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The “McCleary Fix” isn’t a quick fix
The “McCleary Fix” isn’t a quick fix
Posted on 08/26/2018

When the legislature added almost $1 billion for school employee salaries it came with an entirely different system for paying school staff. While the amount of money being provided to school districts may be going up, the amount most districts can raise and spend using local levies is going down, and what the money can be spent on has new limits.

With the McCleary fix a new regionalization funding enhancement factor was applied which changes the amount allocated for students depending on the location of the school district.

The Puyallup School District has received a regionalization funding enhancement factor of 6 percent - nearly the lowest in the state. This provides $12,374 for each student. With an enrollment of 23,142, the amount received is $286.3 million.

Many neighboring districts are receiving much more funding from the state. For example, Sumner, Federal Way, and Tacoma all have a 12 percent regionalization factor and thus are being allocated more money per student. This funding inequity is having a great impact on the budget decisions made by Puyallup School District leadership.

Another blow to the Puyallup budget is a loss of 55 percent levy capacity. According to the OSPI 4 multi-year tool, Puyallup’s total funding increase as of FY 2019-20 will net $14.5 million which provides much less flexibility in providing raises than, for example, Lake Washington School District, whose funding increase is $82.6 million. Thus, there are variations in salary raises being offered from district to district.

In response to some questions which have been raised in the Puyallup community on social media, the following is offered to bring clarity to some perceptions:

  1. Fund Balance - The Puyallup School District Board Policy #6022 established a set aside of 13 to 15 days of operating expenditures to ensure operational cash flow needs are met. It requires $1.2 million for each day of operation, so a balance of $15.6 million to $18 million is set aside for this purpose. Previously, the requirement was for 5 percent of expenditures in reserves, (which is $15,537,885) but this was revised by the board of directors in June 2016. Additionally, there are set asides kept in the fund balance for known obligations, restrictions, and to help protect against unforeseen circumstances. To see the fund balance in greater detail click here.

    Because of cyclical tax collection patterns, the fund balances spike in October and April of each year. For example, in October 2017 the fund balance included the receipt of $18.3 million and $9.9 million in the General and Debt Service Funds respectively due to the fall property tax collection phase. You can see this in the combined balance sheet for October 31, 2017 if you click here. Likewise, May is the last month of substantial tax collection for spring. In May 2018 the General, Debt Service, and Capital Project Funds received $6 million, $3.2 million, and $115,667 respectively in spring property tax collection. The district expects the fund balance to decline significantly through the end of the fiscal year which concludes on August 31, 2018. To view excerpts from the June 18, 2018 school board meeting in which the cyclical tax collection is presented click here.

  2. Reducing taxes for Puyallup community - Because of the new state education tax (part of the McCleary fix) Puyallup residents would have seen a much higher spike in their total tax rate in 2018 and  a significant drop in the tax rate in 2019 as new limitations go into place reducing PSD’s local levy rate from $3.48 to $1.50. In an effort to smooth out the tax rates for residents over the next few years, school board directors approved a short-term inter-fund loan of $10 million from the district’s capital projects fund to the debt service fund. Neither of these funds can be spent on salaries. This inter-fund loan will reduce the amount collected of tax payers in 2018, thus reducing what would otherwise be a one-year spike in tax rates. Then in May 2019 the district will repay the capital projects fund $10 million plus interest from the proceeds of the first half tax collection in 2019. To view the inter-fund loan commitment resolution passed by the school board on November 6, 2017 click here.

    Providing educators current technology - In an effort to provide teachers the tools they need to personalize instruction and prepare students for a technology-driven world, and to increase engagement and achievement for all students, the PSD Board of Directors approved a resolution to accelerate completion of the technology initiative, Empowering Puyallup, from the fall of 2021 to the fall of 2019. This one-time expenditure allows the district to meet its goal to provide all students and teachers the tools they deserve. Acceleration of the Empowering Puyallup timeline furthers the district’s mission towards equity and engagement. To view the resolution passed by the school board on January 22, 2018, click here. To view excerpts from the January 8, 2018 school board meeting in which the board approved acceleration of Empowering Puyallup click here.

  3.  Providing a salary increase - The McCleary Lawsuit was settled with the Washington State Legislature committing more money toward the costs of public education. In doing so, they created an incredibly inequitable funding formula which is different for each community, abolishes the state salary schedules for teachers, funds every teacher based on a statewide average regardless of their education level and years of experience, and gives some districts the right to collect more levy dollars than others. As noted above, the Puyallup School District has been allocated a 6 percent regionalization funding enhancement factor. Some districts in Pierce County have funding enhancement factors of 12 percent and some school districts in King and Snohomish Counties have enhancement factors as high as 24 percent. The minimum and maximum base salaries for these districts would be increased by their funding factor. For example, a school district with an 18% enhancement factor would have a minimum starting salary of $48,097 and a max of $108,218.

Yes, a district receiving an 18 percent enhancement can provide a double digit pay increase. A district with a 6 percent enhancement cannot.

On July 23, 2017, the legislative session finally adjourned. Because of such late decision-making districts were required to build initial budgets for the 2017-18 school year based on many unknowns. Simultaneously, Puyallup SD was in the midst of negotiations with several bargaining groups. At the conclusion of negotiations, the district committed to an ongoing increase of $12.5 million as an investment in employees. For example, in addition to the state’s Cost Of Living Adjustment (COLA) of 2.3 percent, the Puyallup School District increased salaries for all employees by an additional five percent. All staff received a 7.3 percent raise.

Over the past three years, Puyallup teachers have received a 16.1 percent pay raise. The average Puyallup teacher salary, without benefits has been as follows:

2015-16            $68,037

2016-17            $70,081

2017-18            $74,770

Over the past five years, although the state did not always provide a COLA, Puyallup School District provided salary increases for teachers each year.

The Puyallup School District is currently operating with a first year’s teacher base salary of $37,257. In addition, beginning teachers earn a $7,981 Time, Responsibility, & Incentive (TRI) package. TRI is one way of recognizing the many hours teachers spend outside of their 7.5 hour work day grading papers and planning lessons.

Combined, the beginning salary is currently $45,238 - well above the state’s new minimum salary of $43,206. This salary does not include additional professional development days or supplemental days. When included, the current first year teacher earns $46,687 for a 187-day contract. This averages out to $33.28 per hour. At that rate, a first-year teacher working the full year would earn $69,222.

An experienced teacher earning the maximum salary of $97,213 would have an hourly rate of $69.31. Annualized to a year-round/260 day job, that would be an annual salary of $144,165. 

Puyallup teachers also receive retirement benefits which are calculated on total wages earned including TRI and extra days - not only base salary. They also have available $843 per month towards health insurance, $375 for school supplies, 72 hours of sick leave and 32 hours of personal leave per year.

It is important to remember that Puyallup continues to grow in population. The district has seen rapid growth in the last few years. This fall we will welcome 51 new teachers due to growth and reduced class sizes at grades K-3.  We also have 17 additional classified staff to help in the classrooms. The on-going cost for the 68 additional employees will be nearly $6.7 million.

As they manage the annual budget, directors of the school board must be prudent in their decision-making. Any increases in salaries must be sustainable and cannot place the district in a fiscally untenable position.

Additionally, according to Revised Code of Washington (RCW) 41.59.800, the state has limited bargained salary increases to 3.1 percent for 2018-19. If implemented in the Puyallup salary schedule it would provide, at a minimum, a 3.1 percent raise to each teacher over what they received in base compensation alone for 2017-18. Base salary does not represent total compensation which includes TRI, additional professional development days or supplemental days.

The Puyallup School District maintains a conservative approach to financial management particularly because of the uncertainty and instability of future state funding and will continue to provide reasonable compensation through careful stewardship of public funds.

More information can be found on the district website. You may find answers to other questions or concerns by visiting the School Board’s page or by reading the 2018-19 Draft Budget data presented at the August 6, 2018 school board meeting.

You might also be interested in the following infographs:

School Funding in Washington State

PSD Fund Balance

Photo credit: Elaine Thompson/AP