Interesting that The Columbus Dispatch used the headline “Big Savings” to show how SB5 would impact Ohio. From the standpoint of teachers, firefighters, police and other government workers, approving SB5 will result in a “Big Reduction In Pay.” The report cited by The Dispatch indicates that on average, approving SB5 would mean that each state employee would lose $3,739 in pay each year.
The report explains that if SB5 was already in effect, the state would save $216,871,804 — about 2% of the expected $8 billion shortfall this year — and it projects this savings to the 300,000 employees of school boards and local communities. From the report:
“Given that the basic elements of state and local government union contracts are generally in line with one another, multiplying the state’s per-employee savings of $3,739 [$216,871,804 /58,005] by the approximate number of local employees [300,000] results in an estimated savings for local government of $1,121,700,000.”
Mike,
I think you might be slightly misrepresenting the story. It doesn’t talk about reducing annual salary (except by paying more for health benefits), but rather limiting growth from automatic step and lengevity pay increases.
Using your math, if an employee doesn’t get a planned $3,739 increase next year, would that be a reduction in salary? or a salary freeze? I believe that would be a salary freeze.
One thing that has always bothered me is how school districts play the ‘base salary freeze’ card to tilt public opinion to get a levy passed, when in reality step and longevity raises are still in effect. A 1 year across the board, legitimate pay freeze, which is what the article is really talking about, doesn’t seem that unreasonable.
Bryan, my point is that, as I read the report, whose PDF link I gave above, this $3739 “savings,” per worker, means that on average if SB5 is approved, each government worker will lose $3739 in income each year. You are correct that a better headline would have used the term “Income Reduction,” rather than “Pay Reduction.”
A big part of this reduction will come from the elimination of a step increases, but a lot of state employees will see a big increase in out of pocket expense for health insurance. At present, for example, Kettering School employees pay 10% of their health insurance and SB5 requires all state employees to pay at least 20%
It is inaccurate to describe SB5 as a “1 year across the board, legitimate pay freeze,” because SB5, when it becomes effective will eliminate mandatory steps for all future years, not just 1 year. Supposedly, the whole step system will be replaced by a “merit system” yet to be developed.
I agree that school districts, in their levy campaigns, have failed to show transparency to the public about the compensation packages of their employees. It was the anti-democratic campaigns of misinformation used in Kettering school levy efforts that bothered me to the point that I wrote a complaint to the Ohio Election Commission and also, in 2009, pushed me to make the effort to seek election to the Kettering Board.
Mike,
Even “income reduction” isn’t accurate. With the exception of having employees pay more of health premiums, no one is calling for pay reductions, income reductions, pay cuts, or the like. What they are calling for a reduction of salary growth. Big difference! To summarize, state and local governments could save ~$1.36 Billion by simply not allowing salaries to grow for one year! Again, not increasing salary isn’t the same as a pay reduction.
Bryan, when a beginning teacher is hired, he or she signs a contract, and, until SB5, even though specific contracts generally are for a three year period, the teacher had ever reason to confident that this contract was a long term commitment showing the basic structure of his or her pay over a 30 year period or longer. The reality of a teacher counting on the stability of a long-term contract that includes step increases has been firmly established in Ohio for many decades, so SB5 is a huge departure.
Beginning salaries for new teachers generally have been a lot less than beginning salaries for their contemporaries in other lines of work, but, these relatively low salaries traditionally have been justified by the fact that teaching is a life time career that offers the opportunity for long time security. Now that long term contract is being torn up and step raises that teachers were expecting are evaporating.
So SB5 will result in a “reduction in expected income” and will make the arc of a long term teaching career much less certain. In addition to losing automatic step increases SB5 will require teachers to pay 15% for health care, and in some districts this will mean an increase in health cost for teachers.
The state will not immediately save the $1.3 billion per year. I guess SB5 will only apply after current local contracts expire. Kettering’s contract goes through the 2012-2013 school year. And Centerville just this week is signing a new three year contract, so it looks like the implementation of SB5 will be delayed in Centerville for three years.