Friday, February 19, 2010

Bait and kick down the road 

The Pew Center for the States reports a $1 trillion shortfall for state and local government employees' retirement benefits. (h/t: Arnold Kling.) One source of that shortfall here locally has been the presence of health benefit guarantees for retired teachers and administrators. The state of Minnesota gave permission to school districts with such unfunded liabilities to mark up property taxes to pay the benefits, and our local school district did so. Now, they want to divert that money to pay teachers current salaries.
School board members are expected to consider the budget recommendation Thursday. The 2010-2011 budget does not have to be approved until June 30, but staff needs to know how the board wants to deal with the expected shortfall before completing the budget.

Administrators considered layoffs, savings in health insurance and the elimination of a work day before settling on the use of the reserve and tax dollars, Superintendent Steve Jordahl said.

�We have said from the very beginning we would not cut staff. That is not an option for us. We said we wanted to protect, in this economy, our staff members,� Jordahl said.
Mr. Jordahl is a young man, and perhaps he has not had experience with down budgets before. But how much of his budget comes from payroll? What his statement means is "we are declaring more than 75% of our budget off-limits to cuts." Rather than cut one dollar from anyone's pay, or cut one job, the district chooses to kick its unfunded retirement benefits problem down the road ... after having raised taxes explicitly to solve the problem.

Add to this the loss of $250,000 for failing to settle contracts by a state-mandated deadline -- which combined with the Superintendent's statement means the teachers have no incentive to settle -- and you have another governmental unit treating the incomes of their constituents like a cookie jar.

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