Below, we publish a Facebook post from Ward 10 School Committeeman John Avard, Chairman of the Special Committee on Negotiations. Below the post, we will offer our analysis of the numbers for reasons which will be clear upon review. ~PubliusPublished on August 12, 2015
First we need to talk about Candia, Hooksett and Auburn. Why have our long time sending districts opted to take their children out of the Manchester schools? They are tired of over crowded classrooms, under staffing, old technology, no supplies, etc.
What has precipitated their claims? Layoffs due to a contract extension that I challenged in 2009 which was supported and negotiated by then alderman Ted Gatsas. I argued that we would be begging for concessions or laying teachers off. His response, “the money will be there. I guarantee it. The aldermen won’t let you down.” What happened? We begged for concessions and laid off over a hundred teachers. Since then, our schools continue to be underfunded, under staffed and under equipped.
When their claims were brought forward what was the response? How were the sending districts treated? Were their concerns tended to or were they summarily dismissed? Could those contracts have been saved by proper leadership and good faith negotiations?
Now the city financial officer is made to predict the future school budget to evaluate the proposed teacher contract. What do we see? Mr. Sanders estimated a 1% tax cap in Fiscal Year 2017. Of the total amount that would raise city wide, he applied 1/2 to the school district for an available increase of $998,000.
Now, back to the loss of students from sending districts. Mr. Sanders estimated that the loss in school district revenue will be $1,062,000 in FY17. This eats up more than the available amount.
He further notes that the debt service line will increase in FY17 by $51,000 due to the purchase of new buses.
The cost of the teacher’s contract in FY17? $771,000, after a year of saving $298,000 for a total cost over the two years of $473,000.
Does the teacher’s contract break the tax cap? No. Failed leadership does.
Now, our analysis:
First, the basis of our analysis is the financial impact information provided by city Finance Officer Bill Sanders. (You’ll want this open to refer to it as you read the analysis.) Given Avard’s numbers, it appears as if he used the same numbers; which are the same numbers the Mayor Ted Gatsas used in his veto message. He did not, as he has been accused, “do his own math.”
Let’s start with “the cost of the contract.”
Avard’s article asserts the of the contract over its first two years is just $473,000. This number double counts the estimated first year savings of $298,000. The second counting is actually a “carryover savings” from the current fiscal year. It is already calculated into the FY 17 baseline. Remove it, and the “two year cost,” as defined by Avard, rises to $771,000.
In coming to this number, Avard uses non-contract expenses and savings. Sanders was charged with looking not just at the costs and savings associated with the contract, but also other projected school district and city savings and expenses, including debt service, tuition revenue, and retirement savings. If those numbers are backed out, the 2 year cost of the contract itself is $1,971,000, all of which hits in the coming fiscal year, FY 17.
Using the projected numbers provided by Mr. Sanders, here’s how we arrived at that number:
- Salary increase: $1,718,000
- Reduction in district insurance premium payments: $512,000
- Increase in district’s cost of health insurance: $607,000
- “Carryover savings” from first year of contract: $298,000
- Increase in district Social Security cost*: $131,000
- Increase in state retirement costs*: $269,000
- Increase in city retirement costs*: $56,000
- Total added cost in FY 17 (which is the coming fiscal year): $1,971,000
*increases resulting from increases in salary.
The numbers are similar for FY 18, the third year of the contract, only bigger.
- Salary increase: $1,760,000
- Reduction in district insurance premium payments: $570,000
- Increase in district’s cost of health insurance: $629,000
- “Carryover savings” from first year of contract: N/A
- Increase in district Social Security cost*: $135,000
- Increase in state retirement costs*: $276,000
- Increase in city retirement costs*: $32,000
- Total added cost in FY 17 (which is the coming fiscal year): $2,262,000
*increases resulting from increases in salary.
Therefore, the total cost to the district of the proposed contract is $4,233,000.
Making no adjustments for any lost revenues, as predicted in the scenario, the total projected amount of tax revenue the city will be allowed to raise under the tax cap is $4,012,000. If adjusted for the projected tuition revenue loss, that amount is effectively reduced by $1,351,000 as lost revenues have to be “made up” before spending can be increased.
A primary reason for the disconnect in the numbers is the use of “retirement savings” to buy down costs over time. In removing these from the analysis, which are projected $1.2 million in each year, we note those savings are constants that will exist without this contract.
“We” in this analysis is “me,” Richard H. Girard, candidate for School Board at Large and Humble Host of the Girard at Large Radio Show, who, in 2009 agreed with Avard on the prosed contract extension and wrote extensively as a columnist for a local newspaper against it.
That said, what’s done is done. The teachers, who pushed aggressively for the ill fated 2009 deal, “nixed the fix,” which was a proposed contract extension in 2012, projected to save $4.5 million in health insurance costs, and 80 teachers that were laid off as a result of the city’s budget difficulties. Despite the layoffs, the teachers’ step and cost of living increases continued until the contract expired on June 30, 2013, providing every teacher with a raise of between 2.5% and 8%.
Since the expiration of the contract, teachers have “remained on their steps,” meaning there have been no step raises or cost of living increases. The only cost the city has had to budget for are its share of the increased cost of health and dental insurance.
What this contract essentially means for the children of Manchester is this: The school district will not only be unable to restore the course offerings and class sizes lost when teachers were laid off three years ago after spurning the proposed contract extension, the probability there well be even fewer teachers, either through attrition or layoff, as a result of this contract is extremely high. If, after the projected retirement savings are used, there are still salary costs in excess of tax cap revenues because of the pay raises, how can there not be fewer teachers in the classroom?
This contract, simply put, is a repeat of the 2009 contract results. The only difference is that we’ll see the consequences just months from now, not two or three years from now. That is just irresponsible.