Point Austin: Prevailing Winds
AISD says it can't afford bond-project benefits, but local workers beg to differ
To back up a little bit: Last summer, as the district readied a campaign for a $519 million bond package, employee organizations asked that eventual bond construction projects be offered for bid at a Department of Labor rate that would encompass prevailing wages and benefits. The district, presuming DOL rates would be too high, proposed doing its own local market study instead labor reps agreed, the study was done, and the market rates came in at numbers equal to or higher than the DOL rates. The district blanched at those numbers, too, and last month recommended to the board that bid offerings reflect only prevailing wage rates not benefits (most importantly, health insurance). The ensuing outcry included not just labor groups, but local civic leaders (Daryl Slusher, Gus Garcia), religious leaders, and, perhaps more importantly, bond committee members who had helped promote the bond package to the voters at least partly with the assurance that the proposed construction projects would include the increased wages and benefits.
Buying time, the district commissioned yet another study. (If anybody makes out on this deal, it will be John Hockenyos of Texas Perspectives, who worked on both the original study and the latest one, rewriting to order his own earlier analysis.) Now the administration says it wants to use rates incorporating the prevailing local wages but not benefits instead, it proposes a $1.36 per hour health insurance "supplement," said to be based on an "average cost of health insurance" in the Southwest region as calculated by the U.S. Bureau of Labor Statistics (an "average," alas, that includes a lot of companies spending "$0" on health insurance). Contractors will still choose whether to offer benefits, but if they do not, their wage package must include the supplemental pay.
Superintendent Pat Forgione says the new proposal represents the district's "best effort," that including benefits has never been the district's historical practice (hardly a cause for celebration), and that even this modest adjustment when combined with newly anticipated material cost increases is likely to devour nearly half of the $50 million contingency fund built into the bond package. "I can't accept any more risk," Forgione says. "If I open up a roof and there are problems, if we find asbestos that needs removing we need to maintain that contingency fund for unanticipated costs." The threat to the contingency fund has been a steady drumbeat in the administration's presentations to the board, eerily reminiscent of the bloody flag of the "fund balance," waved every time someone suggests that laying off reading teachers might not be the best way to balance the district budget.
Yet it's not even clear that it's necessary to raid the contingency fund to pay for full benefits, variously estimated by the district to be roughly twice the $9.8 million it now wants to budget for the $1.36-an-hour health care supplement it would allot for each worker. Forgione acknowledges that an inflation factor for both labor and materials was supposedly built into the cost estimates for the bond package, but all the official estimates treat the base costs as already spoken for, so that any additional labor expenses must come out of the contingency fund. So did the district not anticipate increased labor costs when it derived the bond estimates from similar expenses incurred in its last construction bond in 1996?
The district's presentations do not show actual labor costs from its 1996 bond projects, although they were supposedly the basis of its 2004 bond proposal. According to an analysis prepared by the employees' union Education Austin based on the actual cost of building Akins High School at an annual inflation rate of 3.5% (24.5% over the last seven years), the recommended wages plus benefits are actually lower than the labor costs already built into the bond package and approved by the voters. Maybe EA is wrong but in all the reports and press releases disseminated by the district, there is not even an attempt to break out the actual costs of labor in the previous projects, or to estimate its growth.
There may be a simple reason. Administrators are understandably concerned about recent alarming increases in materials costs (especially steel), and, even judging from Hockenyos' latest PowerPoint, are looking for ways to hedge those expenses against labor costs on the upcoming projects the numbers are always presented together. "If you ask me," said local electricians' union spokesman Michael Murphy, "I think they're trying to balance their materials budget on the backs of the workers." Forgione bristles at any such suggestion "We're a good employer, we only work with good employers, and this is the first real attempt to even include health insurance for all workers" and responds with his own countercharge. "This was a late hit, after the fact we had already built our bond package when [the unions] brought up prevailing wages," Forgione complains. "They should have brought this up in 2003." He says if the board wants to accept the risks of additional costs, that's up to them but as a good manager he cannot recommend it.
The "late hit" argument is getting increasingly bitter, egged on by a particularly ill-informed and mendacious April 23 editorial in the Statesman, which included an inevitable gratuitous swipe at the unions. "I don't buy it," says Murphy. "If that was the problem, why didn't Forgione just say that last summer, that he couldn't afford it? Why ask for a labor survey, and then ignore what the survey says? I said at the time, when we agreed to it, that I feared that the district was conducting the survey only to find lower numbers than the Department of Labor numbers. It's now clear that that was the purpose of the survey to get our support for the bonds, while they never intended to follow through on the recommendations."
The AISD board, which is scheduled to vote on the administration's new recommendation this Monday, would do well to make certain it knows all the implications of its action. Not only the numbers which certainly bear serious additional scrutiny but whether it risks squandering all the goodwill generated by the bond vote, and the larger community's sense that we support the schools for the simple reason that we're all in this together. For good or ill, the AISD contracts become a benchmark for the whole region, and as the labor members of the survey committee put it, adopting a wage schedule that fails to include benefits gives "a competitive advantage ... to those firms who do not provide health and retirement benefits to their employees."
If the board decides to accept Forgione's lowball bet, it can be certain that when it comes time to consider the district's next bond proposal, some voters will have very long memories indeed.