The Madison Central School District faces a $360,000 reduction in state aid in the coming fiscal year, thanks to Governor Dennis Daugaard and Senator Russell Olson (who thought an even bigger cut would have been "a good idea"). If we borrow a sneaky budgeting trick from Senator Cooper Garnos and the Board of Regents, we could make that entire shortfall disappear without cutting a single program or raising a single tax.
The trick: the infamous payday shift. Here's how it works:
- Madison Central currently signs paychecks on the 20th of each month.
- The school board could amend that policy to move payday a week and a half later, to the first of the following month.
- The new payday policy could take effect June 1, 2012. Paychecks originally scheduled for June 20, 2012, would go to employees on July 1, 2012.
- In Fiscal Year 2012, from July 1, 2011 to June 30, 2012, the school board would thus issue only 11 paychecks. The twelfth paycheck would shift to FY 2013.
- Salaries for certified staff and administrators this year add up to $4.36 million. (That doesn't include janitors, secretaries, and other classified staff working for hourly wages.) Divide that by twelve, and you get one month's certified payroll of about $364,000... almost exactly the Olson-Daugaard shortfall we need to make up.
Now I have said before that payday shifting schemes are bad. Here's why:
- For any institution, not just Madison Central, it's a one-time trick. It does not create a permanently sustainable budget. If Olson and Daugaard hamstring education again next year, we're right back to the same predicament.
- It forces employees to bear a delay in pay. With a number of teachers likely living from low paycheck to paycheck, an eleven-day wait could cause serious grief.
- For our public schools specifically, it may complicate retirement payments. I'd need to consult with SDRS and our new business manager Mitchell Brooks, but shifting one paycheck off the coming year's calendar could affect the annual pay amounts used to calculate subsequent retirement benefits.
- A June shift may not capture savings from employees on the nine-month pay schedule. Many schools give teachers the option to take their pay in nine chunks all during the school year or to spread them out over all twelve months.
Those kinds of reasons led MDL publisher Jon Hunter to brand the Board of Regents' proposal for a similar payday shift scheme an "absurd deception."
But I have to ask (and I'm really asking, not advocating yet): is an absurd deception better than the alternatives of waging an opt-out fight, draining reserves, or cutting staff and educational opportunities this year? Staff, what would you rather do: wait eleven more days for your check next year, or see some checks and some jobs completely disappear?
That's a toughie. The question is, how confident are you that the state will increase funding for education next year?
It seems to me the only reasons to delay these cuts are:
1) The state will restore funding to previous levels, allowing the organization to return to business as usual;
2) It gives the organization longer to find efficiencies and reduce waste (still tough to do when we're talking the elimination of staff positions and/or services).
I wouldn't bet on a 6% increase in education funding next year. I'm not sure I'd bet on any increase at all, no matter what our Governor says about wanting to redraw the line and start working with increases in future years. I can see the strategy of delaying cuts to try to minimize the damage (maybe it can be a 3% cut rather than 6%...), but that assumes our State's revenues will increase next year. I'm not confident that will happen.
It seems a lot like getting a new credit card with 0% interest for the first 12 months, transfering all your credit card debt to it, and hoping you get enough of a raise to pay it off before that 24% interest kicks in.
Actually, Wayne, that's how I'm paying for the Bug I bought from Lake Herman Auto. Yikes! :-)
I'd add a third reason to your list: as you say, delay cuts to minimize damage. Even if we can only forestall the cuts one year (and I agree that's still a likely outcome with Russ and Dennis in office), that's still one more year where we offer more opportunities, one more class of seniors who have one more English teacher to turn to for help with scholarship essays or whatever else. One more year at current level of service may be worth the accounting trick... if the disadvantages of delayed pay don't outweigh. Other thoughts?