Larry Applebaum Commentary on QS
As a former School Board Member for 12 years, I will jump in at this point to talk about the facts. There is one reason and one reason alone that is driving the need for the parcel tax. That reason is the unfunded pension liability facing the school district (and most other governmental entities in the state). By the time governor Brown finally proposed pension reform for government employees in 2012, the unfunded liabilities were in the billions of dollars. One of the reforms was to increase pension contributions going forward. School employees had their contribution rate raised to 8.25% (from 6.25%) while school employers saw their contribution rates sky rocket over a number of years, moving to contribution rates of 19.2% for teachers and 26.7% for classified employees. It used to be that schools could fund employee raises and other increased expenses from the annual cost-of-living adjustment (COLA) provided by the state. In good years the adjustment provided enough money for substantial raise and in lean years nearly enough to give a raise. Now, the increased pension contribution rates totally overwhelm the COLA, leaving no money for raises. This year, the district settled with its employee groups on a 2% raise, paid for by not funding the post employment retiree medical benefit account and drawing down money put aside in that fund to pay the current year cost. The commitment was made to provide a 3% raise next year to be paid from the proceeds of the parcel tax, assuming it passes.
Paying salaries from a parcel tax is wrong on several levels and is why the parcel tax proposed has no sunset provision. It is wonderful how proponents espose all the things the parcel tax will provide our students. It is all bs!! Parcel tax dollars become part of the general fund pot of money. That pot is subject to negotiation EVERY year by the bargaining units. With every one percent of salary increase equal to about 1.1 million dollars, we will be taking 3.3 million dollars the first year away from the funding “goals”. That leaves 5.7 million available in year 2 to bargain. Let’s say the units agree to a 2% raise in year two. That is 2.2 million dollars more. That leaves 3.5 million available in year 3. Let’s say the district and the bargaining groups agree on 1.7% in year 3 and in year 4. That eats up the entire parcel tax. No new classes, no new positions, no new expenditures because 100% of the available dollars would be spent on an ongoing expense (salaries). Worse yet, any positions created with the available parcel tax dollars in years 1-3 will have to be laid off since all of the money would already be spoken for. THEN WHAT??? We will be in the same boat, assuming no additional money comes from Sacramento other than COLA. Of course, if we can sucker voters into the first parcel tax, why parcel tax #2? After all, it is only another $170 for an average size home!!!
Hopefully, you can see why this tax, as presented and implemented, IS NOT THE SOLUTION!
I’m available to discuss this further. My Email is email@example.com and my Cell # is (818) 371-9904.
Additional Thoughts & Comments by Larry Applebaum (12yr BUSD School Board Member & x3 President)
The fact is the pension obligations for both STRS and PERS were fully funded as late as the late 1990’s. Unrealistic earnings assumptions, the dot com bust, pension holidays granted to cities (PERS) and the recession of the late 2000’s caused a collapse in the funded levels and precipitated the pension crisis. As long as we continue to use pensions as a means to attract employee talent, we have an absolute obligation to make sure that the pensions are funded. The best way to do that is to take the funding into our own hands. That is both the moral and responsible thing to do.
A parcel tax that is specifically created to address the pension issue I believe is the best way to deliver on the pension promise to district employees. And the good news is we don’t need any special legislation to accomplish this goal. Rules were instituted by the IRS allowing governmental agencies to create trusts that can be used to fund pension obligations while freeing up General Fund dollars that currently are being drained to pay the onerous pension contribution rates.
Thanks for engaging in the conversation. To be sure, I have not stopped investigating funding mechanisms to deal with the pension issue. It turns out there is a vehicle to be able to appropriately fund pensions and free up general fund dollars that is legal and I believe would better serve the long term needs of our district. Called a Section 115 trust and approved by the IRS a little over a year ago, it allows governmental agencies to put dedicated funding into the trust and then pay out to the Pension agencies the amounts needed to fund the pensions in an as needed basis.
For instance, we dedicate a parcel tax to fund the trust. The district is proposing a 9 million dollar annual contribution. Our unfunded liability is roughly 145-150 million. In roughly 20 years, we could place enough money in the trust to fully fund the liability (actuarially derived) and sunset the parcel tax. The district would pay employees as normal, but contribute a much smaller amount than we currently pay to the pension funds, say 10-11%. The trust then contributes an amount necessary to make up the difference needed equating to the statutory requirement. The district is free to use the general fund dollars that are saved each year in the current year, allowing for payment of raises, benefit augmentation and/or any other use it deems appropriate. The district could adjust the pension contribution amount taken from the general fund in any given year, as long as the trust could make up the differential. I suggested 10-11% because it provides a reasonable cushion, even though once the state meets it’s funding goals, the district contribution rate should theoretically be able to drop down to 8.25%.
No special legislation is required to do this! I (and many others) could support this type of solution because it addresses the real problem, provides a solution that provides additional dollars to the general fund annually, and allows us to put a reasonable sunset on the parcel tax.
Mike & Roy Show on Measures P & QS
Vote NO on Measure QS
NO On Measure QS Flyer - Response to Rebuttals
1 ). The Measure QS Parcel TAX has NO SUNSET Clause, so it never ends unlike Facilities Bonds like Measure S that we Supported & Campaigned for, or the Temp Prop 30 0.25¢ State Sales Tax Measure (3-5yrs), or the Parcel Tax passed a few years ago in La Canada (2014) that has a 7 year Sunset. This is a FACT and We Stand by our Statement. If you can provide some examples of similar Parcel Taxes without Sunset clauses that have ended, we would love to see it as we can find none.
2). YES BUSD has a Balanced 3 Year Budget that provides for increases in Pension Obligations but they do not have enough funding for Cost-of-Living wage increases, as the COLA monies received from the State are being used to pay for ballooning Pension costs, hence the real reason Measure QS is on the Ballot. I encourage BUSD Parents & Burbank Voters to read this excellent CALMatters background article on the Pension crisis driving this Ballot Measure. Of course, there is no mention of Pensions or Pay increases in the QS Ballot measure language, which is where most of the money raised (85%+) is actually going to be spent.
Re “putting Teachers last”; BUSD has always taken care of our Teachers. Teachers have received 15.7% in cumulative pay increases during the last 5 Years, which averages out to a little over 3% year, well above the 2% COLA. Here is a link to BUSD Salaries c/o Transparent CA 2013-16 and a link the Certificated Salary Report for all LA County School District for 2017-18. You will find Burbank listed in the section titled “Unified School District”. Remember to add 2% to every figure you see for Burbank, the Board just approved a 2% on-schedule salary increase at the last meeting for every district employee except the Superintendent.
Here’s what Larry Applebaum has to say: “Burbank still ranks high in pay to our administrators with the exception of Counselors, who in our district are represented by BTA and earn the same as teachers do. Over the last 5 years, the cumulative raises our employees have seen is slightly under 16% total, which puts us smack dab in the middle. Comparison teacher salaries are at the median or below generally, and our benefit contributions rank at the top of the bottom third of districts surveyed. Bottom line, teachers aren’t getting rich but are being paid fairly, taking into consideration the desirability of our school district relative to some others with higher pay.”
3). There was a 16 year gap between the 1997 High School Bond and 2013 Measure S Facilities & Technology Bond. To put another Property Tax increase on the Ballot just 5 years after Measure S passed while we’re still paying for the previous Bonds until 2024 & 2032 respectively, is a bit much IMO, esp. when we haven’t even finished the HVAC Work we promised at 4 School Sites. Moreover, to put QS on the Ballot at the same time the City is proposing a massive 0.75% Sales TAX increase that will give us the Co-Highest TAX in the USA is placing an Unfair Burden on Families & Businesses who are already struggling to survive with Rent increases, higher GAS/DMV costs etc., when our Schools are suppose to be fully Funded by the STATE.
4). Please re-read the bullet-point: “The promised 3% Salary Increase, GIVEN ANNUALLY, would mean that by Year 3, the whole $9M raised would be spent”. BUSD has already agreed to a 3% pay increase, so the first $3.3M of the $9M p/a is spent. The Teachers Union (BTA) wanted 8%. Given the history of pay increases mentioned above & BTA demands during the most recent bargaining period, it doesn’t take a Rocket Scientist to figure out What’s Likely to Happen based on Past History. We believe there is a very strong likelihood that the remaining $5.7M “pool” will be bargained away and the money will be spent in 3 years. But let’s say you’re all OK with just 3% for now and it takes 5 years, then what…another Parcel Tax? Burbank Parents & Voters should Watch This FaceBook Video with former School Board Member (12yrs) & 3x President Larry Applebaum as he speaks to this and form your own opinion as to the likely outcome.
5). NO. If you go to the www.BurbankMeasureQS.com website you’ll find a multi-facet approach to BUSD’s current financial challenges that is Fair, Responsible & Sustainable. It includes a narrow Parcel TAX w/Sunset to pay specifically for Pensions via a Trust that will free up COLA money for annual cost-of-living raises (see Additional Thoughts/Comments by Larry Applebaum). It also involves ALL of us putting immense Pressure on our State Representatives (Mr Portantino & Ms Friedman) & The Governor to provide Proper Funding for our Schools beyond 2008 levels, and a reduction in the Mandatory Pension payments from 19%-26% of Payroll to say 15%-20%.
The STATE is sitting on a $9 Billion Budget surplus and they can’t fully Fund our Schools? Passing Resolutions and sending letters like this is not enough; So let us know when you all plan to March down Chandler, or Protest outside our Rep’s District Offices, or Charter some Buses up to Sacramento, and We Will Stand With You, because whatever happens next Tuesday, this is what we’re going to need to do as a Community to solve the real problems long-term. Cheers!
And one more thing; Regardless of whether you support or oppose Measure QS, may I encourage you to strongly consider Voting NO on Measure P. Here’s Why; Measure QS requires 2/3 Voter approval to pass & we don’t believe BUSD is going to get that. IF Measure P Fails 🙏, we’ll have another option; We could try a reduced Sales Tax increase of 0.50¢ w/5yr Sunset & Split it 50/50 CITY/BUSD like Pasadena is doing, which would generate $7M for each party. Larry made this suggestion back in April & I’m told BUSD approached the City and asked if they’d consider Sharing the Revenue in order to have just 1 TAX Measure on the Ballot but they said NO. So, #VoteNOonMeasureP to Keep that Door Open in 2020. #BurbankVotes
Craig Huey - Election Forum Voter Guide
ELECTION NIGHT RESULTS
Measure QS* – Yes 62% (16,354) / NO 38% (10,161) * QS Fails as Parcel Tax Requires 67% Voter Approval
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