Falling aid may trigger pay cuts
for Grosse Pointe teachers by 2013
When members of the Grosse Pointe Education Association ended a long labor impasse with their approval of a new contract last year, one that linked their compensation to state aid to the district, all were aware that teachers could face pay cuts somewhere down the road.
Few expected it to be so soon.
The contract, which links employee compensation to state funding, could be used to balance the district’s budget at a time when state funding is uncertain, board treasurer Brendan Walsh said in a presentation at the board’s meeting Monday (Nov. 28) evening at South High School. Across-the-board cuts could come as early as January 2013.
In May 2010, the district ratified a contract with teachers that would keep the district’s fund equity from dipping below 10 percent of its budget, around $10 million. If the fund equity fell below that level, employee compensation would be reduced proportionally to bring it back up. It was an insurance plan no one hoped they’d have to use.
But reductions in state aid combined with rising retirement costs created pressure on the district's general fund balance. And unless state aid is drastically increased in the near future, teachers could see compensation cuts of up to 10 percent, Walsh said.
“To be honest, I don’t think any of us expected the extent of the (state funding) cuts,” GPEA president Renae Beyerlein said. “It’s a surprise.”
During his presentation, which he has since posted on his blog, Walsh explained how the district’s fund equity has dwindled in recent years. The biggest drain is retirement spending, he said. The Michigan Public School Employees Retirement System determines retirement costs as a function of salaries. The only way to reduce retirement costs, then, is to reduce salaries, he said.
Walsh said that out of all the district’s expenditures, salaries are the most out of skew with state averages. Retirement costs have increased as revenue has decreased, leaving a sizable gap in the budget.
“MPSERS is the beginning, middle and end of our problem,” he said.
To balance the budget, the district would have to either cut salaries or eliminate 55 positions, including 37 teachers, he said.
“As Michigan has lost wealth and therefore tax revenue, Grosse Pointe is certainly not as wealthy in both relative and absolute terms. And you can not continue to spend at a level that pretends that you are wealthier than you are,” he said.
In other business, the board:
- Recognized distinguished employees, advanced placement scholars and the South Girls Cross Country Team’s state championship.
- Congratulated Dan Roeske and Lois Valente on their election to school board.
- Bid farewell to member Fred Minturn, whose service with the board ended with November’s meeting.
The next board meeting is set for Monday, Dec. 19, at 8 p.m. at South High School.
Comments
2013 School Budget Hypotheticals
First, the level of decline in state aid should not come as a shock to anyone, particularly Dr. Beyerlein. Indeed, any taxpayer within our boundries knows the extent of property value loss by simply taking the time to look at their property tax bill. In Grosse Pointe, where I live, our taxable value has fallen over 50 percent in the past 5 years alone, inflation not included. In other words, the primary funding mechanism of public eductation in Michigan, property taxes, have plummeted. Not only that, but we are the only state to lose population in the last US census, and the unemployment rate has Michigan in the bottom three states for job growth (non-growth). So, it is clear neither the District nor the State has the money necessary to meet its obligations. Herein, however, lies the beauty of the new teacher contract: we don't have to fire 55 people to balance our budget, which I would argue is much worse for our community than an adjustment in pay, based on ability to pay. Those 55 teachers and support employees keep their jobs, live to fight another day, versus going to zero income, a likely home foreclosure, etc.
We can't pay what we don't have, and what we do have is a down economy with high unemployment, so we cannot go on paying for what we cannot afford. This contract should (and likely will) be the model of other public entities with unions trying to maintain an income level not supported by the community.
Glenn M. Watson
Grosse Pointe
Mr. Watson, Dr. Beyerlein and
Mr. Watson,
Dr. Beyerlein and thousands of other state residents were legitimately shocked when the state legislature decided to reduce school aid by about $400 per student DESPITE a half billion dollar surplus in the school aid fund this year. The state did, indeed, have the money to meet its obligations, and then some.
And the school aid fund cuts were not made to balance shortfalls in other areas - they were made to balance the 1.8 billion in business tax cuts that were given at the same time.
So, yes, it was shocking that in the face of a large surplus, Gov. Snyder and his party decided to ravage school funding.