Thursday, December 13, 2007

"Winner Take All" Syndrome Spreads To Public Sector - Anchorage School Superintendent Carol Comeau Gets 10.9 Percent Pay Raise

Anchorage School District Superintendent Carol Comeau's recent 10.9 percent pay raise will bring her 2008 salary to $156,500 and make her the highest paid K-12 educator in the state. It is her largest increase since she began the job in 2001 at $127,000. Full story published on December 13th, 2007 in the Anchorage Daily News. Pictured above left, Carol Comeau.

Anchorage School Board President Tim Steele said the board gave the increase after looking at superintendent salaries in similar-sized districts in the Lower 48. "She is an extraordinarily capable manager, educator, leader and we needed to acknowledge that, and so in my mind it is not unjustified at all," Steele said. "If anything, shame on us for not being able to do it earlier." He said she probably ought to be making somewhere approaching $200,000. The graphic accompanying the story shows that the average school superintendent's salary nationwide is $208,000.

One could make the case that, in her situation, the magnitude of the raise might represent a form of "deferred compensation". In 2003 and 2006, Comeau asked the board not to give her a raise. Both years featured tight budgets when programs were being cut and there were tense contract negotiations with the teachers union. With the new increase, her pay has risen about 3 percent a year on average since 2001.

Carol Comeau heads up a district that's not only the largest in Alaska by far, but is among the largest 100 in the United States. She bosses a total of 5,630 employees, including 140 principals and 3,240 teachers (average teacher salary $49,790). There were 49,230 students at last count. Here is the results from a sampling of other Alaska district (superintendent salary and student population):

Bristol Bay School District (Southwest): Salary $99,000, 180 students
Galena School District (Interior): Salary $152,000, 3,600 students
Fairbanks School District (Interior): Salary $145,000, 14,100 students
Juneau School District (Southeast): Salary $109,000, 5,200 students
Kenai School District (South Central): Salary $117,000, 9,200 students
Mat-Su School District (South Central): Salary $140,000, 16,100 students
Pelican School District (Southeast): Salary $82,000, 16 students (superintendent is also a teacher)

The size of the district and complexity of the job unquestionably warrants a proportionate level of compensation. Furthermore, Carol Comeau committed an act of selflessness when she turned down two previous pay raises. And from my own personal observation, Tim Steele's description of Comeau's performance is accurate to a "T".

However, giving a senior public official a double-digit pay raise at a time when teachers had to settle for 3 percent, the military with 4 percent, and service sector employees such as Wal-Mart employees table scraps, if anything, sends a bad message to the rest of society. It tells society that we attach a preferential value to the rich and privileged simply because they are rich and privileged. It represents the spread of what is called the "winner take all" syndrome from the private sector, where it has run amok for years now, into the public sector where is does NOT belong. Contrast this example with the example of Utah Democratic Congressman Jim Matheson, who has actually donated his annual Congressional pay raises to charity for the past seven years.

Unfortunately, it's not limited to the school district. Back on November 8th, 2007, Anchorage Daily News reporter Kyle Hopkins revealed on his Alaska Politics blog that the Anchorage Municipal Assembly approved a windfall 25 percent pay increase for Municipal Clerk Barbara Gruenstein, hiking her salary from $87,980 to $109,990 per year. And, unlike Carol Comeau, Gruenstein did NOT turn down any previous salary hikes. Gruenstein herself said that she received smaller raises in 2005 and 2006. In 2005, her pay increased from $38.94 an hour to $40.23, she said, and then to $42.30 an hour in 2006. Assemblyman Dan Coffey justified the hike by claiming that she "appeared to be substantially underpaid compared to other city clerks".

City manager Denis LeBlanc’s pay was also an issue. His salary was budgeted at $98,180 in 2007, but he was actually paid $113,734, according to the Assembly’s numbers. In addition, Economic and Community Development director Mary Jane Michael and chief of staff David Ramseur received 16 percent pay raises.

Mayor Mark Begich responded to the concerns expressed on the Alaska Politics blog post. Here's what he wrote:

November 9, 2007 - 10:35pm mbegich

to all

To all of the comments on this issue, I want to give you a little more information. The executives follow the employees at all levels with their pay increases. There were two parts to their pay raise over the past few years. First we did some market adjustments on some of the pay levels. Just as we do with different employees throughout the workforce. Examples are engineers, nurses, entry level police, etc. We have made adjustments that are above their 3.3% 2007 raise. We are always examining our pay levels to make sure we can retain employees and attract employees of quality. With some of the executives we made some adjustments in 2007 to reflect a movement to market, which we are still not at. Then the executives managers will get an allocation equal to what the rest of the workforce receives, i.e.: if the workforce received 3.3% increase then the executives receive the same, except it will be based on merit, meaning that if the overall manager does not believe they should give an executive a 3.3% then they may receive something less. At the end of the day the manager must work with in their allocation.

Unlike the rest of the city employees executives do not receive or qualify for overtime and some other types of benefits the rest of the workforce receives. An example of this is last night at Girdwood. Over 20 executives from different departments went up to our annual town hall meeting to talk about the many issues they have in their area. Most were there until 9pm and then had to drive back to Anchorage. No additional pay is given for this extra time. Most of the executives put in 60 plus hours a week, with out additional compensation. When compared to the rest of the governments, School District, State and Feds the city is at the low end of the pay.

At the end of the day the total amount last year was in the area of $400,000 on a budget of $400 million. The taxpayers get a great value for what we pay our folks. It is interesting that the Assembly seems to be just kicking this issue around on a budget of over $400 million.

Looks like the mayor wasted a hell of a lot of space saying very little, except for the fact that most municipal executives don't get windfall raises. But he fails to justifies Gruenstein's windfall raise.

Nevertheless, the penchant for awarding more windfall pay raises to public sector executives still represents the slow spread of "winner-take-all" economics into the public sector. The 2007 edition of "Executive Excess", a 32-page report in PDF format, reveals that the top Fortune 500 executives earn an average 364 times as much as the average worker. While this number is not as large as it once was (418-to-1 at one time), it is still far too high and not completely justified either objectively or empirically. Taxation policies actually serve to further empower these people and protect their incomes. Don't forget the infamous Bush tax cuts, where 90 percent of the tax relief was directed towards the richest 10 percent of Americans. While we cannot and should not ever impose wage controls, we can restore the top end rates which prevailed before the Bush tax cuts and close off many of the loopholes they exploit for tax avoidance.

The Urbanomics blog offers a reasonably sound analysis of the impact of "Winner-Take-All" economics, although I disagree with the editor's criticism of the increased use of performance-based pay schemes.

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