Wednesday, March 4, 2015

LAUSD Offer Worth $122,938 Per Year – Will They Strike Anyway? — California Political Review

LAUSD Offer Worth $122,938 Per Year – Will They Strike Anyway?

LAUSD Offer Worth $122,938 Per Year – Will They Strike Anyway?

By Ed Ring, executive director, California Policy Center

"Our demands, they're not radical. When did it become radical to have class sizes that you could actually teach in? When did it become radical to have staffing and to pay people back after eight years of nothing?"
 – Alex Caputo Pearl, President, UTLA, February 26, 2015, Los Angeles Times

If the 35,000 members of the United Teachers Los Angeles, the union that represents employees of Los Angeles Unified School District, actually go on strike, in large part it will be because they want an 8.5% salary increase and the district is only offering them 5%. They also want smaller class sizes – tough to do when you're passing out salary increases. But how much do these teachers actually make?

If you review the most authoritative source of public information on LAUSD salaries, the California state controller's public pay website you will get the impression they aren't making much. The summary page for LAUSD shows "average wages" of $40,506 per year and employer paid "average retirement and health" benefits at $10,867 per year.

This is extremely misleading. These "averages" include part-time workers such as student teachers and substitute teachers. But the "Raw Export" tab of the state controller's website yields more comprehensive information.

If you eliminate part-time workers and eliminate workers who were hired or left employment mid-year – based on screening out of the data any individual record where the recorded "base pay" is 10% or more less than the stated "minimum pay for position" for that record – a very different compensation profile emerges. In reality, teachers who worked full-time during 2013 for the LA Unified School District made direct pay that averaged $72,781, and they collected employer paid benefits averaging $17,012, meaning their total pay and benefits package was $89,793. And they collected this in return for working between 163 and 180 days per year (ref. UTLA/LAUSD Labor Agreement, page 30).

Properly estimating how much LAUSD teachers make, however, requires at least two important additional calculations, (1) normalizing their pay to take into account their extraordinary quantity of vacation time, and (2) taking into account the state of California's direct payments into CalSTRS as well as the necessity to increase CalSTRS contributions in order to pay down their unfunded liability.

Normalizing for vacation time is easy. Using the larger number referenced in their labor agreement, 180 days per year of work, based on 260 weekdays per year, means LAUSD teachers work 36 weeks a year and get 16 weeks off. The typical private sector worker rarely gets more than four weeks off, two weeks of vacation and two weeks of paid holidays. While many professionals earn more than two weeks of vacation, they are also required to be perpetually on call and often work far more than 40 hour weeks. Many entry level or low income workers don't get paid for any holidays or vacation. It is reasonable to assume the typical teacher works 12 weeks less per year than the average private sector worker. This translates into a $24,260 value on top of the average LAUSD teacher's direct pay of $72,781 per year.

"Eight years of nothing." Really, Mr. Caputo Pearl?

Normalizing for the value of pensions is not easy, but using similarly conservative assumptions we can develop reasonable estimates. For starters, from the CalSTRS website, here's what the state contributes:

"The state contributes a percentage of the annual earnings of all members to the Defined Benefit Program. Under the new funding plan, the state's contribution is increasing over the next three years from 3.041 percent in 2013–14 to 6.328 percent beginning July 1, 2016. The state also contributes an amount equal to about 2.5 percent of annual member earnings into the CalSTRS Supplemental Benefit Maintenance Account. The SBMA account is used to maintain the purchasing power of benefits."

Sticking with current contributions – 3.041 percent plus 2.5 percent, based on "member earnings" referring to "direct pay," that adds another $4,033 to the average earnings of an LAUSD teacher.

In summary, LAUSD teachers are threatening to strike because they only make – using real world equivalents – $97,041 in direct pay, plus $21,045 in employer paid benefits. The average full-time LAUSD teacher earns total compensation worth $118,086 per year. Throw onto direct pay the 5% offer from the district, worth another $4,852 per year, and you have a total average teacher compensation proposed to go up to $122,938 per year.

Any critic of this analysis who happens to be an LAUSD teacher is invited to work 48 weeks a year instead of 36 weeks a year, or, of course, give up their pension benefit. Otherwise, these are the numbers. To verify them, download this spreadsheet analysis which uses payroll and benefit data provided by LAUSD to the California State Controller's office:  LAUSD_2013_Compensation-Analysis.xlsx (10.0 MB).

No reasonable person should fail to sympathize with the challenges facing teachers in Los Angeles public schools. But the solution is not higher pay. The solution is to purge the system of bad teachers, reward excellent teachers, give principals more autonomy, stop promoting and retaining teachers based on seniority, measure teacher effectiveness based on the academic success of their pupils, and, gasp, improve the ratio of teachers to support staff. As it is, during 2013 LAUSD spent $2.6 billion on full-time and part-time teachers, and $2.1 billion on full-time and part-time other staff. Do they really need to spend 45 percent of their payroll outside the classroom? The solution is also to lower the cost of living for everyone, through supporting government policies that encourage competitive development of land and resources.

Finally, this estimate of the value of average total compensation for LAUSD full time teachers is still dramatically understated, because CalSTRS remains wallowed in an underfunded position that is officially recognized at $73.7 billion.

To the extent the leadership of the UTLA and their membership subscribe to "left wing" political sentiments, remember this:

There are currently $4.0 trillion of state/local U.S. government worker pension fund assets overseen by managers who rampage about the entire planet demanding annual yields north of 7.0 percent per year. This is a financial maelstrom of cataclysmic proportions that is corrupting the entire global economy. It is an act of wanton aggression against honest capitalists and private households attempting to save for retirement. Ongoing annual returns of this size require asset bubbles which require risky investments and cheap credit – antithetical to sustainable economic growth.

Remember this as you fight to enhance your compensation and defend your pensions as they are – you have exempted yourself from economic reality and are recklessly gambling with the future of the people you supposedly serve. Through your pension funds, you are benefiting from capitalism in its most aggressive and parasitic form.

Remember all this when you go on strike because you've had "eight years of nothing."

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Ed Ring is the executive director of the California Policy Center.



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