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Schooling Blood From a Stone

08 Jun

It’s another big blowout at Kingston Schools, according to the Daily Freeman story.

Kingston school board formalizes elimination of 89 jobs (video)

We have been in tough times, and it’s clear we are facing more.  Kingston’s tax base continues to shrink, as does our student population.  Our budget and tax levy continue to grow.  We have just passed another bond for essential repairs and improvements.  In the recent past, we have cut programs, services, schools, and jobs.  The job cuts have been considered, by some, draconian.  Facing mounting costs and dwindling choices, newly hired Superintendent Paul Padalino has come to the jarring conclusion that we need to eliminate another 89 jobs.  The school board we elected, considering the budget we passed, has agreed.  We are running out of options.

What is left to cut?  I don’t think we can take anything else away from the students.  As of this writing, the Kingston Teachers’ Federation and the Kingston School District have not reached agreement on a new contract to replace the last one, which expired almost one year ago.  Transportation contracts will need to be re-worked with new district lines, and we may have other closings, but little savings can be realized from those in the near or long terms.  The Superintendent’s contract just began in January, so nothing can be done there until that one is up.

If the teachers want to save jobs within their own union, their negotiators could agree, for the benefit of their members, to require participants pay for 15%-20% of their health insurance premiums on a sliding scale based on income.  Employees making up to $50,000 annually would pay 15%, $50,001-$70,000 contribute 17.5%, and earners $70,001 and up pay the top rate of 20% of the premium to the KTF Trust.  Also, eliminate the $2500 annual opt-out payment to those that don’t take the health insurance benefit.  Like any benefit, it should be a “use-it-or-lose-it” proposition.  These two measures alone would save well over $5,000,000 based on the current budget.

It is axiomatic that increasing the number of members in an insurance class increases the income and decreases the risk, so opening up the KTF self-insured Trust to all administrative employees of the district at the same rates should benefit both the Trust and the District.

Pensions are great, and for those hired already, they are in the contract.  We have made that deal with the teachers and administrative staff, and any decent society should honor that agreement.  The problem here is that future pension obligations are rapidly outpacing our ability to pay for them, and the whole system will collapse on itself.  For new administrative and union hires, however, we could phase out straight pensions, and move to a more affordable 403b plan, say, TIAA/CREF.  Pre-tax contributions by the employee, and a matching contribution of up to 10% of base salary would supplement retirement incomes nicely, and the employees of the district could do very well over a working lifetime.  Once you have a 403b, you can always contribute to it, even if you are not in the same business.

Obviously, we would not realize vast pension liability savings immediately, but over time, this would add up as people leave the system, and others are hired in.

In the current contract, sick days can be “saved”, accruing up to 215 days.  Upon separation, the employee is allowed to cash out those remaining accrued days at $60 per day.  If the maximum number of days were cut to 50, we could save a potential of over $9,000 per employee.

We can eliminate vacation carry-overs, replace car allowances with mileage reimbursements at IRS rates, and cut longevity pay.  Time on the job is already covered under step increases.

Except for extreme or extraordinary circumstances, any employee resigning before the expiration of his or her contract should be considered in breach of that contract, and all pay and benefits should cease immediately.  While we cannot recoup past losses, we can prevent some of them in the future

Finally, for all contracts; freeze them upon expiration.  If pay or benefits are not increased until a new contract is in place, negotiating parties will be much more motivated to meet at the table and work out a new agreement.

Superintendent Padalino is trying to make the tough cuts where he can, but now is not the time to put even more of our friends and neighbors out of work.  That is very bad for the students, the teachers, and for all of Kingston.  If we can avoid future job cuts, I say we make the moves.

These are some of my thoughts for positive, possible moves forward.  What are yours?

-Andrew Champ-Doran

*All KTF and Superintendent contract information was found at SeeThroughNY  

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9 Comments

Posted by on June 8, 2012 in Uncategorized

 

9 responses to “Schooling Blood From a Stone

  1. Mike Heany

    July 6, 2012 at 8:49 am

    Hi Andrew

    Regarding the teacher’s health insurance premiums, if your numbers are correct, I believe your proposal to be sound and fair.
    The Teacher’s Trust Fund has contributed money toward their health plan so the teacher’s premiums do not increase. Does this have any impact on the school’s budget or is the school still paying the same while the teacher’s premiums are held in check?

     
  2. Mike Heany

    July 6, 2012 at 8:51 am

    Hi Andrew
    I want tor reply to this article and your comments in the Naccarato article in the Daily Freeman.
    First, I have to ask if the retirement age for full pension rights has changed from 591/2 for Tier 6. If not, then my calculations (below) will be wrong.
    Second, you stated a beginning age for teaching around 23 or 24. Okay, let’s pick the even 24. You said the retirement age would be 67 or later. That age would mean a teaching career of 43 years. Don’t you think that to be a bit implausible? If 591/2 is still the full pension age, then the teaching career would be 36 years (rounded). Isn’t that more realistic?

    Okay, based upon your Tier 6 pension numbers of 35% for the first 20 years and 2% for years after 20, what do you think of my (broad) calculations?

    Teacher starts at 24 yrs old and retires at 60—36 years in
    35% for the first 20 and 32% for the extra 16 (2% x 16) = 67%
    I chose $80,000 as the average of the last 5 year’s salary.
    $80,0000 x 67% = $53,600
    The teacher retired at 60 and lives till 80…20 years of retirement/pension.
    20 x $53,600 = $1,072,000 total pension paid

    In the 403 plan, using the same teacher’s numbers:
    Teacher contributes $3,000/yr x 36yrs = $108,000
    School matches teacher contributions = $108,000
    Total = $216,000

    The 403 plan obvioulsy is significantly less. It requires more initiative from the teacher to financially support their retirement. Depending on the investment, the 403 has risk. Even with a guaranteed -type portfolio with low interest, the final outcome between the present system and 403 plan has a substantial gap. Would a successful high-risk portfolio come closer or surpass 1.072 million?

    So, we are asking the teachers to become responsible for their own retirement. That sounds fair to me. We are asking them to take home less money each week as they contribute towards said retirement. While I still think this is fair, asking anyone to do with less is always a problem regardless of the reason. We are asking teachers to realize significantly less in their final retirement fund (whether guaranteed or high-risk). Basically, we are asking teachers to accept that their pension system is inequitable and financially unsound and they should have a system like other employees with 403 plans. Whether or not they see the light of day (I think not), their most immediate concern will be the dollar.

    Perhaps, in the beginning, a compromise would soften the blow, For example, if the teacher contributes 3 grand/yr, the school, instead of matching, would contribute a larger amount…4 grand? 5 grand? …and that could be adjusted in following years/negotiations.

    Mike Heany

     
    • kingstonbarn

      July 6, 2012 at 2:58 pm

      Mr. Heany,

      Thank you for your thoughtful replies. You have obviously spent some effort on these issues.

      While the NY State Teachers Retirement System lists the full retirement age as 63 (quoting their website, “If you retire prior to age 63, you will receive a reduced benefit (without exception)”), I chose 67, because that is the age that the Social Security Administration calls full retirement for people born after 1959. I was born in 1960. But, let’s say we split the difference and end at the NYSTRS 63. That makes the Kingston teacher’s career about 40 years, if they work the whole bit.

      The last Kingston contract published on SeeThroughNY shows tables through 2008-2009 in the last valid Teachers Contract. You can see those here: http://qvs.visiblegovernment.us/seethroughNY.net/contracts/school-contracts/571800010000%20Kingston%20T.pdf
      The first year base salary in 2009 for a Bachelor’s Degree was over 48,000. Step increases by 2012 will have increased that to more than $52,000 for this year, according to past Superintendent Gerard Gretzinger. By the 5th year, you are required to have your Masters, and a commensurate increase in base salary goes with that. Because I don’t want to make the math hard for myself, I will just add the numbers in the 2008-2009 column on the Masters schedule for the first 20 years. Rounding down along the way, I come up with a total of $1,360,000 (which, by the way, comes out before taxes are figured on your pay). Multiply by 10%, and that’s $136,000, saved by the employee. Adding the school district’s matching tax free 10%, I get $272,000. That figure does not include any compounding interest, it does not include the raises that have occurred since 2008, and it doesn’t include the tax break. Incentive pay, longevity pay, and buyouts are excluded. If you look at the figures on SeeThroughNY, you will see that we have teachers and administrators making more than the top pay on the chart, which is outdated at $90,495 after 24 years.

      Remember, this is after just 20 years. What will it be after 40, when the compound interest has kicked in? If you just add the next 20 years of base pay and match, you will have something in excess of $800,000. It is no great leap from there to $1 million on safe and guaranteed investments in a typical 403(b) plan. If my math is correct, a 403(b) plan would pay a monthly income of something like $13,000 after age 65 on that kind of balance, at least according to TIAA/CREF. I am not an accountant or a financial adviser. I am just sitting here with my calculator and 403(b) statements.

      Yes, you will be taxed on the distributions as ordinary income, but so will the pension. Maybe the school district and the IRS allow a roll-over to a tax free Roth IRA. I don’t know. I do believe, though, that if teachers see the benefits of picking up some of their own retirement, including having it available when they retire, they might go for the new plan. Though current teachers are already on the tiered path, maybe they could take a stepped buyout of their pension that puts them right where they would be if the defined benefit program existed all along. Or, is there some combination of the two?

      So, Mike, maybe we can get an accountant to pitch this plan to the state legislature and the unions, not only teachers, but all public employee unions. I know that Governor Andrew Cuomo has already mentioned something along these lines, and maybe he’d like to extend this to ALL public employees and officials, including the legislature and his own office. I only know that we, as New Yorkers, are about to reach the point where our pension system collapses under its own weight, and there won’t be any money to pay anything into anyone’s retirement.

      -Andrew Champ-Doran
      KingstonBarn

       
  3. Mike Heany

    July 6, 2012 at 3:55 pm

    Hi Andrew

    (call me Mike and thanks for the quick reply)

    So, it is now 63 years old.

    I don’t think I can agree with you that the averge teacher will contribute 10%. Do you?
    Perhaps it can be pitch’d that way as a selling point but I think the percentage would be lower.
    Perhaps the financial difference between the pension and 403 is not as significant as I figured (even with my at-home calculations) but I think it would still be the significant factor in any negotiations.

    Yes, a true accounting would he useful. Despite our agreement about the financial insecurity of the system, are the unions and teachers acting themselves to resolve the impending financial crisis or is it the taxpayer? Will they ride that horse till collapse?

    Mike Heany

     
    • kingstonbarn

      July 6, 2012 at 10:06 pm

      Mike,

      Under the match, employees contribute as much as they want. The employer contributes matching funds up to the maximum of 10%, so it’s up to the employee how much their retirement fund is. But, as Suze Orman and Clark Howard say, free money that maximizes your money. Regardless, the match up to 10% is the only responsibility of the Kingston School District, in this case.

      Will they kill the golden goose? When I brought this up at a budget forum in early 2011, two teachers and a teacher’s spouse all told me there was no way they would agree to any contributions to pension or health insurance. But, the teachers, administrators, and support staff are seeing their colleagues lose their jobs at an alarming rate. If people can somehow see that their contributions enable school districts to save jobs, programs, and services, they might get on board. On the other hand, it may not be their choice. Pensions and retirement funds are acted on and decided by the State Legislature and the Governor.

      Andrew Champ-Doran
      KingstonBarn

       
  4. Mike Heany

    July 7, 2012 at 6:05 am

    Andrew,

    Regarding the 10%, my point was only that I didn’t think the average teacher would contribute that mcuh (10%) which downplays the sales pitch but that is a very minor issue. Why would teacher’s want to contribute more toward their health insurance when their premiums are held in check by their Trust Fund? In my many years, I have never heard one, not one, say they would support reform. “Change the school funding system” is always the reply which means the system is fair, deserving, and equitable.

    I don’t know the actual number of jobs that will be lost due to the upcoming redistricting plan…200? 300? Though I do see Naccarato and the KTF making a weak argument against it, this is not the time when we will see their cry for reform. Concern for their co-workers? The system is dug in like a tick. If the trend continues, and it appears it will unless someone discovers dilithium crystals, perhaps in 10-15 years, but I won’t give you odds.

    So, now we come to the Governor and State Legislature. What does history tell us, Andrew?

    Mike Heany

     
  5. Mike Heany

    July 8, 2012 at 10:20 am

    Andrew

    There is an opinion that Gov. Cuomo passed the 2% tax cap as a stepping stone for national office. I have to admit I am not knowledgeable about state politics but I wanted to hear your thoughts. I feel like the ‘Hog Blogger” here but I appreciate your replies. Hope all is well.

    Mike

     
    • kingstonbarn

      July 9, 2012 at 4:05 pm

      Mike,

      This is not my area of expertise, either, but I will say just a couple of things.

      First, I think Governor Cuomo is genuinely trying to do what he thinks is right for the state of New York. Whether I agree with him is another matter, and I’d be silly to think that the Governor of a large state like this one doesn’t have many constituencies to please. But, he did campaign on the promise of a 2% tax cap, and now it’s law. He also said it was time to pass gay marriage; He did. I also remember promises to veto any gerrymandering legislation, which he did not do.

      Second, the governor of any state is, by definition, ambitious. He or she would not make it to the Chief Executive’s position without that ambition. I can not think of a popular governor, in my time here or elsewhere, that didn’t at least entertain the notion of running for President. Can you? With approval ratings as high as Governor Cuomo’s, I wouldn’t be too suprised if he decided to take his 65% or more for a spin around the block at some point, just to see what it can do.

      To your original point; I’d say that what New Yorkers like, many other people might like, and we’d all just have to let the primary voter’s decide if he chose to make a run for the presidential nomination.

      -Andrew Champ-Doran
      KingstonBarn

      Andrew Champ-Doran

       
  6. Mike Heany

    July 9, 2012 at 8:28 pm

    Andrew

    Well, the slip-of the-tongue by Lundquist is almost a done deal. Kingston Hospital closing along with 3 school buildings and there is also Tillson and Meaghr. Whether necessary or not, this will reverberate for many, many years. I was very disturbed, but maybe not surprised, at the comments by our area legislators in The Freeman article: “Pick A Hospital, Either Hospital”. I heard a rumor that the Bruderhoff may purchase Anna Devine and Zena. I don’t know if Kingston Hospital could accommodate the folks at Golden Hill but that could be worth pursuing..

    Mike

     

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