Why the Proposition 2 ½ Override Will NOT Solve Shrewsbury’s Problems
Author: Chris Kirk Date: August 27, 2014
On June 3rd, Shrewsbury’s voters approved a $5.5 million tax increase. It was sold to voters as a long-term solution to the town’s chronic fiscal problems. It isn’t. Another override will be required in just a few years.
The town’s revenues from local property taxes are allowed to increase by no more than 2½ % each year – under the state law ‟Prop. 2½”. Therefore, in order for increases in teachers’ salaries to be sustainable – that is, to be independent of state or federal subsidies (which aren’t dependable) − salaries can’t increase by more than 2½ % each year.
If the average Shrewsbury teacher’s salary had risen by 2½ % each year since 1997, then it would have followed the blue curve. Instead, the average teacher’s salary followed the red curve.
As the graph shows, from 1997 to 2002, salary growth didn’t dramatically exceed the annual 2½ % growth in property tax revenues. However, after 2002, the average teacher’s salary grew at 4% per year – exceeding what the annual 2½ % increase in property tax revenues could pay for.
The difference was paid by state aid and by sacrifices that were made by residents. Bus fees were imposed on students, fees for after-school activities and athletics were also imposed on students, water and sewer rates rose, free trash collection was replaced by “pay-as-you-throw”, town employees and teachers who retired weren’t replaced. All these measures and more were taken in order to free property tax revenues to pay for raises for teachers. One sacrifice after another was demanded because the 4% annual raises consumed the revenues from each sacrifice.
Finally, the state’s own fiscal problems forced it to reduce local aid. Suddenly, the day of reckoning had arrived: there was nothing left to sacrifice in order to fill the gap between what the 4% annual salary increase required and what revenue remained available locally. So, the drumbeat for an override began.
Of course the sane solution to the crisis was not an override; the sane solution would have been to tell the teachers’ union that the days of 4% annual raises were over – because there wasn’t enough revenue to pay for them. But neither the Superintendent of Schools nor the School Committee had the guts to confront the union with the truth.
If raises had been limited to 2½ % since 2002, then by 2013, the average teacher’s salary would have been $12,730 lower than it actually was in 2013. The total savings in 2013 alone would have amounted to $4.6 million – more than the $4.3 million that the School Department will get from the override. In other words, if the School Department had merely restrained teachers’ raises to 2½ % per year, the override would have been completely unnecessary and the Department would have had $4.6 million to spend on improving Shrewsbury students’ education – buying new computers and textbooks, hiring new teachers and aides, lowering or eliminating fees, etc.
Not only did unsustainable pay raises for teachers create the demand for an override, those raises will also quickly consume the new revenues from the override. In 2013, it cost $1 million just to increase the average teacher’s salary by 4%. So just to pay for raises for the teachers meant that the town had to find $1 million in new revenue – during a prolonged recession. Every year, the town will have to find over $1 million in new revenue – just to pay for teachers’ raises. Thus, raises alone would consume the School Department’s share of the override – $4.3 million – in just four years.
To make the situation worse, the School Department plans to hire 71 new employees. At a starting salary of about $43,000, these new employees’ pay alone – not including the cost of benefits such as healthcare – will consume over $3 million.
Thus, almost as soon as these new employees are hired, the School Department’s share of the override revenues will be consumed.
Another override is inevitable until raises for teachers are limited to 2½ % per year.
But no one in the School Department – or anywhere else in the town government – has even had the courage to admit publicly that raises are the root of the problem.
 The graph sometimes shows that the average teacher’s salary fell in some years. This decrease in the average is not due to teachers being paid less. Rather, in those years, many new teachers were hired. Since new teachers are paid less, their lower salaries push the average down. So a decrease in the average teacher’s pay merely reflects a large influx of new teachers.
 Sources: http://profiles.doe.mass.edu/state_report/teachersalaries.aspx , www.doe.mass.edu/finance/statistics/