January 14, 2009

A Disconnect About Motive and Cause

Monique Chartier

East Providence is looking at budget deficits of over $4m per year for 2008 and 2009 and some scary tax increases if spending on the largest portion of their budget - personnel costs - is not brought into line.

This fact seems inexplicably missing from too many statements by the teachers union. These include but are not limited to:

They've set this thing up, they've run this city into the ground just with the sole purpose of trying to knock down this union.


They intentionally cut their budget short. There's a 1% increase in the school budget this year. They knew that wasn't enough.

Does the teachers union honestly think that the city of East Providence has not hit a financial wall? Or could it be that something must be said to justify the demand for ever-increasing compensation even in a bad economy, not to mention the need to justify the unionization of a group of professionals (and the attendant union dues that arise out of that relationship) and nothing resembling a fact-based rationale could be found?

In point of fact, East Providence, like many other municipalities (as well as the state), is facing a very difficult fiscal situation, mostly as the result, it should be noted, of the irresponsible budgeting practices of past School Committees and City Councils. No one on the present committee or council is the least bit happy about asking municipal employees to take a reduction in compensation. Not one bit.

While, to reiterate, the current budget crunch is mostly the doing of prior School Committees and City Councils, the teachers union only exacerbates a difficult situation, thereby mis-serving its membership, by failing to convey important facts and misinterpreting the goals of the School Committee and City Council.

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Remember, our Union teachers have produced a student population that has a mere 22% proficiency in Math.

That was no accident. These people are mathmatical and financial imbeciles.

But I am sure Bob Walsh "who I've always know to be a reasonable guy" will explain to his membership the financial realities and limitations facing EP, the State and every other city/town.

I'm sure he'll also explain that much of this day of reckoning is the result of his Union taking advantage of weak-minded, hand-wringing, half-wit "Do it for the Children" School Committees.

Yup. I am sure Bob is explaining the facts of life to the Union as we speak ...much like he explained the facts of life to Council 94!

Right about now, he is lathering up the crowd with a speach about how we could solve all the problems if they'd just "sell equity" in the Lottery.

Posted by: George Elbow at January 14, 2009 11:06 PM


Would you please explain or tell the WWW community how much money the East Providence school teachers (who are also taxpayers, have mortgages and bills like everyone else) would individually have to give up in wage rollback to balance the $4 million budget deficit.

Because we have not heard about any wage rollbacks for the other East Providence employees.

Posted by: Ken at January 14, 2009 11:13 PM

Since I'm from East Providence, I may have some more facts at my disposal, though of course, Monique is always welcome to chime in. ;)

The "average" teacher in East Providence makes $66,000 a year for 180 days of work, and with benefits, about $85,000. That's average, not median. We have many teachers receiving wages and benefits in excess of $100,000 / year.

Municipal and school employees are completely separate entities in East Providence, although both are ultimately funded through taxes, which are solely regulated through the city council, not the school committee. The SC does not have any taxing authority. The SC passes the school budget, and the city council raises the money. All of the municipal unions already pay health insurance co-shares, and most have accepted some wage freezes, etc. It's my understanding that the city council has or will soon request that certain municipal contracts be re-opened for additional concessions.

The municipal side is already running bare bones, and imposed a 3.5% property tax increase a few months ago. That being said, expect more cutbacks and other service reductions imminently. I also understand that they are currently reviewing the city's assets (mainly buildings and land) to try (the operative word is "try") to sell some of them which are not essential, in order to generate needed cash, to keep the city operating as normally as possible. Right now, we've been able to make payroll, but the projection isn't quite as rosy going forward. Our tax base isn't getting any bigger or deeper, so it's a matter of diminishing returns every time we do a tax increase (remember, we have the most elderly population -- with fixed incomes -- of any city in the state, and we do border Seekonk, MA).

As for the teachers, the teachers contract now in question represents over 50% of ALL city spending, and teachers salaries and benefits account for about 87% of the school department budget, leaving 13% for everything else, like the kids (remember them?) and building maintenance. You cannot ignore that much of the budget when we're facing a fiscal crisis of the magnitude we have in E.P. It's not about the teachers anymore, if it ever really was.

- There was a 5% pay raise rollback imposed. They received a 5% pay raise in 2008 (technically, 4.88% pay raise this past year, in the third year of there three year contract).

- There was a 20% health care co-share imposed. Previously, they were paying absolutely nothing for their health care. I'm careful to not call it insurance, because technically, they are self-insured.

- The "buyback" or incentive payment given to many members as a "reward" for not taking the free health care from the city has been discontinued. This can add up to $5100 annually to some teachers checks, depending on whether they have individual or family coverage.

- The pension plan has not been affected by these changes at this time.

All this will raise roughly $3.25 million. The 2008 deficit (meaning, we still owe money that was expended last year) was about $4.5 million. The city already approached the State Auditor about bonding it or somehow rolling it over, and we were turned down (for very good reasons, as I understand) and the projected 2009 deficit is roughly another $4.5 million (the real number is actually likely to be higher, because several factors used to make the projections upon are likely to change). That cumulative $9.1 million or so deficit already assumed no pay increases for anyone this year. It also anticipated discontinuation of the "buyback." It certainly did not anticipate the governor's recent supplemental budget request to cut off local aid to cities and towns for the remainder of the fiscal year. I've been told that will significantly impact the school department deficit, as well as the municipal side, which is also running a deficit.

PS To answer the specific question, the hit a teacher my feel is dependent on their specific situation. If they are the "average" teacher receiving about $66,000 annually, it's about $3300 less per year. The healthcare also varies, but if one assumes the cost is in the 15K per year range, they would have to contribute is $3000 annually. No one is claiming that they won't feel the hit, because they will, but it's a far better option than laying people off.

Posted by: Will at January 15, 2009 3:03 AM

Nobel prize winner for economics Paul Krugman warns us in an Op-ed piece that was reprinted in the Providence Journal last week that the nation's governors should not turn into what he calls 50 Hoovers. The point he makes is despite hard times the wrong thing to do is cut back now on statewide and municipal spending making matters only worse.
I tend to agree with Mr. Krugman. This is a time to work our way out of bad times and not give in to hand wringing and fear. The potential damage that could be done to education by short sighted cut backs would have longer effects preventing growth and prosperity down the road.
I believe that teachers would take concessions that are fair ( they have overwhelmingly accepted the arbitrators decision which contains significant concessions) if there was a genuine effort by the city's leaders to find solutions and not just hire overpriced lawyers, point fingers and mouth off on rabid radio programs. Taxes will have to be raised. Is this not the fair way to go forward.. that all the residents of East Providence be responsible for the city's finances not just one group of workers.

Posted by: Phil at January 15, 2009 6:22 AM


The Krugman/Keynesian point might be convincing in a world where government has been spending responsibly in the good times, but that's not the government we have. If the reigning philosophy is we need to increase the cost of government when times are good, because we can't afford to cut back on government when the private sector is doing well, and also that we need to increase the cost of government when times are bad, because we can't afford to cut back on government when the private sector is doing poorly, eventually the system is going to be pushed to its breaking point.

The general concept of not making short-sighted cutbacks was also Tom Riley's point, when he said he'd rather see changes that preserve a maximum number of teaching positions, rather than forcing lay-offs of junior faculty. But the unions shouted him down and demanded that the school committee deny him the right to speak on the subject.

Now tell me what's wrong with someone making that kind point on a talk-radio program where they will be heard because speakers are allowed to finish their thoughts without others demanding that the government shut them down (at least until the Democrats pass the fairness doctrine).

Posted by: Andrew at January 15, 2009 8:38 AM

Who is cutting back, we are only trying to stem the flow.

Posted by: bobc at January 15, 2009 9:31 AM

The Governor has been talking about out of control spending on a state and municipal level, and if we didn't stop our bad habits we were going to have serious troubles. Well, here we are doing a death dive into insolvency. Until organized labor starts getting rubber checks, they are just not going to get it. I don't know if the unions are in the denial or anger phase in the death of RI, but they are going to have to accept the fact there is no money. It's a little hard to sell your house when you live in a bankrupt municipality or state. Nobody will open a business, and the businesses that are here will leave or go under.

Nice going organized labor. You were supposed to lift up your membership so they could have a safe place to work at fair wages. What you have done is priced your members out of a job. Nice going.

Posted by: kathy at January 15, 2009 5:33 PM


You say the teachers will loose about $3,300. That is a little more than one paycheck based on your figures and does not include additional lost wages from healthcare contribution.

$66,000.00 average yearly salary

$ 6,270.00 (9.5% State of RI required retirement system contribution)

$59,730.00 before federal and state taxes

$2,986.50 gross paid by-weekly over 180 day school year about 20 paychecks.

Assume loosing 1/3 to federal, state, social security taxes (higher tax bracket because 26 normal checks are compressed into 20 pay checks) and union dues.

$1,991.00 teacher average net take home every two weeks during school year only.

Posted by: Ken at January 15, 2009 6:54 PM


$66,000 per Year is $66,000 per year whether it is paid out over 9 months, 12 months, 26 weeks, 52 weeks or 365 days.

And we all pay taxes.

And when someone starts to pay for THEIR fair share of the ever increasing cost of THEIR Healthcare, that is not a "pay cut".

Rather, that is just following the sound advice of that very bright and professional individual named Patrick Crowley who recently wrote the following:

"Let me ask the business folks reading: is it a successful business model to lower your prices year after year even if your production costs rise each year?"

Lastly, perhaps you could next do an analysis of what the pay cut is relative to the pay of the 10+% of the unemployed workforce in RI. In other words, cry me a river.

These coddled hacks should be happy they have a job, particularly when they have heretofore always received massive raises without any regard to merit or achievement.

Posted by: George Elbow at January 15, 2009 11:13 PM

The main theme of Mr. Krugman's piece was to point out that the strain on state and municipal budgets could cause governors (ours is more like W than Hoover) and mayors to yield to political pressure and reduce spending at a time when jobs are being lost in the private sector. The private sector which is largely responsible for our economic distress has been the reciepient of government bailouts. To shortchange the public sector now would effect the recovery by adding more people to the ranks of the unemployed and weaken the ability to deliver services that are needed now more than ever. As we pull out of recession at least we will not have damaged our intrastructure.
Andrew you mention a person that you allege was shouted down at the school committee meeting by those in attendence and that talk radio would offer a better platform to express your views, but the only talk radio airings of local issuses is dominated by hosts who are anything but fair on a radio station that employs and gives airtime to people of dubious character. You as a guest on one of these shows may be given an opportunity to make your reasonable argument but the other side is rarely given the same chance. Jim Hummel who is not a regular radio host at WPRO did indeed invite in three NEA officials who are dealing with the East Providence negoiations to discuss the ongoing process. This stands out because it is such a rare occurence. School committee member Anthony Carcieri affectionately referred to as "Tony" by the WPRO hosts and newsreaders has had more than ample time to give his ( or his lawyers ) side of things usually without any rebuttal. In fact he's appeared more on that radio station recently than any local politican since WPRO did away with any pretense of fairness and gave the loudmouth mayor of Cranston his own show while he was a mayor. But I digress. The only other opportunity for rebuttal of Mr. Carcieri's views was when he was a guest of The WPRO morning show and a NEA official debated Mr. Carcieri with the host uttering such statements as "you know we all out here pay for healthcare" and "everyone knows there's no money". As the Nea guest was talked over by Mr. Carcieri the host was silent prompting him (NEA) to question who was running the show. That is the backdrop to the frustration of teachers and their supporters who have not had their say when it comes to the way the negoiation process has been handled by Mr. Carcieri and others in East Providence. In a perfect world emotions would be held in check and all who wished to comment could. The story that I keep hearing is that the real reason that the meeting was so abruptly adjourned was that the next speaker was one that Mr. Carcieri did not want to hear from.
Andrew I agree with you that government should spend responsibly so I think that residents should be attending meetings and being heard about all financial decisions made in their name. They of course are responsible for the past decisions also.
Mr. Krugman's columns can be found in the New York Times.

Posted by: Phil at January 16, 2009 9:09 AM

You can take out the payment to social security as a cost factor in you calculations. Also teachers can opt to take their paychecks over 26 weeks.

Posted by: bobc at January 16, 2009 7:22 PM
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