Legacy costs

As we watch the country debate the fate of the auto industry, keep something in mind. Every time the issue of legacy costs – the costs associated with the maintenance of promises to previous employees – are discussed, you should instantly translate that discussion to public school systems.

The long-term costs of school employees are only recently reflected on district books. It will take a few months for the MSM to catch up, but the problems facing the auto industry now are the very same ones the districts will be battling.

Guess who will be paying for that bailout? Wisconsin, with a state deficit and stagnant property values, will be hard pressed to fund those promises. Taxes will increase at a much faster rate to cover both the new accounting requirements and the loss of investments made by some districts.

Sadly, school boards everywhere continue to make new promises, just as auto makers have in the past. It proves once again that those managing education are not necessarily intelligent.

Comments

  1. The auto unions, at one time, could point to the auto companies profits as a reason to give them big benefits and the auto companies would cave. What reason does or did the school board have to cave?

  2. Don’t know, but it keeps happening.

    I guess it’s not the caving that’s the problem. Not responsibly planning for what was promised is the catch.

  3. Jeez, if teacher retirement is next, they had better push for more than the usual 2% salary increase for yearly increases.

  4. Sorry, Dave, but your point isn’t very clear.

  5. My simple point was that 2 huge benefits of being a teacher (my sister teaches) are health care and retirement packages. If retirement is cut or reduced, and teachers pay more for their healthcare each year, then I think teachers should push for more of a salary increase than their usual 1-2%.

  6. Ok. My point was that benefit package should be read as a whole. Healthcare, full and generous retirement, shortened work year and salary. Then compare that to the private sector.

  7. Tinkerbell says:

    Indeed, compare that to the private sector! Many companies face this decision: cut staff to give raises to those who remain, or everyone keeps their job & old pay rate (or even a smaller pay rate thru concessions).

    “Pensions” or retirement benefits are a thing of the past in all but a few select pockets of our economy. Unfortunately, it has been announced for 2 decades that the money we’ve paid into social security may become a thing of the past as well. Wise people have relied on good old fashioned frugality and saving (sometimes using 401K’s, municipal bonds, sweat equity in their homes, stocks, bonds and T-bills).

    Does our society believe certain employees are not up to the challenge of budgeting, frugality, and money management? If they cannot manage their personal financial future how can we trust them to impact the broader future by teaching our kids? building our cars?

    To continue to fund outrageous and disproportionate government salaries & benefits, soon we will receive our home assessments, then our tax bills. I read the other day that local home values would be calculated after business values were known. That does not sound like home values are being set based on fair market value, but contrived to fill a pre-determined budgetary demand (despite recorded monetary surplus at both the school district and city level). The smaller homes are given ever more unrealistic property values in attempt to substantiate an overbearing share of taxes. This to create an endless flow of dollars toward teachers, in this nation which compares so unfavorably to others academically.

    I will agree with Cindy that once promised, a plan must be in place to make sure one can deliver. But underlying this I will first and foremost agree with Leapin that caving is a problem. Essentially it comes down to feasibility: if one cannot or does not *already* have a plan in place to fund the promises, the promises simply must *not* be made. This works on any scale: for families, for governments. Live well within your means.

  8. My sister the teacher pays taxes too. I agree that teachers do have a good deal, for a so so salary, but a very important job.

    If government starts reducing the perks of the job, retirement and healthcare, then they would have to push for more salary increases.

  9. Tinkerbell says:

    Dear Dave,
    They can push for salary increases, have fewer jobs, and those remaining employed will have larger class sizes, thereby working harder for their higher pay.

    In the private sector those with higher salaries are usually cut first, as this makes sense from a numbers standpoint. So as one sees their salary increase, and may feel that much more valuable and irreplaceable, they may in actuality be that much closer to dropping off the edge.

    We may agree the job is important but please realize that parents across the country are homeschooling their children for no salary, miniscule per-student costs, and those children are doing as well or better than the average public school kid.

    Let’s say your sister gets the raise she pushed for, then loses her job in the next round of budget cuts, AND her property tax goes up to help pay the salaries of the remaining teachers. This may exceed her savings and she may list her home for sale… with no buyer she may go into foreclosure despite her diligent financial planning. You may call that worse case scenario, but it is happening all across the country in the current economy. .. and has been for several years.

    Possibily a salary freeze is what is called for to stabilize the economy and minimize job loss?

  10. Tinker,

    No, private sector are not cutting the highest paid, just look at the Car makers who just testified at Congress, making millions and flyiny on private jets to arrive at the meetings.

    They wont be cut.

    And if parents want to be weird and homeschool, well good luckto them and their weird children.

  11. Tinkerbell says:

    Dear Dave,
    In the private sector, the decision makers tend to cut the most highly compensated of their underlings. Yes, the decision makers do not cut themselves. Perhaps then we agree on this?

    You reveal a short vocabulary and even shorter logic when you describe someone/something in the sophomoric term “weird”. Perhaps you could elaborate on your concept of “weird”? Anyone not in the majority? Anyone following their concept of a Higher Power? Anyone who believes they possess enough knowledge and confidence to read books? Anyone who does not agree with you?