DISTRICT BUDGET REPORT

Next year’s salary increase projected to be about 3.3%

By Masao Suzuki, AFT Representative on the District Committee on Budget & Finance

At the January 27 meeting of the District Committee on Budget and Finance, Kathy Blackwood (Executive Vice Chancellor) said that County property taxes were up 5.21% which would translate to a 3.3% salary increase (2% + (5.21% – 3%) x .6) = (2% + 1.326%).   The number could go a bit higher before the summer if sales of property lead to even more increases in property taxes as the properties are re-assessed to market values.

On the other hand, Kathy said that the District “will have to” include benefits in the future increases because of the increasing cost of STRS and PERS.

On this issue, the STRS employee rate is rising 1.05% for 2015-2016 and another 1.05% for 2016-2017 (see calstrs.com/calstrs-2014-funding-plan).  This means that next year, if there is a 3.3% salary increase, the after STRS increase will be only 2.25%, which is less than the 2.7% increase in consumer prices for the Bay Area (see bls.gov/news.release/cpi.t04.htm – note that the Bay Area has the highest rate of inflation of the ten metro areas that the Labor department reports on, and at 2.7% year over year is more than three times the all-city increase of 0.8%).  If the same property tax increase, salary formula, and inflation hold in 2016-2017, we would again lose purchasing power, even though our paychecks would be larger.

Starting 2017-2018 for three years, to 2020-2021, the employee rate will stay the same (at 10.25% for current employees, less for new ones) but the employer rate will continue to rise, going up 1.85% a year for three years and .97% in the last year, topping out at 19.1%, about twice the current rate of 8.88%.