By Tom Gantert | June 7, 2011
from http://www.michigancapitolconfidential.com 
 
In the Linden School District, teachers reaching their 10th year in the district got a 10.5 percent pay increase, even though the union contract has expired.

That’s one of the problems school administrations face when a contract expires and the district must abide by the terms of the expired deal. An expired contract can be lucrative for teachers. For example, in Linden the school district pays 100 percent of the premium for health insurance for teachers. This comes at a time
when new legislation may mandate a 20 percent premium-sharing for school employees and many districts are freezing pay. 

The Michigan Legislature has passed a bill that would stop step raise increases when contracts have expired and would also require employees to pay for any increase in health care costs during the expired contract. House Bill 4152 just needs to be signed by the governor to become law.

At Linden, a teacher with nine years of experience and a master’s degree plus 40 credits would see a 10th year bump from $66,631 to a top-of-the-scale $73,630 — a 10.5 percent increase. Most other teachers with under 10 years of experience would see about a 5 percent pay raise. In 2010, 98 teachers (64 percent of the teaching staff) had 10 years or less of experience in the Linden district, according to the Michigan Department of Education.

The Linden school board agreed to cut its fund balance to 3 percent of its total budget next year as it struggles with the growing expenses of the expired teachers union contract.

Michael Van Beek, education policy director at the Mackinac Center for Public Policy, said the Michigan School Business Officials recommend that districts maintain a 15 to 20 percent fund balance.

“A primary reason for this recommendation is that districts don’t receive funding from the state every month of the year, so they have to keep a fund balance in order to pay their expenses during the periods when they don’t receive state aid,” Van Beek said in an email. “Too low of a fund balance might require a district to borrow just to pay for day-to-day operating expenses.”

Linden Superintendent Ed Koledo said the district is proposing a 10 percent reduction in the salary schedule for teachers. The school would keep the step increases in place. Assistant Superintendent Mike Engelter said the district also wants a cap on health care expenses. He said the board of education has a high-deductible plan that would allow the district to stay under the cap with no out-of-pocket expense for the teachers with regards to the cost-sharing of the insurance
premium.

School officials said health insurance costs will increase by 6.6 percent starting in July. Both sides go to a state mediator starting today (June 7).  Laura Paige,  the MEA spokesman who represents the Linden district, said teachers have offered to pay more out of pocket for health care and have offered to take no wage  increases. “Do we understand  that the school district doesn’t have a lot of money? Yes we understand that,” Paige said. “We are trying to help, but there has to be compromise on both sides.”