IASPA Conference “Negotiations Under Current Economic Times and Salary Schedule Challenges”

1. IASPA Conference“Negotiations Under Current Economic Times and Salary Schedule Challenges” Barry Bolek, Asst. Superintendent for Finance, District #113 Mary Kalou, Asst. Superintendent for Business, District # 207 January 23, 2014

2. Agenda • Important Pre-Negotiation Information • Solutions to the Traditional Salary Schedule • Dual Schedule • New Schedule for All • No Schedule • Other • Important Non-Schedule Items • Summary/Questions

3. Important Pre-Negotiations Information • Where are your current teachers on the scattergram? • What are your Board Parameters • Do these parameters include specific goals? • Will the Board support the recommended changes? • What settlement do you need to maintain fiscal solvency in the future?

4. Variables and Emerging Ideas • Current Financial Condition of the District • Union Leadership • District Team • Changes in TRS rules and regulations • Tie annual expenditures to annual revenues which is most likely CPI • What expenditure variables can be changed in a progression and in increments • Health care costs • Retirement incentives • Post retirement incentives

5. Township High School District 113 Solution Dual Schedule • District Demographics • Many teachers were retiring in a 5 year span • Impact of Dual Schedule • Existing Employees – no change • New Employees – Half steps after year 5 • Combined Schedule Cost saved millions to date • Average savings per year now is over $ 400,000 • Replacement Savings

6. Maine Township High School District 207 Solution New Schedule for All • 5 Steps added to each column • Placed on step closest to but higher than current step cost - .66% • Old schedule 7 step increases greater than 5% New schedule 0 steps greater than 5% • Old schedule 28 steps greater than 4% New schedule 11 steps greater than 4% • Decreases step cost to under 2%. Lowering step ranges from 2.7% - 5.76% to 2.05% - 4.95%. • Saves between $416 to $12,840 on individual salary cells • Allows the District to save a projected $350,000 on replacement teacher costs during the life of the contract.

7. Zion Benton Township High School District Solution No Salary Schedule • Elimination of 15 Step Salary Schedule with 4.35% indexed steps & Longevity Salary Schedule • Three Tier Structure with different percentage raises based on tier. Allows for flexibility during economic difficulty as there is no guaranteed step. Percentage raise is based on salary from prior year. • Tier Level 1 - 1 – 17 Years of Service • Tier Level 2 - 18 – 33 Years of Service • Tier Level 3 - 34+ Years of Service • Educational Category Achievement - One time additional increase to salary when pre-approved educational milestones are achieved. • Additional 5% increase given for: BA15 and MA • Additional 2.5% increase given for: MA15, MA30, MA45, and MA60 • Semester changes equate to 50% of value listed above. Balance given at start of new year. • New hires based on tier level and educational category - will not exceed that of current employee with comparable experience. • A set starting rate was negotiated for each year of the contract, for new hires without experience.

8. Other Salary Solutions • One time stipend payments instead of base increases • Hard freezes • Soft freezes • Cost of Living as a CPI Formula • COLA as a percentage of CPI • COLA as an average of CPI & 2.5% • COLA as CPI – Step = COLA with a ceiling and a floor

9. Retirement • Offering only if retirement occurs at the “First Non-Penalty” year • Retirement incentives ties to years in the District and not total years of Service • Fixed dollar amount for retirement incentive

10. Health Benefits • Increasing employee share • Capping the Board contributions • Fixed Board contributions • Avoidance of the Cadillac Plan Tax • Changing plan (deductibles) to avoid increases

11. TRS changes to keep on the radar • ERO has changed the percentage and also added that the district has the “control” to allow the ERO option IF in the CBO • Cap set for “annual Salary”. At this time, we are not sure if that is the same as “credible earnings” for calculations • Will it include stipends? • Will one be allowed to sell vacation or sick days? • If a person teaches summer school, will that count? • Will a NEW contract that starts on July 1, 2014, but agreed upon with the Union and the Board prior to June 1, 2014 allow the future earning to be used as a new “salary cap”? • With the “new salary cap”, payment for TRS by employees and employers “STOPS” at the cap rate….. Have you talked with technology and payroll yet?

12. Negotiating items to consider • How long of an agreement can you lock in for? • If the law/rules change what kind of “opener” should you consider? • With TRIP and TRAIL changing for “post retirement health care”, what options do retirees have and opportunities you have to change post retirement health care? • Is the cap used to determine calculations to “ACA” , (affordable health care act)?

13. Summary • 5-6 years ago variation in settlements much smaller • What will influence settlements going forward? • Interest Earnings • New Construction • State Funding • Pension Obligations • Takeaway • Ideas that you can apply to your district

14. Questions/Comments • We hope that this has been helpful • Barry Bolek, Asst. Superintendent for Finance, District #113 • Mary Kalou, Asst. Superintendent for Business, District # 207 • Special thanks to you for attending and learning