Copyright© 2007 by School Services of California, Inc.

                                      Volume 20                   For Publication Date: January 5, 2007             No. 1

Ask SSC . . .  

What Is the Best Way to Calculate Step and Column Costs? 

Q.        We are currently negotiating with our teachers’ union. The union is making the argument that our district does not have any step and column costs. They came to this conclusion by comparing the state’s J-90 report from the prior year to the J-90 report of the current year and saying that our average salary did not go up, and consequently there is no cost of step and column. What do you think of that methodology?  By the way, we are a growing district. 

A.                 The J-90 report is a very useful report for collective bargaining purposes with teachers’ unions. In fact, we know of no better document for salary and benefit comparisons. Both management and unions rely heavily on it when preparing for negotiations, impasse, and/or factfinding. Having said that, we do not believe that using the J-90 average salary comparisons between years is the way to compute step and column costs. 

Step and column costs must be calculated on an employee-specific basis. It is not possible to use some broad standardized average since step costs are employee specific. Thus, the best method is to calculate the total schedule cost with last year’s employee step placement and compare it to the current-year schedule cost with current-year step placement for the same employees plus an estimated cost for column increases.  

We have reached agreement with CTA that using the above calculation and subtracting the net savings from employee retirements is the most accurate method for determining step costs.  

The analysis done by your bargaining unit has one of two potential errors. First, if your enrollment is growing, the average salary will drop due to the added staff who have been placed on the lower part of the salary schedule. Growth positions should not be included in an analysis of step and column costs. The step and column analysis is a snapshot of the cost increases for existing staff—or existing positions—and should not include new positions. Said another way, step and column costs are a measurement of the cost of servicing the salary schedule for existing positions and should not include employees who are being added to fill new positions. 

Look at the number of FTE as reported on your J-90 printout. Is it larger in the current year than in the prior year? If yes, you cannot use average salary for a correct analysis. 

Second, the average salary will reflect the entire savings as a result of retirements. All savings as a result of an employee retiring and being replaced by a lower salaried employee are reflected in the average salary. However, the district may still have costs for retired employees. The district, for example, may be paying for the costs of health benefits for a limited period of time or may have provided a bonus as an incentive for early retirement. The real savings to the district is the “net” of the salary savings, including any offset that might have been necessary to induce the employee to retire. 

Using the average teacher salary comparison is just too much of a shortcut. It does not adequately reflect the true costs of step and column and the more detailed analysis is essential in order to understand the real budget impact.

                  —John Gray and Ken Hall