Uploaded: Wed, Apr 13, 2011, 11:48 am
Los Altos district asks voters for new $193 tax
Parcel tax on May 3 ballot would offset falling revenue, proponents say
Mountain View voters living within the Los Altos School District's boundaries are being asked to approve a new $193 annual parcel tax to benefit local schools. Measure E will appear on the May 3, all-mail ballot.
Proponents say Measure E is needed to address education cuts that have come as a result of federal, state and local budgets being slashed. The parcel tax will raise $2.3 million for the Los Altos School District over the course of its six-year life.
Jay Gill, one of the proponents of Measure E, said that the district has done all it can to combat the funding cuts, but has run short on options. "Any additional cuts will hurt what our children get programmatically," said Gill, who has an eighth-grade student in the district.
"We've got a significant cut in funding for next year," said Superintendent Randy Kenyon. "We've lost over $4 million -- potentially $5 million -- from the state."
About 1,000 students living in Mountain View attend the district's seven elementary and two middle schools -- roughly 25 percent of the entire student body. Homeowners in the district already are paying $597 a year for a parcel tax passed in 2002, and a bond issue assessment of about $600 per year on a home with an assessed value of $1 million.
While Gill and Kenyon both say the parcel tax is imperative, an opposition group, led by Los Altos Hills resident Ron Haley, disagrees.
Haley, a libertarian, believes that salaries for teachers and administrators in the district are too high. If only teachers would be willing to take cuts, he said, then the district wouldn't be in this predicament.
In March, the district issued pink slips to 52 teachers, warning that 42 full-time equivalent positions could be cut at the end of the year. Officials from the district saw that as a sign that the parcel tax was needed. Haley viewed it as further evidence that the average overall compensation package for teachers in the district -- at an average salary of around $75,000, plus benefits, comes out to about $99,000 -- is far too high.
Gill and other supporters of the proposed tax point out that the average teacher in the district has 15 years of experience. Furthermore, Gill said, those numbers may seem high when comparing them to poorer districts around the Bay Area, but not when compared to other top-performing districts, like the Los Altos School District.
In fact, according to Gill, the highest salary in the Los Altos School District is lower than what can be found in nearby high-ranking districts. "When you really look at the numbers, these are reasonable salaries," Gill said.
"We have great teachers," Kenyon said. "There are many veteran teachers. It does create stress on the budget, but we value quality teachers and we want to retain them as long as they're performing at a high level."
The district is exploring a structured system for furlough days and has been working on making appropriate cuts to the benefits packages of administrators, teachers and other school employees, Kenyon said. But that isn't going to be enough to save all the positions.
Gill added that the $2.3 million that the parcel tax is projected to raise will not cover the district's entire budget gap -- which could top $5 million next year. "The teachers want to be a part of the solution," he said. "We are asking that the community be a part of the solution, as well."
Posted by KD,
a resident of Waverly Park
on May 2, 2011 at 3:52 pm
Retirement Guru (from April 28)
Your math and logic are somewhat flawed.
Let's assume that the teacher and engineer both decide to retire at age 60, after 30 years of work. During that time, each has received 2% annual raises, cumulating a final salary of $100,000 each (cash salary, excluding benefits and the value of employer contributions to a defined benefit plan in the case of the teacher, or possible matching contribution to 401k in the case of the engineer).
And let's assume that the return on investment is 6% per year. These not unrealistic assumptions if we assume that $100,000 is about the average of the highest paid LASD and MVLA high school teachers, 2% is a reasonable rate for inflation / salary increase.
Over 30 years, the teacher and engineer would have each earned $2.28 million.
The teacher would have contributed 8% of salary (total $187,171) which would have grown (within CalSTRS) to $469,417 at retirement, a 6% per year, through the magic of compounding.
School districts (including LASD) and the state contribute an additional 8% and 2% of each teachers salary to CalSTRS annually. These funds plus investment returns thereon (assume 6% per year) bring the total of the teachers "account balance" to $1,056,188.
The engineer would have contributed 15% of salary ($342,666), which would have grown (at 6% annually, compounded), within the 401k, to $880,000.
At retirement, the teacher is "entitled" to a pension of $68,400 per year (equal to 2.2% (approx) of final 3 years average salary (approx $98,000) times years of service (30).
Fidelity tells us that the cost to purchase a $68,400 a year / $5,700 a month life annuity (no beneficiaries) for 60 year old female living in California is approximately $1,014,000. So the teacher's pension has a market value of approximately $1 million at retirement similar to the theoretical account balance (above) after contributions from the teacher, district, state and investment returns over the years.
The engineer could use the $880,000 in the 401k to purchase a life annuity (no beneficiaries) that would provide monthly payments of $4,600 a month.
So the difference between the teacher's defined benefit plan and engineer's 401k appears to be $134,000 of capital value or $1,100 a month in retirement.
1) whereas the engineer's monthly income is fixed for life, the teacher's pension has a Cost of Living Adjustment (typically 2% per year)/
After 10 years, when the teacher is 70, her monthly pension payment will be $6,950, while the engineer is still at $4,600 per month.
2) the teacher should have been contributing another 7% of pre-tax salary to a 403b (so net, after tax income for both teacher and engineer were the same over the 30 year employment period). If we assume that the teacher's 403b also earns 6% per year compounded, the teacher at retirement has a 403b account balance of $410,000 which is enough to buy a life annuity of $2,141 a month.
Pension at 60 $5,700 / mo
401k / 403b $2,141 / mo $4,600 / mo
Total $7,841 / mo $4,600
Pension at 70 $6,950 / mo
401k / 403b $2,141 / mo $4,600 / mo
Total $9,091 / mo $4,600
In summary, the current teacher / public sector defined benefit pension program provides a retirement benefit that is 70% richer than the 401k benefit available to most tax payers at retirement and almost 100% richer 10 years post retirement.