- The MOU (Memorandum of Understanding) extends the current teacher's contract one year and which ends June 30, 2013.
- Wages: The contract splits the last year of the 4.6% increase (2011-2012) over two years. 2.3% will paid in 2011-2012, and 2.3% will be paid in 2012-2013.
- This is expected to save us ~$650K in 2011-2012.
- We were looking at an originally salary increase of ~$1.3M in 2011-2012.
- There will be no increment/step change in 2012-2013.
- This part of the package helps us address ~$650K of the $2.1M reduction to our proposed budget for 2011-2012.
- There's a retirement incentive offer that requires a minimum number of teachers to retire effective 6/30/2011.
- Option 1: The incentive is paying for a portion of the medical benefits coverage for 3 years for those retiring on June 30,2011.
- Option 2: The incentive is paying for a portion of the medical benefits coverage for 2 years for those retiring on June 30,2012.
- There's cost savings for the BOE with this incentive in that it allows highly paid/tenured teachers nearing retirement to leave the school district sooner.
- It gives the Superintendent the flexibility of not hiring replacements for these retirements OR hiring new, lower-cost replacements for the positions OR allow existing teacher's with appropriate certifications to fill these roles.
- A determined number of positions was specified in order to make certain savings would be achieved.
- The amount of savings from this incentive has been reduced for two primary reasons. First, the BOE budget submitted to the TM already included about $150K in anticipated retirements for 2011-2012. (Note: Negotiations didn't occur until after the budget was submitted). Unfortunately, the TC double-counted this amount in their reduction to the BOE budget proposal. So the savings from this incentive has been reduced by $150K this week via the budget process.
- Second, my bias is not to refill the positions vacated by these retirees unless it's a core position for a core program. As such, if we receive (as an example) 20 retirements, I don't expect us to have 20 fewer teachers next year as some of the positions could be refilled. What that turns out to be will be determined in the next few weeks. Even with some or all of the positions refilled (hypothetically) we will still see savings.
- Basically, any teacher under regular contract with the BOE for 2010-2011 are not be subjected to layoffs in 2011-2012. Teachers working under a one-year, interim or substitute contract are excluded. Same applies for 2012-2013.
- **However, should there be a 5% or more reduction in State and/or Federal funding to the Town of Cheshire OR the BOE then BOE retains the right to a reduction in force.
- Regarding this staffing language, be aware that we will already lose about 2.5% in Federal funding for 2011-2012 due to the loss of the federal stimulus money of $540K
- Should Hartford, namely Malloy, devastate our funding for PILOT, ECS, etc. by 5% or more we can compensate (as best as we can) with layoffs should this situation occur.
Considering the $2.1M reduction to our budget proposal by the TM and TC, this concession package is the only viable option for BOE at this point in time. Arguably, I detailed the restrictions/consequences of taking drastic/unrealistic action by trying to eliminate 40 teaching positions on this blog. Without this concession package, I don't know how we could possibly find $2.1M. While I do have some concerns with this concession, I believe it's the only saving grace we have at this time.
However, I estimate that we're still short somewhere between $600-900K in 2011-2012 budget. I will have a firm number next week and details on how to make up this shortfall soon. I expect a change in program, extra-curricular and tapping into the medical trust fund. But until the BOE chimes in and the Superintendent comes back with details, this is my speculation at this point. But there will be changes.
Regarding the Medical Trust Fund. (And I will have a dedicated post on this topic soon) the balance is about $2.2M. We received the March claims data this week and claims jumped from ~$300K in Feb to ~$600K in March. It appears to be trending back up. This, in conjunction with expected HSA participant claims to be paid soon from the MTF, is beginning to drive the MTF balance lower. Based on my view of the MTF and our claim history over the last two years, I believe a safe MTF balance should be around $1.5M. We've come to close to that level last year about to $1.7M this year.
I detail the above because the MTF is NOT a reserve for the operation budget. It's not a savings account, slush fund or the like. I believe it Mr. Ecke who erroneously referred to it as a general 'reserve' during his banter Tuesday night. If the BOE/Superintendent believes we should underfund it next year (i.e. draw it down) to free up cash flow in the operating budget...this is problematic. It will have to be replenished at some point. Borrowing from one unstable liability to pay for another liability is perhaps what got this country into trouble with the mortgage bubble. It's not a fiscally responsible solution. More on this later.
I want to thank the Town Council for giving us an increase to our budget. Although it's $975K, every penny counts and I do understand what went into their decision and the fact that they are looking out for ALL taxpayers in Cheshire. I'm not happy with it, but the BOE will make this budget work one way or another.
I also want to thank Beverly Jurkewicz (union President) for her efforts during the discussions. The concession package is a tough pill for me to swallow but it does help us and shows that the teachers tried to help. I also want to specifically thank the teachers who supported and voted in favor of this this concession package. Most folks may not know this but Tim Slocum was a very positive influence during the negotiations as well. I mention this because I've read many comments criticizing the TC for not being proactive with the union.
Our work continues.