Well, this stinks.
West Allis-West Milwaukee, which has been digging itself out of a $14 million deficit over the past year, alerted teachers in an email last week that those who normally take their summer pay in a lump sum in June would receive just a fourth of their expected paychecks Thursday, with the balance to come a week later.
What’s more interesting than the actual impact is the reason for it. Yes, it stinks that the teachers will not receive their pay as scheduled, but they will get it all a week later. It’s an inconvenience, but it’s not the end of the world.
Also, the way the school district handled it looks pretty poor.
She said many teachers were blindsided by the news, which was buried in a “budget update” emailed to district employees June 9, the last day of school.
That’s poor management. Whenever something changes that impacts people’s compensation, the organization has a responsibility to REALLY emphasize it so that people can make arrangements. Burying it in a budget update, assuming that’s an accurate reflection of the communications, is bad form.
The Union immediately jumped to blaming this on Act 10:
Steve Cupery, the Wisconsin Education Association Council representative for West Allis-West Milwaukee teachers, said the district has agreed to work with individual teachers who can demonstrate a hardship.
But he blasted the delay as a byproduct of Act 10, the 2011 state law that eroded the bargaining rights of public employee unions.
“It’s just one more example of the consequences of Act 10, how it hurts people and will dissuade people from going into the profession,” Cupery said.
But the truth is that the district has been horribly mismanaged for years and the bills for that mismanagement are coming due.
West Allis-West Milwaukee’s issues appear to stem from a series of costly financial decisions made under then-Superintendent Kurt Wachholz, who retired unexpectedly in the summer of 2014. Among them, according to Chromy: the purchase and renovation of a new building, cost overruns on staffing and benefits, and several facilities projects.
The largest piece of that — about $5 million — was for a debt payment related to a yearslong lawsuit over a risky investment scheme that cost West Allis-West Milwaukee and four other districts a total of $200 million a decade ago, Chromy said.
“Since the verdict had come, there was some anticipation by our legal team that that payment would come in … to offset that cost,” but that didn’t happen, Chromy said.
According to an audit released late last year, the district had overspent its 2013-’14 and 2014-’15 budgets by a total of $14 million, wiping out its entire reserves.
A good description of the financial decisions that led to that huge debt payment can be found in the NY Times, but the gist is this: in 2005, several school districts, including West Allis, needed money to fund their huge pension obligations to retirees. In order to make money, they borrowed money to invest in some risky investments. The thought was that the money received from the investments would be enough to pay back the debt with interest and still have more money left over. It would be like you getting a cash advance on your credit card to buy Powerball tickets with the hope that your winnings from the Powerball would be enough to pay back the credit card company and leave you with a profit.
The districts’ luck was bad and the investments went belly up, leaving the districts with a big loan to pay back for which they had no alternate source of income to fund the payments. Thus, they are having to take money out of the operating budget, which is supposed to be used for things like paying teachers, and use the money to pay off debt so that the district doesn’t default, thus destroying their ability to borrow in the future. The district won a lawsuit over this, but the award has not been paid yet.
On top of that bad decision, the district went on a building spree and racked up a myriad of other bad decisions.
The teachers are getting the short end of the stick here, but it has nothing to do with Act 10 or a lack of funding. It has everything to do with extremely poor management by an incompetent school board and administration.