Brewster Central School District
Budget 101 Workshop: Salaries & Benefits
December 12, 2018
Questions & Answers
Q1: Do the “step” increases range from 1.0 -6.7% in every year?
A1 (Victor Karlsson, Asst Supt for Finance & Operations): It depends on the employee’s position and how many years of service he/she has (ie: where he/she falls on the salary schedule), so it can vary. In a given year, there may not be any employees on the step which is valued at 6.7%, or there may be several.
Q2: What is the difference between a “step” increase and a “schedule” increase?
A2 (Victor Karlsson, Asst Supt for Finance & Operations): A step increase is an incremental increase in salary based upon years of service, while a schedule increase is an annual increase applied to the salary schedule as a whole.
Q3: What are “tiers” within the New York State Pension Systems?
A3 (Victor Karlsson, Asst Supt for Finance & Operations): Tiers are levels of retirement provisions based on an employee’s initial date of membership in the system. The pension systems (and not the District) determine the retirement benefits afforded to its members. Generally, employees with membership dates in the retirement system on/after January 1, 2010 have a longer vesting period, higher employee contributions amounts, and reduced retirement benefits.
Q4: In the example provided, an employee on top step only receives the schedule increase. Why are there two increases in salary (step plus schedule)? Is it market-based that drives the schedule increase? Is there schedule increase every year?
A4 (Victor Karlsson, Asst Supt for Finance & Operations): The example shows a “traditional” contract settlement, which was common before the “Tax Cap”. It typically resulted in a percentage increase being applied to the salary schedule as a whole, while the step increases were previously established many years ago through past collective bargaining negotiations. Since the implementation of the “Tax Cap”, negotiations have not followed a traditional schedule increase technique as shown in the example. The actual settlements for each of the District’s bargaining units are covered over the next several slides.
Q5: What would happen if the salary schedule goes lower?
A5 (Victor Karlsson, Asst Supt for Finance & Operations): The salary schedules (in terms of steps) have existed for many years. Collective bargaining agreements typically last three to five years, and the District and the bargaining unit are bound to the schedule increases for the duration of the contract until it is negotiated again. The amount of the schedule increase is based on market conditions of what other school districts are paying their employees. In order for there to be a decrease in the schedule, the bargaining unit would have to agree to it.
Q6: Do these salary schedules apply to all New York State employees?
A6 (Victor Karlsson, Asst Supt for Finance & Operations): No, each local government and their associated bargaining units negotiate their own local contracts and salary schedules. For example, Brewster’s contracts are different from Carmel’s, and different from Mahopac’s, etc.
Q6: Why can’t these be renegotiated, in light of the fact that there are some step increases which are as high as 6.7%?
A6 (Michael Skerritt, Director of Human Resources, PNW BOCES): Part of the role of the Putnam-Northern Westchester BOCES is to gather collective bargaining contract data from its component districts. This information is then shared with the other districts in order to identify the market for future negotiations. In New York State, there is something known as the “Taylor Law” which protects the provisions of an expired contract (ie: the salary schedule) during the negotiations of a new contract. It was enacted to incentivize both sides of the table to continue constructive dialogue in hopes of establishing a new agreement.
Unlike private industry, local governments in New York State cannot unilaterally reduce salaries and benefits from year-to-year. If both sides of a negotiation are unable to reach an agreement before the expiration of the current contract, the “Triborough Amendment” to the “Taylor Law” requires that the provisions of the expired contract remain in effect until a new contract is negotiated. In other words, the salary schedules remain intact unless the schedules are negotiated to change by both parties.
Q7: Steps are awarded based on years of service. There were years in which the bargaining units agreed to 0% schedule increases. During those years, the members on top step would receive no raise at all, and only those members who were eligible to advance a step would receive an increase, is that correct?
A7 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, and we will see that as we review each bargaining unit’s current contract provisions over the next several slides. The majority of our employees are on top step, and therefore, they are only eligible to receive the schedule increase. They have reached the ceiling and are no longer eligible for a step increase.
Q8: How many steps are included in each schedule across the different collective bargaining units?
A8 (Victor Karlsson, Asst Supt for Finance & Operations): Each bargaining unit’s salary schedule is different:
- SEIU: 7 steps
- Clerical (members hired before 7/1/17): 13-16 steps
- Clerical (members hired on/after 7/1/17): 24 steps
- BTA (members hired before 5/24/16): 21-24 steps
- BTA (members hired on/after 5/24/16): 30 steps
- AAB: no steps
- Non-Union: no steps
Q9: Since a large number of teachers are on top step, is a retirement incentive being considered?
A9 (Victor Karlsson, Asst Supt for Finance & Operations): We have not yet discussed a retirement incentive for this year.
A9 (Valerie Henning-Piedmonte, Superintendent): Each year, there are between eight and 12 teacher retirements. Retirement is something very personal and there are a number of variables that go into each person’s decision whether or not to retire and it requires a lot of planning. Their decisions are based on the same things as anyone’s, such as whether they have children in college, whether their mortgage is paid off, or any other number of variables.
Q10: Are the increases based on performance, or are they just across the board increases?
A10 (Victor Karlsson, Asst Supt for Finance & Operations): The increases provided in the collective bargaining agreements apply universally to all members of those units. The BTA contract runs through June 30, 2020, while the Clerical, SEIU, and AAB contracts run through June 30, 2021.
Q11: Are the pension systems defined benefit plans? Is a change to a defined contribution plan being considered in the future?
A11 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, the ERS & TRS pension systems are both defined benefit plans. The New York State Comptroller’s Office maintains authority over the plans, so New York State would have to legislate a change to a defined contribution plan. In 2010, the State did make changes to the systems for new members generally hired on/after January 1, 2010 that call for extended vesting periods, higher employee contribution rates, longer service careers, and reduced retirement benefits.
Q12: Why has the average ERS contribution rate increased so much more so than the TRS contribution rate?
A12 (Victor Karlsson, Asst Supt for Finance & Operations): It depends on how the two systems were managed by New York State. There are a number of different variables that affect the contribution rates, such as investment portfolio performance, life expectancy of the membership, and pension benefits owed to retirees.
Q13: Are the contribution amounts different for each school district?
A13 (Victor Karlsson, Asst Supt for Finance & Operations): New York State determines the contribution rates for the ERS & TRS, which apply universally to all local governments throughout the state.
Q14: How are the funds in the systems invested?
A14 (Victor Karlsson, Asst Supt for Finance & Operations): The New York State Comptroller’s Office manages the plans, so that information can be found on the State’s website.
Q15: For years in which the TRS rate goes down and the District is able to reduce the TRS expenditure budget, can the District set aside the savings for use in future years?
A15 (Victor Karlsson, Asst Supt for Finance & Operations): Currently, New York State Law does not allow school districts to establish a TRS reserve. For the past decade, legislators have been attempting to create a TRS reserve, but it seems to be defeated each year by one of the two chambers of the State Legislature or by veto of the Governor. New York State Law does, however, allow for the establishment of an ERS reserve to protect the District from future ERS volatility.
Q16: Since a reserve does not exist, could we instead save the difference for use in a future year?
A16 (Victor Karlsson, Asst Supt for Finance & Operations): For years in which the TRS decreases, we would reduce our TRS expenditure budget and reallocate those funds to other areas of the budget.
Q17: For years in which budget reductions are required, how is it determined which programs get cut?
A17 (Victor Karlsson, Asst Supt for Finance & Operations): It is a discussion between the Superintendent and the Board of Education, which takes place from February through April in the development of the subsequent year’s budget.
Q18: Are there any programs which are absolutely forbidden from being cut?
A18 (Victor Karlsson, Asst Supt for Finance & Operations): Mandated services are forbidden from being cut.
A18 (Valerie Henning-Piedmonte, Superintendent): Special Education and English as a New Language (ENL) services are mandated services.
Q19: Does retiree health insurance coverage remain in effect until the retiree reaches Medicare eligibility?
A19 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, and beyond. Medicare becomes the primary insurance provider, and the District’s coverage becomes the secondary provider.
Q20: What is the average retirement age?
A20 (Victor Karlsson, Asst Supt for Finance & Operations): Eligibility for retirement is defined by the ERS & TRS pension systems. For employees hired on/before January 1, 2010, the service requirement is 30 years and the age requirement is 55 years. However, it is rare that employees retire at age 55 and typically delay their retirement until they become eligible for social security benefits, between ages 62-67.
Q21: Can the retirement benefits of retired non-union employees be changed?
A21 (Victor Karlsson, Asst Supt for Finance & Operations): No, the provisions of the contracts that were in effect on the date of their retirement survives in perpetuity.
Q22: Can future contracts with new non-union employees include provisions for a longer service time in order to qualify for retiree health insurance coverage?
A22 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, and that would be a negotiation between the new non-union employee and the Board of Education. A22 (Valerie Henning-Piedmonte, Superintendent): PNW BOCES collects data on contracts throughout the region which is used to formulate future contracts that are competitive with the demands of the market. We would need to be careful not to offer or require something that is inconsistent with other Districts in the region.
A22 (Michael Skerritt, Director of Human Resources, PNW BOCES): It is a competitive marketplace. So while it may be great for a district to boast that ‘we pay the lowest salaries and require the highest employee health insurance contributions’, a district may find it difficult to attract new employees. And keep in mind that you are competing against all of the other districts in your region to attract new employees.
Q23: When the budget is being developed for the next year, is the information available with regard to the employee step and schedule increases?
A23 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, provided all contracts are settled at the time of budget development. In the event that a contract is not settled at the time of budget development, the anticipated cost of the settlement must be estimated. Fortunately, all contracts are settled as we enter the 2019-20 fiscal year.
Q24: Since the next Budget 101 Workshop (Equipment, Contractual, Supplies, and BOCES Services) contains budget items that are more controllable, how will it be presented?
A24 (Victor Karlsson, Asst Supt for Finance & Operations): Each of the Principals/Directors will present their departmental or building-level budget to provide a greater level of detail of their department’s needs.
