This is a story of a once sought-after community that will soon be sought by no one. It is a town in trouble, and it is an example of what is happening, in different but related forms, in many places across the country.
In the last 10 years our school taxes have doubled. Mine now stand at over $16,000 per year (I live in a modest but very comfortable 2,500 square foot home). Reasonable projections, supported by our local School Board, show that these taxes will double again in the next 5-6 years, to $32,000. Yes, I said $32,000. From there, where do they go?
Consider the ramifications of this across a community. First, how many will move out before it gets this bad? And, where is the “tipping point”, where people want to move out but can’t, because no one will buy a house in a community where you pay $32,000 per year in school taxes to live in 2,500 square feet? Will it be in 2 years? 5 years? 8 years? Surely there is a point where this happens. When it does, then what?
The cause? Teacher salaries, benefits, retirement plans, and retirement health benefits.
Over the last 3 years, during the height of the recession, teachers in our community have seen their salaries increase 22%. Over the next 3 years their contract will provide similar salary increases, compounded on their current high base. Their medical benefit costs, to which they contribute almost nothing, are exploding. And their retirement plans and retirement benefits (especially medical benefits) are locked in by state law and rising like mad.
In the last 3 years, many in our usually fortunate community lost their jobs, had their pay reduced, or frozen. A few have held up to the recession just fine, but most that I know are well set-back from where they were. As our citizens are flat to down, their taxes fly higher and teachers reap more and more benefit, with complete security in every way (salary with automatic increases, guaranteed retirement, tenure, healthcare).
Certain leaders in our community have stood up to highlight the fatal trend we are on, and while a few years ago they were screamed off the podium by education zealots, today there are an equal number shouting down union spokespeople (I don’t support shouting down anyone, by the way). You see, there were two types of people in our town, some of which are hybrids. Type 1 is the education-oriented parent who moved to this town for the quality of the education, and who felt whatever it took to provide their child the best education, so be it. Type 2 is the parent that realizes that there are two benefits to having education quality in our town, the first is that their children will receive an excellent education, and the second is that as long as the education system is well-regarded, their real estate values will hold up.
It is the people in type 2 that are in an uproar. Yes, education quality is still high in our community. But it’s cost is on a sure course to destroy real estate values in our town. In the long run, this will not only severely damage residents financial statements, it will also lock them in to the town, or force them to sell at significant losses to get someone to buy into the town and its taxes. Surely under such conditions education quality will suffer significantly as well.
Is the solution to vote-in a prudent Board of Education? For the town to reject it’s school budget referendums?
Unfortunately, neither of these will help. The teacher’s union has their bases covered, thanks to $100’s of million in campaign donations over the last several years to politicians (mostly democrats). Towns have no control over the major cost levers. In effect, we receive a bill from New York State each year to pay for teacher pensions, healthcare, and retirement healthcare. Without the State changing these, towns have literally no influence over them. Salary increases are locked in as well, and if the community rejects the teacher’s contract, a provision kicks in which provides increases to eternity.
Will the state change them? Well, we saw what happened to Scott Walker in Wisconsin. Andrew Cuomo does not seem ready for that kind of fight, nor does our legislature. And the money, oh the money, is so good from the teacher’s union.
This is the Chappaqua/New Castle version of this problem. Many towns, cities, states, and of course the Federal government face their own versions of this challenge.
Changes will come one way or another, in response to trauma or through pro-active changes initiated by brave leaders. Other than Chris Christie, Scott Walker, Mitch Daniels, and Paul Ryan, I don’t see many leaders out there. Perhaps we should brace for impact?