Santa Rosa City Schools

Transcription

1 Santa Rosa City Schools Affordable Health Care and Benefits Review November 12, 2014 Prepared By: Jeff Bell Director, Management Consulting Services Ron Bennett Chief Executive Officer

2 Santa Rosa City Schools Affordable Health Care and Benefits Review November 12, 2014 Prepared By: Jeff Bell Director, Management Consulting Services Ron Bennett Chief Executive Officer Copyright 2014 by School Services of California, Inc L Street, Suite 1060 Sacramento, CA (916) FAX (916) All rights reserved. These materials may not be duplicated in any way without the expressed written consent of School Services of California, Inc., except in the form of brief excerpts or quotations or as a teaching guide to employees of the school agency or organization that contracted for this report. Making copies of this report or any portion for any purpose other than your own or as noted above, is a violation of United States copyright laws.

3 Table of Contents Executive Summary... 2 Issues for Consideration... 3 Mt. Diablo Model... 6 Add an Additional Benefits Schedule in the District... 6 Recommendations:... 7 Methodology... 8 Introduction... 8 Team... 9 Scope... 9 Salary and Benefits Tables... 9 Salary Tables Health Benefits Tables Total Compensation Administrator Salary and Benefits Comparisons Results of the Review Mt. Diablo Model Add an Additional Benefits Schedule in the District Recommendations: Conclusion: Attachments Attachment A Attachment B School Services of California, Inc. i

4 Executive Summary This report was prepared by School Services of California, Inc., (SSC) at the request of the Superintendent. For many years, Santa Rosa City Schools (District) has provided a stable environment that has resulted in excellent services to students and historically competitive salaries to all employees. For many years now, the District has provided nearly all compensation to its employees on the salary schedule (versus a salary and benefits schedule), with the exception of dental and life insurance benefits. The theory behind the current salary model has historically been that District employees would garner higher wages on this salary based model, and would purchase their health benefits with the increased salaries, enjoying a higher level of overall compensation. Given the need for a careful review of compensation packages and of health and employee benefit plans over the next several years as the Patient Protection and Affordable Care Act (PPACA) is implemented, the Superintendent and her team commissioned this study to determine to what extent the District compensation package is comparable to other similar districts. Pursuant to this charge, this study compares the District to ten other comparable school districts, as well as the statewide, and regional averages to get a sense of where the District stands in comparison to its peers. This comparison examines total compensation, salary, and health and welfare contributions for all the districts in the Comparative Group. As will be evident in the study, the District is competitive when exclusively comparing salaries between districts; however, when combined with health and welfare benefits, the District is generally at the lower end of the Comparative Group in nearly every comparison. Some of the key questions and findings in the report: Are salaries competitive in the District? Yes, they are. Are benefits competitive in the District? No, they aren t. How much does it cost to reach the average total compensation in the Comparative Group? It will cost $3.4 million per year. Where is the money going if it s not to benefits? The District employs more teachers than most districts in order to have lower staffing ratios. How much does the extra staffing cost? It costs $5 million per year. The bottom line: to be more comparable in compensation the District will need to be more comparable in staffing. We recommend a phased in implementation of attrition to get there School Services of California, Inc. 2

5 Issues for Consideration As part of our report, this study set out to answer a few key questions: Is the District competitive with other school districts in the Comparative Group? As will be evident when we review the data, while there are some instances of comparability, generally total compensation in the District is below its Comparative Group. Table 1: Total Compensation: Maximum Scheduled Salary Plus Average District Contribution for Health and Welfare Benefits (Certificated Staff) District Name Total Compensation Salary Health And Welfare Contribution Statewide Unified Average $95,426 $83,796 $11,630 Vacaville USD 1 $91,274 $80,882 $10,392 Berkeley USD 2 $90,364 $82,022 $8,342 Novato USD 3 $89,605 $82,342 $7,263 Napa Valley USD 4 $88,835 $84,634 $4,201 Fairfield-Suisun USD 5 $87,092 $79,009 $8,083 Comparative Group Average $86,634 $77,953 $8,681 Cotati-Rohnert Park USD 6 $86,487 $70,524 $15,963 Petaluma City Schools 7 $85,629 $72,627 $13,002 Region 01 Unified Average $85,363 $72,763 $12,600 Sonoma Valley USD 8 $82,739 $68,879 $13,860 Santa Rosa City Schools 9 $82,303 $80,863 $1,440 Vallejo City USD 10 $79,977 $71,305 $8,672 Travis USD 11 $79,651 $74,507 $5,144 To provide some context for this report discussion, let s see how District overall compensation looks as compared to the other districts in the Comparative Group. For this report, we gathered data from a number of districts that were within a 50 mile radius, and were generally the same size as, or close to the same size as the District. As is evident in Table 1, the District ranks in the lower third of districts in the Comparative Group when comparing maximum salary and average district contribution for health and welfare benefits. The District total compensation package ranks 9 th out of 11 districts, and is ranked below the Statewide Unified Average, the Comparative Group Average, and the Region 01 Unified Average. Total Maximum Compensation for the District is $82,303, which includes a maximum salary of $80,863 and $1,440 in benefits. When comparing salary and health and welfare benefits contributions separately, the District is more competitive in salary, ranking 5 th with a salary of $80,863. However, the District health and welfare contribution of $1,440 ranks 11 out of 11 in the Comparative Group School Services of California, Inc. 3

6 Table 2: District to Comparative Group Average Funding District Santa Rosa Median Difference BA 30 Step 1 $50,778 $52,074 $1,296 BA 60 Step 10 $65,031 $69,759 $4,728 Maximum Step $82,303 $86,634 $4,331 Table 2 provides a comparison of total compensation for certificated teachers in the District as compared to the median of the Comparative Group in each of three categories: BA+30, Step 1, or the early part of a career; BA+60, Step 10, the midway part of a career, and Maximum Step, the highest available via step and column. The difference between amounts reflects the difference per full-time equivalent (FTE) in salary that would need to be added to salary and benefits in the District to reach the median in each respective category. For example, to provide enough to meet the Comparative Group Average at Maximum Step, the District would have to increase spending by $4,331 per average daily attendance (ADA). Based upon the total number of certificated employees in the District, which as of was 781 FTEs, it would cost the District approximately $3.4 million to move to the Comparative Group Average in Maximum Total Compensation with Average Health and Welfare Benefits, as noted in Table 3. Table 3: Cost to Become Competitive with Comparable Districts District # FTEs Augmentation Total Certificated FTEs 781 $4,331 $3,382,511 One comparison that the District scores very favorably in is the comparison of staffing ratios. This may be where the District turns to when looking for resources to pay for the $3.4 million in salary and benefits needed to get to the median of the Comparative Group. The District has a significantly lower staffing ratio when compared to other districts. Specifically, when reviewing staffing ratio data from , the Comparative Group Average has a staffing ratio of students per classroom teacher, with a high of students per classroom teacher. In the District, staffing ratios have clearly been a priority, as the average staffing ratio in the District during the same period was students per classroom teacher. That is a difference of 2.04 students per classroom teacher compared to the average in the Comparative Group, and a difference of 4.07 students per classroom teacher against the district with the highest average size in the Comparative Group. Providing lower staffing ratios on an ongoing basis in a school requires the dedication of considerable resources and funding, and if the District is willing to bring its staffing ratios more in line with the averages of other comparable districts, it would be able to dedicate a portion of its resources to other priorities, including staff benefits should it find that a priority. For example, Table 4 highlights the difference between providing student/classroom teacher staffing ratios at the existing students per classroom teacher ratio, and the savings that would result from 2014 School Services of California, Inc. 4

7 bringing the ratios to the Comparative Group Average of At a savings rate of approximately $2.5 million per 1 student decrease per classroom teacher, the District would save approximately $5 million by increasing the ratio to the Comparative Group Average of It could save an additional $5 million by increasing to 24.68, resulting in $10 million in savings. Table 4: Staffing Ratio Comparative Group Average Funding District Santa Rosa City SD Group Staffing Ratio Difference Funding Amount Average $5 million High $10 million What are the options for catching up with the other comparative districts when it comes to restoring purchasing power in benefits? There are a variety of ways the District could catch up to the average. Add the funding to the current salary schedule Mt. Diablo Unified Benefits Schedule Add funding to a benefits schedule Let s explore each one of the funding options above individually. For example, the first option would be one where the District simply adds additional funding to the existing salary schedule, keeping in place the current funding model. By providing additional funding to the existing salary structure, the District would provide funds to employees, and then employees would be responsible for paying for any increases in costs associated with their benefit plans out of the increases they get in salary. Funding increases utilizing the current model would benefit those who are close to retirement, and are going to have their health care costs funded either through the District or through MediCal. Funding using this model will increase the amount of funding available for retirement calculation purposes at a greater rate than those that fund benefits separately, since the funding is blended and included as compensation. However, there are some disadvantages to continuing to use the existing method of funding benefits in the District. First, benefit costs typically grow at a faster rate than the increases in salary provided by most districts, and as such, those who work under this model find it difficult to keep up with health benefit cost increases. Further, it is likely that going forward benefit costs will increase at a faster rate than the additional resources that will be provided to the District from the state as part of the LCFF. Thus from both a District perspective, and a District employee perspective, it is likely that continuing the existing salary/benefit structure will not keep up with the need for resources. For example, over the past 20 years, statewide school district funding has gone up 3.2% per year, while benefits have gone up 8% per year. This fix will likely cause this problem to recur almost immediately School Services of California, Inc. 5

8 Mt. Diablo Model The District could add a benefits schedule similar to that provided by Mt. Diablo Unified School District (please see Attachment A). This model provides benefits fully paid by the District up to the single or two-party 2010 Kaiser capped rates for all full-time Mt. Diablo Education Association members who choose to take District health benefits. The capped rate is $ per month/$6, per year for single employees, and $1, per month/$12, for twoparty and Family. District employees may participate in any District offered medical plan; however, these rates are capped for district employees regardless of which health care program they participate in. How is Mt. Diablo able to offer such a well-funded benefits program? Well, staffing ratios are higher in Mt. Diablo than they are in the District, closer to 22 students per classroom teacher on average. These higher ratios are likely allowing the district greater flexibility in resources in other areas. Add an Additional Benefits Schedule in the District The final option we discuss here is the addition of a benefits schedule in the District for the specific provision of health and welfare benefits. The additional benefits schedule would provide the District with several built-in advantages, and little down side. For example, the additional benefits schedule would provide full transparency, showing the amount of funding provided in the salary and benefits schedules specifically for the provision of health and welfare benefits. It would make it much easier to do an apples to apples comparison with other like districts when trying to compare benefit costs and complete budget reviews. It would also allow the District to be clear about when it provided resources for health and welfare benefits, and would provide tracking capability for those investments. To fund the new benefits schedule, the District could begin to build a benefits schedule and fund it by investing the savings it garners by slowly increasing staffing ratios to the levels needed to provide benefits at or near the level of the Comparative Group. For example, if the District were to begin to increase staffing ratios based upon attrition of the existing workforce, and if that attrition were to generate $1.25 million in the coming fiscal year, that funding could be invested in a benefits schedule, which the District could use to start to provide benefits, from either its existing plans, or even from an expanded provider network. Benefit funding could be provided on a prorated basis until the negotiated level of funding was reached. If the District decided it wanted to expand the selection of providers, there are others out there available for comparison. For example, Attachment B shows the Monthly Premiums for Contracting Agencies in the Bay Area Region for health care provided by the California Public Employees Retirement System (CalPERS). As the District considers its options for future benefits schedules, it may want to review what is offered by other providers School Services of California, Inc. 6

9 Finally, as an added part of the discussion for District consideration, the PPACA requires that, starting in 2015, the District will be required to offer a medical plan of at least minimum value that is affordable to all employees working on average at least 30 hours per week or the District could be assessed penalties. These provisions are referred to as the employer shared responsibility provisions. They are very detailed and complex and will require the District to classify employees appropriately under the regulations and to track hours for employees that are classified as part time, temporary, or substitute. We were not provided with a plan or risk assessment related to the District s compliance with this phase of the PPACA. Recommendations: We recommend that the District establish a benefit schedule, and begin to contribute to the benefit schedule as savings from attrition permits, while gradually increasing the staffing ratio in the District until it reflects the Comparative Group Average staffing ratio of students per classroom teacher. We do not recommend a layoff to increase the benefit contribution factors; we recommend the District re-balance using normal attrition. We recommend the District periodically re-compete all major elements of the health care insurance plans. We further recommend that the requests for proposals, and the responses to the proposals, be jointly reviewed by a District insurance committee, which is comprised of representatives of both management and labor groups, We recommend that the District review regularly its benefits and its bargaining units recognize that nearly every potential change to benefits will need to be negotiated with each of the bargaining units. The parties will need to set aside time to develop communication methods to ensure that issues are fully understood, and how the consequences of collective judgments and actions regarding health and welfare costs will affect other elements of compensation. We recommend that the District request data from its major health carriers as to the commonality of physician panels to ensure a complete understanding of how any contemplated change in plans might affect the availability of doctors and hospitals to plan participants. We recommend that the District examine the current health benefits program to determine PPACA compliance and prepare for implementation. This would include ensuring that the hours of part-time, temporary, and substitute employees are tracked in a manner compliant with the PPACA to determine eligibility for benefits, determining whether the health benefits offered comply with the PPACA, and considering changes to the program based on costs versus the risk of penalties if there are areas of non-compliance School Services of California, Inc. 7

10 Methodology The methodology employed is comprised of data collection and analysis, comparison with other like agencies, and multiple measure analysis to develop and evaluate the data that was collected. We used a combination of interrogation of state-level databases, collection of data from the district, and surveys of providers to accumulate the information upon which our conclusions are based. We also exercised our professional judgment as to comparability of plans and methods we have seen to provide the District with an assessment of the current benefit plan. In the final stages of report development, we were careful to validate the data upon which our conclusions were based as well as the validity of our findings and recommendations. Introduction This report was prepared by SSC at the request of the Superintendent. For many years, the District has provided a stable environment that has resulted in excellent services to students and historically competitive salaries to all employees. For many years now, the District has provided nearly all compensation to its employees on the salary schedule (versus a salary and benefits schedule), with the exception of dental and life insurance benefits. The theory behind the current salary model has historically been that District employees would garner higher wages on this salary-based model, and would purchase their health benefits with the increased salaries, enjoying a higher level of overall compensation. Beginning in , the District, like all other California school agencies that have been totally dependent upon the state for funding, saw its resources diminished. The fall was both broad and deep; the base revenue limit, which is the primary source of education funding, was cut approximately 15% and none of those dollars have been restored. Additionally, the funding for categorical programs, which makes up about a third of district funding, was cut 19.84%; those dollars that are only now beginning to be restored. With the implementation of the Local Control Funding Formula (LCFF) and the tenuous pace of the state s economic recovery, reserve policies of the district will need to be carefully planned for the next several years. Given the need for a careful review of health and employee benefits plans over the next several years as the PPACA is implemented, the Superintendent and her team commissioned this study to determine the best way to address salary and benefits funding going forward, and to see to what extent there is any need to consider revising the existing salary and benefit budget structure School Services of California, Inc. 8

11 The following individuals participated in the review of health and welfare benefits: Team Ron Bennett, Project Leader, CEO, has been the Chief Business Official for Long Beach Unified School District, Fresno Unified School District, and ABC Unified School District. As CEO of SSC, Ron focuses on position control, staffing, financial comparison, and negotiations issues. In addition to many years of experience as a CBO, Ron brings a wealth of experience in the areas of negotiations, staffing, and management information systems. Ron holds an MBA from Michigan State University and is licensed as a CPA (inactive) in the state of Oklahoma. Jeff Bell, Director, Management Consulting Services, has served in the Education Unit at the State Department of Finance during three different Administrations, and he brings many years of education finance and legislative experience, most recently as an Assistant Program Budget Manager for budget, legislative, and policy issues surrounding the K-12 education budget. Jeff graduated from San Diego State University with a B.A. in Economics and a minor in Naval Science, and from the Naval Postgraduate School in Monterey, California, with a master s degree in Operational Intelligence. Scope We conducted an extensive review of certificated salary and health and welfare benefits that included, but not limited to, the following categories: Multi-district salary and benefit data review and analysis Staffing ratio data review and analysis Search for other plan providers with comparable offerings Review of collective bargaining agreement language Salary and Benefits Tables The next series of data are salary and benefits tables that provide the comparative data that support the conclusions of this report. The tables are presented in three sections; first series of tables are exclusively salary comparisons, followed by health and welfare contribution comparisons, finally concluding with a third section that contains combined total compensation comparative tables School Services of California, Inc. 9

12 Salary Tables Table 5: Comparative Analysis of Certificated Salaries and Benefits, Lowest Scheduled Salary and Per Diem Amounts District Lowest Scheduled Salary Number Of Service Days Per Diem Per Diem Amount Napa Valley USD 1 $46, $ Santa Rosa City Schools 2 $42, $ Novato USD 3 $41, $ Statewide Unified Average $41, $ Berkeley USD 4 $39, $ Comparative Group Average $39, $ Fairfield-Suisun USD 5 $39, $ Region 01 Unified Average $38, $ Cotati-Rohnert Park USD 6 $38, $ Petaluma City Schools 7 $37, $ Vallejo City USD 8 $37, $ Travis USD 9 $35, $ Vacaville USD 10 $35, $ Sonoma Valley USD 11 $35, $ At the lowest scheduled salary and per diem amounts listed in Table 5 the District ranks 2nd in the Comparative Group in both salary and per diem. At $42,699, the District s salary paid to its lowest paid certificated employees is $3,346, or 8.5%, above the Comparative Group Average of $39,353. Table 6: Comparative Analysis of Certificated Salaries and Benefits, Salary Paid for BA+30, Step 1, with Per Diem Amounts District Salary Paid For BA+30, Step 1 Number of Service Days Per Diem Per Diem Amount Santa Rosa City Schools 1 $49, $ Napa Valley USD 2 $48, $ Berkeley USD 3 $46, $ Fairfield-Suisun USD 4 $46, $ Statewide Unified Average $44, $ Novato USD 5 $43, $ Comparative Group Average $43, $ Travis USD 6 $42, $ Region 01 Unified Average $40, $ Vacaville USD 7 $40, $ Vallejo City USD 8 $39, $ Petaluma City Schools 9 $38, $ Sonoma Valley USD 10 $38, $ Cotati-Rohnert Park USD 11 $38, $ School Services of California, Inc. 10

13 When turning to certificated salaries paid for BA+30, Step 1, as listed in Table 6, the District moves up from 2 nd to 1 st in both salary and per diem. At $49,338, the District s salary is $5,945, or 13.7%, above the Comparative Group Average of $43,393. Table 7: Comparative Analysis of Certificated Salaries and Benefits, Salary Paid for BA+60, Step 10, with Per Diem Amounts Percent FTE District Salary At Ba+60 Step 10 Receiving Higher Salaries Per Diem Per Diem Amount Travis USD 1 $66, % 1 $ Berkeley USD 2 $66, % 3 $ Statewide Unified Average $65, % $ Napa Valley USD 3 $65, % 2 $ Novato USD 4 $63, % 5 $ Santa Rosa City Schools 5 $63, % 4 $ Fairfield-Suisun USD 6 $63, % 6 $ Comparative Group Average $61, % $ Petaluma City Schools 7 $59, % 7 $ Vacaville USD 8 $57, % 8 $ Region 01 Unified Average $56, % $ Sonoma Valley USD 9 $55, % 9 $ Vallejo City USD 10 $55, % 10 $ Cotati-Rohnert Park USD 11 $53, % 11 $ Certificated salaries paid for BA+60, Step 10, as listed in Table 7, indicate the District is 5 of 11 in salary at $63,591, and 4 of 11 in per diem salary at $ At $63,591, the District s salary is $2,513, or 4.1%, above the Comparative Group Average of $61,078. Table 8: Comparative Analysis of Certificated Salaries and Benefits, Maximum Scheduled Salary, with Per Diem Amounts District Maximum Scheduled Salary Step Requirements Per Diem Per Diem Amount Napa Valley USD 1 $84, $ Statewide Unified Average $83, $ Novato USD 2 $82, $ Berkeley USD 3 $82, $ Vacaville USD 4 $80, $ Santa Rosa City Schools 5 $80, $ Fairfield-Suisun USD 6 $79, $ Comparative Group Average $77, $ Travis USD 7 $74, $ Region 01 Unified Average $72, $ Petaluma City Schools 8 $72, $ Vallejo City USD 9 $71, $ Cotati-Rohnert Park USD 10 $70, $ Sonoma Valley USD 11 $68, $ School Services of California, Inc. 11

14 At the final benchmark, Maximum Scheduled Salary, the District ranks 5 of 11 in the Comparative Group with a total salary of $80,863, ranks 2 of 11 in per diem, at $ as listed in Table 8. The District s salary at this level is $2,910, or 3.7%s above the Comparative Group Average of $77,953. Health Benefits Tables Table 9: Comparative Analysis of Certificated Salaries and Benefits, Average and Maximum District Contributions for Health and Welfare Benefits for Active and Retired Employees District Average Active Employee District Contribution Per FTE Maximum Active Employee District Contribution Per FTE Maximum District Contribution For Retired Teachers (Under 65) Maximum District Contribution For Retired Teachers (Over 65) Cotati-Rohnert Park USD 1 $15,963 $16,073 $10,548 $0 Sonoma Valley USD 2 $13,860 $20,862 $336 $28 Petaluma City Schools 3 $13,002 $14,255 $0 $0 Region 01 Unified Average $12,600 $16,156 $8,028 $341 Statewide Unified Average $11,630 $16,187 $10,829 $3,820 Vacaville USD 4 $10,392 $16,111 $0 $0 Comparative Group Average $8,681 $11,178 $8,053 $10,321 Vallejo City USD 5 $8,672 $14,750 $11,748 $11,748 Berkeley USD 6 $8,342 $12,436 $13,571 $12,167 Fairfield-Suisun USD 7 $8,083 $9,610 $6,437 $0 Novato USD 8 $7,263 $9,825 $4,563 $0 Travis USD 9 $5,144 $6,469 $0 $0 Napa Valley USD 10 $4,201 $5,101 $5,280 $0 Santa Rosa City Schools 11 1,440 $1,440 $9,884 $0 In the area of Average and Maximum District Contributions for Health and Welfare Contributions for Active and Retired Certificated Employees, as listed in Table 9, the District ranks 11 of 11 for both Average and Maximum contributions per employee. However, when comparing Maximum District Contribution for Retirees under 65, the District s maximum contribution of $9,884 ranks 4 of 11, considerably higher than some of the other districts in the comparable group School Services of California, Inc. 12

15 District Table 10: Comparative Analysis of Certificated Salaries and Benefits, Maximum Contribution to Health and Welfare Benefits Maximum Health Contribution (Family or Composite) Maximum Dental Contribution (If Any) Maximum Vision Contribution Maximum Life Contribution Maximum Other Contribution Sonoma Valley USD 1 $19,968 $895 $0 $0 $0 Vacaville USD 2 $14,503 $1,347 $261 $0 $0 Cotati-Rohnert Park USD 3 $13,852 $1,880 $274 $68 $0 Statewide Unified Average $13,135 $1,307 $184 $52 $262 Region 01 Unified Average $12,150 $1,403 $233 $70 $0 Petaluma City Schools 4 $12,106 $1,734 $348 $67 $0 Vallejo City USD 5 $11,748 $1,663 $139 $0 $1,200 Berkeley USD 6 $11,716 $720 $0 $0 $0 Comparative Group Average $9,763 $1,203 $180 $32 $317 Fairfield-Suisun USD 7 $7,800 $1,395 $343 $72 $0 Novato USD 8 $7,662 $1,970 $193 $0 $0 Travis USD 9 $4,800 $1,305 $264 $77 $24 Napa Valley USD 10 $4,163 $0 $0 $38 $900 Santa Rosa City Schools 11 $0 $1,368 $0 $72 $0 When comparing the Maximum District Contribution to Health and Welfare Benefits as in Table 10, the District does not provide an allowance for Composite Health Care, Vision,, or Other care, but is competitive when reviewing Dental and Life Insurance. In the Dental category, the $1,368 provided by the District is the median amount provided within the Comparative Group, while in Life Insurance, the District provides $72 per year, which is $34, or 47%, above the median. Total Compensation The most complete evaluation of a teacher s compensation is that of total compensation, which includes both salary schedule wages and district-provided contributions to health and welfare benefits School Services of California, Inc. 13

16 Table 11: Comparative Analysis of Certificated Salaries and Benefits, Total Compensation: Lowest Scheduled Salary Plus Average District Contribution for Health and Welfare Benefits Average Health District Total Compensation Lowest Scheduled Salary And Welfare Contribution Cotati-Rohnert Park USD 1 $54,092 $38,129 $15,963 Statewide Unified Average $52,854 $41,224 $11,630 Region 01 Unified Average $51,143 $38,543 $12,600 Petaluma City Schools 2 $50,857 $37,855 $13,002 Napa Valley USD 3 $50,590 $46,389 $4,201 Sonoma Valley USD 4 $48,978 $35,118 $13,860 Novato USD 5 $48,710 $41,447 $7,263 Comparative Group Average $48,034 $39,353 $8,681 Berkeley USD 6 $47,801 $39,459 $8,342 Fairfield-Suisun USD 7 $47,364 $39,281 $8,083 Vallejo City USD 8 $45,858 $37,186 $8,672 Vacaville USD 9 $45,825 $35,433 $10,392 Santa Rosa City Schools 10 $44,139 $42,699 $1,440 Travis USD 11 $40,748 $35,604 $5,144 Table 11 shows Total Compensation Lowest Scheduled Salary Plus Average District Contribution for Health and Welfare Benefits, in which the District ranks 10 of 11 in the Comparative Group. At $44,139, the District s salary and benefits paid to its lowest paid certificated employees is $3,895, or 8.8%, lower than the Comparative Group Average of $48,034. Table 12: Comparative Analysis of Certificated Salaries and Benefits, Total Compensation: Salary Paid for BA+30, Step 1 Plus Average District Contribution for Health and Welfare Benefits Average Health District Total Compensation Salary At BA+30 Step 1 And Welfare Contribution Statewide Unified Average $56,150 $44,520 $11,630 Berkeley USD 1 $55,199 $46,857 $8,342 Fairfield-Suisun USD 2 $54,795 $46,712 $8,083 Cotati-Rohnert Park USD 3 $54,094 $38,131 $15,963 Region 01 Unified Average $53,537 $40,937 $12,600 Napa Valley USD 4 $52,532 $48,331 $4,201 Sonoma Valley USD 5 $52,317 $38,457 $13,860 Comparative Group Average $52,074 $43,393 $8,681 Petaluma City Schools 6 $51,756 $38,754 $13,002 Santa Rosa City Schools 7 $50,778 $49,338 $1,440 Novato USD 8 $50,728 $43,465 $7,263 Vacaville USD 9 $50,484 $40,092 $10,392 Vallejo City USD 10 $48,208 $39,536 $8,672 Travis USD 11 $48,120 $42,976 $5, School Services of California, Inc. 14

17 At the total compensation benchmark of BA+30, Step 1, as listed in Table 12, the District ranks 7 of 11 in the Comparative Group. At $50,778, the District s total compensation at this level is $1,296, or 2.6%, lower than the Comparative Group Average of $52,074. Table 13: Comparative Analysis of Certificated Salaries and Benefits, Total Compensation: Salary Paid for BA+60, Step 10 Plus Average District Contribution for Health and Welfare Benefits District Total Compensation Salary At Ba+60, Step 10 Average Health And Welfare Contribution Statewide Unified Average $76,689 $65,059 $11,630 Berkeley USD 1 $74,443 $66,101 $8,342 Petaluma City Schools 2 $72,445 $59,443 $13,002 Travis USD 3 $71,478 $66,334 $5,144 Novato USD 4 $71,112 $63,849 $7,263 Fairfield-Suisun USD 5 $71,097 $63,014 $8,083 Cotati-Rohnert Park USD 6 $69,933 $53,970 $15,963 Comparative Group Average $69,759 $61,078 $8,681 Region 01 Unified Average $69,390 $56,790 $12,600 Napa Valley USD 7 $69,234 $65,033 $4,201 Sonoma Valley USD 8 $68,952 $55,092 $13,860 Vacaville USD 9 $67,835 $57,443 $10,392 Santa Rosa City Schools 10 $65,031 $63,591 $1,440 Vallejo City USD 11 $63,691 $55,019 $8,672 At BA+60, Step 10, traditionally referred to as the midpoint of a teacher s career, as listed in Table 13, the District ranks 10 of 11 comparative districts with a salary of $65,031. The District s salary at this level is $4,728, or almost 7.3%, lower than the Comparative Group Average salary of $69, School Services of California, Inc. 15

18 Table 14: Comparative Analysis of Certificated Salaries and Benefits, Total Compensation: Maximum Scheduled Salary Plus Average District Contribution for Health and Welfare Benefits District Total Compensation Maximum Scheduled Salary Average Health And Welfare Contribution Statewide Unified Average $95,426 $83,796 $11,630 Vacaville USD 1 $91,274 $80,882 $10,392 Berkeley USD 2 $90,364 $82,022 $8,342 Novato USD 3 $89,605 $82,342 $7,263 Napa Valley USD 4 $88,835 $84,634 $4,201 Fairfield-Suisun USD 5 $87,092 $79,009 $8,083 Comparative Group Average $86,634 $77,953 $8,681 Cotati-Rohnert Park USD 6 $86,487 $70,524 $15,963 Petaluma City Schools 7 $85,629 $72,627 $13,002 Region 01 Unified Average $85,363 $72,763 $12,600 Sonoma Valley USD 8 $82,739 $68,879 $13,860 Santa Rosa City Schools 9 $82,303 $80,863 $1,440 Vallejo City USD 10 $79,977 $71,305 $8,672 Travis USD 11 $79,651 $74,507 $5,144 At Maximum Total Compensation, which combines the maximum salary and the average health and welfare benefits contribution, as listed in Table 14, the District ranks 9 of 11 comparative districts with a salary of $82,303. The District s salary at this level is $4,331, or almost 5.3%, lower than the Comparative Group Average salary of $86, School Services of California, Inc. 16

19 Administrator Salary and Benefits Comparisons District Table 15: Unrestricted Site and District Administrator Salary Expense Admin Salary Per ADA Admin Salary Dollars % of Total Expense % of Total Expense, Transfers & Other Santa Rosa City Schools $ $6,950, % 8.14% Santa Rosa City Schools $ $7,102, % 5.37% All Unified School Districts $ $1,489,001, % 6.31%, Unaudited Actuals Table 15 shows a comparison of District administrator salary expenses between and While administrator salary per ADA went up slightly year-over-year, the percent of total expense for Site and District Administrator Salary Expense decreased in the category % of Total Expense and % of Total Expense, Transfer and Other Costs. In this case, administrator salaries went from 8.16% of % of Total Expense in to 5.38% of % Total Expense in Similarly, administrator salaries went from 8.14% of % of Total Expense, Transfer and Other Expense, to 5.37% of this category in Additionally, expenses in both categories for the District in dropped below the expense percentages for all Unified Districts in the state, which were 6.43% for % of Total Expense and 6.31% for % of Total Expense, Transfer and Other Costs in Table 16: Student Enrollment Per District-Level Administrator District Petaluma City Schools 1 1, , , , Vallejo City USD Berkeley USD Comparative Group Average , Travis USD , , Sonoma Valley USD , All Unified Districts Average , , , , Fairfield-Suisun USD , , Vacaville USD , , Novato USD , , , , Napa Valley USD 9 1, , , , , Cotati-Rohnert Park USD 10 1, , , , , Santa Rosa City Schools 11 1, , , , , Table 16 compares student enrollment to district-level administrator staffing. As is evident in the comparison, the District is ranked 11 of 11 in this comparison, with the leanest staffing of the entire cohort. There is no surprise in this data set, given the cuts in staffing that have occurred over the past several years. Indeed the comparative data in this table reveals that the District is nearly twice as lean as the nearest comparable district that is ranked 10 th, and the average unified 2014 School Services of California, Inc. 17

20 district in the Comparative Group has nearly three times as many administrative staff as are in the District. Table 17: Student Enrollment Per School-Level Administrator District Novato USD Berkeley USD Vallejo City USD Petaluma City Schools Napa Valley USD All Unified Districts Average Cotati-Rohnert Park USD Comparative Group Average Santa Rosa City Schools Travis USD Vacaville USD Sonoma Valley USD Fairfield-Suisun USD Table 17 compares student enrollment per school-level administrator. As is evident, the District is ranked much more comparably in this comparison, scoring closer to the midpoint as compared to its contemporaries in terms of site-level administrators. Results of the Review Following the review of the salary and benefits comparisons above, there are a few observations that can be made regarding compensation in the District: The District is generally not competitive with other school districts in the Comparative Group in terms of total compensation. A review of the data shows that there are some instances of comparability; however, generally total compensation in the District is below its Comparative Group, and the existing model of compensation has not kept up with increases in health care costs over time. Where is the District spending its operations budget if it is not competitive with other districts in compensation? When it comes to staffing ratios, the District has some of the best ratios in the group. Indeed the District has more than enough teachers to meet the State 24 to 1 Grade Span Adjustment (GSA) criteria as required by the LCFF. By exceeding the requirements of the LCFF with lower than necessary staffing ratios, the District has tied up considerable resources in lower staffing ratios, leaving little available for other important areas like compensation and benefits. To provide greater resources for benefits, some level of adjustment in staffing ratios will likely be necessary School Services of California, Inc. 18

21 Table 18: Total Compensation: Maximum Scheduled Salary Plus Average District Contribution for Health and Welfare Benefits (Certificated Staff) Health And District Name Total Compensation Salary Welfare Contribution Statewide Unified Average $95,426 $83,796 $11,630 Vacaville USD 1 $91,274 $80,882 $10,392 Berkeley USD 2 $90,364 $82,022 $8,342 Novato USD 3 $89,605 $82,342 $7,263 Napa Valley USD 4 $88,835 $84,634 $4,201 Fairfield-Suisun USD 5 $87,092 $79,009 $8,083 Comparative Group Average $86,634 $77,953 $8,681 Cotati-Rohnert Park USD 6 $86,487 $70,524 $15,963 Petaluma City Schools 7 $85,629 $72,627 $13,002 Region 01 Unified Average $85,363 $72,763 $12,600 Sonoma Valley USD 8 $82,739 $68,879 $13,860 Santa Rosa City Schools 9 $82,303 $80,863 $1,440 Vallejo City USD 10 $79,977 $71,305 $8,672 Travis USD 11 $79,651 $74,507 $5,144 To provide some context for this report, let s see how District overall compensation looks when compared to districts in a Comparative Group. For this report, we put together a Comparative Group of similar districts that are within a 50-mile radius, and are generally the same size as, or close to the same size as the District. As is evident, the District ranks in the lower third of districts in the Comparative Group when comparing maximum salary and average district contribution for health and welfare benefits (Table 18). The District s total compensation package ranks 9 th out of 11 districts, and is ranked below the Statewide Unified Average, the Comparative Group Average, and the Region 01 Unified Average. Total Maximum Compensation for the District is $82,303, which includes a maximum salary of $80,863 and $1,440 in benefits. When comparing salary and health and welfare benefits contributions separately, the District is more competitive in salary, ranking 5 th with a salary of $80,863. However with a health and welfare contribution of $1,440, the District ranks 11 out of 11. Table 19: District to Comparative Group Average Funding District Santa Rosa City Schools Median Difference BA+30, Step 1 $50,778 $52,074 $1,296 BA+60, Step 10 $65,031 $69,759 $4,728 Maximum Step $82,303 $86,634 $4,331 Source: State-Certified Reports Table 19 provides a comparison of total compensation for certificated teachers in the District as compared to the Median of the Comparative Group in each of the three categories; BA+30, Step 1, or the early part of a career, BA+60, Step 10, the mid part of a career and Maximum Step, the highest available via step and column. The difference between amounts reflects the difference per FTE in salary that would need to be added to salary and benefits in the District to 2014 School Services of California, Inc. 19

22 reach the Median in each respective category. For example, to provide enough to meet the Comparative Group Average at Maximum Step, the District would have to increase spending by $4,331 per ADA. Based upon the total number of certificated employees in the District, which as of was 781, it would cost the District $3.4 million to move to the Comparative Group Average in Maximum Total Compensation with Average Health and Welfare Benefits, as noted in Table 20. Table 20: Cost to Become Competitive with Comparable Districts District # FTEs Augmentation Total Certificated FTEs 781 $4,331 $3,382,511 Source: State-Certified Reports Given the costs to bring the benefits in the District closer to the Comparative Group Average, one question that might come up is, where would the District find the resources to pay for the $3.4 million needed to invest in salary and benefits to get to the median? Indeed there is a way to pay for these additional benefits utilizing existing resources. One comparison that the District scores very favorably in is the comparison of staffing ratios. This may be the area where the District turns to when looking for resources to pay for the $3.4 million in salary and benefits it would take to get to the median of the Comparative Group. The District has a significantly lower staffing ratio when compared to other districts. From the Comparative Group Average staffing ratio was students per classroom teacher, with a high of students per classroom teacher. In the District, staffing ratios have clearly been a priority, as the average staffing ratio in the District during the same period was students per classroom teacher. That is a difference of 2.04 students per classroom teacher compared to the average in the Comparative Group, and a difference of 4.07 students per classroom teacher against the district with the highest average size in the Comparative Group. Providing lower staffing ratios on an ongoing basis in a school requires the dedication of considerable resources and funding, and if the District is willing to bring its staffing ratios more in line with the state requirements, it would be able to dedicate a portion of its resources to other priorities, including staff benefits should it find that a priority. For example, Table 21 highlights the difference between providing student/classroom teacher staffing ratios at the existing students per classroom teacher ratio, and the savings that would result from bringing the ratios to the Comparative Group average of At a savings rate of approximately $2.5 million per 1 student decrease per classroom teacher, the District would save approximately $5 million by increasing the ratio to the Comparative Group average of It could save an additional $5 million by increasing to 24.68, resulting in $10 million in savings. Table 21: Staffing Ratio Comparative Group Average Funding District Santa Rosa City Schools Group Staffing Ratio Difference Funding Amount Average $5 million High $10 million Source: State-Certified Reports 2014 School Services of California, Inc. 20

23 What are the options for catching up with the other comparative districts when it comes to restoring purchasing power in benefits? There are a variety of ways the District could catch up to the average. Add the funding to the current salary schedule Mt. Diablo Unified Benefits Schedule Add funding to a benefits schedule Let s explore each one of the funding options above individually. For example, the first option would be one where the District simply adds additional funding to the existing salary schedule, keeping in place the current funding model. By providing additional funding to the existing salary structure, the District would provide funds to employees, and then employees would be responsible for paying for any increases in costs associated with their benefit plans out of the increases they get in salary. Funding increases utilizing the current model would benefit those who are close to retirement, and are going to have their health care costs funded either through the District or through MediCal. Funding using this model will increase the amount of funding available for retirement calculation purposes at a greater rate than those that fund benefits separately, since the funding is blended and included as compensation. However, there are some disadvantages to continuing to use the existing method of funding benefits in the District. First, benefits costs typically grow at a faster rate than the increases in salary provided by most districts, and as such, those who work under this model find it difficult to keep up with these costs. Further, it is likely that going forward benefits costs will increase at a faster rate than the additional resources that will be provided to the District from the state as part of the LCFF. Thus from both a District perspective, and a District employee perspective, it is likely that continuing the existing salary/benefit structure will not keep up with the need for resources. For example, over the past 20 years, statewide school district funding has gone up 3.2% per year, while benefits have gone up 8% per year. This fix will likely cause this problem to recur almost immediately. Mt. Diablo Model The District could add a benefits schedule similar to that provided by Mt. Diablo Unified School District. This model provides benefits fully paid by the District up to the single or two-part 2010 Kaiser capped rates for all full-time Mt. Diablo Education Association members who choose to take District health benefits. The capped rate is $ per month/$6, per year for single employees, and $1, per month/$12, for two-party and Family. District employees may participate in any District-offered medical plan; however, these rates are capped for district employees regardless of which health care program they participate in. How is Mt. Diablo able to offer such a well-funded benefits program? Well, staffing ratios are higher in Mt. Diablo than 2014 School Services of California, Inc. 21

24 they are in the District, closer to 22 students per classroom teacher on average. These higher staffing ratios likely allow the district greater flexibility in resources in other areas. Add an Additional Benefits Schedule in the District The final option we discuss here is the addition of a benefits schedule to the District salary and benefits records for the specific provision of health and welfare benefits. The additional benefits schedule would provide the District with several built-in benefits, and little down side. For example, the addition of a new benefits schedule would provide full transparency in the amounts of funding that were provided in the salary and benefits schedules specifically for the provision of benefits. It would make it much easier to do an apples to apples comparison with other like districts when trying to compare benefits costs and complete budget reviews. It would also allow the District to be clear about when it provided resources for health and welfare benefits, and would provide tracking capability for those investments. To fund the new benefits schedule, the District could begin to build a benefits schedule and fund it by investing the savings it garners by slowly increasing staffing ratios to the levels needed to provide benefits at or near the level of the Comparative Group. For example, if the District were to begin to increase staffing ratios based upon attrition of the existing workforce, and if that attrition were to generate for example $1.25 million in the coming fiscal year, that funding could be invested in a benefits schedule, which the District could use to start to provide benefits, from either its existing plans, or even from an expanded provider network. Benefit funding could be provided on a prorated basis until the negotiated level of funding was reached. If the District decided it wanted to expand the selection of providers, there are others out there available for comparison. For example, Attachment B shows the Monthly Premiums for Contracting Agencies in the Bay Area Region for health care provided by the California Public Employees Retirement System (CalPERS). As the District considers its options for future benefits schedules, it may want to review what is offered by other providers. Recommendations: We recommend that the District establish a benefit schedule, and begin to contribute to the benefit schedule as savings permit, while gradually increasing the staffing ratio until it reflects the Comparative Group Average staffing ratio of students per classroom teacher so as to direct the savings into the benefits schedule. We do not recommend a layoff to increase the benefit contribution factors; we recommend the District re-balance using normal attrition. We recommend the District periodically re-compete all major elements of the health care insurance plans. We further recommend that the requests for proposals, and the responses to 2014 School Services of California, Inc. 22