND SEE:
4 is not 2

Here’s a quick back-of-the-envelope calculation to estimate the shortfall we face in 2013-2014.

Assuming no change to “Other” expenses (which is probably unrealistic), I come up with a $610,000 shortfall. Personnel is 80% of the budget, so If the union does not agree to cap raises at 2%, that would mean roughly 6 teachers laid off in order to fund 4% raises.

(6 teachers because under LIFO the teachers earning the lowest salaries are laid off first. You have to lay off more of them to make up the shortfall.)

Obviously, these are very rough calculations, but they’re not a bad place to start.

FTE = full-time equivalent Essentially, 1 FTE = 1 teacher.

2012-2013 BUDGET
Personnel $40,800,000
All other $10,200,000
TOTAL $51,000,000
 2013-2014 BUDGET
 4% increase Personnel  $42,432,000
 All other (0% no increase)  $10,200,000
TOTAL  $52,632,000
PERCENT INCREASE   3%
 budget w/2% increase $52,020,000
SHORTFALL  $612,000
 # FTEs POTENTIALLY LOST  ~ 6

AND SEE:
4 is not 2

My sister says that a bar graph is much clearer than the line graphs I used in my first post. I think she’s right.

This chart shows the average size of three hypothetical employees’ annual rise:

BLUE: average Irvington teacher
RED: average employee of state and local government
YELLOW: average employee in private sector

The issue here isn’t the absolute amount of IUFSD compensation — but, rather, the speed with which it is increasing.

Every year for many years Irvington teachers have had a higher percent-increase in compensation than the average in the private sector and in state and local government. This is the difficulty, and this is what people are talking about when they say school spending is “unsustainable.”

Employee compensation can’t go up faster than taxpayer compensation forever. It’s unsustainable.

DATA:
Wages & Salaries: Private Industry Workers (FRED)

Wages & Salaries: State and Local Govt (FRED)
AND SEE:
4 is not 2

click image to enlarge

3 employees with some but not all salaries

Data used in chart

What’s important to notice here is that Irvington teacher wages, which will increase at an average rate of 4% a year for the next 4 years, are likely to pull away from taxpayer wages.

NOTE: In the chart above, I have assumed the following percent increase in wages each year:

  • 4% for Irvington teachers
  • 1.1% for  state and local government employees
  • 1.9% for private sector employees

If that assumption holds true, the gap between the blue line on top and the green and red lines down below will grow wider.

AND SEE:
Average teacher compensation IUFSD

Wages & Salaries: Private Industry Workers (FRED)
Wages & Salaries: State and Local Govt (FRED)

AND SEE:
4 is not 2

Estimated median HOUSEHOLD income for area code 10533 in 2010:  $113,840
Estimated median HOUSEHOLD income area code 10591 in 2010: $99,265
(Estimated median household income for New York: $55,217)

Average INDIVIDUAL teacher salary 2011-2012: $96,400*
(Average teacher salary 2012-2013: $99,150.00)

I don’t have a figure for average teacher salary in 2010. I’m guessing it was around  $89,000.

How does an individual income of $89,000 compare to a household income of $99,265 or $113,840?

I don’t know the answer, but I suspect that median household income of Irvington teachers is higher than median income household of IUFSD residents.

AND SEE:
4 is not 2

* I don’t have a median figure for Irvington teachers.

The problem we are having with the school budget is that the average increase in teacher compensation is 4 percent, while the tax cap is 2.

4 is not 2.


AND SEE:
Do IUFSD teachers earn more than IUFSD residents?
Why we can’t cut our way out
Raises
5/2013: Inflation at 1.26%
Raises and benefits at IBM
“Step” and “column” raises for teachers explained
Budget surpluses since 2008-2009
7th grade reading curriculum (curriculum & property values)
What people who do not have children in the schools pay
to educate the children of people who do

How we got here
All student achievement scores & posts

Irvington Parents Forum at Facebook
Irvington Parents Forum at Yahoo
IUFSD Factoids

Irvington Union Free School District
Irvington IUFSD at YouTube #SENDOUT

Figures from Asst. Superintendent For Business & Facility Mgmt:

Average teacher cost of compensation (w/o lane increases,* life insurance, disability insurance, workers comp):

2011-12: $129,644.27
2012-13: $134,739.75
Percent change: 3.93%

Complete set of figures:

2011-12
Average teacher salary $96,400
Social Security $7,374.60
TRS pension $10,710.04
Health insurance $15,159.63
TOTAL: $129,644.27

2012-13
Average teacher salary: $99,150.00
Social Security $7,584.97
TRS pension: $11,739.36
Health insurance: $16,265.42
TOTAL: $134,739.75

PERCENT CHANGE: 3.93%

* Lane increases are raises received upon completion of further education. Most lane increases are 5%.


WHITE LINE BREAK
UPDATE 5/29/2013

2011-12
Average teacher salary $96,400
Social Security $7,374.60
TRS pension $10,710.04
Health insurance $15,159.63
Life Insurance $84.00 ($7 per month x 12 months)
Disability Insurance $144.00
TOTAL: $129,872.27

2012-13
Average teacher salary: $99,150.00
Social Security $7,584.97
TRS pension: $11,739.36
Health insurance: $16,265.42
Life Insurance $84.00 ($7 per month x 12 months)
Disability Insurance $144.00
TOTAL: $134,967.75

The district has 310 employees in all, of whom 180 are teachers.
2011-12 enrollment: 1756
projected enrollment 2012-13: 1740
projected per pupil spending 2012-13: $29,400

Salary Schedules 2009-1010 through 2015-2016

AND SEE:
What people who do not have children in the schools pay
to educate the children of people who do

How we got here
4 is not 2
budget vote
Core Knowledge: curriculum & property values

(click on images to enlarge)

Quick note for people who feel they’re not good at math: These graphs show the percent change in people’s wages from the year before.

The figure 7.5%, on the left side of both graphs, means that in 2006 the “average” Irvington teacher received a 7.5% increase in salary over what he or she earned in 2005. That same year, the “average” employee of state and local government received a pay increase of 2.8%, while the “average” private sector employee received an increase of 2.5%.

To make things simple (I tutor pre-algebra – !):

Suppose it’s 2005, and we have three workers: a teacher in Irvington, a person working in the private sector, and another person working for state and/or local government.

Let’s say that each worker earns $100,000 for that year’s labor.

Here’s how things change the next year, 2006:

  • Irvington teacher now earns: $107,500.
  • State and local government worker now earns: $102,800
  • Private sector worker now earns: $102,500

The year after that (2007), here’s the situation:

  • Irvington teacher now earns: 115,562.50
  • State and local government worker now earns: $106,706.40
  • Private sector worker now earns: $106,087.50

After just two years, the Irvington teacher is pulling decisively ahead of both the private sector and the government employee – and this difference continues to compound over time.

The gap gets wider.

+++++

Arguably, the two graphs above tell our story.

First of all, by way of background, until very recently no one knew what the average teacher compensation actually was. Proposed budgets were extremely difficult to decipher, and the district flatly refused to tell voters – or the one board member who asked – what the average teacher was being paid. Contracts had to be FOILed, and the salary schedule was not published.

Average teacher salary was the one figure many people needed in order to make sense of the situation. Most of us aren’t accountants, and the arithmetic of percent increases and compounding over time isn’t intuitive.

All of that said, here is the story I think these charts tell:

  1. Prior to the crash, the district was paying salary increases to teachers that were in all likelihood far above the salary increases many or most Irvington taxpayers were receiving.
  2. After the crash, in a depressed economy, the district is still paying salary increases at least double what workers in the private sector are receiving (assuming they still have jobs) and nearly 4 times as large as the increases government workers are receiving (again, assuming the government worker still has a job).
  3. Irvington voters may have failed to notice just how large the district’s annual pay increases were in part because the annual increase in home value was even higher. We were in the midst of a boom, and (almost) everyone was getting richer. The financial reality of district budgets failed to register on voters (and the details of the budget were obfuscated by the administration).
  4. The crash changed everything. Home prices are now far below the level they were when voters were funding 7.5% wage increases and voting ‘yes’ on bonds.
  5. For their part, although Irvington teachers are still receiving annual raises double that of most taxpayers’ annual raises, they also, between 2008 and 2009, suffered a far steeper drop in their annual wage increase than private or government workers: from 7.5 to 4.5 on the day the 2006-2009 contract expired. Their increase decreased more. That matters greatly. People make financial decisions on the basis of projected future income, and suddenly, virtually overnight, teachers’ projected future income changed dramatically.
  6. Thus teachers feel they have made unprecedented concessions during negotiations for the new contract, while taxpayers feel they can’t afford to fund 4% pay increases when they themselves aren’t receiving anything close to 4% pay increases and the value of their homes has tanked.

Both are right.

Wages & Salaries: Private Industry Workers (FRED)
Wages & Salaries: State and Local Govt (FRED)

AND SEE:
4 is not 2

Average pension for new retirees: 2011
Compare and contrast: IBM raises & benefits

Hamilton Project Jobs Gap Calculator