Archives for category: Teacher compensation

In 2011, after the unemployment rate doubled from 5 to 10 percent, the housing market crashed and the stock market took a nose dive, we took an early look at the impact of those economic contractions on teacher employment and found that, while there were isolated layoffs of significance (mostly in California), teachers had been relatively protected from job loss.

[snip]

  • On average, teachers continued to get raises post-recession, but the increases were one-third to one-half of what they were at the start of the recession.
  • In 80 percent of the districts studied (33 out of 41), teachers had a total pay freeze or pay cut in at least one of the school years between 2008-09 and 2011-12.
  • 95 percent of the districts (39 out of 41) froze or cut at least one component of scheduled teacher raises (step increases or annual adjustments) at some point over the four years.
  • Of the forty-one districts in our sample, Chicago Public Schools had the highest average raise over the four years at 6.5 percent.

The Recession’s Impact on Teacher Salaries
NCTQ

“Sticky wages” are the reason for unemployment during recessions and depressions.

In recessions, money and wealth fall, but wages stay the same or even increase. Thus some people must lose their jobs altogether so that others can keep the salaries they had before.

Click image to enlarge
Teacher raises since crash
AND SEE:
Wages: average for Irvington teacher compared to average Irvington
& Tarrytown residents

4% average increase in teacher compensation year-to-year
Highest IBM raise = 3.5%
Sticky wages: wage change in 2011
Work sharing: A strategy to preserve jobs during the global jobs crisis
Kuzarbeit scheme

Post in progress…

I don’t understand the relevant passage from the contract; will finish this post when I do:

Schedule “E” will be in effect from July 1, 2013 until June 30, 2014, increase of 1.75%. In addition, all Association members shall be ineligible to receive step increment in the 2013-2014 school year until February 1, 2014.

My question:

Does this clause mean that teachers will receive only half of the full step increase, or that payment of the full increase is delayed for several months?

UPDATE: I’ve heard from someone who should know that next year teachers receive half of the full step increase.

Still fact-checking.


Here are the raises a hypothetical IUFSD teacher who began working in the district last fall (in Column 3) would receive over the next three years of the contract.

By way of comparison, the highest raise an employee of IBM receives is 3.5%, and those raises are based in merit.

Core PCE inflation is currently at 1.26%.

School
Year
Step Salary
w/o benefits
Subtract
1/2 of
Step raise
Percent
change
2012-2013 1  $56,585
2013-2014 2  $60,051  -1733 ??
2014-2015 3  $63,628
2015-2016 4  $67,314
INCREASE

2012-2013 Step 1 Column 32013-2014 Step 2 6.12% raise2014-2015 Step 3 6% Column 32015-2016 Step 4 5.8% Column 3
Click images to enlarge

Screen grabs from CONTRACT | SALARY SCHEDULE | 2009-10 THRU 2005-16 | 5.24.2013

AND SEE:
Raises and benefits at IBM
IUFSD teachers have not had a wage “freeze” 
“Column” raises for teachers explained
4 is not 2
5/2013: Inflation at 1.26%
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

Grados: we will need to go over the tax cap next year
How we got here
2012 budget vote
All student achievement scores & posts
Irvington Parents Forum at Yahoo

052812krugman5-blog480 Sticky Wages - FRBSF bell curve
Why Has Wage Growth Remained Strong?
By Mary Daly, Bart Hobijn, and Brian Lucking
FRBSF Economic Letter

4% increases in teacher compensation in IUFSD
Salary schedules 2009-2010 through 2015-2016

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”

Core PCE, not the CPI, is used by the Federal Reserve.

US Core PCE Inflation Rate Chart

US Core PCE Inflation Rate data by YCharts

Click to enlarge
Teacher Salaries
Source:
A Nation at Risk: Where Are We Now? | Education Week | Published Online: April 23, 2013 | Published in Print: April 24, 2013, as Where Are We Now?
WHITE LINE BREAK
Average IUFSD teacher compensation: $99,150
2012-2013

Salary: $99,150.00
Social Security $7,584.97
TRS pension: $11,739.36
Health insurance: $16,265.42
TOTAL: $134,739.75

4% average increase in teacher compensation year-to-year

March 8, 2012 conversation with an employee of IBM, who explained IBM’s pay schedule to me:

  • every year all employees are evaluated on a scale of 1 to 3
  • each employee receives a rating of 1 (highest), 2+, 2, or 3 (lowest)
  • IBM grades on a curve, so if you have a team of 10 employees, probably only 2 of them can be given 1s no matter how good they all are
  • she thought perhaps 5 of the 10 can receive a rating of 2+ or 2, which means 3 would have to be given ratings of 3
  • she was given a rating of 1 last year & received a raise of 3.5%
  • the amount of the raise given to a ‘1’ varies year to year according to how well the company has done
  • this year she was given a rating of 2+ and will probably receive a raise of 1%
  • a person who receives a rating of 3 receives no raise at all
  • she currently pays $300/month for health care benefits
  • IBM ended pensions in the 1990s

AND SEE:
4 is not 2

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

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