scasd collective bargaining document

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Home Our District Collect ive Bargaining

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A message from the State College Area Board of School Directors

We are pleased to provide background information about the Boards recently completed negotiations with the State College Area

Education Association (SCAEA), the "exclusive bargaining agent" for SCASD teachers.

Our discussions were respectful and productive, producing tentative agreements in many areas. However, nine open issues, or

differences between our respective positions, could not be resolved without the assis tance of a fact-finder appointed by the Pennsylvania

Labor and Relations Board. These differences and the context that informs the boards decision-making can be reviewed by clicking on the

appropriate sidebar.

We thank our community for its patience and support, and SCAEA for their continued dedication to teaching and learning.

The Board is committed to the collective bargaining process

The Board is required to negotiate "wages, hours, and terms and conditions of employment," with SCAEA. The Board and the Association

negotiated for approximately two years. Since June 30, 2010, members of the Association have been working under the terms of their last

contract, or status quo.

The Board is guided by four principles for its respective positions. The Board wants a contract that:

1. is fair to all constituents, including teachers, other employees, taxpayers, and students;

2. treats, to the extent possible, all employee groups consistently;

3. keeps the District in the leading position in Centre County and in Intermediate Unit 10 (comprising districts in Centre,

Clearfield, and Clinton Counties), and appropriately comparable with similar size and wealth districts across the

Commonwealth (the comparison cohort) comprised of

Abington Cumberland Valley

Lower Merion

North Allegheny

Parkland

Tredyffrin-Easttown

4. is sustainable in an Act 1 environment, and where other traditional revenue sources are lesser or flat, and where other

traditional expense items are increasing, in some cases exponentially.

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Open Issues Prior to Fact-Finding

1. Salary

During the term of the prior contract, most teachers received annual salary increases between 5 and 8%, a smaller number

going through the so-called jump step received an increase of between 6 and 10%, and those at the top of the salary

schedule received annual increases of approximately 3% (in addition they received a longevity payment).

The parties agreed to a salary freeze for 2011-2012.

For the remaining three years of the proposed contract, 2012-2013, 2013-2014, and 2014-2015, the District has proposed

annual increases of 2.0%.

The Fact Finder, after consider the positions of the parties, recommended salary increases of 2.7%, 2.8%, and 2.9% for

2012-2013, 2013-2014, and 2014-2015, respectively.

What follows are some comparisons and/or benchmarks to place the Districts wage proposal in context:

Penn State, by far the largest employer in the District, in 2009-2010 instituted a salary freeze for all employees

and then in 2011-2012 cancel[led its]plans for [its] normal program of salary increases for faculty and staff.

In 2012, the State College Educational Support Personnel Association (SCESPA), representing District secretaries and

paraprofessionals, and part of the same Pennsylvania State Education Association as the teachers, agreed to a wage

freeze for 2010-2011, a 2.0% increase for 2011-2012, and 2.25% increases in 2012-2013 and 2013-2014.

In 2012, the Districts American Federation of State, County and Municipal Employees (AFSCME) unit, which includes

bus drivers, mechanics, maintenance personnel, custodians, and food service employees, agreed to a wage freeze

for 2011-2012, a 3.5% increase in 2012-2013 (coupled with a large increase in their health insurance premium

co-payments), and the Act 1 index for 2013-2014 through 2015-2016. The Act 1 index agreement, though, has a

floor of 1.7% and a ceiling of 3.25%. For next year, the Act 1 index is 1.7%, so the salary increase for these

employees will be 1.7% for 2013-2014.

Building and central office administrative staff had smaller salary raises than teachers in 2009-2010 and 2010-2011,

and wage freezes for 2011-2012. For 2012-2013 those employees received raises of 2.0%.

The superintendent and assistant superintendent have provisions in their respective contracts entitling them to base

1.5% increases, as well as the opportunity to earn an additional 1.5% based upon performance. They also have 3-5

year contracts, which permits the Board to end their employment, even if they have performed satisfactorily, at

those junctures.

Based upon information supplied by the Association during fact finding, the weighted average annual increase for

the comparison cohort for 2012-2013 is 2.00%, and for 2013-2014 is 2.48%.

Even if the Association agreed to annual salary increases at 2.0%, it would still cost the District nearly 6.0% to move

a teacher from one year to the next because of disproportionately larger increases for items such as health

insurance and retirement contributions, ore than three times the current Act 1 index.

The starting and maximum salaries for County schools (with Districts 2.0% proposal) are below, and clearly show

that the District is well above the other districts in the County.

2012-2013 2013-2014 2014-2015

min max min max min max

Bald Eagle 36,572 65,755 ---- ---- ---- ----

Bellefonte 40,634 73,816 40,984 74,066 42,963 74,316

Penns

Valley

39,877 79,865 40,320 80,316 41,070 81,081

StateCollege

42,400 86,291 42,884 88,017 43,273 89,777

The Districts average teacher salary (11-12) is also the highest in the County, and in the Intermediate Unit.

Bald Eagle - 46,777

Bellefonte - 50,666

Penns Valley - 55,111

State College - 65,015

Clearfield - 55,474

Keystone Central - 63,591

The comparison cohort districts, other than Cumberland Valley, have higher starting and maximum salaries, but they are

located in considerably more affluent areas. Several economic indicators (some drawn from 2010 census information) are

reflective of these regional differences:

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- The median home price in Centre County is less than $200,000; in Montgomery County it

exceeds $250,000.

- Lower Merion has the highest paid teachers in the comparison cohort, but their salary

falls lower on a percentile basis within Montgomery County than does State College in Centre

County.

- The same is true for Tredyffrin-Easttown, the second highest paid teachers in the

comparison cohort, for Chester County.

10-11 (12-13 for T-E) percentile of County household income

District County min % max %

Lower Merion Montgomery 51,221 32 113,264 67

T-E Chester 50,250 28 110,900 59

State College Centre 42,000 45 84,599 75

2. Credit for previous professional service

The District has given expansive credit for previous professional service, well beyond prior teaching experience in publicschools elsewhere in the Commonwealth. Depending upon where a newly hired employee is in his or her career, and the

amount of credit given, the District can pay a premium of $1,000 to $10,000 or more annually for the remainder of that

employees tenure with the District. For some employees, the cost to the District could exceed $200,000.

The District proposed restricting credit to prior work at public schools elsewhere in the Commonwealth, and substitute

experience in the District.

Although the language is not identical in every other contract, the language contained in the contracts for the so-called

comparison cohort districts allows management latitude in giving credit for prior service.

The Fact Finder, after considering the positions of the parties, recommended the District's position on credit for previous

professional service.

3. Extra duty extra pay

Teachers are paid additional amounts for work performed outside the scope of their regular teaching assignments.

Examples of such work include division chair, team leader, unit chair, coaching, and intramural supervision.

Given the disproportionately larger increases in other items over the life of the contract, principally health insurance and

retirement contributions, and at known and expected levels well above the Act 1 index, the District proposed that the pay

for these assignments remain unchanged from current levels.

The Fact Finder, after considering the positions of the parties, recommended no increase for 2011-2012, and increases of

0.66%, 0.81%, and 1.00% for 2012-2013, 2013-2014, and 2014-2015.

4. Additional payment to retirees

Retiring employees who meet years of service requirements were given an additional payment based upon a percentage of

the salary that they would have received had they continued the following year. The exact multiplier varied with their years

of service.

The District originally proposed eliminating this provision in its entirety. Subsequently, the District modified its position to

include an additional payment in 2013-2014 as follows:

10-15 years of service, 2.5% of the next years salary

16-20 years 3.0%

21-25 years 3.5%

26+ years 4.25%

The District proposed eliminating this payment after 2013-2014. This line item is estimated to cost the District $120,000

annually if it were continued.

The Fact Finder, after considering the positions of the parties, recommended the following:

2011-2012 2012-2013 2013-2014 2014-2015

10-15 years 5.0% 5.0% 4.0% 3.0%

16-20 years 6.0% 6.0% 5.0% 4.0%

21-25 years 7.0% 7.0% 6.0% 5.0%

26+ years 8.5% 8.5% 7.5% 6.5%

5. Health insurance

The parties agreed on plan changes, and premium sharing copayment levels for so-called Plan A (lower premium


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share/higher deductible) and Plan B (higher premium share/lower deductible) options for 2012-2013. They did not agreed

on premium sharing copayment levels for 2013-2014 and 2014-2015. The District wanted them to incrementally increase

on an annual basis.

The District based its position principally on the fact that its average annual increase in costs for health insurance has

exceeded 11% for the past decade, and this average is expected to continue. Even with the increased premium share

numbers proposed by the District for 2013-2014 and 2014-2015, the District will continue to absorb an ever larger cost for

health insurance. The Districts proposed monthly premium share figures are here:

Plan A Plan B

12-13 13-14 14-15 12-13 13-14 14-15

Single 55 65 80 25 25 30

Parent/child 115 140 175 45 55 70

Parent/children 120 145 180 45 55 70

Employee/partner 135 160 190 50 60 75

Family 140 170 205 50 60 75

The District proposed $2,000 for individual opt-out payments, a payment that an otherwise eligible employee would

receive if he or she chose not to be covered under the Districts health insurance policy. Other District employees, to include

those covered under the support staff contract, those covered under the AFSCME contract, and administrators receive

$2,000 if they opt out.

The District wanted spouses who have coverage available elsewhere to take that coverage, or if they wished to be on the

Districts policy, to pay the additional costs therefor. This provision is in the multi-year support staff and AFSCME contracts.

The Fact Finder, after considering the positions of the parties, recommended the following schedule on premium sharing,

the District's position on the opt-out payment, and a modified version of the District's proposal for spouses and others who

have coverage available elsewhere:

Plan A Plan B

12-13 13-14 14-15 12-13 13-14 14-15

Single 55 55 60 20 20 22

Parent/child 115 115 125 45 45 50

Parent/children 120 120 130 45 45 50


Family 140 140 155 50 50 55

6. Health insurance for part-time employees

The District proposed moving the qualifying level from 0.50 to 0.667, and to do so for new hires only (i .e., it would not

affect any current employees). While it is not known how frequently persons will be employed in the future who would be

between 0.50 and 0.667, there would be savings when it would occur.

The District currently pays (subject to a $55/month premium co-payment) for health insurance for employees (and their

dependents) who work at least a 0.50 schedule (i.e., a half-time employee). Although the District's proposal would not

affect current employees, for purposes of understanding what might be the economic impact of this proposal in the future,

annual health insurance premium payments made by the District for current employees who are at or above 0.50 but below

0.667 approach $300,000.

The Fact Finder, after considering the positions of the parties, recommended the District's position.

7. Using School Code for demotions and suspensions


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Teachers are demoted and/or suspended (furloughed) when a position is partially or completely eliminated. The

procedure for doing so is set forth in the School Code, and is incorporated into the teachers contract by reference. The

School Code provides that suspensions are based on seniority.

The District preferred that the language remain as it is, which, if seniority were to be removed by a subsequent act by the

legislature, and if suspensions were to be necessary, would retain for the District its inherent management rights in making

staffing decisions.

The Fact Finder, after considering the positions of the parties, recommended the District's position.

8. Payment for unused sick days

Under the terms of the previous contract, the District paid retiring teachers who meet qualifying criteria pertaining to age,years of service, years of service in the District, and years of credited service in the PSERS system, the sum of $55/day for

unused sick days, provided the employee has accumulated a minimum of 30 days, but not to exceed a maximum of 300

days, for a total payment not to exceed $16,500.

The District proposed maintaining the payment at $55/day, but requiring that a retiree have at least 60 days to qualify and

capping payments at 200 days. A retiring employee with 200 days would receive $11,000 at the $55/day rate. The District,

by comparison, pays administrative and quasi-administrative staff between $38 and $60/day for unused sick days upon

retirement

The District estimates the cost differential to be $36,000 to $56,000 annually. The District paid the sum of $295,041 to

retiring employees in 2011-2012.

The Fact Finder, after considering the positions of the parties, recommended that there be no change to this provision from

the prior contract.

9. Tuition

The District pays directly for and/or reimburses employees for certain college courses, up to a maximum of 9 credits

annually and at 85% of the tuition rates at Penn State. The District proposed a hard annual cap of $205,000 for 2012-2013,

for 2013-2014 and 2014-2015, an amount that would cover actual expenses in 2011-2012. This amount would be available

on a first come, first served basis, and once it would be exhausted, there would be no more money available for that year.

The Fact Finder, after considering the positions of the parties, recommended a hard annual cap amount of $300,000.




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Balancing Educational Excellence and Fiscal Sustainability

PSEA members understand that difficult decisions must be made in this tough economic time. We also understand that access to a

high-quality public education is a basic right that should not be suspended when times are tough.

- W. Gerard Oleksiak, PA School Education

Association Treasurer

May you live in interesting times," says the ancient Chinese curse. Indeed, public education is experiencing such times, but public

education has never been more relevant to our community and our nation. It is the fiduciary responsibility of the Board of School Directorsto assure that we maintain a thorough and efficient public education system for the present and the future, even when revenues have

declined dramatically.

To maintain educational excellence and budget balance, the Board must negotiate collective bargaining agreements which are fair,

equitable, competitive, and affordable within the districts financial structure. We offer the following considerations as background to our

recently completed agreement with the State College Area Education Association (SCAEA) (click each for more detail):

Consideration #1: Planning for the Future

In a more constrained revenue environment, the District must adopt a multi-year budget strategy that looks beyond the term of its labor

contracts

Consideration #2: Comprehensive Budgeting

To be sustainable, the District must address its budgetary responsibilities comprehensively

Consideration #3:The Economic Climate

The compensation package for employees must reflect the changing economic forces affecting the District and families

Consideration #4:Outcomes from the Fact-Finding Process



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Consideration #1: In a more constrained revenue environment, the District must adopt amulti-year budget strategy that looks beyond the term of its labor contracts

Three examples illustrate our approach to this perspective:

Fund balances

Employee pension obligations

Physical plant maintenance

Fund balances. The district is conservative in its budgeting practices. Currently its general fund balances total $21 million, with an

additional $8.8 million in the capital projects restricted fund balance.

The general fund balance consists of $12 million committed for future retirement obligations and an additional $9 million (about 8% of the

districts budget) in unassigned funds. The Pennsylvania Department of Education limits the latter to no more than 8% of the districts

budget.

Historically, the Board has approached the accumulation and use of fund balance in a deliberate manner. Much of the districts fund

balances are constrained as to their use (i.e., they are restricted by legislation or committed through Board action). The unassigned fund

balance, while not constrained, is set aside purposefully to cover potential non-recurring or emergency (one-time) expenditures. For

example, the district used its unassigned fund balance to pay the Village at Penn State $460,000 to settle a tax dispute in 2010. In 2013,

the district will use $6 mill ion from its reserves to make the first payment due under its settlement agreement with the Royal Bank of

Canada.

Whether determined through collective bargaining or other agreements, total compensation paid to employees represents a significant

portion of the districts annual expenses. Since salaries, wages and benefits are recurring expenses which can be approximated and

anticipated, it would be shortsighted and fiscally unsound for the district to use money that had been set aside to mitigate the impact of

future unanticipated expenditures (i.e. unassigned fund balance) to pay for scheduled increases in salaries or benefits. More simply said,

if the district adopted a strategy of using fund balance to meet its ongoing payroll obligations, it would soon find itself in dire financial

straits.

In a similar manner, the use of one-time money (e.g, income from the sale of property) to balance the budget is not sustainable

because the same receipts are unlikely to be duplicated the next year, however the funded expense will continue to exist and possibly

grow.

At present, three elementary schools and the high school are in need of renovation. The district has been working proactively to make

consistent transfers to capital reserve so that each of its elementary schools can be renewed on a fifty-year schedule. Major renovations to

the middle schools and the high school will require additional funding procured through a public referendum.

Employee pension obligations. The district has taken a proactive approach to meeting its pension commitments to employees.

One of the many challenges that the district faces is the pension crisis for its employees. Most teachers participate in PSERS, The

Pennsylvania School Employees Retirement System, which is a defined benefit pension plan. With a defined benefit retirement plan, the

employee receives a guaranteed benefit independent of the investment results. Unlike a 401K where the benefit is based on the return, in

a defined benefit plan the employer assumes all the risk.

Currently, PSERS assumes a 7.5% rate of investment return but earned only an average of 2.7% return on investments during the fiscal

year ending June 30, 2012. This means the employer (and state) must make up the difference, most likely by increasing property taxes.

This is not a single year problem. After a decade of generous promises, meager contributions, and unrealistic investment expectations,

PSERS shortfall exceeds $26 billion statewide and $350 million for the SCASD. The total bill will probably be much larger.

School districts didnt cause the crisis the funding rates are determined in Harrisburg. While school districts and the state have

contributed 16% of PSERS funding over the past 25 years, it was decidedly less in the early 2000s. (Act 120 of 2010 established a

minimum payment that prevents such lapses from occurring in the future.) Meanwhile, employees have maintained steady contributions

averaging 6.2% of payroll, about 14% of PSERS total funding. Because investment growth, not employee or employer contributions,

generates the bulk of PSERS revenue, poor investment returns, not a lack of employer contributions, caused the largest portion more

than 40% - of the PSERS shortfall.

As a result, the districts contributions for retirements are increasing at about $1.4 million per year. Pension costs alone equal the amount

of revenue that the district can raise by increasing property taxes within the Act 1 index.

Because of investment underperformance, the system currently pays out about three times more than it takes in. To make up the

resulting shortfall and cover future pension expenses, SCASD costs for PSERS will exceed $10 million per year by the end of the decade; a

massive increase in employee compensation that was not planned for when the previous contract was negotiated.

The district has worked proactively to prepare for this liability by committing some of its pre-existing reserves toward the PSERS obligation

and by raising taxes in excess of the Act 1 caps for the past three years using an exception designated for this specific purpose. The

reserve now totals $12 million, all of which will be expended for retirements over the next 7-8 years.

Physical plant maintenance. Modern and well-designed educational facilities contribute to school climate, ensure the safety of students and

staff and provide a vibrant and student-centered learning environment.

In our school district, we have 700,000 square feet of facilities that are more than 40 years o ld and which have not benefited from a

regular cycle of renewal. Two million dollars from the general fund are used for annual maintenance of district facilities; its barely enough

to cover the yearly cost of minor repairs and maintenance at the high school. As a result, the backlog of district-wide deferred

maintenance has grown to approximately $30 million.

The original high school building was constructed in 1957; at this point in time, much of the 450,000 square foot facility has exceeded its

practical life. Outside consultants rate our high school facilities in poor overall condition; much of the infrastructure (for example, the

entire hydronic heating system and underfloor piping) must be replaced.

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Our district has started an educational planning initiative to improve learning spaces in our high school facilities with 21st century

collaborative learning at the forefront. A high school renovation/reconstruction project is an investment in the future of secondary

education in our school district and, moreover, necessary for our students and teachers to be more competitive in a future global economy.

Based on the administrations recommendation, the Board has hired an architectural firm with an outstanding reputation for building

quality, cost effective structures. Even with a goal of low cost, state of the art facility, however, the investment from our community will

be substantial.

In addition to the high school, several elementary schools; various facilities which house our alternative education programs, administration

and support functions; and our primary athletic competition venue, Memorial Field, are in need of repair, renovation or replacement.

In an effort to catch up on its facility backlog, the district has increased its contributions to capital reserve fund from zero in 2008-2009

and 2009-2010 to $2.7 million in 2012-2013. While the progress toward sustainable funding for facilities is excellent, is not nearly enough

to pay for the high school project. The district will seek to provide the bulk of the high school project revenue by issuing new debt. A

public referendum seeking community permission to issue debt for the project will be held sometime in 2013-2014.



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Consideration #2: To be sustainable, the District must address its budgetaryresponsibilities comprehensively

The 2012-2013 SCASD budget is approximately $116 million. Property taxes, which generate about two-thirds of the districts revenue, are

restricted to an annual increase (currently 1.7%). Although some limited exceptions exist (e.g., special education costs and pensions),

there is no exception to the property tax cap designated for salaries.

Currently, the sum of all district revenues increase by less than $3 million per year. However, the sum of the districts pension and health

costs alone rises by about the same amount of money. To continue within its means and meet all budgetary responsibilities, the

organization of the district must change. This districts response to this perspective is informed by three considerations:

Education is people-intensive

The student population is shrinking

The districts sources of revenue have changed

Education is people-intensive. Since 2004-2005, approximately 75% of the districts budget has been used to fund salaries and benefits.

Projections through 2016-2017 show this share going to as high as 78%. About three-quarters of this amount is for teachers.

A district cant function without administration, but administrators dont teach children. Therefore a healthy school district minimizes its

administrative costs to keep as much funding as possible in the classroom. The SCASD performs well in this regard among its peers.

About 7 percent of its personnel costs are for administrators, better than the average of its performance cohort. In the past three years

alone, the district has reduced its total number of administrators from 40 to 37, saving nearly $220,000 per year.

Simply put, since the districts investments are in people, potential cost savings in anything other than human resources are modest. While

the district respects its employees and wants contracts that are fair, competitive, and equitable, they must also be fiscally sustainable. By

law, school districts are required to produce balanced budgets; deficit spending is not permitted.

The student population is shrinking. We value staff and prioritize what happens in classrooms, but staffing must remain aligned with the

communitys education needs. Our enrollment has decreased over time, from a high of approximately 7,452 in 2002-2003 to less than

7,000 students today. The decline results from a combination of factors, especially a decrease in the average size of families and higher

enrollment of students in charter and private schools. With fewer students, a proportionate downsizing of staff has been achieved through

a combination of retirements and furloughs. Because there are now 27 fewer full-time teachers in the district than there was even three

years ago, the obvious result is that payroll growth has slowed and occasionally reversed.

Nevertheless, the districts cost of benefits (PSERS and health insurance) continues to grow. Attritional savings from retirements and staff

reductions free up revenue that can be reallocated to fund employee benefits and other aspects of district operations. In the current Act 1

environment, this trend is likely to continue in the future.

The districts sources of revenue have changed. The State College Area School District is one of the most locally supported school districts

in Pennsylvania. Local property and other (mostly income) taxes supply 83% of all revenue.

Over the past 17 years, the Board has raised property taxes every year except one. The average increase over the past decade was 3.9%,

while inflation increased at an average annual rate of only 2.7%, resulting in revenue increases that exceeded inflation. The district was

able to mitigate some of the tax increase because of growth in real estate values and interest income. As a result, district expenditures

increased at an average annual rate of 5.5%.

Since the economic collapse in 2007, the combination of business real estate tax appeals, low interest rates and a soft real estate market

affected SCASD finances in four ways:

Growth in the assessed value of real estate. Property taxes generated 68% of all SCASD income last year. As new properties

join the tax rolls, the assessed value base and property tax revenue increase. In 2008, assessed value growth added $2 million in

new revenue. After 2009, it was $800 thousand.

Real estate transfer taxes. When you buy or sell real estate your municipality collects a 2.0-2.75% transfer tax; the SCASD

share is 0.5%. In the previous decade transfer taxes added more than $2 million annually. Nowadays its less than $1.5 million.

Interest income. Interest on the districts short-term investments cash on hand and funds set aside for planned future

expenses and unforeseen events is $1 million per year less than it was in 2008.

Income taxes. Earned income tax revenue increased by more than $500 thousand per year for much of the last decade. As the

recession took hold, it declined $100 thousand each year.

All told, these revenue streams net $2 million per year less than they did before the 2008 economic collapse. This gap - a fair estimate of

the disparity between a soaring and sagging economy - equals the loss of 1 mill, or $71 per year, in property taxes from an averagehomeowner.

To make up some of this loss in revenue, the board raised taxes a total of 13.3% from 2008-2012. Using an exception for retirement

expenses, the district exceeded its state mandated Act 1 cap in each of the past three years. This cumulative increase is more than double

the cumulative increase in inflation from the same time period (5.4%) and even more than the cumulative tax increase during the

2004-2008 time period. However, it is not enough to restore revenues to the levels they were five years ago.

To achieve budget balance, expenses must be curbed.

Three years ago the district formed a Cost Control Task Force to identify areas where expenses could be reduced and revenue could be

increased. These efforts reduced expenses by $3 million per year. Some additional modest revenue was obtained through increases in

student parking fees. When compared to the districts recent loss of $1 million per year for state charter school reimbursement, new

sources of revenue have little impact on the budget.

A combination of strategic spending reductions and property tax increases are a likely pattern of budget activity for the rest of the decade.

If more revenue is needed than these mechanisms provide, the board has the option under Act 1 to authorize an annual budget

referendum. In other words, higher tax increases are possible only with voter approval. If the referendum should fail, however, then the

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property tax increase would be restricted to the Act 1 index for that year. While such referendums are commonplace in Ohio, New Jersey

and New York, no annual budget referendum in Pennsylvania has been successful.



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Consideration #3: The compensation package for employees must reflect the changingeconomic forces affecting the District and families

The accepted proposal increases an average employees total compensation at an average annual rate of $4,985 per year over the life of

the contract; larger than any similar period of time in the past 10 years.

Over the past decade, total employee compensation has increased at more than double the rate of inflation. Much of this increase has

been driven by benefits. In 2001, employee benefits (mostly health care and retirement) comprised less than 15% of an employees total

compensation. In 2011, benefits were more than 28% of total compensation. By 2018 it will approach 40%.

With the districts commitment to increasing employee compensation comes an expectation that employees will share a greater proportion

of their health care costs. Currently the district pays about 94% of an employees health care premium - $937/month or $11,240/year.

Under the terms of the most recent contract, teachers pay $55/month, regardless of the number of individuals covered.

The district and union collaborated to create a new tiered cost structure. Based on the fact-finder recommendations, employees monthly

premiums will be priced as follows:

Plan A Plan B

12-13 13-14 14-15 12-13 13-14 14-15

Single 55 55 60 20 20 22

Parent/child 115 115 125 45 45 50

Parent/children

120 120 130 45 45 50


Family 140 140 155 50 50 55

For an employee/family choosing Plan A the district would continue to pay about 87% of the premium cost, with employees who choose

family coverage (the most common health care plan) paying $140/month. Because an increase in employee health care contributions will

affect take home pay, the parties agreed to offer a lower cost health care option (Plan B) that would actually reduce employee costs (the

family premium would be only $50/month) in exchange for a higher deductible and co-insurance. For the first time, employees have a

choice how to distribute their compensation by choosing health care options that will allow them to increase their take home pay.

Complete details of the plans can be found in the fact-finders report.

Teachers have been well compensated in State College over the years. During the term of the most recent contract a teacher who had not

reached their career rate of 20 years experience received an average salary increase of 2.9% per year for experience (step movement)

and 4.5% per year as a raise. Annual salary increases of 6-8% were the norm in the last contract. Coupled with a generous package for

health care, retirement and professional development, the SCASD is a great place to work.

Salary increases of this magnitude are not sustainable in an Act 1 environment, which limits property tax increases to a state-determined

percentage. The Act 1 index has been declining progressively since 2008-2009, with values of 1.4% in 2011-2012, 1.7%, in 2012-2013,

and 1.7% in 2013-2014. Whereas many school districts receive a state augmentation to their index because of a poorer economic

environment, the SCASD is the only district in Centre County that does not.

From the districts perspective, salary increases had to be more modest than the previous contract. This is neither an issue of employee

respect nor an indictment of employee competence; its simply a matter of long-term economic sustainability.

The SCAEA bargaining team has demonstrated awareness of these challenges, offering a wage freeze in 2011-2012 (i.e., no step

movement). Members were, however, able to receive the benefit of a column movement increase for 2011-2012 by earning additional

graduate credits. The district will continue to partially reimburse employees for such professional development, but there will be a total

annual cap of $300,000 for this benefit.

Both parties agreed to the wage freeze in 2011-2012. The district offered 2.0% salary increases for each year 2012-2013, 2013-2014,

2014-2015 including step movement and settled with annual raises of 2.7%, 2.8% and 2.9%; including the freeze, the four-year average is

2.1%. For employees at less than the career rate, annual salary increases (step movement plus raise) will be 3.6%-3.8%. Although this

is considerably less than the previous contract (from 2006-2007 to 2010-2011, annual salaries increased at 5.0-8.0% for employees at less

than the career rate), it is a larger annual salary increase than many citizens have seen during the past four years and compares favorably

with the districts performance cohort.

Because the wage agreement is larger than the Act 1 index, the budget runs the risk of going into the red unless the district commits to

cost changes elsewhere. Without long-term, structural change, the problem would compound annually, with more reductions and cost

savings needed every year throughout the contract.

One challenge for the district will be a bubble of employees who will reach their career rate during the term of the next contract. With

prudent planning, we believe that the additional costs can be managed effectively.

To summarize, while salary increases are more modest than employees have experienced in previous contracts, total compensation will

accelerate.

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Historical and projected sources of total compensation for the average teacher under the accepted proposal



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Outcomes from the fact-finding process

These are very trying times for public education in Pennsylvania. For the past several years school districts have been struggling with a

"perfect storm" of falling revenues and increasing costs. The state legislature has limited our ability to raise taxes through Act 1 and has

reduced funding in a number of ways. While the State College Area School District has been fortunate to have weathered the national

recession better than many communities, we have experienced a marked slowdown in the local economy and housing market, which have

reduced our local income as well. When these economic factors are combined with significant increases in our health care costs, in our

state mandated increases in PSERS (Public School Employees Retirement System) contributions, and with our significant facility needs, the

process of balancing our budget has been very difficult. We know that the economic factors we face are not going to improve significantly

in the near future, and we know that our health care costs and PSERS contributions will continue to rise well past the length of this

agreement.

Throughout the budgeting process over the past few years, the Board directed the administration always to look for savings as far from the

classroom as possible. Using a transparent budgeting process, the administration and the Board sought to respect all of its stakeholders

by sharing as much information as possible.

Similarly, we have reminded ourselves that when we need to tighten our belts in challenging economic times like these, everyone needs to

share in some way.

This is a tough time to negotiate labor contracts, and yet over the past two years the district has negotiated contracts with three of our

four employee units. We have entered all of our negotiations with appreciation and respect for the contribution of each employee in

making the SCASD the great district that it is. That is especially true for the teachers, whom we appreciate are at the core of the districts

mission, to prepare students for lifelong success through excellence in education.

To maintain our educational excellence, we have been guided in all of our negotiations by a few basic principles. These are fairness,

equity to all employees, competitive compensation, and economic sustainability.

We are in this together. We believe that fairness and equity requires that we treat all employee groups consistently, but not identically.

We appreciate and respect the role of our teachers in the success of the children of our district, and we want to maintain this success. We

want to maintain our position of having the highest teacher's salaries in the county and the Central Intermediate Unit. We want to remain

competitive with our "cohort districts."

We believe that the accepted proposal achieves this goal. It provides the most generous salaries in Centre, Clearfield and Clinton counties.

Although our teacher's salaries are not equal to several of our "performance cohort districts in absolute dollar terms, due to the higher

cost of living in those districts, our teachers' salaries place them in a higher percentile for household income than most districts in our

performance cohort.

Finally, we have tried to negotiate what we believe are sustainable agreements, agreements that we know that the district can afford for at

least the length of the agreement. This has meant that we have had to look at all of our agreements in terms of a total compensation

model, salaries plus benefits, since this is the only way that we can plan for employees expenses for the life of the agreement.

Despite the good faith efforts of both sides in our negotiations with SCAEA, we reached a point in late October 2012 when the district

asked for the assistance of a "fact finder" in the hope of moving the negotiations forward. While the two sides had agreed on a number of

points, we were still too far apart on the major economic issues to reach an agreement. We sincerely appreciate the efforts of Mr. Alex

Kaschock to help the parties move toward agreement.

No one in the district gains, certainly not children or teachers, from an agreement that we cannot afford. We are sobered by the fact that

a five-year projection of the accepted recommendations produces budget deficits in the third year of the contract. The total compensation

package, which grows at an average rate of 5.8% per year, commits the district to a pathway of structural reform and educational

innovation to make its operations more economically sustainable in the future.



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Home Human Resources Contracts/Agreements

State College Area Education Association

State College Area Education Association (SCAEA) teachers union contract dated July 1, 2006 through 2011

71-06-SCAEAContract.pdf, 1.96 MB (Last Modified on October 31, 2012 )

State College Area Educational Support Personnel Assocation (SCESPA)

State College Area Educational Support Personnel Association (SCESPA) is the organization that represents State College Area School

District secretaries and para-professionals. This contract period is 2010 to 2014.

SCESPA-CBA-10-14.pdf, 3.13 MB (Last Modified on October 31, 2012 )

Administrative Compensation Plan for First Line SupervisorsContract for 2012-13 covers:

Bus Garage Supervisors

Contract coordinators (Physical Plant)

Food Service Supervisors

Plant Supervisors (Secondary)

Maintenance Supervisors

FirstLineSupervisors2012-13.pdf, 123.45 KB (Last Modified on October 31, 2012 )

Contract for Custodial, Maintenance, Food Service Employees

American Federation of State, County and Municipal Employees, AFL-CIO for 2011-2016

CustodialMaintFdSContract2011-2016.pdf, 905.31 KB (Last Modified on October 31, 2012 )

Bus Driver Contract

Contract for Bus Drivers for 2011-2016.

BusDriverContract2011-2016.pdf, 1.01 MB (Last Modified on October 31, 2012 )

Act 93 Compensation Plan for Administrators

This plan is for 2012-13.

Act93Admin12-13WithAmend.pdf, 177.23 KB (Last Modified on October 31, 2012 )

Act 93 Administrative Compensation Plan for Managers

This plan covers 2012-13.

Act93Managers2012-13.pdf, 76.61 KB (Last Modified on October 31, 2012 )



acts/Agreements / Contracts http://www.scasd.org/Pa

scasd collective bargaining document

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