The Cross Report

The Name “Dottie Cross” is sprinkled throughout my childhood memories because she was friends with my mother who would mention her from time to time. I finally met Dottie and her husband George on May 22, 2005 at the Sheraton Hotel. They happened to be sitting directly behind my mother and me at the speech by Ann Richards there that day. Boy I miss my mother. We used to do cool things like that together. When I was eleven she took me to my first political rally. That time it was Geraldine Ferraro at Memorial Auditorium when she was running for vice-president. Ferraro didn’t know that day that her son would eventually be under house arrest just a few blocks away from there. The last movie my mom and I saw together was Sicko by Michael Moore. Ironic since my mother was dying of cancer. Just a few months before she died we went to a dinner held by the Society of Mayflower Descendants where my mom was inducted as a member. It’s smart to wait until right before you die to join the Mayflower Society. Saves on dues.

Where was I going with this? Oh yes. Jeanne Collins emailed the school board tonight to let us know Molly Walsh from the Burlington Free Press was asking about the proposal to shift retirement costs for non-teacher school employees from the city to the school department.   I’d better scoop Molly.  This cost shift and other measures were recommended to the Burlington City Council on June 22, 2010 by Dottie’s husband George Cross who was hired as a budget analyst a year earlier by the Democratic city councilors who pooled their meager operating budgets to pay him.

Now in April of 2009 when Cross, a former teacher was hired, I was pleased to see the city council empowering itself in such a way.  The Burlington Telecom scandal had just broken and it seemed logical that the plurality Democratic council would have its own guy to counter Jonathan Leopold.  I thought he was just going to help the council interpret the budget, so they didn’t have to rely entirely on the JPAL.  I didn’t know he was actually going to make recommendations, or that those recommendations would have legs with both the council and the administration.  I also had no idea at the time that I would be elected to the school board a year later and be forced to deal with the ramifications of those recommendations.

There’s the “be careful what you wish for…you just might get it” philosophy.  There’s also the “it doesn’t matter what you wish for, something bad always happens” theorem.  I like the way David Letterman put it best: “Life is just one disappointment after another, isn’t it?”

Some of reccomendations of George Cross’s “final report” (here’s a draft of the report which is similar to the final version) presented as a memo to the council June 22, 2010 first came to my attention a few months ago when Dale Tillitson told me Leopold was working them.  I asked Jeanne and Keith if they knew why a somone might be asking me about this and they gave me a breakdown of how the retirement works right now.   The proposal to change it wasn’t discussed, but how it works now is as follows.

School Department employees come in two types- folks licensed as educators by the Vermont Department of Education, and everybody else.  The licensed educators pay into and draw from the State Teachers’ Retirement System (STRS).  Everybody else- food service, para-professionals, custodians, after-school staff, business manager, grants manager, diversity director- they are all considered municipal employees by city charter and draw from the Burlington Employees Retirement System (BERS) which the city pays for.  Also- until now they city has always cut the School Department a check to reimburse it for the FICA tax (Federal Insurance Contributions Act of 1935) for these non-teacher employees, which pays for their Social Security and Medicare benefits.

Cross has 3 main recommendations to the city with regard to its financial relationship with the school department 1) Stop paying the non-teacher FICA tax.  Make schools pay it.  City saves estimated $550K; 2) Stop paying into BERS for non-teacher employees.  Make schools pay it.  City saves estimated $792K 3) Move crossing guard services from the Department of Public Works (DPW) to Schools.  City saves estimated $216K.  These were estimates for FY11.

The School Board’s Planning Committee was made aware last month that the city is planning to move on these recommendations as soon as possible.   Since then there have been two meetings about this between city and school officials which took place on October 12 and November 3 at the mayor’s office.  Present 10/12: Me, Alan Matson, Jeanne, the school department’s financial manager Karen, Bob Kiss, Bill Keogh, acting CAO Scott Schrader and another city money guy named Rich… I think that’s it.  Present 11/3 were all the same people plus Keith, the school board chair.

The Cross report and the city officials explained several arguments in favor of this cost shift- 1) Act 68 which says “funds received by a municipality other than a school district may not be used directly or indirectly for education expenses” which is meant to prevent so called “gold towns” from shifting school costs to the town to keep their school rate lower; 2) Cleaner accounting.  It’s hard to know true school costs if city is paying for some of the school department’s retirement. 3) shifting the cost to school taxes and gives tax payers the benefit of school tax income sensitivity (it socializes those costs across the state).

Bob and Bill both seemed resolutely in favor.  From my perspective, I can see no up-side of doing this for the school department.   Even if this is a good idea, timing matters.  Right now it looks like the city’s broke and it wants to cannibalize money from the schools… from the kids. Plus the schools are losing stimulus funding this year, and this hit compunds the problem.  I argued a little bit, and Bill Keogh warned me if the school board fought, there would be political fallout…  Then I was like “that’s not a fair political fight for the council!” Then Bill stood up, shook his fists and yelled “You want a piece of me?!”

Just kidding.

Schrader tried to argue we’re at risk of a lawsuit from a taxpayer seeking income sensitivity, but I found that argument silly.  We’ve been doing it this way forever and nobody has ever sued.  The arguments in favor of the shift appear to make sense on the surface, but however much the city lowers their dedicated retirement tax rate because of the cost shift to the schools, the savings will appear invisible to the taxpayers because they’ll inevitably be swallowed up by increased spending elsewhere.  That’s as sure as the sun rising.  Nobody’s going to really feel that decrease, but people will feel the increase on the schools side, which will not be the only one coming, by the way.

In any event, it appears this is how it appears it’s going to play out…

Next year the city council isn’t planning on cutting that FICA check to the schools which will mean another 411K the schools will have to ask from the taxpayers for FY13 .

The BERS cost will be tougher for the city to pass on to the schools because it will require a charter change and the cooperation of the school board.  We’re going to kick that can down the road for now and see how the elections pan out.

Jeanne says the proposal to move crossing guards from DPW comes up every few years and it always gets beat back.  This one will probably get punted indefinitely.

There are a lot more ins, outs and what-have-yous, but there’s a little background for you to compare to the Free Press story on this if Molly writes one.