State of Michigan statistics show Grosse Pointe Public School teachers are the highest paid in the state. Questions have been asked and theories presented as to why this is the case. Teacher salaries are every district’s highest investment. As such we need to understand the dynamics of employee compensation fully, but undertake the analysis in an objective, constructive manner.
Teacher salaries. This is a heavy topic. So here’s the preamble.
You are NOT about to read an argument that makes a case that our teachers are overpaid, or that they are greedy, or that they are to blame for school districts’ financial predicament, or that unions are evil, or any other similarly negative interpretation of this analysis. We have to be able to talk about compensation. We cannot fearfully avoid these discussions. This would be like a household under financial distress avoiding discussion about their mortgage as they plan their budget.
The fact is that teacher salaries are our highest investment. This should come as a surprise to no one. Furthermore, salary costs have a direct impact on our second highest expense, retirement costs. When dealing with financial challenges such as we are today it would be simply foolish to avoid analysis of our two largest budget items.
In anticipation of the next logical question, how can I, as a member of the Board of Education, position myself as an objective analyst? I myself am a graduate of the Grosse Pointe Public School System (South, ’86). I remain in frequent contact with dozens of fellow GPPSS graduates who are eager to see the district flourish. As a parent of three GPPSS students, an uncle to many more students, and friend or neighbor of the parents of scores more students, I want nothing but the best for our district. These are my motivations for Board service.
I count many teachers as friends. Many recall I, too, was once a teacher and know how familiar I am with the value they deliver, their motivation for their profession, and unique challenges of their jobs. I recognize the importance of a mutually respectful and beneficial partnership.
I don’t buy into the idea that Board members and teachers have to be cats and dogs. I have nothing to personally gain in the increase or decrease of employee compensation. I believe, as I am sure our employees believe, that the Grosse Pointe Public School System must maintain financial equilibrium in order to deliver the services the community expects. As a Board member, my responsibility is to help ensure short-term AND long-term financial equilibrium within the construct of how Michigan funds public schools. So with that foundation, let’s get started.
In a recent post and in a variety of benchmarking reports I have pointed out the implications of employee compensation on school budgets. This begs the question, if it is true that Grosse Pointe Public School teachers are the highest paid in the state, how did it come to be that way and how can we afford it? One hypothesis is that our teacher salaries are higher because we have a more experienced staff (in terms of years of service) and better educated teachers (measured by degrees and post-graduate credits).
Before we get into the weeds, let’s look at the big picture. Salaries are the most significant of the direct compensation vehicles common to public school teachers. Other human resources costs are considered indirect compensation. Here are examples of both types:
| Direct Compensation |
Indirect Compensation |
| On-Schedule Salary | Health Insurance |
| Off-Schedule Salary | Ancillary Insurance (Vision, Dental, Life, Disability) |
| Longevity Payments | Retirement (MPSERS) |
| Retirement Incentive Payments | FICA |
Salary is characterized as on or off schedule because teachers are paid according to what is commonly called a salary schedule or grid. Here is the GPPSS teacher salary schedule for the 2007-8 budget year.
The dollar value in each cell represents a teacher’s annual direct salary, not inclusive of any other direct compensation vehicle. Salary schedules operate along two dimensions – steps (flowing from top to bottom) and lanes (from left to right). A step represents a year of service to the district. A new teacher starts at step1 and the next year would progress to Step 2.
Lane position is dictated by teacher attainment of degrees and/or post-graduate credit hours (BA, Masters Degree, doctorates, and incremental credit attainment along the way.) If that same new teacher’s highest degree is a BA, the starting position would be lane 1 / step 1.
As post-graduate credits or degrees are obtained, a teacher will move lanes to the right while maintaining step level from lane to lane. Let’s assume that in the 8th year of employment our once new teacher had accrued more than 20 post-graduate credit hours, he/she would slide over a lane to Step 8 / Lane 2. If in 2 more years he/she earned a Masters degree, he/she would be on Step 10 / Lane 4. And so on….
Every change in a step or lane delivers salary increases (raises). The raises in the schedules remain in place regardless of whether a contract is expired, until a successor contract supplants it. When you see news coverage of school district contract negotiations the percentage changes referenced are to the salary schedule on the whole. If a new contract delivers a “raise” it is incremental to the raises already embedded in the salary schedule.
For example, a 2% “on-schedule” raise in a new contract would increase every cell on the schedule by 2%. It delivers a permanent change to the schedule. An “off-schedule” payment of any percentage pays as a bonus that amount applied to the annual salary dictated by the schedule, but does not deliver a permanent change to the schedule.
Salary schedules in all districts serve a similar purpose, but often in vastly different ways with significant financial implications.
Salary schedules can have significant differences. Let’s look at examples from three local school districts for the 2007-8 school year that most would consider comparable to GPPSS; Bloomfield Hills, Birmingham, and Farmington Public Schools.
Many of the cells correspond closely with one another – the first year BA teacher (step 1 / lane 1) is a good example. Some have pretty significant variances. Notice the Step 11 BA teacher in Bloomfield earned $75,640 compared to Birmingham’s $70,205. Bloomfield must be the better paying district, right? Maybe. That depends.
Remember how each move along the salary schedule represents a wage increase? Well, each of these examples have the same 11 Steps, but notice the difference in the number of lanes. Obviously time passes as teachers earn post-graduate credits and degrees. The more lanes in a salary schedule means the more opportunity to monetize the credits earned in salary.
Bloomfield’s salary schedule offers no incremental salary increases via lanes between a BA and a Masters Degree (MA) whereas Birmingham provides an increase upon attainment of 15 credits and then 30 credits before earning a Masters Degree. So while the Bloomfield Step 11 / BA teacher may earn more at that particular level, the Birmingham teacher earned raises along the way. The actual difference would depend on how long it would take the teacher to earn the Masters Degree.
There are other considerations, such as the rate of increase of steps within a lane. Bloomfield clearly pays more than Birmingham for the Step 11 / BA teacher, but along the path to get to Step 11, the Birmingham teacher will have earned $17,258 more than the Bloomfield teacher. The difference is even more pronounced for the GPPSS teacher’s trip up the BA Step ladder. Even though the Bloomfield Step 11 / BA teacher earns more than the equivalent in GPPSS, on the way there the GPPSS teacher will have earned $29,854 more than the Bloomfield teacher.
As you can see, comparison of salary schedules must factor many variables. How do we compare them? How can we test the hypothesis that GPPSS teachers are the highest paid in the state because they are either more experienced and/or have better educational credentials? If this theory were true then if the entire staff of GPPSS teachers were transferred to another district, keeping with them their years of experience, degrees, and credits, then the total salary costs should be, at best, the same.
All the schedules had the same number of steps but different numbers of lanes. To array the GPPSS teachers across those schedules I carried over the salary of the preceding lane since that is the same effect of not having a lane that corresponds with the GPPSS schedule. Where there were offsets (18 credit or 24 credit lanes) I evenly distributed those to the lanes on either side of the GPPSS schedule. I then laid in the array of GPPSS teachers just as they are in our district and applied them to the other revised grids. Here are the results:
| GPPSS Teachers on District’s Salary Schedule | GPPSS Actual On-Schedule Salary Costs | Difference
|
|
| Bloomfield Hills | $44,456,053 | $46,273,480 | ($1,817,427) |
| Birmingham | $44,723,441 | $46,273,480 | ($1,550,039) |
| Farmington | $43,171,837 | $46,273,480 | ($3,101,643) |
The data does not support the conclusion that Grosse Pointe Public School teachers earn more simply because they are more experienced. The difference is the salary schedule itself.
So the hypothesis was that GPPSS teachers make more because they are more experienced and/or have better educational credits. Experience, just in straight years of service, does not support this hypothesis. With the same years of experience, the GPPSS teachers make more on the GPPSS salary schedule.
Why? It varies by example. The GPPSS salary grid has 11 lanes as compared to Bloomfield’s 4 and Birmingham’s 6. The teachers in those districts may well have the same educational credentials as GPPSS teachers, but GPPSS compensates for incremental progress in post-graduate credits by virtue of its 11 lanes, significantly more than both Bloomfield and Birmingham, offering far more opportunity for pay increases.
This difference is best exemplified in looking at the span between obtaining a Masters degree and a Doctorate. In 2007-8, over 500 of GPPSS’ 602 teachers had earned a Masters degree, but only 7 had Doctorates. Teachers typically take graduate classes to maintain teacher certification status. In GPPSS we offer 6 lane changes triggered by post-graduate credits between a Masters and Doctorate. Bloomfield has just one and Birmingham has only two. That translates to a massive difference in individual teacher salaries.
Farmington’s root cause is different – perhaps far simpler. With the same number of steps and just one less lane than GPPSS (which would account for some difference) Farmington appears to simply pay less. GPPSS pays a $3,101,643 premium in comparison despite a salary schedule with structurally similar characteristics.
Salaries are just part of the direct compensation story. In comparing teacher salaries from district to district, all compensation vehicles must be factored.
But as is usually the case, there is more to the story because On-Schedule salaries are only one element of direct compensation. A review of the contracts for the comparison districts for this report shows significant differences in the following areas:
-
Off-Schedule Payments: As stated above, these are essentially bonus payments calculated as a percentage of On-Schedule salary. For 2007-8 (and 2008-9) GPPSS paid a 1% Off-Schedule bonus. None of the other districts did this in this year.
-
Longevity Payments: These are also annual bonuses paid in many contracts that deliver a dollar value based on years of service. GPPSS’ Longevity payments are much richer than these comparison districts. Bloomfield appears to have none. Birmingham pays a flat $1,100/year/teacher with over 10 years of service. Farmington increases in increments from $500 to $750 to $1,000. GPPSS goes from $1,690 to $2,536 to $3,390. The data shows that GPPSS pays much more in Longevity pay, which would also drive up average salary statistics.
-
Retirement/Severance Bonus: Birmingham, Farmington and Bloomfield have contract governed programs, paying maximum of $4,500 and $10,000 in 2007-8. Birmingham pays $400 for every year of teaching service. GPPSS does not have one in the contract, but offered one 4 years ago.
I wrapped this all up together in the sheet below to show the aggregate impact of all these differences – again on the basis of using GPPSS teacher experience data to normalize the comparison. (Space was tight for a one-pager. Please view in “full screen” mode and zoom in.)
This makes it more clear why in summary reports the GPPSS teacher salary is higher when all of these other costs are factored. I then extended the comparison to show the incremental impact on retirement costs (MPSERS) and FICA, which are both factored as a straight percentage of salary. This presentation of the data provides a better understanding of factors contributing to total compensation. I do not believe the theory that GPPSS salaries are higher based on a more experienced or better educated staff.
How can GPPSS afford to have the highest paid teachers in the state when many districts receive more revenue per pupil?
So how is it possible that GPPSS can afford these higher salaries – particularly in relation to our per pupil revenue which is significantly lower than all three comparison districts? I’ll use that word again – equilibrium. Almost all district expenses factor into this answer and underscores the danger of cherry-picking isolated data points. Michigan public school districts have each reached their own levels of equilibrium in vastly different ways. This is where pupil to teacher ratio, administrative costs, class size, bell schedule options and hundreds of other decisions play a part. Over the 15 years of Proposal A’s existence, district’s have taken different paths to maintain balanced budgets. All the pieces matter.
Here’s a perfect example. Grosse Pointe has neighborhood schools requiring very low transportation costs. This is a large expense in other districts. In fact some district’s now are exploring the elimination of bus services as a way to reduce costs. This is not a lever we can even pull in Grosse Pointe. Yet the state makes no unique allowance for districts with busing expenses and those who don’t.
Can we say for sure that the expense other districts divert to buses go to our employees? Of course not, but it is undeniably a factor. Farmington spends $6,000,000 more on transportation than GPPSS. (Reference the chart above.) The comparison district’s transportation costs are strikingly consistent with the degree of difference in teacher compensation. It’s highly unlikely to be a coincidence and indeed there has even been discussion in Lansing of legislation to reduce per pupil funding to districts that do not provide bus services. What would that do to our equilibrium? We don’t have busing service to cut!
Health care costs are another great example. The variances in this spend from district to district is substantial. I just came across a data source for this comparison and will be giving that a look in an upcoming blog so stay tuned.
At issue for districts who spend more on salaries, however, is the incremental expense of MPSERS and FICA it creates. $6,000,000 of transportation expense is simply $6,000,000. If that same $6,000,000 is employee salary expense then it carries a 25% uplift from MPSERS and FICA and becomes $7,500,000. In the context of short and long-term budget planning, this requires attention, especially since the state dictated retirement rate percentage has been increasing steadily for years.
For those of you still reading, congratulations or my condolences. Take your pick. I know this is not an easy topic and is pretty dry, but understanding these concepts is critical to the ability to understanding school district budget and policy decisions.
I have been a trustee on the Grosse Pointe Public School's Board of Education since August, 2005. My familiy resides in GP Park. My three children attend GPPS schools and I am a graduate of GP South High School and the University of Michigan. 
Another excellent analysis and spreadsheet Mr. Walsh!
Keep them coming.
A great detailed comparison. Your comment “I don’t buy into the idea that Board members and teachers have to be cats and dogs” is spot on!
In fact, school boards are often the teachers best friend. School Boards recognize that teachers represent our finest and most important asset. We are now forced to adapt to lower revenue streams and are all looking for adjustments to SAVE teacher jobs. Yet, the dynamics of collective bargaining seemingly dictate the “cats and dogs” model. The union needs a “foil” in order to claim “victory” even as the process is collaborative in nature. It’s unfortunate.
Everything we’ve done in Birmingham (I’m a board member there) has been done to protect teacher jobs and programs. Our privatization of transportation and custodial services has saved nearly $8 MILLION over two years — all of which has gone to keep teachers teaching. We are now at the point where we’ve cut over $22 Million during the last 7 years. There are more savings to be realized via operational restructuring, but that path quickly running dry.
It’s time to look for small changes in our major cost components — salaries and benefits; small shared sacrifice will go a LONG WAY to stabilizing budgets and preserve teaching jobs. Our Central Administrative team has stepped up to the plate by giving back 1% of this year and CUTTING their pay by 4% for the coming year. I expect that most districts would realize dramatic stabilization if all employee groups employed a similar analysis. Compare this to the sacrifice members of our community have endured during the recession, mandated pay cuts of 20% to 30% and in many cases lost jobs and benefits. Those cuts and job loss represent structural change required to keep organizations alive. Schools need to do the same while the relative costs are low; waiting will make matters much worse for everyone.
With the new changes in state law — the impact of which has not been quantified — there is no reason to avoid this discussion. In fact, once economic activity recovers, the discussions should not only revolve around immediate cost savings, but how additional compensation can be directed towards teachers for demonstrated excellence in the classroom. As it is in a private corporation, outstanding teacher performance should be rewarded. This type of merit pay is above payment for years worked. I’d venture to bet that school boards across Michigan would be pleased to see their very best enjoy additional rewards for demonstrated excellence. We face a new reality in Michigan, and we face it together (not as “cats and dogs”).
Mr. Lawrence:
I would like to respond to just one particular point of your post: privatization.
Let’s just call privatization what it is — taking a state pension away from our custodial staff. As both a teacher and resident in the district, I do not want my compensation funded by slashing the retirements of my co-workers.
Yes, privatization makes good financial sense. But it doesn’t make good moral sense. We can find other alternatives for our community schools.
I would argue that its hidden costs do not make good financial sense either. A thorough transparent examination would show that the privatization of Grosse Pointe’s cafeteria has, in fact, not produced the savings that were promised to the district’s taxpayers. That any savings (at most, 6% of each employee’s wages), the district could reap come as a result of raping the retirement hopes of its least skilled, and lowest paid workers, almost all of whom work less than full time is, indeed a moral travesty.
I find the moral arguments made to be a little lacking in perspective of the overall context of the issue.
Don’t get lost in the weeds on the details of whether outsourcing does or doesn’t make financial sense without first recognizing the factors contributing to the drivers for outsourcing in the first place.
Why are school districts experiencing financial compression? Is it mainly because of the rising total compensation cost of custodians, bus drivers and cafeteria workers themselves? Only partially. Maybe a re-read of this article will help shed some light on the answer.
If you seek to make a moral judgement on this issue, which should also be expanded to include the past and pending layoff of both teaching and non-teaching staff, make sure you recognize your role in that passion play.
I’m sorry I did not see your response earlier.
Regarding morality, my point is simple. Career employees of the district should have a district-funded pension. That’s the “right” thing to do and taking it away is the “wrong” thing to do.
I specifically refrained from critiquing the rest of the economic environment. Don’t assume that means I don’t understand or appreciate it.
This is a complicated issue. But sometimes it is not.
Andrew,
Here’s a simple comparison. Your members make more than twice what the custodians do, yet you pay nothing for your health care and they pay about $2,500 each. They also pay a greater portion for their retirement than you do. Is that right or wrong? Or is this complicated?
Brendan
Brendan,
As the great American Dana Carvey said, “it wouldn’t be prudent at this juncture” for me to publicly debate negotiated items with you. “Not gonna do it.”
In my other post, I was lamenting the *process* which has stirred so much angst.
Your reply reminds me that our custodians receive reduced health care benefits as well as their outsourced retirement plan.
I try to dedicate myself to the cause a great liberal blazed: “to tame the savageness of man and make gentle the life of the world” (Robert F. Kennedy). I stray too often from that path and must correct my course.
I hope the Board of Education members will each revisit what drew them to public service and sacrifice. I doubt the current environment is the rewarding journey they envisioned. Citizens expect much from their leaders.
The last words RFK spoke included: “What I think is quite clear is that we can work together in the last analysis.”
Is that being done here?
Thank you for providing the forum.
Ahh, I see. It’s complicated. Look in the mirror.
Brendan,
When you began your blog, you critiqued those who use “deliberately charged words with connotations that detract from the real differences they represent.” (8/08/09)
Later you wrote, “I don’t buy into the idea that Board members and teachers have to be cats and dogs.” (1/5/10)
In all of my communication to you, I’ve displayed respect for both your elected position and your perspective. I do not use rhetoric to create enemies or martyrs.
You once quoted the movie Wall Street: “When a man looks in the abyss, there’s nothing staring back at him. At that moment, man finds his character. And that is what keeps him out of the abyss.” (8/31/09)
I’m sure you’ve received many hostile messages, but not from me. In your posts directly to me, you’ve suggested that I am hypocritical and naive about the complexity of the budget crisis. Since I’ve never revealed my perspective, you are ill-informed to make such conclusions.
Rather, I continue find the process demoralizing, a process that is not worthy of us in this community. I hope this is not part of the “new normal.”
Andrew Taylor
Grosse Pointe Park resident
Dear Brendan,
Thank you for this useful exploration of the compensation issue. I imagine that some school administrators and union leadership reading this post will find these variables familiar terrain in their collective bargaining negotiations. I think you have done a particularly good job describing the Grosse Pointe compensation scheme.
Several residents of my Groton, Massachusetts community were referred to your post as our town tries to grapple with these same issues. Our school and municipal budgets are straining the ability of our taxpayers to afford. One should try to understand how budget and teacher compensation are structured so that dollars spent will avoid waste and best express our community values. Thank you for your smart effort.
Thanks, Fran. I am glad you found these useful. I expect there is a good deal of commonality of issues such as these all across the country.
I totally agree that we must have a thorough understanding of these issues before making the really big decisions.
Best of luck to you and your community.
Brendan