$200 per hour gym teachers

Yes, you read the headline right. We have gym teachers that are getting compensated at the equivalent of about $200 per hour, give or take a few bucks.

I'm sure they are well worth it. After all, it is for the children.

How did I come up with this outrageous amount? I will carefully break it down in the following article. Feel free to post your disagreements below as comments. But if I am off, I'm surely close enough for government work, as they say.

START WITH SALARY
We have gym teachers in Acton who are making over $100,000 a year. See the list of top school salaries, posted on Acton Forum, here: http://www.actonforum.com/story/school-releases-2016-w-2-wage-list

#19 and #20 on the list make more than a school principal (#21). They make over $110,000. See also #37, #38, and #47 (over $100,000).

CALCULATE HOURS WORKED
The number of hours in the school day is around six. High School starts at 7:30 and ends at 2, elementary schools start at 9 and end at 3, give or take. We also know that kids must be in school around 1060 hours to be considered a full school year. So we will just say 1060 hours, or round up to 1100 to any extra time spent after school. That brings the pay for $115,000 annual salary to just over $100 per hour.

HEALTH BENEFITS
The typical cost of health insurance for the government is around $20k/employee (family plan). That is another $20/hour, so we are now up to $120 per hour.

RETIREMENT BENEFITS
The state pays incredibly generous retirement benefits to public-sector employees. These defined pension plans are paid regardless of how much money employees contribute, how well the stock market does, or how long an employee (or their spouse, who are usually covered under these plans too) lives. The unfunded state liability for teacher's pensions in Massachusetts runs into the Billions (with a "B") of dollars. One estimate was $15 billion. We also know that these defined benefit plans can actually incur payments greater than what an employee was paid during their entire working time! But then, we should deduct the "present value" of these future benefits and the fact that employees are making token payments of around 10% of their gross compensation to maximize their future benefits. So I will just ballpark this value at $25,000 per year, or $25 per hour. We are now up to $145.

OPEB BENEFITS
Future healthcare costs are also covered to some degree by future taxpayers. This also is supposed to be prefunded but many towns do not. Acton is starting to do so, but the benefit to employees is there whether we fund it or not. I will estimate this future health benefit at $10,000 per year or $10 per hour. We are up to $155.

MA TAX-FREE INCOME
Teachers who collect their future pensions do not pay Massachusetts income tax on those earnings. This saves 5% of the gross. For someone earning $110,000 now, with an 80% payout, that would be an annual pension of around $90,000. At 5%, that saves about $5,000 a year, or another $5 per hour. (I know this is a future savings, but since taxes could go up in the future and someone and their spouse could collect a state pension for literally 40 years, this could be pretty valuable. Let's just ballpark it this way.) We are up to $160.

VALUE OF SICK DAYS, PERSONAL DAYS, SNOW DAYS, OTHER DAYS OFF.
When there is a snow day that is not made up, everyone gets paid for not working. When there is a day where all the kids get released early, because of exams, weather, or a bear-sighting, everyone gets paid for not working. When someone has to visit the doctor, has a sick relative, or has some personal business, they take the day off (with pay) and someone else covers for them. I don't know how many of these days there are, but let's assume that 5% of the time is affected on average by these events. That is another $5 per hour, so we are up to $165.

AVOIDING SOCIAL SECURITY
Town and school employees, if memory serves, do not participate in social security. Their generous pension benefits are meant to cover them instead. Social security tax is around 5%, so that's another $5 per hour. We are up to $170.

VALUE OF JOB SECURITY AND SENIORITY
There is a real value in belonging to a union and having seniority. If there is a layoff, you won't be let go. If you are doing a poor job, you can't just be dismissed; the union protects its members and firings for cause are few and far between in government work.

One of the historic reasons why salaries in the public sector haven't kept up with private sector compensation is that job security was such a great benefit that employees were willing to sacrifice some short-term cash for it. The government has never run out of workers as we all know.

There is a cash value to this benefit, even if it isn't taxable income. It is like the value of having say life insurance. If you could pay to ensure that your job and income were essentially guaranteed until you retired, what would that be worth to you? If you were in the private sector but you really didn't have to be afraid of being fired or laid off, what you be willing to take say a 20% cut in pay to be given that benefit? I'll bet most would. Just the savings in stress and uncertainty would be worth it.

Unfortunately, the days of lower salary to achieve this benefit are long gone. Now our public-sector employees get very high salaries plus this benefit.

By the way, if you don't think there is a cost to taxpayers for having this guarantee, think again. But I will leave that speculation up to you. Let's assume this is worth 20%, or $20,000 per year. That beings us up to $190 per hour.

MISC. BENEFITS
I'm sure our employees get pretty good other benefits...dental, vision, short-term disability, long-term disability...who knows what else. I think there is family sick leave and maybe even bereavement leave. Let's assume all these other benefits are worth $5,000 a year. That brings us up to $195 per hour. We are almost there!

ROUNDING ERRORS
To hit my magic $200 mark, I'll end with rounding errors. The compensation of our unionized employees is dozens of pages long. These union contracts, the charts used to calculate pay, are purposely not transparent to the public. I'm sure I've left off a little benefit here or there, and if I actually got it all, we can assume that the union is still unsatisfied at the compensation of their members and they will continue to argue for higher salaries and benefits in the coming years.

Never mind, this last fudge factor. I've found my extra $5 per hour.

Since our figures are based on 2016 W-2s, we are already in 2017. So by now, salaries and benefits have probably increased 5%. So that is another $5,000 or $5 per hour. We are now at $200.

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Comments

I think you left out a few hours ...

I'm pretty sure you forgot to include all the time these two particular people (#19,#20) spent on coaching AB sports teams, some for decades. And I'm sure there are lots of other teachers and staff members on our roster who give more hours than just their classroom time for their salaries.

Compensation calculations

I agree, coaches in particular can spend extra hours coaching teams (and their gross wages reflect that extra pay.) But when you look at the perks and benefits, taxpayers are paying quite a lot of money to our staff, well outside what many people in the private sector earn, and without all the job security, union protections, seniority, benefits, etc.

I'm not saying that these employees in particular, or our staff in general, aren't great employees doing a fantastic job. They are probably very dedicated and valuable members of the community. I'm just saying they are overpaid. That's my opinion, which as a taxpayer I'm entitled to have.

Allen Nitschelm has lived in Acton since 1998 and writes about fiscal issues at the
local and state level. He is a former member of the town's Finance Committee
and publisher of the Acton Forum.