April 30, 2010
by Michael J. Mullarkey
Dear Editor:
The April 20 meeting of Chappaqua’s Board of Education at Greeley H.S. was instructive.
Upon questioning, Assistant Superintendent for Business John Chow revealed that the unfunded liability for teachers’ medical coverage was $93 million. With roughly 400 teachers in the system, that is around $232,500 per teacher. When asked what the unfunded pension liability was, Board members claimed they did not know because, in any one year, it is state-mandated.
One attendee, in discussion afterward, reasoned that teachers might be guaranteed pension growth of 8% per year. Any one paying attention to U.S. equity markets knows that returns between January 1, 2000 and December 31, 2009, has been roughly zero per year. To the degree that teachers’ assets have been invested in those markets, Chappaqua has accumulated a huge unfunded pension liability for its teachers. It would help to know precisely how large that liability actually is.
I asked the Board to prepare a white paper explaining how these unfunded liabilities are calculated to Chappaqua residents. No assurances were forthcoming that any such plain-English analysis would be prepared for the instruction of taxpayers obligated to fund these liabilities.
Yet even a gross explanation would be helpful. For example (simply for purposes of illustration, not accuracy), if the entire N.Y.S. Teachers Retirement Fund is underfunded by, say, $40 billion and Chappaqua’s share of that fund is 1/2 of 1%, that means Chappaqua could be obligated, hypothetically, for $200 million.
All of this matters because, in California, if a state or municipality goes bankrupt, the pension claimants get in line with all other creditors. In New York, I believe, pension claimants on state administered systems are guaranteed by the NY State Constitution. So a community’s pension liability is more onerous in our state. A clearer explanation of Chappaqua’s obligations is needed.
Asked what the medical plans cost and how much each teacher paid in, the Board indicated that the plans cost approximately $15,000 for a family and $6,000 for an individual; and that each teacher paid 9% of the total cost. It was left to resident Judy McGrath to clarify: family plans costs Chappaqua $15,741 per year, per teacher and each teacher contributes only 7.75% of the total cost.
The Board functionally ignored the question as to why teachers were not required to pay a larger share of costs. Yet, the Board has a responsibility to taxpayers to discourage unsustainable Cadillac plans and to lower the percent contributed by taxpayers.
Ms. McGrath asked why the school budget had risen from $74 million in the 2003-4 school year to the current projection of $109 million when (1) the number of students has remained stable and (2) SAT scores have also remained largely unchanged despite the flood of tax dollars. She received no creditable answer.
The Board’s complacency toward costs ignores the fact that a majority of the households in Chappaqua have no children in the school system! John Chow estimates roughly 5,800 households, of which 2,500 use the schools. If these numbers are correct, then 43.1% of households are being substantially subsidized by the majority.
You can look at the school system’s spending from three perspectives: 1) There is the proposed budget of $109.5 million. 2) Then there is the proposed level of spending, which is $110.5 to $113 million, depending on who you talk to. 3) Lastly, there is spending plus incremental unfunded medical commitments, which are higher still and inadequately disclosed.
The Chappaqua school system has 400 teachers and 4,183 students or one teacher for every 10.5 students, an indulgent ratio. If we took the ratio back to one teacher for every 12 students, we could reduce the school budget.
I want to thank Jim McCauley and Judy McGrath and their colleagues at New Castle Citizens for Responsible Education for publishing a detailed analysis of the school budget on their website.
Respectfully yours,
Michael J. Mullarkey
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