The MG school board met in special session this afternoon and approved an extension of the current contract with MGEA for the next school year with several important modifications:
1) Teachers will contribute 1/2 the WRS pension contributions from their salary. This is the same requirement as the "Budget repair bill".
2) Teachers will pay 12.6% of their health insurance costs. This is the same requirement as the "Budget repair bill".
3) Only teachers currently eligible for retirement within the next 5 years will retain the current retirement benefits. No provisions for retirement benefits for teachers retiring beyond the next 5 years are provided in the contract, these will be up to the board to provide in policy.
4) There will be a 0% increase to the salary schedule, although step and lane increases will occur.
5) The district calendar will be determined by the board and is no longer a subject of bargaining, teacher transfers also become a management prerogative.
Estimated Fiscal impact: The WRS and Health care contributions will save the district about $1M a year. The salary schedule freeze will probably cost less than the possible CPI salary increase that would be the subject of bargaining under the "budget repair bill". The agreement also allows the board to very significantly reduce retirement benefit liability in the future.
Question: Why would the board agree to this contract when the "budget repair bill" would allow us to "do anything we want" next year?
1) Without a contract, disputes regarding employment are governed by applicable (and complex) state law, which means they end up in court, which can be expensive. Considering the vast changes in the law there is considerable risk of litigation - this contract protects the district from that risk because it establishes the working conditions and compensation and procedures for resolving disputes. Private companies frequently establish agreements and systems which minimize recourse to the legal system in the event of disputes.
2) In the event that the new law is overruled in court, or repealed in whole or in part (either of which is a possibility) it is a very distinct advantage for the district to have an established contract with these terms (especially reduced retirement liability) in places as a starting point for any new contracts.
3) The operating structures of the district are long established through our contract - this extension provides the district and the staff with a bridge that allows us to adapt to both the new law and other budget changes with some degree of security and structure, while giving the board significantly improved flexibility. Continuity of operation is critical to good management of any organization.
5) Establishing a cooperative environment through a voluntary agreement rather than the adversarial relationship that will result from a one-sided imposition of conditions will go along way towards helping us adapt to the new realities. The relative goodwill is a significant advantage to the district.
Once the "budget repair bill" becomes law (no later than March 25th) we would not have the opportunity to enter into this contract and would therefore be unable to obtain the risk protections afforded. This is a good deal that provides important benefits and reduced risks to the district.