November 19, 2009
UEA Speaks to Three Bills of Concern in Education Interim Committee
by Kory Holdaway, UEA Director of Government Relations
The final Education Interim Committee meeting was held on November 18 and, as usual, the agenda was full of issues that we will be dealing with during the coming session. Specifically there were three bills that UEA spoke to during the committee:
“School Property Tax Equalization Amendments.” This bill, sponsored by Sen. Stephenson, deals with the distribution of property tax revenue that goes to schools for counties of the first class. It requires any school district that receives property tax from other districts within the county to increase the utilization of their buildings by creating a new schedule from the current two-semester schedule to a three-semester schedule. This would be limited to a single cone or high school and its feeder schools to begin with and then expanded out as the schedules were worked out.
Concerns were expressed by the UEA about the current status in Jordan School District where many of the schools are already on a year-round schedule. We did express interest in the option for educators to be able to teach year round thus increasing their salary for the additional time taught. There were also concerns expressed related to the management of a system where students on- and off-track would be sharing the building for different functions. There was a motion to pass the bill out of committee to be considered during the upcoming legislative session. The motion passed the Senate but failed with the House members of the committee. The bill likely will be brought back during the coming legislative session for additional debate.
“Amendments to Education Financing.” This bill, brought up by Rep. Newbold, affects the various property tax levies that local school districts are able to impose. It would consolidate the current twelve different levies that a local school district can impose into six. It sets the maximum tax rates for the different levies and requires the funding for adjustments for the levies set to come from the weighted pupil unit (WPU). Generally, funding for the WPU comes from the individual and corporate income tax. It was shared with the committee that over time the funding for education has relied more and more on income tax and less and less on property tax. Property tax is a more stable revenue stream than income tax, but over time, the share of property tax has gone from 20.8 percent in 1986 to 9.3 percent in 2009. Rep. Newbold’s bill would further reduce the property tax share causing a major concern with regard to funding stability. The bill was not voted on because of these concerns. The UEA Legislative Team will continue to meet with the bill sponsor to make the necessary points to minimize the effects.
“School District Employees-Career Status Requirements.” This bill, sponsored by Rep. Menlove, is a very short bill yet makes a significant policy change by allowing the number of years a new hire is placed on provisional status to be extended from the current three years to five years. The bill is supported by the Utah School Superintendents Association and Utah School Boards Association. The provisional status allows an administrator to fire a teacher at will with no cause necessary. There are no due process requirements for provisional teachers. As an association, we argued the points related to the increased costs for those additional years of provisional status, monetary costs as well as costs to students in the event that a teacher needs to be redirected to a different profession. It was our position that if a principal was doing their job they should know by the third year if a teacher was going to be successful. The bill would leave it up to each district school board to determine if they want to move to a five-year provisional status. We did bring up the fact this may be an issue that would become part of the negotiations for each district. The bill passed out of both the House and the Senate committees and will now go forward in the 2010 General Session where it will be heard again.
November 11, 2009
Legislative report shows association leave benefits school districts
By Kim Campbell, president, Utah Education Association
Today a report on Association Leave in Utah’s School Districts was released by the Office of the Utah Legislative Auditor General. The audit report provides strong support for our assertion that association leave is a benefit to both educators and the school districts. It includes examples of benefits provided to school districts by having teachers released from their teaching duties to represent educators on a variety of district matters.
The report also points out a few minor management and record keeping issues in current practices. Recommendations to correct these include:
- Districts should account for association presidents’ time (in districts that fund a portion of the president’s time),
- There should be written guidelines for prescribing which activities benefit the district and which do not, and
- Districts should implement controls to ensure teachers other than the president get permission from administrators before taking association leave.
The Utah State Office of Education responded by indicating it would address these issues and recognizing that “the audit concerns identified are in a very limited number of school districts.”
The audit was requested by Rep. Chris Herrod who sponsored legislation last session that would have eliminated the practice of school districts sharing the salary cost of association presidents. After reading this report, however, I’m curious why more school districts aren’t taking advantage of the benefits and savings realized by sharing costs with their local association. Currently only presidents in Davis, Granite and Salt Lake City School Districts share salary costs with their local associations. These presidents perform many duties that would otherwise fall to a district employee and they provide valuable input and feedback as the voice of the educators. It is clearly a win-win for teachers and school districts.
November 13, 2009
Committee Hears Reports on Retirement
By Courtney White, UEA Director of Policy and Research
The Utah State Legislative Interim Retirement & Independent Entities Committee met Thursday, Nov. 12. They reviewed the latest information from their actuary as well as heard audit reports from the legislative auditor about costs associated with rehiring retired state employees including educators. The committee heard public comment from employee associations including UEA about concerns related to changes to the retirement system.
URS Actuarial Report
The actuary and URS reported that the retirement system investment returns and funding level has rebounded this year after losses last year associated with the economic downturn. The system last year ended with a $6.5 billion loss and a funding level of almost 84%. Investment returns are up a $1 billion this year and the funding level has risen to 86%. The actuary indicated that Utah was in the top 10% of states with their retirement system funding level and that should continue to be the case after the economic downturn. Most states prior to the economic downturn were funded near the 80% level. A variety of different future investment return scenarios were explored by the actuary—most with very conservative assumptions built in. The URS is assuming 7.75% investment return for the next 10-25 years. The URS has averaged a little over 9% investment return over the last 20 years.
Report on Rehiring Retirees
The legislative auditor reported on costs to the state associated with rehiring retirees. Costs have risen over the years as more retirees have returned to work for a variety of reasons, including being asked to return to hard to staff positions in school districts and helping close the teacher shortage gap especially in rural school districts. Rep. Christine Watkins and UEA Director of Government Relations Kory Holdaway shared a significant flaw in the audit report with the retirement committee. The legislative auditor, in calculating the cost of rehiring employees, assumed all rehired personnel come back at the same salary level they were at when they retired. Some police chiefs are allowed to rehire at the same salary they were at when they retired, however, virtually every school district in the State caps the salary step to which a rehired employee can return. Less than 0.5% of all employees in the URS System have been rehired. The legislative auditor is recommending that rather than allow a rehire to receive the current 401(k) contribution of 14.22% to his/her retirement account (for public safety the contribution is closer to 30%) in addition to receiving a URS pension, that the money for the 401(k) contribution go to the URS system to help maintain its financial solvency—capped at a reduce level of 1.5-3%—or not be paid at all.
Proposed Retirement Changes
After much discussion and newspaper coverage the last several months by the League of Cities and Towns and legislators about a variety of possible changes to the URS defined benefit (pension) system, Sen. Dan Liljenquist, who has been the legislator most involved in discussing changes, shared with the UEA legislative team this week that he has arrived at a preferred change. He shared his plan with the committee on Thursday. He is committed to honoring State commitments to employees in the URS retirement system. He acknowledges that it would be very difficult legally to make changes to current or already retired employees retirement. His change focuses on future employees.
He would like to move new employees to a defined contribution plan only. Under his plan, the State would pay an 8% contribution rate into a 401(k) and subsidize the current defined benefit plan with an additional 8% contribution that the new employees would never see. This new defined contribution program would have its own costs associated with its implementation and administration and the State would not realize any savings for at least 10 years if ever. The UEA legislative team has posted some very helpful information outlining the differences between defined contribution and defined benefit plans on the UEA website and outlined the cons associated with moving to a defined contribution system.
In his comments to the retirement committee, UEA spokesperson Kory Holdaway indicated the UEA position is that the URS is on sound financial footing and that changes to the well-funded, almost hundred year old system should not be made hastily because it has experienced some bumps the last year or two. He pointed out that the URS has had a very profitable investment year in 2009. He suggested that investment losses and gains be averaged or smoothed over a longer period of time—the current practice of five years is a very conservative approach. Holdaway reminded committee members that teachers and public employees don’t go into their professions thinking they will get rich based on yearly salary but that they have been able to look forward to a decent retirement. Any change that would impact the State’s ability to hire well qualified educators would be opposed by UEA. He suggested a legislative taskforce or committee be established to look at the retirement system and evaluate what is best going forward including have other third-party actuaries make a report. The current system has served us well for close to a hundred years and any change should made after careful study, thought, and feedback from all constituency groups and involved parties.
October 30, 2009
Diverse, Aging Population Puts Utah at a Dangerous Crossroads
by Kim Campbell, president, Utah Education Association
This year’s UEA Convention was one the best I’ve attended in the 30 years since I became a teacher. Thousands of educators from throughout the state gathered to hone their teaching skills, share ideas and mingle with colleagues. It’s open to the public, so if you would like to attend next year, please feel free to join us Oct. 14-15, 2010.
Perhaps the most insightful and moving presentation was given by University of Utah Research Economist Pam Perlich at the Convention’s opening session. Dr. Perlich’s candid assessment of Utah education demographics and trends elicited an enthusiastic standing ovation from the teachers in attendance.
Starting with Utah’s early status as an isolated, rural community, Perlich detailed demographic changes that led to today’s economy. “We’ve obviously transformed from a classic western economy, one that was mostly dependent upon extractive industries and also the federal government and agriculture to what is the present day diversified Utah economy,” she said.
“In the middle of the 20th century…we didn’t have much immigration in our country, and white women had babies at very high rates. It was a singular period in the history of our nation where we created an internally generated, very homogenous population. At the end of the 20th century, the immigrants began coming again. Now we (are returning) to what is the historical precedence of our country, which is the immigrants, their kids, and their grandkids, constituting 80 percent of the growth of the nation’s population over the next 40 years.”
Data shared by Perlich show currently about one in five Utahns are a minority. Projections indicate the U.S. will be minority majority within a generation and Utah within about two generations.
Combine this with how Utah’s population is aging and we find ourselves at a dangerous crossroads for Utah’s students. According to Perlich, “if you look at the numbers, there will be as many elderly people per working person in the state of Utah as there is in the nation as a whole, but more kids. So that’s the mother lode of trouble we’re leaving to this next generation. And we do that, in the state where we brag about ‘stacking them deep and selling them cheap.’ Now that model of education might have worked in the past if you have two things: one, a very high level of parental involvement and, two, a very homogenous school population. Those days are long gone.”
“It is, for me, a very self-evident truth that (investment in education) is an investment in human capital,” concluded Perlich. “These kids are the future of our state. We are in a situation now, I believe, it is critical that we increase our investment in education.”
October 27, 2009
Retirement Benefit Changes Considered
By Courtney White, UEA Director of Policy and Research
The last several years have seen legislative attempts to make changes to the Utah Retirement Systems (URS), the primary retirement funding mechanism for all state employees. This year is no different. In fact, there is concern some legislators may use the current economic downturn as an opportunity to press those changes.
The Utah Retirement System (URS), along with nearly every other financial or investment institution across the nation has lost fund value and revenue as a result of the economic downturn. Still, the URS continues to be one of the best administered, invested and funded retirement systems in the nation and is not considered to be at any risk of insolvency.
The last several years have seen losses, but they are offset by previous years of significant increases. At the end of 2008, the URS was funded at 83.7 percent of anticipated future needs, down from 94.6 percent at the beginning of 2008. The URS funding high occurred in early 2001 at 103.4 percent and has been as low as 74.6 percent in the early 1990s.
Possible changes to the Utah Retirement System that have been identified by employers (principally the League of Cities and Towns) and/or legislators include the following:
- Suspend or lower the 1.5 percent contribution to 401(k) or 403(b);
- Suspend or lower post-retiree employees’ (“double dippers”) contribution to 401(k) or 403(b);
- Extend the final average salary period (from the current three years to perhaps five years or more), thereby slightly reducing the retirement benefit;
- Increase the vesting period (i.e.: from four years to six years);
- Put a minimum age condition on the 30-year benefit (there is currently no minimum retirement age if you have 30 years in URS);
- Partial benefit payments until certain age (phase retirement);
- Reduce the multiplier from 2 percent of the final salary to 1.9 percent;
- Change to a contributory system (employees are currently on a non-contributory system);
- Create a hybrid contributory/non-contributory system;
- Turn the defined-benefit system into a defined-contribution system 401(k) or 403(b);
- Require all new employees to participate in a defined-contribution system 401(k) or 403 (b);
- Reduce post-retirement benefits.
Any changes would require legislative approval. The UEA legislative team is watching the situation very closely and is working with legislators and decision-makers to safeguard your benefits. The legislative team will keep you up to date and, if necessary, issue a call to action. Stay tuned to developments here at “UEA Under the Dome.”
September 14, 2009
Are incentives the best “investment” in Utah’s future?
by Kim Campbell, president, Utah Education Association
Goldman Sachs threatened to expand elsewhere if Utah didn’t give them almost $30 million in tax incentives…this on top of more than $20 million already promised by the state. While not technically a tax increase, this “incentive” still costs Utah taxpayers in the same way by forcing lawmakers to either cut services or increase revenues to make up the difference.
According to the Salt Lake Tribune, members of the Governor’s Office of Economic Development board, made up of private-sector members of the business community, approved the deal (which begs the question, ‘Why is private business deciding how to use our tax money?,’ but that’s another topic). The deal was lauded as an investment in Utah’s future.
And yet studies show that same “investment” of tax dollars could have yielded much more for Utah’s taxpayers. Dollar for dollar, an investment in public education, for example, grows the economy more than corporate tax cuts and subsidies. Since nearly 90 percent of Utah’s public education budget is spent on payroll, investments create jobs for teachers and school staff all around the state, not just in downtown Salt Lake City. And unlike big business tax incentives that typically end up in corporate offices in another state, public school investments go directly back into the local economy, supporting Utah’s small businesses.
Businesses want to operate where they can find a qualified pool of trained employees. Like it or not, two key factors companies consider are a state’s per-pupil education spending and average class sizes. With the nation’s largest class sizes and per-pupil spending ranked dead last ($4,000 below the national average and nearly $1,000 below the next closest state), no company would ever locate or expand in Utah using those measures.
A study on the subject of business expansion and relocation goes on to say “tax incentives and tax packages are uniformly viewed as low priorities by location consultants, relatively unimportant to the basic decision.” Of course, if a state is willing to fork over $50 million in free money, the company will certainly take it.
The message many of our elected officials and business leaders need to hear is that a great business climate is the natural result of a great education climate, not the other way around.
August 24, 2009
What are the top two or three issues that Gov. Gary Herbert should focus on as he begins his tenure as governor?
Response from Kim Campbell, president, Utah Education Association
The number one issue Gov. Herbert should address as he begins his tenure as governor is education. Surprised? I thought not. As president of the Utah Education Association, you’d expect that from me.
What I hope Gov. Herbert will recognize is I’m not alone. In poll after poll after poll, Utah citizens consistently rank education as their number one priority.
Having said that, it will be very difficult for Gov. Herbert to really focus on education and Utah’s other long-term needs without first addressing the elephant in the room. (No, not the Republican Party…we know he’ll spend ample time addressing that elephant between now and the primary elections.) I’m referring, of course, to the state’s massive revenue shortfalls. Gov. Herbert takes office during arguably the most difficult financial situation the state has faced in our lifetimes.
In his first “Let me speak to the Governor” program last week, Gov. Herbert indicated his top priority will be economic development. May I suggest to our new governor the best way for him to attend to his top priority, while also addressing the top priority expressed by Utah citizens, is to invest in education. Here’s why:
First, investing in public education immediately stimulates the economy in nearly every community in the state. Nearly 90 percent of Utah’s public education budget is spent on payroll. As we invest in Utah’s school system, jobs are created for teachers and staff in both urban and rural areas. These school employees don’t send their money to offshore accounts. They spend their payroll checks on shoes and groceries, supporting local businesses and playing a major role in assisting an economic recovery.
Second, when looking to relocate or expand, the top reason businesses give for choosing one city over another is education. Businesses want to operate where they can find a qualified pool of trained employees. Like it or not, companies consider a state’s per-pupil education spending. If spending is low, they assume they will be unable to find the most qualified workers. With per-pupil spending ranked dead last ($4,000 below the national average and nearly $1,000 below the next closest state), no company would ever locate or expand in Utah using that measure. A study on the subject of business relocation goes on to say “tax incentives and tax packages are uniformly viewed as low priorities by location consultants, relatively unimportant to the basic decision.”
Third, Utah taxpayers get more “bang for their buck” by investing in education than any other place they can spend their money. A study from the World Bank reveals that a taxpayer’s return on investment in public education exceeds returns generated by the stock market. The study shows that over 10 years, the long-term return on common stocks was 6.3 percent, while the public return on investment in education was 14.3 percent.
The best legacy any governor could leave for the children of Utah is to enact tax laws that will provide stable, viable and dedicated sources for future public education funding. We look forward to working with Gov. Herbert on these and other issues to enhance our quality of life and ensure Utah continues to be a vibrant place to live, learn and work for all its citizens.
August 19, 2009
Public Education Needs Health Care Reform
by Kim Campbell, president of the Utah Education Association
National health care reform is not a topic I would typically address in the public forum as president of the Utah Education Association. However, there are aspects of this issue I feel are critically important to the teachers and students of Utah.
I have two major concerns:
First, Utah’s public school teachers are charged with teaching each and every student who enters the school door. Yet far too many of these students come to school ill prepared for the rigors of learning due to inadequate access to proper health care. Studies show proper health and nutrition are major factors in a student’s ability to learn.
Second, escalating health care costs are inhibiting the state’s ability to properly fund education and improve teacher salaries. Medical insurance costs have more than doubled since 2000, with no end in sight. These costs take a bigger and bigger slice from the education pie each year and/or are passed along to employees, reducing take-home earnings.
Whether it’s single payer, public option, co-op, national, state, or some other solution, public education needs substantial health care reform and we need it now.
My greatest fear is the radical fringe, rather than seek compromise, will use shrill half truths to crush any meaningful reform. If successful in squashing health care reform, these radicals will pound their chests and pump their fists in victory—and the teachers and students of Utah will once again be left with no solution to a real problem.
July 28, 2009
Race to the Bottom—Utah’s Waning Commitment to Education
By Kim Campbell, president, Utah Education Association
The national rankings are out again—according to a U.S. Census Bureau report released yesterday, Utah is still dead last in per pupil spending on K-12 education (http://www2.census.gov/govs/school/07f33pub.pdf). This is not particularly surprising. In fact, no current student in Utah’s public education system has seen a time when Utah wasn’t the penultimate cellar dweller.
No, what’s surprising to me is how far behind we’ve fallen given that Utah is purportedly a “pro-education” state. Ten years ago, we spent $3,930 per student, or about 64 percent of the national average. The recently released Census Bureau report shows we spent $5,683 in 2007, or just under 59 percent of the national average. In other words, other states are increasing their commitment to public education much faster than we are here in Utah.
But we haven’t always been at the bottom. I was recently digging through archives at Utah State University and discovered that up until about 1950, Utah was perennially above or very near the national average in per pupil spending. Unfortunately for three generations of students, it’s been a steady decline since then.
Over that same period, Utah’s class sizes have steadily grown to be the nation’s largest. Declining wages and benefits have caused Utah to lose the competitive advantage we once had in attracting and retaining the very best teachers. We’ve lost many of the resources we once had to help struggling students succeed.
Up until now, dedicated parents, teachers and administrators have done a commendable job of masking the deficiencies caused by shrinking budgets. However, with the proliferation of accountability demands, escalating testing requirements, enrollment growth, and increasing racial and socio-economic diversity, Utah’s overburdened public education system cannot continue to produce the results it once did without a long-term plan for adequate funding.
Utahns place education as their number one state priority in survey after survey. A majority indicates they are willing to pay more in taxes if that money is targeted to education. Yet not only does our legislature elect to hold the line on tax increases for education, over time they have actually reduced the percentage of revenue going to the state’s K-12 public education programs.
It’s time to refocus on what is important and reestablish our commitment to education.