Friday, March 11, 2011

Board agrees to MGEA contract extension (with modifications)

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2) In the event that the new law is overruled in court, or repealed in whole or in part (either of which is a possibility) it is a very distinct advantage for the district to have an established contract with these terms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.

40 comments:

Anonymous said...

thanks to the teachers and thanks to the board-this contract reflects the times and is one that will enable the district to pass a referendum-maybe just maybe.

Lily said...

Ditto. Thanks to the board and MGEA for your heavy lifting.

Anonymous said...

How many teachers will need to be laid off to balance the SD budget in the next year or two?

Your levy is essentially frozen - so the only thing you can cut now are people.

Anonymous said...

The actions of this school board are, to say the least, unsavory. For more than a year and a half beyond the end of the last contract teachers bickered and would not settle. Suddenly, with reality finally hitting home, the teachers and school board "agree" on TWO contracts in less than two weeks?

Like I said - this is unsavory. There is little difference between the MGSB and the Wisconsin Senate.

Peter Sobol said...

Actually there is a lot of difference. The senate forced through an unnecessary political bill that creates significant disruption to local governmental units statewide. The MGSB negotiates intensively in good faith to reach an agreement that protects the district's interests and the taxpayers - we do it quickly because the legislature's action force us to before the window is closed.

Should we have waited and missed this opportunity to make things look "savory"?

Bill said...

The MGSD teachers will take a collective $1,000,000 pay cut for at least the next two years. I hang my head when I think of the impact on those professionals, their families, the local economy, and the future of the teaching profession and public education in our state.

There is a very strong lesson in democracy here--pay attention or someone will steal it. Scott Walker was elected Governor of Wisconsin with only 26% of the eligible ballots in the state. He won 52% of the votes cast BUT HALF OF THOSE ELIGIBLE DID NOT VOTE. Hardly the mandate he would like us to believe.

Anonymous said...

Yes Peter you should have waited!!!! You know despite what you may think there are many, many, many people that live and work in the MG school district that do actually support the Governor and the tools that he is trying to give the school boards to deal with their budget shorts falls. When this board was meeting the last couple of years talking of cutting and more cutting there were no concessions being offered by the union. There are going to be more of those meetings and you as a board should have waited instead of taking things off the table now.

Anonymous said...

You need to realize that when the Governor says "tools" he really means "I have no idea how to run schools so I'm going to use this good sounding word that is really meaningless".

But just for our amusement, please list the "tools" the Governor's bill gives the school district? Be specific.

Anonymous said...

I agree that the Governor's term "tools" is very inaccurate.

First of all, by using collective bargaining, MG (and most school districts) was able to balance the budget, and did so each year. The deficit is from a mandated limitation, not from spending sprees. If anything, the Governor took away a valued tool with this bill.

Secondly, the Governor's tools (pay more for health and retirement) only cover about 50% of his cuts this year. The best he could say is "I'm giving districts half of the tools they need."

Last of all, the Governor is balancing the budget by cutting payments to districts. The only way for districts to match it is to cut staff. It makes the local districts the bad guy, so parents might yell at a school board instead of the Governor. Not a very effective tool, unless you mean "political tool."

Anonymous said...

"But just for our amusement, please list the "tools" the Governor's bill gives the school district? Be specific."

We're waiting...

Anonymous said...

Again...the only tool out there is Walker himself.

Anonymous said...

"But just for our amusement, please list the "tools" the Governor's bill gives the school district? Be specific."

We're waiting...

Still waiting...

kevin said...

The tools the budget gives is the stripping of seniority rights & the need for just caus. This allows the District to dismiss the more expensive senior employee for any reason it so desires and hire two younger teachers. The two younger teachers will cost the district about the same as the one older teacher in salary, yet the two younger ones can teach twice as many classes. You do the math with your tool and let the education of your neighbors child be what is left on the chopping block.

Bill said...

I'm sure you many of you have noticed that the Governor, despite being a huge Ronald Reagan fan, would not consider ANY ideas for increasing revenue as a part of his deficit reduction plan. He also has never acknowledged the serious impact of the recession or skyrocketing health care costs on our ability to provide important services such as public education.

You will never see this man go to the health insurance executives and tell them to stop paying their top management obscene salaries and lower their premiums.

Peter Sobol said...

1) Would IBM fire an experienced higher paid engineer and replace him with 2 cheaper freshly minted ones? Of course not! The only thing professional organizations have is their cumulative knowledge on how to get things done - this resides mostly in your more experienced employees and is invaluable to any organization. The school district is no different, and it is already losing (through retirements) too many teachers this year.

2) Firing a teacher over 40 just to replace them with a lower paid teacher is certainly illegal under federal law (with good reason) and would result in significant legal liability to the district. If this is one of the "tools" the governor had in mind he is significantly misinformed.

It would be foolish to think that this is practical or legal way to balance the budget.

Peter Sobol said...

I too would like to hear what real "tools" the Governor has in mind.

Anonymous said...

So far the only "tool" identified appears to be illegal.

So still waiting...

Anonymous said...

"So still waiting..."

Look the gov. has a lot of tools in his toolbelt. I can name three or four-it appears that he has at least four different types of sledge hammers.

teabaggers are not known for their free thinking or intelligence

Anonymous said...

"You will never see this man go to the health insurance executives and tell them to stop paying their top management obscene salaries and lower their premiums."

Hey! Knock it off! Insurance executives are people too! Have a little heart man. You know, it's expensive to live on the lake. If school taxes go up I might have to move into a mansion off the lake somewhere.

Anonymous said...

Businesses To Boycott For Supporting Walker
Haussman Insurance
Stark Realty - Any realtor actually
Beyler Chiropractic Clinic
Madison Chiropractic
Robb Chiropractic
Gugger Construction Inc
White Cap Real Estate LLC

Anonymous said...

Add Metcalfe Development/realty

Take it to the streets. They donated with their money so that there bottom line would flourish-I am going to fight back with the power that I have (darn little.)

it us versus them

Anonymous said...

Recall Kugle?

Anonymous said...

Peter:

This document, released by DPI this week, seems to suggest an overall budget deficit for MG next school year as about $2.5 million.

http://www.wispolitics.com/1006/large/dpinr2011_26_memo_and_alpha_list.pdf

While still awful, does that jibe with the board's estimate of a $3.1 million gap?
http://www.wispolitics.com/1006/large/dpinr2011_26_memo_and_alpha_list.pdf

Just wondering if the district can avoid that second round of budget cuts of @ $500-600,000?

Anonymous said...

Sorry, bad cut-and-paste:

This says $2.5 million:

http://www.wispolitics.com/1006/large/dpinr2011_26_memo_and_alpha_list.pdf

This says $3.1 million:

https://lh3.googleusercontent.com/-vMombB76xrs/TX_P3Dt_8EI/AAAAAAAADPA/bRilcXcTk5A/s1600/mg+budget+sum+20001.jpg

DMAN said...

What insurance does the MGSD offer to it's teachers?

Please define in a little more detail the concessions for the extended retirement compensation...a rumor that I have heard is that the MGSD pays 100% pension and insurnace until the teachers are 75 years of age. I can't believe that that would ever be agreed to...so I thought that I would check.

Bill said...

Peter,

Jason was the dissenting vote, but there were only 6 votes total. Who was absent?

Peter Sobol said...

I believe the $3.1M number is more accurate, the $2.5M number is an estimate that doesn't include enrollment changes and other impacts.

The teacher's pension is paid out by the state run (and fully funded) WRS, the district is not involved in the pension payments. The district does pay for current retirees health care until age 70. Essentially we continue the coverage they have while employees. Needless to say this is expensive and has been the negotiation sticking point for several years.

Peter Sobol said...

Lionel Norton wasn't present.

Anonymous said...

"Needless to say this is expensive and has been the negotiation sticking point for several years."

It shouldn't be any longer...

Where can I get adeal like this:

Retire at 55 or 57 with a taxpayer funded pension and have my health care entirely paid for until I am 70 years old?

Where? Please tell me where?

Oh - That's right - the MGSD.

No wonder we're broke. Quit bumping the pipe board members. Come back to reality.

Bill said...

"Retire at 55 or 57 with a taxpayer funded pension...Where? Please tell me where?"

I will tell you where pal, right here in the MGSD. We've got a lot of teachers retiring before it gets any worse, so there will be quite a few openings for next year. So you can step right in and get on the gravy train. Oh wait, you don't have a teaching license? No problem, if you have a college degree it will only take you a year or two to get course work and field experiences to get your teachers license. What? No degree? Oh oh, then you better plan on 5 years, but don't worry, by then there will be a ton of jobs open.

If you complete all of this education and training you might be able to get a sweet piece of this action. Oh wait, by the time you are qualified to step into the classroom who the hell knows what we will be able to offer our starting teachers as compensation. And don't forget all those college loans you have to pay back.

Another problem pal, how old are you? Because to get those benefits at age 55 or 57 you have to start young, right out of college, and dedicate your whole professional career, 30-35 years to get the benefits you covet. A word of caution too, those last 5-10 years are a grind man. This is a job that will make you old in a hurry.

One last thing. If you are going to make it through those years of college and teacher training, you are going to have to do a much better job of paying attention and do all of your homework. You don't seem to grasp just how complex this whole thing is. You say "taxpayer funded pension" as if it were a frivolous gift. Our teachers earn this benefit year after year in return for their hard work and dedication on behalf of your children. The district's contribution on behalf of the employee is a form of deferred compensation.

So there you go. Now you know how to get on to easy street. If you struggle along the way, just ask a teacher for some help.

Anonymous said...

I guess you need a union!

Peter Sobol said...

The WRS pension fund is fully funded and does not need taxpayer money to meet its obligations.

http://etf.wi.gov/

The school board has been very much aware of this issue of the growning cost of retirement health benefits for several years, and has been working toward resolution. Recall that the retirement benefits were put in place to save the district money by encouraging higher paid teacher to retire, its only the rapid increases in health care costs that have made this system unworkable. The "generous" system you complain about was actually designed to save you money while providing competitive compensation.

Note that education spending in Wisconsin has been shrinking as a % of gdp, while health care (and other) costs have rapidly expanded. It is this difference that has created the budget problems, not increased spending.

DMAN said...

Thanks fo your response Peter. What insurance does the MGSD provide for it's teachers?

Does the school district "shop around" for insurance?

Peter Sobol said...

Currently we use the State group health insurance plan - we believe this is the lowest cost plan available!

Anonymous said...

re:"Currently we use the State group health insurance plan - we believe this is the lowest cost plan available!"

Thank you for letting us know about this. I see one of the talking points that are floating around is how many school district use the WEAC insurance plan which costs more than the State plan.

But the people that repeat that talking point, never say why districts who have made the switch should be cut funding equal to those that have not switched. Shouldn't districts that have been smarter with money be rewarded?

Peter Sobol said...

Insurance is complicated, its dangerous to say one plan is more or less expensive than another. Insurance premiums vary with locality (rural areas tend to have fewer, less competitive providers, increasing costs), or it could depend on a district's pool of employees. An older average employee, or more retirees covered, would mean higher prices in general and a relative change in costs by provider. I suspect that most state employees are in higher population areas with lower costs than many rural districts can get.
There are also different rules in play: the state plan doesn't let us "buy out" retirees- something that could potentially lower costs in retiree heavy districts - but something unavailable to MG.
On average districts pay less than WEA insurance for the state plan, but if all the WEA covered teachers moved to the state plan it might be forced to raise its premiums! Its never as simple as it seems.

Anonymous said...

ANyone else the irony in conservatives arguing a move to a state run single-player health plan to save money!

Anonymous said...

"ANyone else the irony in conservatives arguing a move to a state run single-player health plan to save money!"

As much as I see the irony in Mitt Romney complaining about Obama's health care reform, which is based on Romney's plan.

Anonymous said...

The school District, jointly with the employees, did shop around for insurance about 5 years ago. The group saw teaser rates being advertised by others, trying to encourage a switch out of the state plan and into their plan. They offered a guarantee of a raise no larger than (fill in a low number here) for the year following the switch. There were no guarantees on cost or increases beyond that date. Now that the teaser time is over, by not switching, the District dollars allocated for this beneift has saved hundreds of thousands of dollars.

DMAN said...

Thanks Peter for your response.