At San Diego Schools we believe the interests of parents and kids should have the highest priority in every action taken by a school district.
Payroll cost is the largest part of every school district's budget. By far. Pay and benefits are typically 80 to 90% of every district's costs.
With funding always tight, any decision affecting those costs - even by a few percent - can have significant impact on funds available for programs and services for kids.
Balancing the needs of employees with the needs of kids is difficult but important. Perhaps the most important responsibility of any board member.
Decisions with such consequential effect need to be made with all data available, to all Board members as well as the public. To help in this we've made a summary of key considerations that are critical to know in the course of making decisions on compensation agreement changes.
All proposed settlements with employee groups require the district file a Collective Bargaining Disclosure (“CBD”) with the County Office of Education (“COE”).
If a district's budget has certified positive, the COE's role is simply advisory, they will review the settlement and note any issues they may feel should be considered.
Districts in “qualified” budget status have some more specific legal requirements that apply (per CA Code 3540.2) 1) CBD must be filed at least 10 days prior to presentation of that settlement to the Board for approval (3540.2 (a))
2) Settlements that “would endanger the fiscal well-being of the school district” require each parent organization of the district be notified within those 10 days (3540.2 (c)) Regardless of budget certification, the CBD requires, on page two, item C, that the district provide “the specific impacts on instructional/support programs to accommodate this settlement”
Given our Board’s responsibility to balance the interests of employee groups with the interests of kids, it would make sense to know if a settlement will result in a need to cut from programs for kids, so that can be factored into the decision.
After submission of the CBD to the COE, the COE will respond with an analysis, called the “Response Letter”. This response letter should be disclosed to the Board as well as the public in any public hearing. The COE analysis may confirm the district’s projections, or it may contain observations or highlight issues that should be considered as part of the approval process.
If you are presented an agreement for approval without the COE response letter, you do not have all the information you need to make an informed decision. We recommend you obtain a copy before any vote is taken.
Revisions to employee compensation agreements can often cost millions of dollars. In districts with financial challenges adding that cost can often trigger a need to make cuts – from other employees or our kids. All Board members owe it to their district to make sure they fully understand the current financials of their district as well as the impact any new settlement may have prior to making a decision.
If you don’t have the key data elements below available, ask staff before making any decision.
1) What is the current fiscal status of your district? Is your budget considered “Positive”, “Qualified”, or “Negative”? https://www.csba.org/TrainingAndEvents/OtherTrainingOpportunities/~/media/CSBA/Files/GovernanceResources/EducationIssues/FairFunding/DistrictFinance/2013QandNBudgetCERT.ashx
2) Is your district running a structural deficit? If normal annual spending exceeds revenue adding extra cost will likely require cuts somewhere. 3) What does the multi-year projection (MYP) show? Districts are required to project their ability to maintain a state-mandated “Reserve for Economic Uncertainties” for the current and two following years to be certified “positive”. 4) How does the proposed agreement affect that projection? The last MYP usually does not the cost of the settlement being proposed – because it has not been approved. Ask your district what impact approval will have on that MYP.
5) What does the COE’s response letter indicate? If the COE analysis indicates a need for “budget solutions” as a result of this settlement, does your district propose making cuts as a part of those solutions? If so, what will they be cutting? Board members may want to familiarize themselves with the recent issues surrounding Sweetwater Union. Financial projections were mis-reported in part to justify higher raises for district staff. The state’s Fiscal Crises Management Team (FCMAT) audit conclusion (item 1) notes “the governing board relied upon incomplete and inaccurate financial information presented for consideration and approval of negotiated salary agreements…” https://www.fcmat.org/PublicationsReports/Sweetwater-UHSD-AB-139-final-report-1281.pdf
6) Will approval of this settlement result in an automatic request for a corresponding compensation increase for all unrepresented employees? This is called a “me too” clause and is often the case. Ask your Superintendent if approval of a settlement with a labor group will result in a proposal to apply the same increase to unrepresented employee compensation as well, when they plan to introduce that, and how much it will cost. At San Diego Schools we feel having the administration negotiate compensation increases with full knowledge they will then personally benefit from that increase is clearly unethical and would be completely unacceptable in private industry. Note that in 2018, the San Diego COE was forced to settle a lawsuit on a similar issue, https://www.sandiegouniontribune.com/news/education/sd-me-ward-settlement-20180902-story.html
7) What is the employee group’s current annual compensation increase rate, defined in its salary schedule, without this settlement? What is the normal periodic increase rate of that schedule?
8) What is the actual increase rate of this employee group’s members over time (including all increases), and how does that relate to average wage growth in your area? Employee groups often are granted periodic increases that are in addition to their normal scheduled increases. What is the overall growth rate, including all increases? County wage data is available through the US Bureau of Labor Statistics at the link below. How does this group’s normal increase rate compare to the average for the residents of your area? https://data.bls.gov/PDQWeb/en
9) What is the employee group’s actual median annual compensation rate? Increases are usually given out to make sure employees are compensated at rates appropriate for their area. No informed decision on increases can be made without knowing what the current median rate is. For our analysis of this we use the public pay data provided by your district from it’s records to Transparent California, for the latest year available. It’s important to consider both total pay as well as total compensation, given non-paycheck compensation if usually significantly higher in education than it is in private employment.
10) What is the average compensation rate in your area for employees with similar job responsibilities and/or education? No responsible Board would make a decision on compensation increases that may have impact on the education of kids without knowing what the standard for compensation in their area is. Not “what other schools pay”, because employees rarely move to other districts, but “what people in the area commonly make for similar jobs”. In support or administrative jobs, comparable pay data is easily available in salary surveys. Has your district provided this to you? Without that, how can you know if your pay rates are competitive? In certificated positions it can be difficult to compare “like jobs”, however it is easy to determine what private individuals with similar educational attainment make in your area, using the US Census Bureau’s Educational Attainment reporting at: https://data.census.gov/cedsci/table?q=educational%20attainment&g=&hidePreview=false&table=S1501&tid=ACSST1Y2018.S1501&t=Educational%20Attainment&lastDisplayedRow=16&vintage=2018
The educational attainment mix of your own district can be obtained either directly from your staff or from the California Department of Education’s data at:
https://dq.cde.ca.gov/dataquest/PaifSearchName.asp?TheYear=2018-19&cTopic=Paif&cLevel=District&cName=&cCounty=&cTimeFrame=S using the “Staff Education Report – District Level”
11) How does your non-paycheck compensation compare to private employees in your area? Typically the benefits paid to district employees (both in retirement contributions as well as health and welfare costs) exceed that paid to private employees. This additional compensation certainly needs to be factored in when considering making changes in pay rates. For healthcare contributions in private industry - https://www.commonwealthfund.org/publications/maps-and-interactives/2021/jan/average-employee-premium-contribution-and-deductible
12) What is your voluntary turnover rate? Properly compensating employees helps minimize turnover. What is your districts’ voluntary turnover rate (excluding retirements and terminations.) According to the payroll processor ADP, the normal turnover rate in the Education and Health industry in 2019 was 1.6% per month (page 22 below), meaning about 19% per year. How does your district’s rate compare to this, is there a turnover problem at current compensation levels? https://www.adp.com/resources/articles-and-insights/adp-research-institute/research-topics/-/media/62FB03253C3B4B80A2EE73EB8EC29B82.ashx 13) What does your districts’ exit interview data show? If an employee leaves your district voluntarily, why? What does your districts’ exit interview data show, are people leaving for reasons related to compensation or for other reasons?
14) How many qualified applicants does the district get for new job openings? Compensation rates are part of what attracts applicants. Ask your district for their statistics for the last year – how many openings have there been in this employee group, how many applicants were there for each opening and how many of those were deemed qualified? How long did it take from posting the opening to filling the position?
Whew! Is this a lot to consider? Certainly, with a decision worth millions of dollars in front of you that could have major impact on the education of our kids, worth the effort. We recommend you use the template below as a "worksheet" to determine these details before any decision. Current District Metrics
To help you in this consideration, we present the following suggested list of important data elements to you.
Given you’re just starting the negotiation process, you have plenty of time to ask your district to verify this and “fill in any blanks” you may have in the data you need to make this decision with full knowledge.
1) Budget certification - Positive, Qualified, or Negative?
2) Structural Deficit - If your district has one, what is it?
3) Multi-Year Projection - What is your district's MYP? 4) Impact on MYP - How would this agreement, if approved, affect that MYP?
5) COE analysis - Has your district given you the COE's analysis of your proposed agreement?
6) “Me too” raise - Will the labor group raise in front of you result in an additional "automatic" raise to other groups, either presented in the same meeting or in the future? Were those costs included in the Disclosure?
7) Scheduled compensation increase rate - What is the normal annual increase rate of the existing schedule, over all steps and columns?
8) Actual compensation increase rate - What does your district's actual pay records show the actual increase rate is for members of this labor group over a period of time (we suggest 5 years or more) and how does this relate to the inflation rate during this time?
9) Actual median compensation - What is the actual median compensation rate - both pay only and total compensation (including non-paycheck compensation) for this labor group?
10) Average compensation rate in area - Has your district provided you with a salary survey of comparable jobs in your area (not somewhere else, given the reluctance of most people to relocate...) What is the average or median compensation rate for similar workers in the area? How are similar private workers with comparable educational attainment compensated compared to your district employees?
11) Non-paycheck compensation - How much non-paycheck compensation do district employees receive for retirement or healthcare plans, and how does this relate to the compensation received by private employees?
12) District voluntary turnover rate - Do you have a turnover problem at all that needs to be addressed? What is your voluntary turnover rate for this group, and how does that compare to standards for similar organizations in private industry?
13) Exit interview data - What does your district find when they interview employees who are voluntarily leaving their jobs? Do they say they're leaving because they found higher paying jobs elsewhere, or are they leaving for other reasons?
14) Qualified applicant rate - How many qualified applicants do they get for each job opening? How does this compare with similar rates for private industry - are they finding enough qualified applicants for each opening or is that a problem? With all this, the decision is yours. We strongly recommend you involve parents in that decision by giving them full access to the data above as well, to help guide your decision.
Whether a compensation increase above the normal salary schedule is warranted, reasonable and necessary - even if it impacts funds available for the education of kids - is a decision the Board has the power to make, we trust you will make that decision with the best interests of our kids in mind.
If you would like help in doing this analysis, we're there for you, and we've done this often - contact us at email@example.com and we would be happy to help you make the right decision for your employees and your parents.