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Archive for May, 2015

Today is the fall-out day for Christina School District, after the voting public voted 54-46 to not approve a referendum for a smaller tax increase than the one asked for in February.

With this, the district says they now have a $9.5 million budget shortfall. They say over 100 teachers, paraprofessionals and secretaries face layoffs, with more possible depending on next year’s enrollment. Extracurriculars, maintanance, and textbook purchases are also likely to be delayed or cut.

There is a lot of anger on both sides about this vote. Check out one well-known blogger’s take on the referendum; he is clearly upset that a majority of voters opted not to pay extra for CSD to continue running. Or read the comments section in the News Journal. On the one hand those who supported the referendum are furious that there will be layoffs at the classroom level; on the other hand, those who voted no are unhappy that they are being accused of not caring about kids when some went on record saying they want the district to watch how it spends money and cut all spending until they can cut no more, and then they can ask for a tax increase.

This was actually the position of some of the school board members in Capital School District, when they ran for office (and have, for the most part, kept to their word). Only after all efforts are made to reduce wasteful spending should school boards ask their constituents for a tax increase.

We at CRI have no dog in this fight. We are not allowed to support or oppose a referendum, and this illustrates the need for voters to be informed about the issue before going out to vote.

Here are some facts:

  • Christina SD spent more money in 2013, the latest year Transparent Delaware has data for, on employee payroll. Now Christina Sd has the second-largest public school enrollment (Red Clay is #1), and part of the district encompasses Wilmington. However, Red Clay’s reported payroll was $130.3 million, or $27.6 million less than Christina, for roughly equally-sized districts.
  • Both districts have roughly the same number of non-public school students, and each has a charter school which has been accused of taking only the “best” students. Newark Charter and for Red Clay, Charter School of Wilmington.
  • It’s not a 100% perfect comparison, but the state DOE says Christina SD employed 2,749 people this year, of which 43% were in-classroom teachers. Using roughly $158 million for spending for this year, that’s an average district salary of $57,475.45, which is above the statewide average for both private and public sector employees. Now this is, of course, a somewhat inaccurate picture: the state DOE says a new teacher with a bachelor’s degree and 4 or fewer years of experience makes about $41,000, but at 15 years of services averages at $61,530. Have a Master’s degree? That teacher can start out at just over $47,000 and at 30+ years of service averages just over $77,000 a year. 54% of district staff (included non-teachers) have a Master’s.
  • 60% of the district is made up of Black and Hispanic students, and 41% of students are low-income while 18% are classified as special needs. The good news is, the overall graduation rate is up. The bad news is, the district’s SAT scores are lower than the state average, which is already 50th in the nation (we will soon have ACT data to back up our SAT results).

The district absolutely has a lot of challenges, and it may be time to split the Wilmington section from Christina and build a school district just for Wilmington, so the city’s leaders can focus on helping those kids, or splitting Wilmington into just two districts (Red Clay and Brandywine). But Christina, like virtually every other district in Delaware, is simply not producing results, and clearly the lack of money is not the problem.

For 50+ years, education leaders and union officials say if we just “invested” more in public education, we’d have  these great schools. But they never talk about changing the system, which is the real culprit here. Running a one-size-fits-all classroom setting only encourages proactive parents to pull their kids out and send them to charters or private school. They say they’re forced to take special needs and “problem” kids, but there are schools like Prestige Academy, Reach Academy (soon to close), Tall Oaks Classical School, and Kuumba Academy who will take in students from different backgrounds, not just the “good” kids. For instance, in 2013-2014 Prestige’s student enrollment was roughly 20% who were classified as special needs or requiring an IEP. There are schools who will take students from diverse backgrounds, but the most ardent proponents of public schools will not allow parents the opportunity which can be offered via an Education Savings Account, insisting that all kids go to public school, then complain when they get the kids they won’t allow to leave.

It’s long past time that Delaware, and the rest of the country, take a look at our public school system and implement real changes. The ultimate focus should be on how we as a society can best educate our kids, not who gets the money. As long as who gets the money is the focus of our system, it will be the kids who suffer the most, as ultimately the students will be the ones who will be affected by the fallout from yesterday’s referendum.

For the record, there is no word on how many of the district’s 108 employees (4% of the total) who earn over $100,000 in total salary will suffer pay cuts or job loss.

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Every year, the General Assembly finds a way to balance the budget, as they are required to do by our state constitution, or at least use accounting gimmicks to move spending around so future liabilities aren’t held against the current FY budget.

This year, the state’s “in a pickle”, so to speak, or maybe something to do with scrapple would fit better. There is a budget deficit in the neighborhood of $70 million, which increased after legislators caved to state employee demands not to pay additional expenses for their healthcare policies due to a wage freeze for most state employees, a freeze which has lasted for years. Not only did they not make this move at the request of Governor Markell, but they added $21 million to the deficit with money we don’t have to keep their constituents happy.

Meanwhile, the state wants money to pay for infrastructure spending, cleaning up the waterways, investing in startups/businesses to grow the economy, paying for increased Medicaid and public education expenses, services for the increasing number of senior citizens retiring into Delaware, and so on. As spending goes up, the state is collecting less from casino revenue and  personal and corporate income taxes than in previous years. You can see where we’re going to run into problems, and we’ve predicted for some time that the next governor of Delaware is going to have a serious fiscal mess to fix.

So what do our elected officials have in mind to balance the budget? Some new ideas include: raising state income taxes on top earners from 6.7% to 7.6%, increase Delaware’s per-gallon gas tax, motor vehicle fees, and taxes levied on wholesale fuel deliveries to fund new road and bridge improvements, increasing the gross receipts tax, reduce corporate income taxes, eliminating the estate tax, and actually cutting personal income taxes across the board.

“There’s not going to be a split of these issues that will give us the transportation money and we’ll figure this out later,” Lavelle told the News Journal. “I didn’t fall off the banana truck yesterday. I’ve been fooled more than once down there and it ain’t going to happen again.”

Did you see what was missing among these ideas? Ways to cut state spending. This is how our state does “the water dance,” similar to how many indigenous tribes around the world pray for rain; they do a symbolic dance and hope the sky will open up and rain will just fall and provide much-needed water to grass and crops so they will grow and life can continue. Replace the actual dancing with accounting “dancing” (tricks), and the rainfall with moneyfall, and otherwise the concept is the same.

Now some of this has already been done; we know the state Department of Education is about to take a big hit, as Legislators have become increasingly opposed to the Governor’s education plan, which includes Secretary Murphy. Race To The Top funds are phasing out and school district referendums continue to alternate between passing and failing, which means some districts have found themselves cutting back on spending and hiring while freezing wages for some district employees.

Yet when we see the final budget, which must be passed by June 30, where else will the state consider making cuts? Senator Lavelle went on record suggesting that tax increase were off the table unless the prevailing wage law is reformed or repealed. Will Delaware Democrats be willing to stand up to their union supporters and change the prevailing wage law?

Another way the state could make cuts is to get us out of RGGI, which is a regional cap and trade scheme. RGGI does not do anything for the environment, but it does increase our electric bills by an average of $50/year per household, and thousands more per year for most industrial businesses, who have most of the remaining few manufacturing jobs Delaware still has. Will the GA make an effort to pull us out of RGGI?

Delaware has plenty of room where cuts could be made, the only determination will be whether they make them or not. In the meantime, please visit caesarrodney.org

for the latest news and information you can use to learn about our state’s fiscal situation and click on the “Impact Delaware” link to learn more about how you can make a positive impact on Delaware.

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A few weeks ago President John Stapleford (yea, that has a nice ring to it) published an article praising Governor Markell for making the decision to ask state employees to contribute a little more to their healthcare plans. He wrote:

“State employee and retiree health care costs have been rising exponentially and are not sustainable. The claims have jumped 20% over the past three fiscal years and the latest Pew Trusts analysis estimates that the State of Delaware has unfunded long term health care liabilities of $5.6 billion.

Data from the U.S. Bureau of Labor Statistics shows what the Governor proposes is not onerous. The State pays for almost 91% of the employee’s health care premium. Nationwide, state and local governments pay 87% and the average in the private sector is just 79%.

According to the BLS, the average pay for workers in service-providing industries in Delaware was $51,647 in 2013 while the average pay for Delaware state government employees that year was $53,450. The 2013 BLS occupational wage survey for Delaware shows an average wage of $39,130 for full time workers in protective service occupations while 2013 State of Delaware payroll data shows annual pay for full time workers in the Department of Corrections to be over $46,800.”

After publishing this article, we heard back from state employees, upset by our article. Some unfriended us on Facebook. Others unsubscribed from our e-mail blasts. I even received on particularly upset letter with a five-dollar bill saying the following:

“As a State of Delaware employee, I work hard for my paycheck. I do not have a flashy job and am not in a position where I will ever receive accolades for my wondrous feats. When I retire, no one of acclaim will come to speak at my send-off party, if I’m lucky enough to have my friends pay to have one. I am grateful to have the ability to contribute to a retirement plan that will help supplement the meager social security check that I will receive when I am eligible under the rules of the Federal Social Security Administration….I am a fan of your organization, but would love to see some positive support for the hardworking State Employee.”

This particular letter is upset over our Transparent Delaware website, where we wrote:

“Caesar Rodney requested the State Pension Data as part of our Freedom of Information Act (FOIA) effort and received this response from the State Office of Management and Budget.

“The release of pensioner information is addressed in Delaware Code.  Specifically, 29 Del. C §8308 (d) states as follows:
‘(d) All records maintained by the Board or the Office of Pensions and Investments relating to the pensions or pension eligibility of persons receiving pensions from the State or other post-employment benefits and who are not presently employed by or serving as officers of the State or its political subdivisions shall be confidential.’

Accordingly, your request for state pensioner information as contained in your December 16, 2011 request cannot be fulfilled.”

Many other states now release State Pension information for public use.

Caesar Rodney would have to go to court to secure the release of the Pension data even though the release of that data is forgone because it is taxpayers’ money. ”

We have a large number of supporters who are current and retired state employees, so let’s set the facts straight and respond to our letter writer.

No one at CRI hates state employees. Nor do we assume they are collectively a lazy, undeserving bunch. Delaware needs some number of competent, hardworking state employees, and this letter writer is correct that most of them receive middle class wages and not the six figures much of the leadership gets.

But what this letter writer misses, and what many state employees miss, is that they are receiving their salaries from taxpayers in the private sector. Regardless of where it comes from, if the government provides it, the private sector paid for it in some way. If government were completely honest about spending, we would not need to threat a lawsuit. But we as taxpayers have a right to know what they are giving to others, and while this letter writer may believe his or her pension is too meager to be noticed, the collective pension total of all state employees is very high- just how high, we don’t know.

AS for the complaints that Markell was wrong to ask state employees to contribute more to their healthcare plans, they are not being asked to pay more than anyone in the private sector, nor do we want it taken away in its entirety. But for many people, it’s difficult to see past their own personal lives. Most of those who voted in our poll to say taxpayers should pay more because state employees haven’t received COLA raises since Markell took office are missing the point that their private sector counterparts aren’t doing much better.

The reality is, Delaware spends too much money. Unfunded liabilities are a problem and private sector tax collection from individuals and businesses has declined the last two years, not even counting the casino troubles. This is a big reason why most of the referendums to raise property taxes to pay for the public schools were voted down- it isn’t because people hate teachers or don’t want to see the local public school succeed. In fact, all of us at CRI join the majority who want to see public schools do well because when all schools succeed, all children have the opportunity to succeed to. This success can and should include traditional public schools.

But people are tired of paying money into a system with mediocre to poor results. They are tired of being excluded from the policy-making process, all while told they need to cough up more or else they’ll prove they don’t like teachers, et. al. Why should taxpayers continue giving money to a system which has failed?

If state employees feel disrespected, they should understand the current system is the problem. The way we do business is simply unsustainable and unless changes are made, we really will collapse, and this is not a blog for conspiracy theories or nihilistic predictions. CRI is a government accountability organization, and as long as our state government officials are not held accountable for their actions, then CRI will continue to support policies which reduce the burden on the private sector and hold the government accountable for how they spend our money.

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National Right to Work Legal Defense Foundation

Last week the General Assembly took a look at right to work zones and another minimum wage hike, and neither bill was brought out of committee. This should not be a surprise, as right to work (RTW) has long been opposed in Delaware as the “right to work for less” and a corporate ploy to deny workers their basic human rights, like a reasonable wage, health care benefits, workplace safety, pensions, and the like. Minimum Wage (MW) increases are far more popular: think about the great PR between the “big businesses” who don’t want to increase worker pay, such as in the restaurant and hotel industries, and the struggling worker who can barely afford to make ends meet.

MINIMUM WAGE The MW bill failed for two reasons: one, they had just passed an increase last year, with the second half of the increase set to take effect on July 1, raising the MW from $7.75/hr to $8.25. The new proposed bill, also by Senator Robert Marshall (he sponsored last year’s proposed increase), would have raise the minimum wage to $10.25 by 2019 and then tied increases to the Cost of Living Adjustment (COLA).

First off: If people are struggling so much right now, why doesn’t this bill just go for $10.25 right now? The argument will be that businesses “need time to adjust”, but if the wage was made $10.25 by January 1, 2016, businesses would adjust. And why $10.25? Given the price of food and electricity in this state, $10.25 an hour, at 29 hours a week, is $297.25. Times 52 hours a week, that’s $15,457 in annual salary…which is within the federal poverty level.

So let’s that that $7.25 federal minimum wage. At 29 hours a week, 52 weeks a year, that’s $10,933 a year. As you can see, that’s basically giving a person in poverty a little more comfortable poverty.

What we at CRI want is for people to have economic mobility. That means that instead of feeling pressured to work a low-wage job for slightly more per hour, we want there to be opportunities, combined with better education, that let you leave that low-wage job entirely for something much better with more job security.

Here’s the secret sauce: the more power workers have to find new jobs, the more power they have over their wages. For example, in certain parts of North Dakota, near the Bakken Formation, some McDonald’s stores was posting entry-level jobs at $15. Why? Because they had to pay better to meet the growing demand and convince people there to work at McDonald’s to help meet demand instead of taking another job. Wages go down in economies where the employer has all the power. Arbitrarily telling businesses what they must pay isn’t going to magically make worker wages go up. Restaurants, hotels, and other industries with low-wage employees will either raise prices on their customers, or let go of some employees. And if customers don’t want to pay the higher costs needed to keep workers employed, then employees become ex-employees very quickly.

The reason for this assumption is that many voters and lawmakers believe business owners actually do have the cash to pay their employees, but they’re greedy and so want to exploit their workers so they can bank bigger profits. For the most part, this is just not true. These minimum wage hikes not only hit franchisees of major establishments, but local small businesses who cannot keep up with the paperwork and costs of businesses the state keeps imposing. And lest anyone think government intrusion is wonderful and anyone who can’t pay “the cost of doing business” should just go under, remember that when these people are unemployed and then you wonder why far too many people cannot find decent paying jobs.

RIGHT TO WORK To no surprise, RTW was not released from the chambers for a floor vote. The underlying belief is that somehow RTW destroys the local economy and, combined with Prevailing Wage (PW), is great for workers. Even if Delaware continues to shed blue-collar manufacturing jobs which kept many workers employed, sometimes for life, some will insist that our current situation is better than having RTW/

RTW does NOT abolish unions; in fact, the two states with the most union growth in 2014? Indiana and Michigan, who just recently passed RTW laws. This is because more jobs=more opportunities for union leaders to offer representation to workers. Fewer workers= fewer opportunities to reach out to new workers. RTW laws make it explicitly clear that unionization is not banned; unions cannot, however, compel a person to join that union as a condition of employment or ask an employer to fire a worker who fails to pay union dues, as states like Delaware do.

This issue is not about “union busting”, it’s about worker freedom. If a union organization thinks members of a particular industry should unionize, then justify their reason to join to them. Offer the kinds of services and support your members want, and they will be convinced to become or stay union members. Right now many workers nationwide don’t think their union leaders are effective, so the appeal of keeping money in your pocket is far more effective. Rather than justify their positions, union leaders and their allies just declared unionization a “right” and went on all-out smear campaigns against anyone who disagreed. In some cases pro-union members got violent with their opponents, as in Wisconsin and Michigan.

Anecdotally, we at CRI can tell you that Governor Markell could not get anyone from Volvo to return his phone call when he tried to make one of Delaware’s two empty plants available for manufacturing jobs. He was also told that no automobile company will consider moving a new plant into a state that doesn’t have a RTW law. Notice how our New Castle County plants sit empty, waiting for businesses and good-paying jobs,and even mainstays like DuPont have moved a large portion of its manufacturing out of state. Companies like Fisker and Bloom failed to bring the jobs they promised to bring. The failure to have  RTW law encouraged DEDO to hand over billions in taxpayer dollars to businesses as an incentive to move here.While a lot of Fortune 500 companies incorporate here, notice how many of them don’t actually conduct their non-administrative business in the state.

In the economic system CRI champions, cronyism (crony capitalism) of government subsidizing preferred businesses is not the best use of taxpayer money. Instead, a RTW law, combined with tax and regulatory decreases, will send a strong signal to out-of-state businesses that Delaware is open for your business, and we welcome new manufacturers and the “job creators” who employ people.

The next step is for the business community, which rallied around opposition to the second MW hike proposal and a proposed worker’s comp increase to come together on RTW and support the need for worker freedom in Delaware. Workers who are dissatisfied with their union should feel able to speak up without the fear of getting fired for disagreeing with their union, any more than whistleblowers should be protected from those they are blowing the whistle on. Let’s hope the General Assembly gets it right next year and really get the First State going again.

top photo: National Right to Work Legal Defense FOundation, Inc.

bottom graph: theatlantic.com

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