Thursday, February 21, 2013

Employer Contribution rates High????

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There has been a bit of noise lately in the New York media about the upcoming contribution rates for the public employees' retirement plans. Since I was once a teacher, I will limit my comments initially to the New York State Teachers, Retirement Association (NYSTRS).
The upcoming Employer Contribution Rate (ECR)  is estimated at 16.25% of payroll.  That means that that percentage of salary of employees who are members of NYSTRS will be paid to the system.  There is a lot of groaning about that, perhaps rightfully so. There are stories as to how this cost will force districts to cut staff, cut program, etc.  That may be so, but...
Until 1988-89 school year, the ECR was constantly higher than that 16.25%, frequently much higher.  I will not comment on any complaining during those years: there was some, so be it.
I will comment, however, on the lack of complaining during the 1990s, as the ECR fell dramatically to an all-time low of .36%.  A slight bump in 1994, but the big trend was down.  School districts were steadily liable for retirement costs that were declining. Now, what did they do with that money they were saving? They spent it!!
During the 1990s some of the best teacher contracts were approved and enforced, best from the teachers' point of you. For that I say to the public, thank you. I benefited from those years. I can't say I was ever paid what I should have been. My union negotiated not a minimum salary for its members, but a maximum salary as well. (For that matter, find me a teacher who gets paid for overtime in a manner like many many other public employees)
Districts were not allowed to take part of the savings and bank it, saving it for the rainy day that we are in now.  Collecting and saving money would be considered, in simplest terms, a misuse of taxpayer funds. Not wanting to create the situation whereby they are given less money one year because they didn't need what they got the year before, districts made sure they spent what they had. They prided themselves on "no tax increase this year". They found ways to spend dollars that were available.  (A number of times we were told in our district, towards the end of a school year, that we could purchase items because "money was available". Those occasions were always at the end of the year, never the beginning, when we would then have an opportunity to use what we purchased.)
Enough grumbling. The fact is that salaries went up at little or no cost to school districts. The costs of those days are being paid now.
Take note that this is occurring in a state that has had several "retirement incentives" geared towards getting the more highly paid experienced worker off the payroll and onto the retirement dole, the idea being that employers could bail out of paying those higher salaries. That might seem fine, but this is the same state the turned around and bumped the minimum age for retirement with full benefits by 8 years (Tier 5 brought it from 55 to 57, and Tier 6 brought it to 62). What's the message now? Hey old timers we need you to stick around longer?
Part of the problems that have arisen in public education funding in New York is that school budgets are done one year at a time and basically preclude any long range planning. No business could succeed under those parameters.
That concept does lead to strange circumstances. For example, in my district teachers had to fill out requisitions for the following year as early as January. Of course, you would not know the courses you would teach until June, or even later at times.
Enough for now.
As a final word I will say that the education of our youth will never be excellent as long as we run it as a caveman's business. Click the graphic to access the entire NYSTRS briefing booklet (the source.)

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