Sunday, February 7, 2010

Out Tomorrow: Teachers Must Contribute to Health Care Benefits

The Star-Ledger is reporting that tomorrow Gov. Christie will announce major pension and benefit reforms that will affect all public employees, including school teachers. The proposals include requiring all local school district employees to contribute at least 1.5% of their annual salaries to health care costs. Pensions would be calculated based on factoring in the highest five years of salary instead of the current three years to determine pension pay-outs, sick leave would be capped at $15,000, and part-time school employees would be enrolled in defined-contribution plans. In addition, the government would put up for voter approval a constitutional amendment requiring the State to fully fund its pension obligations in each year’s budget.

The NJEA had no immediate comment.

2 comments:

Neils said...

This will probably be decided in the courts, which will end up costing us even more money. If my understanding is correct, teachers have negotiated contracts that include benefits. If they have to begin contributing to their benefits, they will want increased wages to maintain their current standard of living...not to mention financial obligations made prior to this potentially unconstitutional proposal.

Bruce said...

Actually, following some of Neils' logic, this proposal is most likely to lead to property tax increases in many communities that have typically provided the greatest salary increases over time (see: http://schoolfinance101.wordpress.com/2010/01/27/new-jersey-teacher-salaries-spiraling-out-of-control/ )

As I point out in my blog post and subsequent comments, teacher wages in NJ lag behind non-teacher wages for same age and degree level (and hours per week and weeks per year) and have fallen further behind over time.

There is evidence that nationally, teacher benefits plans including pension contributions are a larger share of wages than for non-teachers. But, it's a larger share of a lower wage. There will indeed be pressure to increase wages to offset contributions.

It seems that the argument for contributions is to lessen the stress on the state pension obligation. If the difference is offset in many communities with increased wages funded with increased property taxes, this plan would simply be raising property taxes to solve the state's (multi-year, bipartisan) self-inflicted fiscal woes.

To really simplify this argument - the state is asking you to increase property taxes to pay for a share pensions.

I know - you're saying we can counter this by reinstating "last best offer." School boards can simply refuse to cave in to the wage increases. But there appears to be no real change in NJ teacher wage growth before and after the removal of last best offer. And, as I've shown, NJ teacher wages really aren't growing out of control. They are lagging!

That said, Niels is also probably right that the state cannot so easily trump all of the district negotiated agreements without a legal fight.