STUMP » Articles » Happy Teachers Appreciation Week: Teachers in Spokane Learn about Trade-offs » 6 May 2019, 05:51

I am told by google and several of my friends on facebook that this is Teacher Appreciation week. So I’m going to focus on teachers this week for my non-Taxing Tuesday posts.

Before I do my usual stuff, I’m going to plug Donors Choose, which is a targeted charity for teachers. Looking at my history of projects I’ve donated to 13 projects, and which have ranged from buying a bunch of Dr. Seuss books for an elementary school classroom, multiple copies of the same book for a cousin’s classroom so her students could take home a copy, materials needed for a special needs classroom to help with communication skills, and more. The most recent project I donated to was buying math toys for a high poverty classroom out in Montana. Heck, one was buying snacks and juice for one classroom for afterschool activities.

Some of these are the types of projects parents fund in wealthy school districts like mine, and even sometimes teachers dig into their own pockets. I figure my kids’ schools have a lot (of my tax money), so I focus on high poverty classrooms and special needs-related classrooms.

I can’t provide the complete list of projects I’ve donated to, as evidently the site is really busy today (yay!). Google is providing a 50% boost for donations today (Monday May 6, 2019), so boogie on over there and pick something. Many of the projects are of modest total cost, at least the ones I’ve donated to, and have very concrete goals.

I come from a huge family of teachers from both sides of my family. I have cousins, aunts, and even my grandma was a teacher. I’ve taught, too, but I’ve primarily stuck to adults. Unsurprisingly, I’ve stuck to teaching math and math-adjacent items.

I have a lot of sympathy for teachers. So the following is not intended to be mean.

Much.

My main thrust on the blog is public finance, and for all people like to natter about the school-to-prison pipeline, yadda yadda, a huge portion of public funds are spent on public education. So I have some public finance knowledge for the teachers: there is no magic money tree.

TOTALLY FORESEEN CONSEQUENCES SUPPOSEDLY UNFORESEEN

I’m jumping off from this news item:

Pay raises should have been a huge win for Spokane teachers. Instead, it backfired

There was a buzz among the teachers as they filed into the Shadle Park High School gym last August. They were told a deal with district officials had finally been reached.

They crammed into the bleachers, ready to vote on a new contract that would give most teachers and staff members double-digit pay raises. In the hours before the meeting, they flipped through packets in coffeeshops, scrambling to understand the deal. They wore red, signaling their solidarity with the rest of the teachers union. And when Spokane Education Association President Katy Henry announced the final tally — 95 percent voted “yes” — more than 1,500 educators erupted with cheers.

“The tone of all the communications that came out was that it’s a success and everyone is happy,” says Stephanie Oakes, a school librarian who was there that day.

But already, the writing was on the wall for widespread layoffs affecting hundreds of teachers in Spokane Public Schools. The school district had to dig deep into its budget to pay for the raises. The night before the teachers’ contract was ratified, the district projected a $12.6 million budget shortfall for the upcoming school year. The outlook for the following school year was even more grim.

Okay, readers. I’m going to stop right there. What do you think the next step was going to be?

Was it:

- A magical money fairy dropped the needed $$ on the school districts
- The school district increased taxes in Spokane
- The budget got cut, most notably by cutting staffing

Before we get to the totally foreseeable answer, let’s take a look at Spokane taxes.

PROPERTY TAX IN SPOKANE

The following web page has tax rates by county, and before I get to the tax levels, I want to point out an innumeracy issue:

Spokane County

Eastern Washington’s Spokane County has property tax rates close to the state average. The county’s average effective tax rate is 1.20%, slightly higher than the state average of 1.06% but below the national average of 1.19%.

In the city of Spokane, the total 2015 levy rate was around $14.5 per $1,000 of assessed value. That means that the taxes on a city with an assessed value of $100,000 would be about $1,450 annually.

There are several things wrong with the above text.

First, the most obvious: the average effective tax rate of 1.20% is not below the national average of 1.19%.

So if you were wondering: yes, that text is wrong. [Maybe a human wrote it and screwed up their copy/pasting, but I would assume for this sort of project, you’d write some code. Maybe I’m wrong in that.]

Second, 1.20% as a tax rate is not slightly higher than the state average of 1.06%.

Now, you may be thinking: it’s only 0.14% different! (That’s 14 bps to us finance folks)

That’s true. But how much higher would your taxes be if you paid a 1.20% rate vs. a 1.06% rate?

That’s 1.20%/1.06% – 1 = 13% higher. Now, you may think a 13% difference is slight. I don’t. If I got a 13% raise, for example, I’d be very pleased. Likewise, if my taxes went up 13%, I’d be quite unhappy.

Third — that first paragraphs talks about percentages, doesn’t it. What about that second paragraph? Why doesn’t it mention percentages?

Because the percentage, if the basis of all the percentages is assessed value, is 1.45%. And 1.45% is a lot higher than the state average, the county average, and the national average.

Back to the page:

How the Property Tax works in Washington State

In Washington State, taxes on real estate account for about 30% of all state and local tax revenues. Property taxes pay for local services like fire protection, public schools and parks.
….
Increases in a given taxing district’s levy are limited to 1% per year or the rate of inflation, whichever is lower. Thus, if a county’s budget this year is $3,000, next year it cannot be more than $3,030. That limit does not apply to new levies, or in other special cases like annexation or new construction.

So, I’m going to seek a second source to see if this is really true. A 1% growth rate cap on county revenues seems… very restrictive.

So if $12.6 million were to be made up in a 1% increase, that would mean you had a full district budget of $1.26 billion and increased taxes could make up for it.

Looks like their revenues was about $450 million. So they wouldn’t be able to increase tax levels, if that 1% hike per year cap were imposed.

MAGIC MONEY TREE HAS A VERY SHORT LIFE

There was something like a magic money tree part of this story. Let’s return to the piece:

or the better part of this decade, discussions about school funding have been dominated by the McCleary case, a major lawsuit in which the state Supreme Court held the Legislature responsible for underfunding schools. In particular, the case highlighted how a lack of state money forced districts to rely on local taxes, or levies, to pay teachers.

The case was put to an end last year, after the state Legislature pumped billions of dollars into education over the course of the previous two sessions. At the same time, however, the state put a cap on the amount of money a district could raise through those local levies.

What that meant was that all of the sudden, school districts had an influx of new money, at least temporarily. Under the new funding formula, Spokane had $45 million in increased funding in 2018-19 compared to its budget two years before. And that’s after accounting for the loss of $21 million in local levy dollars.

So, if you got a temporary influx of cash, and you knew it was temporary, what is the most prudent thing to do?

I’m not going to do the snarky “pick the obvious answer” thing here, and just give you an answer: you would not increase your base operating costs, which have to be maintained year-after-year.

The most appropriate things to do would be use it for capital improvements, which can be enjoyed over decades, retire some debt (which will allow for future financial flexibility), or something else where you don’t need the money to keep coming in continuously every year.

Teachers unions, who argued teacher raises were long overdue, said the new money from the state in 2018 was earmarked for teacher salaries. The Spokane Education Association was seeking $28 million toward teacher salaries. Some districts pushed back on that. The State Office of the Superintendent, meanwhile, didn’t provide much clarity. What the agency did say is that districts should be limited “by what you can afford and what you can sustain.”

In other words, it’s your choice to make, knowing that choices will have consequences.

That advice wouldn’t stick, however.

As teacher unions across the state held strikes for higher pay, school districts negotiated pay raises for educators often in the double digits. Spokane teachers saw an average 13.3 percent pay bump; Mead teachers a 15 percent bump. It was a win for teachers — or at least ones experienced enough not to lose their jobs.

Remember how I said 13% wasn’t slight? I think the Spokane teachers thought that 13% raise was very welcome.

Right up to the point where 300+ of them got laid off.

TRADE-OFFS ARE EVERYWHERE

So let us see how the raises were imposed… and who got fired.

In Spokane, the raises were generally larger for teachers with the most experience. First-year teachers with a master’s degree might not get a raise at all. “Thanks to [Spokane Education Association] for making me feel less valued than my other colleagues,” one teacher wrote under a Facebook post by SEA celebrating the raises.

Oakes, too, felt left out. She was happy for everyone who did get a raise, but says, “As someone who did not benefit, it didn’t sit quite right for me.”

Meanwhile, Spokane Public Schools was projecting a budget shortfall. All that extra money from the state? Gone. The district devoted roughly $30 million more to salaries for certificated and classified staff in 2018-19 compared to the prior year. The budget was in the red. And the outlook was even worse for the 2019-20 school year, when revenue from local levies would drop even more and the district projected a $31 million shortfall. Spokane, for instance, projected $6 million less in General Fund revenue in 2019-20 compared to this year because of the loss of local dollars.

Layoffs, then, seemed inevitable.

And yet Katy Henry, Spokane Education Association president, says she was blindsided when the layoffs were announced this spring.

“When we bargained, we did not anticipate that this might happen,” Henry says.

When asked if she was concerned with the budget deficit following negotiations, Henry says she wasn’t because the school district has “healthy reserves.” The union simply bargained for the money the state gave districts for salaries, she says. If they didn’t bargain for that money, her members would be questioning her.

Okay, teachers, you are not doing yourself any favors by voting for somebody this ignorant.

“Reserves” are not an ongoing source of funds. They are a pool of assets intended to cover unexpected expenses, to tide things over. If you exhaust them in one year, they don’t magically come back the next year.

I am pretending that Katy Henry is being thoroughly truthful here, mainly because I’ve heard this from all sorts of public employee unions, not just teacher unions. They really don’t understand money. Or finance.

Or they think that magical money tree keeps sprouting every year, except that magical money trees, when they do appear, have extremely short lives.

Because they don’t exist. That “windfall” was a political settlement that was never going to last very long.

PUBLIC EMPLOYEE UNIONS FAVOR THE SENIOR

I could get all philosophic about why teachers supposedly get blindsided by this sort of stuff. For one, school is a very artificial environment, where (theoretically at least) everybody can earn top marks by satisfying well-defined criteria. If you satisfy requirements, you get a gold star, and everybody is happy. Do what you’re supposed to, and you’re rewarded.

That’s not how most of the world works. That said, it’s not a bad way to teach very small children.

The teachers could be doing everything they’re supposed to do, and “deserve” a raise and a good job and appreciation and…

via GIPHY

Well, life happens. There are constraints in terms of money, time, and more. There are trade-offs in all these, and one of the trade-offs public school teachers make is that, in general, the low seniority people are the ones who will get traded off if the constraints start to pinch, no matter what they deserve.

I’m going to jump back to the top of the piece, which answers my original question.

It’s why Spokane Public Schools announced last month that a total of 325 staff members — those with the least seniority — will be laid off due to the budget deficit. More were placed on “involuntary transfer” to a new job within the district. Oakes, a part-time employee who’s been with the district for six years, is one of those placed on involuntary transfer. After what she’d heard back in August, she was thrown off when the layoffs were announced.

“I had no idea anything like this was in the works,” she says.

The layoffs have surprised some teachers, but school districts largely saw this coming. Similar projected layoffs have occurred to varying degrees in districts across the state. Even though the Washington State Legislature has added billions of dollars in recent years to fund schools — and even though this week they passed a law allowing more flexibility for districts to raise money locally — it likely won’t be enough to prevent layoffs for many local teachers and staff members in Spokane and other schools.

So why are school districts cutting teachers? Some state lawmakers argue it’s the fault of school districts and teachers unions for knowingly negotiating salaries that put districts over budget. But school districts and teachers unions say lawmakers caused this mess by cutting local funding.

In a way, both are right.

So, as I said earlier, there is a growth cap on that local funding via taxes. Towards the end of the piece, we get this:

State lawmakers like Billig, meanwhile, made some of their own decisions just before the end of the legislative session this year. Importantly, they raised the levy limit so that school districts can use local dollars to pay for nurses, mental health counselors or other programs voters want — as long as they don’t pay for teacher salaries.

That should provide some relief to local school districts. They can now collect $2.50 per $1,000 dollars of assessed property value, up from the previous cap of $1.50 per $1,000.

But don’t expect districts to recall the layoffs they recently announced. Spokane Public Schools spokesman Brian Coddington says it’s “conceivable” there could be some recall of the layoffs, but it’s likely the majority of the layoffs will stand. In order to raise the levy, the district will need voter approval. If the district decides to seek it, that would likely be a vote in the fall, and the money wouldn’t come until the following school year.

Hmm, 2.5% property tax?

Compared to a current 1.5% tax cap? A 66% increase in property taxes?!

I decided to check out my earlier source for NY property taxes, and specifically in Westchester County. The average effective tax there is, evidently, 1.97%. You think you can raise property taxes in eastern Washington state to levels beyond Westchester County in NY?

I really don’t see that happening.

What about other Washington school districts, far away from the big “rich” city of Seattle?

West Valley and East Valley, however, aren’t dealing with the same kind of layoffs as Spokane. West Valley is only laying a few teachers off, and they’re losing other positions through attrition. East Valley reportedly isn’t laying teachers off at all.

Those Valley districts also didn’t negotiate as high of salary increases as last year.

“When we negotiated last summer, our teachers association worked very closely with us and understood that we had a perfect storm … that we were going to take a huge hit,” Sementi says. “We were able to get a contract that was a little more equitable based on lack of funding.”

See, it’s all about trade-offs. Even union negotiators know that.

This one is a fairly clean issue to see, because current year costs of teacher salaries can be easily accounted for.

There have been lots of teacher strikes and semi-strikes around the country surrounding wanting higher pay, and the results may differ, based on whether the taxpayer pool is increasing (and thriving), the number of students increasing, or other factors. In some of the places, where there is the most contention, the number of students is decreasing and the tax base is not necessarily doing well.

So, this is my set up to look at teacher pensions during the rest of this week. Because that’s where the real pain resides.

Current teachers may get laid off not only due to higher costs of more senior teachers… they may find themselves getting laid off (or suffering other financial constraints) due to retired teachers.

But that is for another day.