Illinois

1
Illinois Climate Is Changing How to Negotiate
Successfully

• Moderator Sheila Peckler, Business Manager,
  Gurnee SD 56
• Barney R. Mundorf, Attorney, Guin, Martin
  Mundorf, LLC
• Kevin B. Gordon, Partner, Himes, Petrarca, CHTD
• Susan L. Birkenmaier, Director of Operations,
  LaGrange Highlands SD 106
• Barry A. Bolek, Asst. Supt./Finance, THSD 113

2
Goal of this presentation

• Give ideas on future negotiation's strategies
• There is not a single solution
• Share two districts strategies that may provide
  ideas or potential strategies for your district
• Create your own vision and long range plan
• Dont get discouraged with a baby step
• Make a plan now and pace yourself
• Look with a vision of the future with changes

3
The Changes of Negotiations with a Stagflation
economy

• Reduced revenue sources
• State and Federal Funding
• Reduced tax levies due to PTAB appeals
• Increased expenditures beyond CPI
• Goal is to have Expenditures NOT exceed Revenues

4
Previous variables used in negotiations

• Contract language Employees and Employers want to
  add sometimes cost money
• Comparable of districts must be accurate
• Adjusting to retirement(TRS) and system changes
• CPI used for base and steps ignored
• Extra-curricular stipends and others were minimal
• Medical, Dental, Life were minimal costs

5
New Variables since 2004

• CPI lower than before
• Multiple changes in TRS and rules with Tier II
• Pension publicity and increases prior to
  retirement
• Insurance costs for retirees increased
  substantially
• TRS Penalties added for 6 cap
• Al Gores Internet makes information easier to
  obtain
• FOIAs became part of the job description for
  business managers
• GASB opens more accounting requirements
• PTABs and falling EAV in taxing formula

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Can one use Logic and Reasoning with all of the
changes?

• Expenditures should not exceed Revenues
• If additional funding becomes available, the
  focus should be on one time expenditures and not
  reoccurring costs (capital not personnel)
• Static costs/benefits need to be used
• Fund balance is usually used by negotiating
  teams. Salary and employees are NOT A ONE TIME
  expenditure

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Issues of Interest

• Re-examination of salary schedule structure
  (Board)
• Increasing non-economic benefits / conditions
  (Union)
• Promoting salary lane changes (Union)
• Increasing employee participation in health
  insurance costs/risks (Board)

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Issues of Interest

• Re-examination of longevity and retirement
  incentives (Board)
• Preservation of longevity and retirement
  incentives (Union)
• Increasing instructional time (Board)
• Focus on job descriptions (Union)

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Demise of Seniority

• Vacancy / transfer language (Board)
• Job descriptions (Union)
• Preservation of salary schedules (Union)

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Negotiating SalaryStrategies to Consider

• Provide financial information early and often
• Complete negotiations, then address administrator
  and non-union salary
• Projections and model building

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Negotiating SalaryStrategies to Consider

• Scattergram Issues
• Negotiating Salary v. Payroll Budget
• Union targets savings from retired teachers how
  do you respond?
• What can you afford? know the end point

12
Negotiating SalaryStrategies to Consider

• Percentage of what (base, cell, total payroll)
• Referendums and contingent funding
• Salary Re-Opener

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How can you slow down the cost of steps?

• Freeze the step movement
• Change the schedule
• Totally new or elimination
• Add half steps (grandfather or not of current
  teachers)
• Change the lane increase or number of lanes
• Different requirements for a lane change
• Get rid of the schedule
• Merit pay (how is it awarded)
• Zone raises with groups of years of experience
  getting different raises

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THSD 113 Deerfield and Highland Park High Schools

• THSD 113 had a 20 step schedule that had a top
  salary of 130,000
• We had 60 teachers in the pipeline to retire
  over the next 5 years
• PMA developed a toggle schedule that could show
  savings with a second schedule of half steps for
  new hires
• Half steps for NEW hires showed significant
  savings with retirees and then staff that leaves
  each year

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Schedule modification with steps has variables

• With the change of Tier II versus Tier I
• Tier I has an employee maxing at 33 years of
  service with 2 years Sick
• Tier II have an employee maxing at age 67
• 2.2 is still the multiplier
• Keeping a 20 step schedule has the person on top
  for 25 years
• Is there a first penalty free year that makes
  sense with Tier II?
• There is a max salary of 106,800, and a
  cost-of-living annuity adjustment of the lesser
  of 3 percent or ½ of the annual increase in the
  CPI, not compounded.

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Steps 0-4 Same for hiring purposesHalf Steps
only for those hired AFTER 7/1/2011Now 37 Years
to get to TOP Salary
Prior to After 2011-12 2011-12 SALARY SCHEDULE SALARY SCHEDULE SALARY SCHEDULE    
7/1/2011 7/1/2011 BA BA15 MA MA15 MA30 MA45 MA60
Step Step              
0 0 50,498 53,024 55,046 56,557 58,578 60,600 65,143
1 1 52,189 54,800 56,890 58,451 60,541 62,630 67,325
2 2 53,297 55,962 58,094 59,693 61,825 63,957 68,754
3 3 55,962 58,627 61,825 63,424 65,556 67,688 72,485
4 4 58,627 61,292 65,556 67,155 69,287 71,419 76,215
  5 59,960 62,625 67,421 69,020 71,152 73,284 78,081
5 6 61,292 63,957 69,287 70,886 73,018 75,149 79,946
  7 62,571 65,209 71,046 72,751 74,883 77,015 81,812
6 8 63,850 66,462 72,804 74,616 76,748 78,880 83,677
  9 65,130 67,741 74,323 76,482 78,614 80,612 85,542
7 10 66,409 69,020 75,842 78,347 80,479 82,345 87,408
  11 67,421 70,060 77,361 80,213 82,345 84,397 89,273
8 12 68,434 71,099 78,880 82,078 84,210 86,449 91,139
  13 69,473 72,111 80,479 83,837 86,075 88,261 93,004
9 14 70,513 73,124 82,078 85,596 87,941 90,073 94,870
  15 71,525 74,137 83,677 87,141 89,753 91,938 96,468
10 16 72,538 75,149 85,276 88,687 91,565 93,804 98,067
  17 73,577 76,215 86,875 90,233 93,084 95,669 99,933
11 18 74,616 77,281 88,474 91,778 94,603 97,534 101,798
  19     90,073 93,324 96,149 99,400 103,584
12 20     91,672 94,870 97,694 101,265 105,369
  21     93,271 96,468 99,267 103,077 106,915
13 22     94,870 98,067 100,839 104,889 108,460
  23     96,468 99,613 102,384 106,675 110,006
14 24     98,067 101,159 103,930 108,460 111,552
  25     99,586 102,678 105,529 109,979 113,071
15 26     101,105 104,197 107,128 111,498 114,590
  27     102,384 105,502 108,727 113,044 116,189
16 28     103,664 106,808 110,326 114,590 117,787
  29     104,943 108,087 111,925 116,162 119,306
17 30     106,222 109,366 113,524 117,734 120,825
  31     107,528 110,646 115,096 119,040 122,105
18 32     108,833 111,925 116,668 120,346 123,384
  33     110,454 113,598 118,102 121,806 124,924
19 34     112,074 115,272 119,536 123,266 126,464
  35     112,449 115,645 119,920 123,657 126,877
20 36     112,823 116,018 120,305 124,048 127,289
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LaGrange Highlands 106Eliminated step and lane
salary schedule

• Rationale
• Board desire to put money behind professional
  growth.
• Lack of confidence that longevity proportionately
  improved instruction.
• Provides immediate benefit upon completion of
  coursework.
• Salary schedule is established to set entry level
  rate only to ensure competitive pay rates
  thereafter each salary is unique to the teacher.

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LaGrange Highlands 106Eliminated step and lane
salary schedule

• How it works
• Upon hiring the teacher is placed on the entry
  salary schedule reflecting level of education and
  years of experience.
• Each time a teachers completes a grad level
  course, salary credit is given.
• If completion is mid-year a lump sum pro-rated
  payment is made until full credit is given the
  next year.
• Each summer grad credit value is calculated and
  added to the annual base salary.
• The adjusted base salary is then increased by the
  negotiated pay increase.

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LaGrange Highlands 106Eliminated step and lane
salary schedule
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LaGrange Highlands 106Eliminated step and lane
salary schedule

• Some safeguards for consideration
• Classes must be pre-approved.
• Salary is frozen at certain benchmarks if less
  than 10 grad credit hours are completed within
  designated time periods.
• Tuition reimbursement is not offered.
• Hours awarded are limited.

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What other variables have changed in recent
negotiations with D 113?

• Tied retirement incentives to Years in the
  District and not TRS credit
• To be eligible for incentives, one MUST retire at
  the First Non-Penalty year
• Percentage of Family medical percentage was
  increased for employees (81 to 76)
• Will there be a Cadillac Plan for health
  insurance

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Why do districts offer retirement incentives and
how do you explain it to your board?

• Veteran teacher pay is higher than a rookie
• ERO penalty can be avoided if contract is tied to
  first Non-Penalty year
• ROI (return on investment) should be tied between
  penalty and incentive with savings on salary
• District ERO Penalty is 23.5 X service years
  below 35 or age below 60 whichever is MORE
• Teacher ERO Penalty is 11.5 x service years
  below 35 or below age 60 whichever is LESS
• Penalties for adding sick days and pay over 6

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Health Care costs and variables

• The employee cost versus employer cost share can
  change
• Static costs/reimbursements can be a solution
• Formulas for increase cost share can be tied to
  CPI or increases
• Changing providers, co-pays, deductibles

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Potential issues of the future

• Can you stay competitive in the market place with
  the salary and benefit packages that you offer?
• Will the market place/education field change with
  the changing economy?
• Will the pension complaints of the public go away
  ?
• Will the state start increasing their funding and
  find new funding mechanisms?
• Will legislation change how the Tax Levy works?
• Will local taxing bodies take TRS payments over?
• Will law changes in TRS/IMRF change causing more
  penalties for employers and employees?

25
Performance Evaluation Reform Act and how
can/does that fit into negotiations?

• The one main issue on the supervision side of the
  world that is missing is the impact of PERA
  (Performance Evaluation Reform Act) and the
  inclusion of student growth as an evaluative
  tool. Some are discussing moving toward merit pay
  and making those issues work in concert with one
  another.
• PERA riffing rules make it a bit more unlikely
  for tenured people to shift districtsthey no
  longer will merely look at pay scales they will
  be more concerned with what group they are in
  as it relates to the riffing sequence.

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So how do we adjust the negotiation strategy?

• Work closer with business managers to get valid
  comparable data
• Focus on keeping year to year budgets tied to
  CPI/Levy increases
• Adjust retirement to be a win-win with employees
  and employers
• ERO penalties should be more than incentives cost
• First Non-Penalty year is a required retirement
  date

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Reminders from Lawyers

• Make your parameters with your lawyers ahead of
  time to avoid legal issues
• Guard yourself with language for future TRS and
  other law changes
• Agreements are a two way street, be fair to both
  sides of the table
• One can make incremental changes in a multiyear
  agreement

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Share your ideas on P2P

• Peer to Peer with IASBO is an excellent way to
  share ideas and successes with one another
• We are all looking for new ideas and ways to keep
  fair and equitable agreements while being
  fiscally responsible to taxpayers
• Thanks for sharing YOUR ideas