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Andy Wells on Catawba Communities

Building Demolition Cost Reduction on “Catawba Communities”

When You Are In A Hole

The problem with today’s political debates is they’re loud, clanky, and breed confusion rather than spreading light.

Lately, I’ve been hearing a lot from the NCAE (the teacher’s union) about how wrong it is to only pay teachers, on average, $41,000 a year. So, I looked into the numbers and, well, like a lot of numbers in political debates they don’t quite tell the whole story.

Teacher salaries are $41,000 a year on average. But, in addition, like other state employees, teachers also receive benefits (like health insurance and retirement benefits) – which my friends in small business would consider generous.

Let’s look at health care benefits: A teacher receives the standard state government health insurance package, which is a deluxe package, for free. In addition, if he or she chooses, they may upgrade to an even better package by paying 5% of the total premium out of pocket.

Not long ago, a teacher wrote me, taking me “to task” for saying the state pays for her health insurance as part of her total compensation. She made it very clear she was paying for her own insurance and the money is deducted from her paycheck. In fact, it appears she’d chosen to pay for the upgrade and believed the 5% that came out of her paycheck covered the whole cost of her health insurance. She’d simply missed the fact the state was paying around $5,000 per year for her health insurance in addition to the $250 she was paying for the upgrade.

The story doesn’t end there: The State has also promised to pay nearly $30 billion in health insurance benefits for teachers and state employees after they retire. Here’s how these benefits work: After teaching for twenty years and after age 50, a teacher is eligible to stop teaching and to continue to receive his or her state health insurance (paid for by the state) for the rest of his or her life. That’s called a ‘health care’ retirement benefit. Except unlike most retirement benefits it doesn’t start at age sixty-five – a teacher can claim this benefit when he or she is fifty,  fifty-five, or sixty years old.

Right now, North Carolina spends $1.35 billion a year to provide health insurance to public school teachers. Of that, one third ($450 million) goes to pay for health insurance for teachers who are no longer teaching. Even teachers who are on Medicare continue to receive a state healthcare benefit as a supplement.

The NCAE’s reaction to all this has been to say we should be ‘talking salaries, not benefit packages.’ But paying $450 million in benefits to folks who don’t teach is a pretty big number. If the legislature had $450 million to spend to give teachers pay raises, it would be an average raise of $4,500 per teacher.

It would be simple to say, Well, let’s just do that. Let’s just pay health insurance for teachers who are teaching. And use the $450 million to fund pay raises. But we can’t because the state has made a commitment to pay that $30 billion in health care retirement benefits. We can’t just say, Well, yes, we did make that promise – but that was then and this is now.

The hard truth is the state’s on the hook for a $30 billion debt and that $450 million is just this year’s payment on it.

Here’s my point: Instead of a system that pays teachers who are teaching more, we have a system that provides benefits to teachers who don’t teach. That’s another big flaw in how North Carolina pays teachers that needs to be fixed.

If it walks like a duck…

NCAE-duckpost

It seems I offended some folks when I recently referred to the NCEA as a union. After checking with Merriam-Webster.com, it appears the correct term should be “labor union – an organization of workers formed for the purpose of advancing its members’ interests in respect to wages, benefits, and working conditions.” While words do matter and “labor union”, appears to be more accurate, I hope the shorter version is acceptable.

Since the passage of the NC Budget, we have heard much about teacher salaries as if that was the only component of employee compensation. But there is a missing piece here.

The NCAE says teachers’ salaries average $41,000. But they intentionally skewed the number downward by leaving out health insurance, pension fund benefits and social security payments – all of which North Carolina provides our teachers.

Add in those benefits – complete the picture – and teacher pay (average) rises dramatically to over $55,000.

The NCAE knew this because it lobbied for all those benefits. On its website it states, “The maintenance of a viable health insurance plan and a fully funded retirement system are vital to recruiting and retaining a stable, vibrant workforce for North Carolina’s PreK-12 public schools.“

Not many of our friends in the private sector are offered pension benefits that allow them to retire after 30 years, regardless of age. That’s a fact about teacher’s compensation the NCAE never mentions when blasting Republicans.

It’s time we get beyond the political finger-pointing and posturing and determine what is fair compensation for teachers.

The salaries we pay our teachers must be competitive with the four states that surround us. I’ve been lambasted from six directions for voting for the budget but I’ve been amazed by the critics’ lack of actual, reliable data. As an engineer, I like numbers. I realize every state funds education differently. There are salaries, current benefits and even unfunded future benefits – that the state has promised and will have to pay down the road.

For instance, North Carolina has promised to pay teachers $33.3 billion in future benefits (for retirement and health care). But it hasn’t set aside a penny to meet those obligations. That’s an unfunded liability. That’s bigger than the entire state budget.

All that said, teachers’ pay is measureable and it’s not a huge task to find an economist to do a well-documented study to measure how well we pay our teachers compared to our four neighboring states.

Focusing on our neighboring states may sound a little provincial, but they are our most direct competitors, not just in education but also in jobs and economic development. Once we determine how we are doing compared to our neighbors, if needed we can look further afield. But, right now, I’d be happy to have clear, unbiased, unpoliticized numbers to see how we’re doing compared to South Carolina, Virginia, Georgia and Tennessee.

Passing the Buck

It’s not surprising the NC Association of Educators (which acts as a teacher’s union) would like to collect as much money as it can in dues. As a businessman, I understand that.

But based on the emails I’ve been receiving from teachers about pay raises, and an article just published in the Hickory Daily Record, the union also has a fundamental conflict of interest: It represents both teachers and school administrators.

Whoever heard of a union that was clever enough to represent both management and labor – at the same time?

Consider the article in the Hickory Daily Record. It reports teachers in Catawba County earn an average of $43,000 (not including benefits like healthcare and pension). The Record also listed the top administrators’ salaries – and all were earning over $100,000.

How is that a conflict?

The NCAE naturally wants teachers to be paid more – and one productive way to do that is to reduce administrative costs. But, of course, the NCAE can’t support that kind of reform because some of its members are administrators. The NCAE is caught straddling the fence. That’s the conflict of interest.

The NCAE’s solution? It passes the buck – it says, Let’s not cut anyone. Let’s give everyone a raise. Of course, that works out fine for the NCAE. But what about taxpayers?