News Story

While Schools Try Fiscal Responsibility, Union Sets Up Protests

Clintondale and Richmond are trying to stay out of financial trouble, but it may not last

Two school districts with a history of running budget deficits are encountering union demonstrations as they try to reach contract agreements. Clintondale and Richmond are operating without a current teachers contract as administrators and union representatives clash over compensation, working conditions and union perks.

Clintondale Community Schools, a district in Clinton Township in Macomb County, began running a deficit in the 2005-06 school year. The district was facing declining enrollment and increasing payments for retiree benefits. Although its foundation allowance from the state increased from $7,289 per pupil in 2005 to $7,641 in 2015, its student population declined from 4,750 to 3,118, a reduction of 34 percent.

At the same time, the district’s teacher pension costs grew from $2.8 million to $3.5 million. Though the teaching staff declined by 22 positions, pension costs went up 25 percent. The rising pension costs, along with declining enrollment, helped keep Clintondale on the state’s list of financially struggling districts.

But Clintondale began turning things around financially by focusing on saving money and getting concessions from employees. Searching for ways to cut costs, it took advantage of a 2011 state law that set a hard cap on what districts must pay for employee health care. It also reduced its staff and increased the job responsibilities for some employees as a way to reduce the need for hiring. Administrators found savings in textbooks and other instructional material.

The efforts worked: The district eliminated its deficit in 2016 and now has a $1.3 million surplus. That surplus, at about five percent of the total budget, is the minimum fund balance the district needs to avoid the early warning triggers of “fiscal stress” that bring state oversight.

But now the school administration and its teachers union are locked in a contract dispute, with the school board wanting more fiscally conservative measures and the union wanting the district to ratchet up the spending again.

The district has been operating without a current contract for several years. In fact, it’s been so long that the last collective bargaining agreement listed on Clintondale’s website includes illegal provisions, such as automatic union dues deductions and a violation of Michigan’s 2013 right-to-work law. And despite the deficits, the district is still providing paid release time to the local union president, who can spend half his time every day working for his union but still receive full pay from the district.

The district is proposing salary increases of at least $500 per teacher. If Clintondale’s fund balance is above 6.5 percent, teachers will then begin seeing raises of $1,611 or more. The proposal would also end taxpayers’ funding of the president’s union release time. The district also wants to move away from the current expensive health insurance plan run by the Michigan Education Association. Switching insurance providers would reduce premium contributions teachers must make and save the district money, too.

The district says its financial situations resulted from “a perfect storm of state funding cuts, decreasing enrollment, and increasing operational costs, including insurance, mandatory retirement contributions, and compliance expenses.” School board president Jason Davidson said the deficit was eliminated through shared sacrifices by all employees, including teachers, administrators, maintenance and custodial staff, secretaries and all other support personnel. The district also renegotiated vendor contracts.

“The board’s proposal is fiscally affordable and sustainable to allow the district to maintain a five-percent fund balance while providing a quality education for our students,” Davidson said. “As student enrollment has declined and with unpredictable funding from the state and federal government, we have to be cautious going forward to prevent another financial crisis in our district. Therefore, the board’s proposal ties future wage increases to the district’s fund balance. As elected trustees of the Clintondale Community Schools, the board has constitutional, legal, and fiduciary responsibilities to make decisions that will not risk another deficit or state oversight.”

But the union wants more. The Clintondale Education Association’s proposal would keep paid union release time, though it does promise to delete illegal provisions related to right-to-work and the automatic deductions of union dues.

The union also calls for immediately giving all teachers a significant salary increase, with more raises to come as long as the district has a positive fund balance of 6.5 percent or more. It also wants the district to keep the health insurance policy provided by the MEA, which, based on the bids the district got, would cost it between $200,000 and $546,000 more than other plans. The cost of keeping the MEA’s plan, offered by an affiliate known as MESSA, appears to be more than double that of providing salary increases for teachers.

The district proposed a new contract on Nov. 29, 2016. One day later, the union rejected it and offered a counterproposal. In 2017, teachers in the district began wearing T-shirts at school promoting the union and displaying picket signs about “working without a contract.”

Union members have been handing out fliers claiming that teachers have taken a 30 percent salary decrease – an incorrect claim — to get residents to contact school board members.

A half-hour drive north, in Richmond Community Schools, the story is similar. Richmond also saw declining enrollment and increased expenses over the last decade. The district was locked into a contract that called for pay raises.

Even after the collective bargaining agreement expired in 2009, teachers continued to receive raises until 2011. That’s because, until then, Michigan law said that the terms of a contract stayed in effect even if the deal expired — meaning teachers in Richmond continued receiving 4.5 to 5 percent raises despite the district being in deficit.

Teacher raises and the cost of health care — the district paid 100 percent of health care costs up until 2012 — helped push the Richmond district into deficit. In the meantime, the district lost more than 30 percent of its students as enrollment declined from more than 2,100 in 2004 to 1,434 today. The district has improved its financial position and still has a positive fund balance, but it continues to operate with annual deficits.

The teachers contract expired last year, but as the administration and union negotiate a new one, they are far apart.

Facing an ongoing loss of students, the district wants to shift insurance away from MESSA and to Blue Cross Blue Shield, which would save teachers up to $6,400 each year in premium payments and deductible costs. For next two school years, Richmond would give teachers about a 1 percent pay increase each year. Even then, the district projects that its general fund balance will be under 5 percent, which would trigger state oversight.

The union wants an immediate raise for teachers, reimbursement for snow days and other cash payments. It also wants teachers to keep moving up the salary step schedule. But the district projects insolvency would come in less than a decade were the union proposal enacted, so it is pushing for mediation.

Both districts have met with their union locals more than a dozen times, and in the case of Clintondale, the two have met with a mediator as well. Both districts have been targets of the powerful Michigan Education Association, which has led picketing and applying pressure on school board members.

The union leadership in Clintondale and Richmond did not respond to a request for comment.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.