You are on page 1of 17

Grosse Pointe Public School System

Financial Transparency Series

EMPLOYEE DIRECT
COMPENSATION
Presentation Objectives
Deliver a Basic Understanding of:
2

Definition of Direct Compensation

Contract Salary Grids (Steps and Lanes)

Staffing Levels and Direct Compensation
Trends

GPPS Compensation in Comparison to Other
School Districts

Financial Transparency Series - Employee Direct Compensation
Difference Between Direct and Indirect
Employee Compensation
3

Direct Compensation Indirect Compensation

• “On Schedule” Salary • Health Care Benefits
• “Off Schedule” Salary • FICA Payments
• Longevity Bonus • Retirement System
• Health Care “Opt Out” (MPSERS)Payments
• Extra Pay for Extra
Duty (EPED)*
* e.g. Additional pay for coaches, extra and co-curricular duties, department chair, club sponsor, etc.

Financial Transparency Series - Employee Direct Compensation
Salary Schedule Basics
Every Bargaining Unit Has a Contract and Salary Schedule
4

• Salaries increase with longevity
(Steps), and post-graduate credits and
degrees (Lanes).
• Employees maintain Step positions as
Salary they shift Lanes.
• Steps and Lanes embed raises into the
Schedules schedule. Schedules remain in place
establish even after a contract expires.
• “On Schedule” raises increase the rate
employees’ of the raises already established via
pay Step and Lane increases.
• “Off schedule” raises are paid as a
percentage of the “on schedule”
payment and expire when the contract
expires.

Financial Transparency Series - Employee Direct Compensation
Salary Schedule Characteristics
Breakdown by Bargaining Unit or Category
5

# of # of Longevity Health Care
Bargaining Unit Union?
Steps Lanes Pay? Opt Out?
Teachers Yes 11 11* Yes Yes
Teacher Asst. Yes 6 6± Yes Yes
Custodians Yes 4 8± Yes Yes
Building Admin. Yes 4 8± Yes Yes
Clerical Staff Yes 8 5 Yes Yes
Non-Instruct. Supv. No Range 12± Yes Yes
Exec. Admin. No N/A N/A Yes Yes
Tech Support No 6 4± No No
Paraprofessionals No 9 2* No Yes

* Lane changes based on degree and/or post-graduate credits
± Lane changes based on job description and responsibilities

Financial Transparency Series - Employee Direct Compensation
2007-8 Teacher Bargaining Unit Salary Schedule
Lane 1 Lane 2 Lane 3 Lane 4 Lane 5 Lane 6 Lane 7 Lane 8 Lane 9 Lane 10 Lane 11
BA BA+20 BA+30 MA MA+10 MA+20 MA+30 MA+40 MA+50 MA+60 Dr
Step
1 41,425 43,418 44,414 49,705 50,697 51,698 52,690 53,690 54,675 55,676 57,165
2 44,326 46,318 47,304 52,769 53,767 54,762 55,752 56,746 57,742 58,737 60,234
3 47,230 49,211 50,201 55,843 56,844 57,830 58,826 59,820 60,813 61,811 63,300
4 49,873 51,865 52,858 58,570 59,570 60,564 61,555 62,549 63,546 64,541 66,032
5 52,530 54,522 55,515 61,681 62,676 63,671 64,664 65,668 66,651 67,647 69,145
6 55,175 57,165 58,163 64,422 65,413 66,402 67,401 68,391 69,390 70,383 71,875
7 57,830 59,820 60,813 67,160 68,147 69,145 69,964 71,129 72,132 73,120 74,613
8 60,366 62,477 63,465 70,263 71,254 72,248 73,246 74,232 75,228 76,228 77,722
9 63,511 65,489 66,493 72,991 73,988 74,974 75,975 76,971 77,964 78,950 80,450
10 67,312 69,300 70,308 77,109 78,104 79,101 80,100 81,101 82,086 83,081 84,571
11 74,157 76,153 77,146 84,606 85,600 86,585 87,577 88,579 89,576 90,566 92,065

Embedded Salary Schedule Raises Other Negotiated Raises
Avg. Step Level Pay Increase 4.90% On-Schedule 1% (over 2006-7 schedule)
Avg. Lane Level Pay Increase 2.50% Off-Schedule 1% (on top of in year schedule)
Annual Longevity Payment Starting at:
Year 10 $1,690
Year 18 $2,536
Year 23 $3,380

Financial Transparency Series - Employee Direct Compensation 6
30 Year Teacher Direct Compensation Projection
Assumes 1% Annual Off-Schedule Raises, 3 Graduate Credits/Year
7

Years of Service Base Salary Off-Schedule Bonus Longevity Payment

$130,000
$120,000
Direct Compensation

$110,000
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Years of Service

Financial Transparency Series - Employee Direct Compensation
30 Year Teacher Direct Compensation Projection
Same Data as Previous, but Adding 1% On Schedule Raises Annually
8

Years of Service Base Salary Off-Schedule Payment Longevity Payment

$130,000
$120,000
Direct Compensation

$110,000
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Years of Service

Financial Transparency Series - Employee Direct Compensation
2009-10 Distribution of GPPS Teachers on Salary Grid
Vast Majority at Top Step (11) and most at MA or Above
Number of Teachers 9

80

60

40
Step 10

Step Level
20
Step 7
0 Step 4
BA
BA+10
BA+20
MA
MA+10
MA+20

Step 1
MA+30
MA+40
MA+50

MA+60

PHD
Lane Position

Average age of all GP teachers is 45. Average Michigan teacher retires at about 60.
Financial Transparency Series - Employee Direct Compensation
Full Time Equivalent Employees
Three Year View Shows Staffing Levels Scaled to Enrollment
10

2007-8 2008-9 2009-10
Teachers 602.80 603.65 566.15
Teacher Assistants 147.60 153.00 141.60
Custodians and Engineers 75.00 76.00 76.00
Clerical Staff 59.40 61.00 57.90
Building Administration 26.00 25.00 25.00
Non-Instructional Supervisor 16.15 18.80 17.90
Paraprofessionals 11.92 11.92 11.71
Technology Support 7.00 7.00 7.00
Executive Administration 5.00 5.00 5.00
Total FTE Employees 951 961 908
Blended Student Enrollment 8,589 8,359 8,172
Ratio of Employees to Pupil 9.0 8.7 9.0
Financial Transparency Series - Employee Direct Compensation
Average Direct Compensation Per Employee
Total Cost Slightly Reduced, but Per Employee Costs Rise
11

2007-8 2008-9 2009-10
Executive Administration $153,998 $155,414 $155,414
Building Administration $118,738 $120,842 $121,680
Teachers $80,320 $82,040 $85,519
Non-Instructional Supervisor $82,627 $75,979 $75,141
Technology Support $60,677 $60,993 $62,801
Custodians and Engineers $43,857 $42,777 $42,294
Clerical Staff $37,111 $37,280 $37,880
Paraprofessionals $25,959 $26,612 $27,298
Teacher Assistants $18,457 $18,269 $18,668
Total FTE Employees 951 961 908
Total Direct Compensation Cost $62,560,838 $63,814,210 $62,390,599
Direct Compensation Per Employee $65,793 $66,378 $68,692
Financial Transparency Series - Employee Direct Compensation
Direct Compensation Represented on Per Pupil Basis
$350/Pupil Increase from 2008 to 2009, Flat from 2009 to 2010 because of Layoffs
12

2007-8 2008-9 2009-10
Teachers $5,637.11 $5,924.54 $5,924.66
Custodians and Engineers $382.96 $388.93 $393.33
Building Administration $359.44 $361.41 $372.25
Teacher Assistants $317.18 $334.38 $323.46
Clerical Staff $256.66 $272.05 $268.39
Non-Instructional Supervisor $155.36 $170.88 $164.59
Executive Administration $89.65 $92.96 $95.09
Technology Support $49.45 $51.08 $53.79
Paraprofessionals $36.03 $37.95 $39.12
Direct Compensation Per Pupil $7,284 $7,634 $7,635
Blended Student Enrollment 8,589 8,359 8,172
Per Pupil Foundation Allowance $10,128 $10,184 $10,184
Financial Transparency Series - Employee Direct Compensation
Direct Compensation Costs Outpace Revenue
Adding Indirect Compensation Costs Takes Us From Bad to Worse
13

2007-8 2008-9 2009-10
Per Pupil Foundation Allowance $10,128 $10,184 $10,184
Employee Direct Compensation on a Per
$7,284 $7,634 $7,635
Pupil Basis
YOY Foundation Allowance Change $56 $0
YOY Direct Compensation Costs Increase $350 $1
MPSERS, FICA, Health Care Costs Increase* $129 $84
Net Compensation Cost Increases on a
$424 $85
Per Pupil Basis

Multiply the Net Compensation Cost increase per pupil by the total number of
students to quantify the full impact of the problem this poses.

* Refer to “Indirect Compensation” Module for details
Financial Transparency Series - Employee Direct Compensation
14
GP Rank
Comparing (out of 85)
GPPS Direct Student Enrollment 18
Compensation Total Revenue per Pupil 12
In Wayne, Oakland, and Average Teacher Salary 1
Macomb Counties there
are 85 traditional public
Instructional Salaries per Pupil 3
school systems. Administration Costs per Pupil 27
The state publishes Operations and Mntc. Costs per Pupil 18
pertinent financial data Support Services Salaries per Pupil 37
from all public schools
annually.
Analysis
This is where GPPS
ranks in their most If all districts scaled expenses in equal proportion,
recent report (2007-8) per pupil cost rankings would correlate to revenue
in relation to all 85 per pupil ranking.
districts in the tri-county
area in these The data supports that GPPS indexes on Teacher
categories. and other Instructional Salaries.

Financial Transparency Series - Employee Direct Compensation
15
GPPSS Top 70 Largest District Avg.
Benchmarking
Allocation 50.3%
Basic Instruction
Options GP Rank = 13 46.4%
School districts have
common expense 34.6%
Teacher Salaries
29.2%
areas. How each GP Rank = 3
chooses to fund those
11.8%
areas varies. This chart Added Needs Instruction
GP Rank = 35 12.3%
compares GPPS to the
70 largest districts in the 10.6%
state (GP is the 30th Ops and Maintenance
10.6%
largest.) The GP Rank = 29

percentages reflect the 10.2%
Instruct. Staff Support
portion of total 11.0%
GP Rank = 44
expenditures allocated
to each area. GP’s rank 9.9%
Administration
among the 70 is noted 11.0%
GP Rank = 29
as well.

Financial Transparency Series – Employee Direct Compensation
The Compounding Problem of Higher Salaries
16

Every $1.00 of
salary above
market value
Like a pro sports therefore
team “luxury tax”, actually costs
salary costs the district
compound with $1.23 – a 23%
Two of the MPSERS and premium on
district’s largest FICA rates. our largest
expenses are expense.
calculated as a
percentage of
salaries:
Retirement at Meanwhile, MPSERS rates can
16.94% and FICA be expected to rise.
at 6.5%.
Financial Transparency Series - Employee Direct Compensation
Key Observations on Direct Compensation
17

Direct Compensation • Direct Compensation per employee is up 4.4% from 2
Costs are Increasing years ago. (Teacher direct compensation up 6.5%.)
Faster Than Our • Revenue per pupil up only 1.1% in same time.
Revenue Per Pupil • Compounding MPSERS / FICA makes this worse.

Most employees reach • 67% of teachers are at highest step level in 2009.
near maximum on their • 88.7% of teachers have Master degrees or higher.
Salary Grid within 6 to • This creates demand for on/off schedule increases and
11 years of employment alternative means of increasing salaries.

Direct Compensation • Pre-Prop A: Generating revenue was easier. New
Models have the Same millages funded embedded compensation increases.
Characteristics of the • Post-Prop A: Rising enrollment masked this weakness.
Pre-Proposal A Era Declining enrollment has exposed it as a major issue.

Financial Transparency Series - Employee Direct Compensation