Cash Cow

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Cash Cow

Rob Jones, VEA's Government relations director, sent an email out today calling attention to a dire threat facing every one of Virginia's educators during the next General Assembly session.

In the General Assembly session ahead, one thing we can count on is that the benefits offered by the Virginia Retirement System will be under attack. In these tough times, legislators will be looking under every rock to find ways to cut costs.

Thanks to a Joint Legislative Audit and Review Commission(JLARC) report released a year ago, seven proposals are up for consideration, including eliminating the current traditional pension plan and replacing it with a 401(k) personal risk account.

According to Rob, many of our members simply do not understand the true benefit and promise of our current system. Why? Perhaps they haven't experienced the real ebb and flow of investment life. More likely, they have never invested at all.

Do you realize that before Roanoke County Schools revamped our 403-b investment program last year, about 18% of our employees took advantage of the program? When we switched over to the Hartford management team after an intense selection process necessitated by IRS tax law changes, participation has dropped to 9.6%. Folks, the industry average for 401-k (similar to 403-b) participation in the business world is 79%. Given time and a strong effort by our Hartford representatives, Kyle Scully and Rob Mangano, this percentage should slowly grow back.

As a career educator, I fully understand why it’s easy to let retirement thoughts slide. We face so much in our daily PRESENT lives serving others that it's hard to carve out time to think about our own futures.

My wife and I are that unique educator couple. We both teach elementary school and have been investing in 403-b's since the mid-1980's. We began investing simply because we wanted a full retirement option when we decided that teaching was over for us. We wanted the ability to live comfortably and maybe travel a bit.

We were confident to develop an investment plan because we knew that we had two components in place already, the defined benefits offered by Social Security and VRS. With that security in mind, we scrimped and saved pennies from our meager salaries (I started at $10,500 a year) and strode out into the investment world. We developed a relationship with a financial planner in whom we have grown to trust implicitly. We knew that, between VRS and Social Security, we could expect a constant sum of money that would allow us to live. Our 403-b’s would just be icing on the cake and allow us to experience life.

Like many others, the 403-b dream has been mixed. We’ve invested faithfully for over 20 years in solid funds but the inherent risky nature of the product doomed us in the down times. The technology bubble burst bashed our accounts and the recent crash sank us.

Here’s what I’m getting at. We knew the risks and were willing to take them because we had security in our hip pocket. Now, some legislators want to take my security away. They want to turn my DEFINED BENEFIT RETIREMENT PLAN into a PERSONAL RISK ACCOUNT.

On top of switching VRS from a defined benefit plan to a personal risk account, the General Assembly is eyeing the giant pile of money being held by VRS in our name. They covet these billions. Even though these billions were earned by us and were kept in guarded trust for us, sometimes in lieu of salary increases, this money is a very tempting pot of gold that could cure the state of what ails it in the short-term, so they believe.

According to Rob’s analysis of JLARC’s report, a retiring teacher can expect a 48% REDUCTION in benefits from VRS. 48% . I’m trying hard to understand why someone could possibly think that idea is acceptable or advised. Perhaps such people are taking advantage of Math SOL 4.5 (Front End Estimation). 48% written as a decimal would be 0.48. Using the front-end method, underline the front digit and drop the rest 0.48. Hence 0.48 can accurately be estimated as 0 or 0% using front-end estimation. Of course, most of the rest of us would simply round off 48 to 50 and advertise the 50% reduction in benefits (Also Math SOL 4.5).

That’s right, there are people who don’t care and may even be blind to the fact that educators will endure a 50% cut in benefits if we go to Personal Risk Accounts. I fully expect Rob to share more information in the coming weeks of how exactly these accounts will impact us.

We need to educate our colleagues about both the benefits of the current system, which provides a guaranteed benefit for life following retirement, and the shortcomings of the 401(k). The current issue of Time magazine includes an excellent article entitled, "Why It's Time to Retire the 401(k)."

http://www.time.com/time/business/article/0,8599,1929119,00.html

Please read this article and share it with friends.

Our current pension system is worth fighting for.

What Rob said. Some things you just have to fight for. But, hey, maybe you think we should all just be thankful to have a job.

Save the Golden Goose

Delegate Bob Tata, a Republican fromVirginia Beach, is the Chair of the Education Committee in the General Assembly. On Monday January 26, he rose to speak up for public school education. His message was measured and powerful. It deserves to be heard.

(The video has been slow to load for me, but if you open the link and hit [pause], it will eventually load the whole six minute clip. Then click [play]. )

What About the Budget?

Folks, we are beginning to experience some of the darkest financial times I’ve ever encountered in my 27-year teaching career. Over the past week, Your Uniserv Director Pat Wood and I have visited with Delegate William Fralin, Delegate Onzlee Ware, and Senator John Edwards to discuss education funding.

Each of these local representatives hold key positions on either/both the education or appropriations committee. Thus, they will be positioned squarely to affect education funding in this year’s General Assembly. The message from each regarding that funding was bleak. Both Ware and Edwards volunteered that the funding shortfall in the state cannot be erased solely by making cuts to programs. New revenue (tax) must be raised. Both seemed to zero in on one area that may offer some hope, a gasoline tax. Ware talked about raising the gasoline tax by $0.10 a gallon at the pump while Edwards had a detailed plan to apply a 5% tax (similar to a sales tax) on gasoline at the wholesale level. He reasoned that by applying the tax in that manner, it would grow with inflation. Neither man, however, could assure us that such revenue enhancements would pass through the legislature.

We spent a great deal of time explaining to Mr. Fralin that Roanoke County is proactively planning how to cut the budget in order to make ends meet. We impressed upon him the fact that these cuts will affect instruction. There seems to be a popular and erroneous notion in the legislature right now that Governor Kaine’s proposed cuts in education funding will not affect the instruction programs, instead they’ll target school administration. Well, we’re looking at larger class sizes, a reduction in core services, a closed middle school (Central Middle), potentially a closed elementary school (Bent Mountain), a hiring freeze in association with an early retirement plan, potential RIF’s, and a potential pay cut.* You can’t tell me these things will not affect the instructional program!

* Very Recent Word is that a 1 to 1.5% pay cut is on the table for next year…we’ll know more as we learn more.

Some of you have asked what you can do to help secure funding for education during the upcoming General Assembly session. Well, our VEA president, Kitty Boitnott shared this letter with me, and I, in turn, am sharing it with you.

Dear Local President (That’s me!):

I am writing to request your help with mobilizing our members to take an active part in the lobbying effort that we are undertaking this week prior to the opening session of the General Assembly on January 14th.

We need our members to complete two simple tasks, and both of them can be accomplished by going to the Government Relations section of the VEA web site at http://www.veanea.org.

The first task is to click on and complete the writing of the electronic letters that have already been drafted. These messages need to be sent to their local legislators and senators (Delegate William Fralin, Delegate Morgan Griffith, Delegate Onzlee Ware, Senator John Edwards, Senator Ralph Smith). While the message has already been crafted, it may be altered to meet individual and specific needs.

The second task is to click on the link for the online petition which is being sponsored by a coalition of education stakeholders who have joined together for the purpose of advocating for public schools and the children of the Commonwealth. The link is at http://www.fundqualityschools.org.

So far we have had only 3,559 individuals to sign the online petition. Given that we have over 60,000 members, and their friends, family members and non-member colleagues may sign, I would like to see that number increase exponentially.

Likewise, so far, only 480 individuals have sent the electronic message to their local legislators. In order for us to capitalize on our strength as an organization of advocacy for public education, we must increase that figure into the thousands rather than the hundreds.

Please make every effort to engage your membership and mobilize members to take these two relatively simple actions. We cannot afford to miss out on this opportunity to let our collective voices be heard. Our students are depending on us to advocate for them, and I urge you not to let them down.

Thank you in advance for your quick response to this most sincere request for your help.

Kitty

E-mail: kboitnott@veanea.org

Web site: http://www.kittyboitnott.net

So my advice for now is to remain calm and respectful, but be vigilant and ready to defend what’s right. Please grab some friends and family and take a few minutes to introduce yourself to your local state delegate or senator by using the online site linked in Kitty’s letter. In addition, please, please sign the online petition. Let Richmond know that they must protect education funding, and if cuts need to be made, they must be temporary. We have almost 1,000 members, plus we all have friends and family. We really could make a huge difference!

Thanks for reading,

Thom Ryder

RCEA President

tryder@rcs.k12.va.us

...And It Begins

Governor Tim Kaine of Virginia officially released his proposed budget amendments today. The details on how his budget amendment proposal would impact our beloved county is still to be understood, but it's impossible to cut money out of a budget without there being an impact. Brace ourselves, we must. (I don't know why I just wrote in Yoda-talk.)

According to Rob Jones of VEA, there are supportable details found within the Governor's amendments. Tackling an announced $2.9 Billion deficit will not be easy. Rob passed along the following notes this afternoon.

He cut education less than any other area.

He looked at both sides of the ledger, and raised the cigarette tax, tweaked the land-preservation tax credit and eliminated the “dealer discount” (paid to merchants for collecting the sales tax) to reduce the harm to essential state programs.

We have grave concerns regarding the fact that:

He made $400 million of the cuts to education permanent cuts that will be with us even when the recession is over ($400 million in SOQ funding reductions partially offset by $60 million in loss mitigation for the 2009-2010 school year). The impact on next year is $340 million. The impact into the future is $400 million per year. This eliminates the state share of funding for 13,000 positions including custodians, finance officers, HR directors, assistant superintendents and central office personnel).

What we know about the cuts for the next school year?

$340 million SOQ cuts to support and administrative components of the formula
$78 million in teacher salary
$82.5 in school construction

Total = $500.5 million, or slightly over ½ billion

No doubt many of you will want to know what can be done faced with the reality of the budget shortfall (could end up being larger than $2.9 Billion). I can almost say with complete certainty that the budget will be amended. What we must do is help direct the amendments in a positive direction for public school education.

On January 9, I plan to join our education coalition partners in Lynchburg at a state budget hearing. At that hearing, I will no doubt push for examination of different revenue generating plans that would soften the blow. Re-instituting the estate tax, along with the cigarette tax increase, is one idea that is being considered (tax on estates valued over $2 million).

Most importantly, we must fight hard and strong to keep any cuts that happen from becoming permanent. This is paramount! Any cuts made in the remainder of the biennial budget must remain temporary. Virginia is already ranked 37th in support for public schools in America. That dubious ranking would slide further if these cuts were to become permanent.

President Boitnott will present a petition at the budget hearing in Richmond on January 19 that all members, friends of members, relatives, parents, and citizens are invited to sign. The petition clearly speaks to the issues we care deeply about. Please sign this on-line petition and urge your colleagues, family and friends to sign on as well. Our battle is to prevent permanent cuts to education funding.

The petition can be found at:

http://www.fundqualityschools.org/

Penny Hodge, Assistant Superintendent of RCPS, is working on getting a clear picture of how the proposed amendments may affect Roanoke County. Right now, this early in the budget process, it's really too early to tell. However, brace ourselves, we must.

On a side note, I'm experimenting with a new service on this blog. I realized that from time to time, I want all of you to be able to see documents that relate directly to a specific topic. Meg Swecker, master of all things technology, pointed me to a site called, Drop.io. With Drop.io, I can upload all kinds of documents, sound, and pictures and have you access them at your leisure. You can view and download the files as you wish. So far, I've added all of the back-issues of the RCEA News from this year, Governor Kaine's press release from today, and a few other documents that will be related to future blog entries. You can test out the service by clicking on the link in this article for proposed budget amendments or you can visit the whole RCEADistrict4 site.


Thom Ryder
RCEA President

Bail Out

Robert Reich, most famous for his time spent as a cabinet secretary in the Clinton administration, opined recently that, regarding public school education in our country, we're all out of whack. We bail out corporations, while we are starving and throttling our educational system.

Our preoccupation with the immediate crisis of financial capital is causing us to overlook the bigger crisis in America's human capital. While we commit hundreds of billions of taxpayer dollars to Wall Street, we're slashing our outlays for public education.

Education is largely funded by state and local governments whose revenues are plummeting. As consumers cut back, state sales and income taxes are shrinking; three quarters of the states are already facing budget crises. State revenues account for about half of public school budgets and most funding of public colleges and universities. In addition, as home values drop, local property taxes take a hit. Local property taxes account for 40 percent of local school budgets, on average.

The result, across the nation: Teachers are being laid off and new hiring frozen, after-school programs cut, so called "noncritical" subjects like history eliminated, schools closed, and tuitions hiked at state colleges and universities.

It's absurd. We're bailing out every major bank to get financial capital flowing again. But we're squeezing the main sources of our nation's human capital. Yet America's future competitiveness and the standard of living of our people depend largely our peoples' skills, and our capacities to communicate and solve problems and innovate ­ not on our ability to borrow money.

Reich continued,

It's our human capital that's in short supply. And without adequate public funding, the supply will shrink further. Don't get me wrong: I'm not saying funding is everything when it comes to education. Obviously, accountability is critical. But without adequate funding we can't attract talented people into teaching, or keep class sizes small enough to give kids a real chance to learn, or provide them with a well-rounded curriculum, and ensure that every qualified young person can go to college.

So why are we bailing out Wall Street and not our nation's public schools and colleges? Partly because the crisis in financial capital is immediate while our human capital crisis is unfolding gradually. Headlines scream what's happening to our money but not to our kids.

As our state stares a $3.5 billion budget deficit in the face and as our school division considers what and whom will be axed, Reich's words ring with a sense of authenticity. When will people wake up and start investing in the foundation of education in our country?

Some will say that the educational system has all the money it needs and that there is tons of waste embedded within the system. As a teacher, I've learned that there is some merit to those arguments. Waste does exist in the educational structures, but that waste generally is does not filter down and enrich anyone at the teacher/student/classroom level.

The greatest waste both financially and instructionally is the propagation of the ridiculous national and state accountability systems. These mandates, which are easily recognized by their acronyms- SOL, NCLB, and AYP, strike fear into the hearts of communities, administrators, teachers, and students. The tacit threats attached to them have encouraged the development of a seemingly slimy accountability business resplendent with guides, formative assessments, data-driven analyzation tools, and testing materials all peddled to frightened school divisions by data sharks.

The ultimate result of this destructive movement, is that the real art and process of teaching has become hopelessly caged and filtered. The intentions may have originally been good, but the results have been destructive.

So I'm with Reich. We do need to bail out the public education system in America. We need to bail out of the myopic accountability mandates. Accountibility is important. Teachers must be accountable for what they teach, but parents and students must be held accountable for their end of the bargain as well. We need to bail out of inferior funding formulas for our schools. State and local governments must be held accountable for providing funding that is more than basic. The nonsensical SOQ game our state plays with public school funding as it seeks to further and further reduce and shirk its responsibility for fully funding its share of the budgets for our public schools needs to stop. We need to improve the physical infrastructure of our schools, reduce class size, fully fund preschool initiatives, and attract highly qualified professionals with highly attractive wages and benefits. Education needs to be the priority.

If you don't bail out a canoe as it charges head-long down a turbulent stream, it will eventually sink.

http://tpmcafe.talkingpointsmemo.com/2008/12/03/of_financial_capital_and_human/

Hard Times

Hard Times honors one of my personal heroes, Studs Terkel, who passed away earlier in the month.

Robley Jones sent out another Budget-gram today...For those who follow the budget, the news is rather ominous. Folks, the budget shortfall in Virginia keeps growing. Back in the summer, it was predicted to be $1 billion. Then it eeked-up to $2.5 billion. Now..$3.2 billion. I've even heard whispers of more earth-shattering deficits. Times remain serious and uneasy.

Here's the full text of Rob's letter today:

The two day Senate Finance Committee Annual Retreat immediately followed the House retreat. This time the setting is the Fredericksburg Hospitality House Conference Center.

Four straight days of reports of doom and gloom have me paring my Christmas list.

Chairman Colgan’s opening remarks were shocking and courteous. Shocking in that the size of the budget hole has grown to $3.2256 billion. The Chairman was courteous in his emphasis on a desire for a bipartisan approach to the crisis. In my time as your lobbyist, exceptional individuals have chaired this most powerful committee in the Virginia General Assembly. Colgan maintains the high standard set by Andrews and Chichester.

Staff analyst, Becky Covey, said we have been in a “slow motion recession – probably since the beginning of 2008.” She asserted that, “A deeper recession lasting several quarters in now the likely scenario.”

When the discussion shifted to education, Education Committee Chairman Edd Houck pointed out that, “There really has not been a percentage change for K-12 since 1998. It has remained basically constant.”

What was most interesting is that staff presented the Compound Annual Average Growth from FY1998 to FY2010. Listed were the state programs that increased more than the 5.85% annual growth in revenue. What follows in a list of the programs and their growth:

Car Tax 14.7%
Child Support Enforcement 13.9%
Debt Service 11.0%
Comprehensive Services Act 10.2%
Aid to Localities – Police Dept. 9.8%
Indigent Defense 9.2%
Medicaid 7.5%
MHMR Grants to Localities 7.0%
Student Financial Aid 6.6%
Total General Fund Budget 6.0%

Why isn’t education on the list? The compound annual average growth of public education’s share of the budget was less than that of the growth of the budget – despite enrollment growth, expansion of pre-school programs, and new burdens on public schools such as NCLB. The growth for public education was slightly less than 5.85%. This refutes the claims of our enemies that education spending is out of control.

Given the size of the budget hole, there appeared to be consensus among those present to cut public school funding. VEA will fight cuts, but if they must be made, we will fight to make them temporary rather than permanent, with an eye on restoration of funding as we come out of the recession. We will also work to ensure attention to pupil equity.

Cuts presented to the committee included increasing class size, decreasing state support for school employee health care insurance costs and reducing the state share of SOQ funding from the current 55%.

In contrast with the House, the Senate seems willing to look at the revenue side, possibly revisiting recent tax cuts, to lessen the severity of the cuts to public education. While support for permanently reducing state support for public education seems broad in the House, the Senate leadership is resistant to that method of addressing the current budget shortfall. Hopefully, the Governor will align himself with the Senate in this regard.

Please encourage any non-members at your school join us. it's not too late. While we can't guarantee a future job, we can guarantee support and strength during these difficult times.

Thom

The Fall Line

Act Now! Jetzt handeln! Actúa ahora! Закон в настоящее время! Agire ora!

February 28, 2008

Dear RCEA Members,

For the past couple of weeks VEA has been monitoring some disturbing developments at the state general assembly regarding educational funding and teacher compensation. If you recall, VEA was initially disappointed with the Governor’s proposed budget. Although it included a full rebenchmarking of the Standards of Quality, it had very little support for teacher compensation.

Since that time the Senate and House have weighed in with their budgets for education, and after careful study, it’s apparent that the House budget, if approved, would be very damaging to education funding not only for the two year term of the budget, but on into the future. Penny Hodge, in her NEWS item to all Roanoke County employees today, explains the proposed House budget best.

The Governor’s, House, and Senate budgets all include approximately the same total dollars for Roanoke County Schools. There are, however, some significant differences in how those dollars are allocated to the school system. The House budget proposes to permanently change the funding formula so that future raises given to teachers are capped within the funding formula at the rate approved by the state. This effectively shifts the cost of future raises in excess of the typical 1% annualized state approved rate from the state to the local school divisions. The House has included funding for raises and additional construction grants in their 2008-09 budget so that it appears that the total revenue is as good as the Senate and Governor budgets. However, the funding for the raises and construction may or may not be included in future budgets and, in the meantime, the funding formula will have been permanently changed to reduce state aid to schools.

As many of you know, VEA has a team of legislative specialists led by Rob Jones and our very own Doris Boitnott. They have been keeping tabs on the situation and provide daily reports. The budget proposals are currently being debated by budget conferees. These legislators, a small band of senators and delegates, will hash out the details of the entire state budget and try to come to consensus. If the Senate conferees aren’t able to dissuade the House conferees from their destructive path for education funding, then the last line of defense would be the Governor’s veto pen. We simply don’t know for sure where the Governor will side in that battle, if it comes to that.

So our best option now is to contact the budget conferees directly and immediately!

The VEA has made this very easy.

Visit this link

http://www.veanea.org/legislative_contact.asp

and click on

Tell Budget Conferees to Support Public Education in Budget.

Rob and Doris have set the system up to send a letter on your behalf to each conferee. You can use the VEA wording or modify it with your own thoughts and ideas. Either method is effective. The key is that the conferees need to hear from educators, school administrators, school board members, Board of Supervisor members, classified employees, and exceptional citizens. Everyone needs to let the conferees know that the House budget’s educational funding solution is simply unacceptable.

Should you need further reading to more fully grasp the danger of the proposed House budget, I suggest you read the recent editorials in The Roanoke Times and The Virginian-Pilot. Also, please visit the official RCEA blog and VEA’s Daily General Assembly Reports to keep up on the latest on this battle for the present and future in Virginia Public School Education.

Yours,

Thom Ryder