The months of budget problems the Clark County School District faced last year will soon look like the good ol’ days. Thank collective bargaining for that.
On Tuesday, an unaccountable, out-of-state arbitrator awarded district teachers a $13.2 million compensation increase. One problem. The district’s ending fund reserves are a scant $18.2 million, just 0.78 percent of a $2.4 billion budget. That’s less than three days’ worth of expenses.
Unless the district makes cuts, the arbitrator’s decision takes that down to 18 hours’ worth of expenses. Read that again. 18 hours.
The arbitrator’s award allows teachers to receive a step increase for just one month this year. But that higher pay rate will be in effect for all of the next school year. That will cost the district $38.5 million.
And it now must reach a new contract with the Clark County Education Association for next school year. It has to go right back into negotiations.
It gets worse.
The district has five employee organizations. It didn’t include compensation increases for any of them in its current budget. Unless those groups agree to a salary freeze, which is unlikely, four more arbitration decisions are coming. The district will also have to reach new contracts with these groups for the next school year. Plus, a judge ordered the district to pay support staff employees an extra $7 million last April. District officials have appealed that decision, but if they lose, they won’t have enough cash to pay the bills.
Trustees now have no good options. The responsible thing is to cut expenses. That would likely include layoffs, because salaries and benefits make up 87 percent of the general fund budget.
Do that, however, and you’ll preserve the district’s meager ending fund balance, which arbitrators keep ruling gives it the “ability” to dole out salary hikes. That increases the chances of another unelected, out-of-state arbitrator awarding a raise for a different employee group. An arbitrator could also decide to award raises even if he finds it’ll produce cuts. Last May, an arbitrator did just that. He awarded administrators raises, even after finding that the “evidence did establish that cuts in the district’s budget would have to be made.”
Don’t miss the true culprit in all this: collective bargaining. The district has to live with rules set by the Legislature. School boards should decide contracts if there’s a negotiating impasse, but state law mandates binding arbitration. At a minimum, the Legislature should exclude a portion of a school district’s ending fund balance from collective bargaining. For reference, cities and counties can exclude 25 percent. The school district can’t even exclude 0.25 percent.
These rules will govern the district’s next budget. That means it’s going to be a train wreck.
The school district says it expects a $34 million revenue increase next year. That’s good, but it won’t even cover the $38.5 million the arbitrator’s decision Tuesday will cost it next year. Here come the cuts. There’ll be even more cuts if the district keeps losing in arbitration Plus, it must pay for new hires and may end up with less money if it has over-projected enrollment growth.
This is why the district can simultaneously have increased revenues and need to reduce spending. It doesn’t have a revenue problem. Its problem is that state labor law prevents it from setting or reducing employee compensation. Again, that’s 87 percent of the general fund.
If the district somehow ends up with more money than expected, arbitrators will just rule that it has the ability to pay its employees more. This is why putting more money into education — the reflexive cry of Democrats — won’t help. Dump more unrestricted funds into the district, and the unions will just increase salary demands proportionally.
If you want to fix the district’s budget problems, you must demand legislators and Nevada’s next governor fix collective bargaining.
Victor Joecks’ column appears in the Opinion section each Sunday, Wednesday and Friday. Listen to him discuss his columns each Monday at 9 a.m. with Kevin Wall on 790 Talk Now. Contact him at email@example.com or 702-383-4698. Follow @victorjoecks on Twitter.