Here is what has been placed on Facebook by the School District this afternoon (Thursday, February 13)

Update: After an optimistic afternoon, the negotiations fell apart about 5 p.m. Thursday. The District put a new $4.5 million on the table about 2 p.m. to satisfy the MEA on early retirement. This was a huge move on the District's part. In response, the union moved $60,000 in its counter proposal. Bargaining is a tough process, and a lot of people keeping track try to spin the numbers depending on their mindset. This is the mathematical reality: one side moved a mile, the other moved about 70 feet. And regardless of which side you are on, this was an enormous disappointment after three days of school with substitute teachers. This city needs a resolution, but that requires two sides to bargain in good faith. Just a terrible way to end a promising start, and the result is that this strike will continue into next week. The District wants to end this, responsibly and fairly. Please help us find constructive solutions.

I am extremely disappointed.  I care about the teachers and their families, but most especially I care about the students.  So often people ask me to somehow get this settled, but both sides have to move.  So sad.

Have a nice Valentines Day, somehow.   

So What About the $750,000 transfer?

So tell me about the transfer of $750,000 from the insurance fund in June 2012.

For the past decade our district, like every other district in Oregon, has ridden a roller coaster of funding fluctuations. Fiscal year 2011-12 was one of the more volatile. That was the year where all of our employees helped stabilize our finances by taking reductions in compensation. The impact of those reductions helped but it was challenging to manage the impact on various parts of the budget. Our finance office brought an unprecedented four budget amendments to the board in an effort to keep the budget reconciled with spending.

That year the board approved a budget, altered it before adopting it in late June, and then amended it four different times (8/29/2011, 11/7/2011, 2/27/2012, and 6/4/2012). In three of these four amendments changes were made to the Health Insurance Fund. It is the fourth change, a transfer out of $750,000 that has been the focus of some contention during the current bargaining process. This is due in part, in that after that transfer occurred, we became aware of the need to share information about such transfers to the District Insurance Committee. Most districts don’t have such a committee. We have one because we are a self-funded insurance district and part of the way we protect that status is by involving our various employee groups in the review of the financial records so that we can produce collaborative recommendations on whether to adjust benefits or employee costs as the insurance industry changes.

As soon as we became aware of the need to communicate with the District Insurance Committee regarding transfers, our finance team shared the information regarding the transfer and apologized for not discussing the transfer with the committee. Our CFO publicly acknowledged that we had not followed the protocol for involving the insurance committee at a subsequent board meeting. We thought the matter had been resolved.

During the current bargaining process, however, the transfer has been characterized in ways that imply the District intentionally transferred out funds for some ulterior purpose. That was not the intent. The facts actually support the opposite. Transfers in and out of this fund reflect responsive budget management and helped provide stability of services for our students during an instable fiscal season.

The irony in all of this is that during the 2011-12 fiscal year, the district actually transferred substantially more money into the fund than out. The amounts transferred in totaled about $1.215 million and were part of two earlier budget amendments that year.  The transfer out of $750,000 was intended to rebalance funding back to the general fund to provide the flexibility the district needed to fund additional services for students. The net change in the Insurance Fund was actually a $465,000 increase in the Insurance Fund over the fiscal year. Here are the specific amounts and dates of transfers:

·         On November 7, 2011, the district transferred $350,000 into the fund as part of the second budget amendment.

·         On February 27, 2012, the district transferred $865,000 into the fund as part of the third budget amendment.

·         On June 4, 2012, the district transferred $750,000 out of the fundas part of the fourth and final budget amendment.

One can view a record of all of these transfers by looking at the Budget Roadmap provided to the Board at the June, 4, 2012, regular Board meeting. This is accessible via our district website (www.medford.k12.or.us, click on School Board and Committees, click on Medford School Board, click on meeting agendas, select 2012 in the drop-down menu, scroll down and click on Monday, June 4, 2012 at 7:00 pm, click on Agenda Packet, scroll down to 14. Action Agenda e. and click on Adopted to Amended Budget Roadmap).

While all employees have an interest in the funding available for the District’s Health Insurance program, the fact remains that the District has kept its word regarding the funding of its contractual obligations for Insurance costs. We have been able to maintain excellent health insurance benefits for our employees even as 190 other Oregon school districts have defaulted to the state OEBB insurance pool.  This is specifically due to the careful fiscal management of the program by the District and the cooperation and support of our Medford employees.

All transfers have been authorized by the board after being presented and discussed in public board meetings. The information is provided to each of our employee associations, MEA and OSEA, and MEA has consistently had representatives attend board meetings. And the District Insurance Committee provides an additional level of review and scrutiny.

Is the Proposal Really a 10% Raise?

A detailed response provided by Dr. Long:

Two-and-a-half years ago our district had a very large funding gap to close. It was caused mostly by escalating costs and flat funding by the state. A big PERS bump and rising insurance costs were the biggies, but there were other factors as well. The way we resolved it was to go to all of our employees and essentially ask for everyone to take about an 8% reduction in compensation. Most of our employees agreed to pay their 6% employee portion of the PERS (the PERS pickup) and accept some health insurance plan changes. We also did some staff reductions to make up the rest. All of these employees continued to work their full contracts (no reduced days).

The MEA was bargaining with the District at that time and while they were willing to help, they were unwilling to make changes that might easily become permanent. They were unwilling to accept the need for a compensation reset. Their solution was for the district to eliminate about 50 FTE licensed positions, furlough the remaining licensed staff for 8 days, and they also accept some changes in the costs of health insurance and pay 7% of the premium cost of health insurance. They also wanted a mechanism that could restore days if funding came back. We agreed on a rubric for that: For every $350,000 of increased revenue, we would add one day back. That was equal to about ½% salary.

At the end of the 11-12 school year the district received one-time adjustments from ODE for the 2011-12 year and the 2010-11 year that equaled four days. Because this came after April 15, we added the four days to the 2012-13 school year. That was the equivalent of a 2.1% restoration of salary in 2012-13.

If the reset year (2011-12) was the baseline for all employees, then teachers came into this contract negotiations 2.1% ahead of all other employees based on contract days. Our current offer is 10%, 1%, and 1% for a 190 day contract. Given that we are asking them to pay their 6% PERS pick-up, the math actually looks something like this:

Make contract whole (186 to 190 days) = 2.1%

Buy the PERS pickup                            = +6%

Employee contribution to PERS             = -6%

Remaining Salary increase                    = 1.9%

District Offer Total                              = 4.0%

Some would argue that the days should not count as a raise because it was simply a matter of making the contract whole. If you accept that logic, then the raise for the first year of the district’s proposal is about 1.9% - still pretty good when one looks around the state. Still a teacher who has been at the top of the salary schedule the past three years would see that, all other factors being the same, their December 2012 paycheck was about 2.1% higher than their December 2011 paycheck . . . and their December 2013 paycheck would be about 4% higher than their December 2012 paycheck. And about half of all teachers have received additional annual step increases of 3.4% during this extended period of economic turmoil.

Given this scenario, here is how the Association’s most recent base salary proposal costs out:

Pay for four days          = 2.1%

Salary increase             = 2.0% to 2.99%

Total Year 1                 = 4.1 to 5.1%

Propose Year 2            = 3.75%

Of course, this is just one of several economic variables in the contract. It does not take into consideration proposed payments to teachers at the secondary level for high class sizes or payments to elementary teachers for combination classes. And the most challenging issue is the supplemental health Insurance retirement benefit. While the district has been able to find a solution that eventually shifts that future post-employment benefits to a current benefit (matching 403b) for all of our other employees, the Association has struggled with this. We are currently at least $45 million apart on resolving that issue alone.