Salaries and Benefits – facts for your information

March 9, 2012

Q – We haven’t had a raise for going on five years.  What is the possibility of a raise?

Clarification – It is true that we have not awarded steps or COLA the past several years.  Please keep in mind that DCSD has continued to award Knowledge Level Advancement, Longevity, and has paid Extended Service Severance to a small percentage of employees.  Both KLA and Longevity are reoccurring costs – they are a permanent raise.  Over the past 4 years, KLA has cost the district about $900,000 per year including benefits (this is the incremental cost yearly – once the KLA level is awarded, the pay is ongoing), Longevity increases have cost the district $200,000 incremental costs yearly – ongoing budget for longevity right now is $2.8 M, and Severance has cost $2,000,000 on top of the committed about $1,600,000 yearly from the FY 2008-2009 Early Separation Agreement.  If you add these up, over the past 4 years they could have been used for over a 1% raise for all employees.  As it is, roughly 10% of employees benefitted to varying degrees.  During difficult financial times, I believe it is important that we review all significant expenditures and make sure that we are doing what is in the best interest of our students and staff.

In addition, we have absorbed year after year increases to PERA on behalf of our employees as well as increased costs in Medical Benefits for everyone.  While they are not viewed as a “raise,” these have been total compensation improvements.  I think we need to do a better job of talking about total compensation.

That said…I realize that the medical plan was dramatically changed a few years ago.  Personally, I am not a fan of the design for several reasons that I won’t get into here.  However, last year we added a PPO plan to help people who were “experiencing” the entire deductible year after year, and we are committed to continual improvement to our plans.

I have heard you loud and clear — that the deductibles are scary and that many of you are reluctant to go to the doctor for fear of being presented with a huge bill you cannot pay.  It wasn’t that long ago I was a young teacher, and I remember it very well.  Clearly economic down cycles (recessions) are not the best time to fix benefits, but we are going to do all we can with the goal of continual improvement.  Please keep in mind that having Cigna as an option (instead of just Kaiser) costs us over $3.3 M.  We believe you value flexibility and we are working hard to keep it.  Also keep in mind that many of you have significant dollar amounts sitting in your H.S.A. accounts – approaching $7 M in the aggregate for an average balance of $1,900 across about 3,600 account holders.  It seems that some people don’t feel comfortable with the plan and aren’t spending and other people do understand and are benefitting from it.  We need to find a way to make everyone as comfortable as possible while keeping a healthy medical fund and maintaining choice.

Q – I would rather see our students get what they need.  I could go another year without a raise.  Can we do that?

A- In a time of increasing revenues, we would be talking about where to spend our extra money.  That would be GREAT!  However, in a time of decreasing revenues, we can only add things for our students if we reduce in another area.  I am not advocating for one over the other — the dollars to the schools or to our employees (I know we need both).  I am simply sharing that when you have a shrinking revenue stream; reallocation is the only way to fund an increase to one particular part of the organization.  You can use one-time money but that is a temporary “fix” that depletes our savings and puts us in a less secure financial position as a district.