Accelify Blog

Teacher Layoffs Widen Financial Stress (GA)

July 19, 2010

Richard Thomas has eliminated his land-line phone and cut his cable television and uses his air conditioning sparingly. When he shops he searches for sale items, and despite 142,000 miles on the odometer, he’s sticking with his 2003 Dodge Dakota.

Thomas, a single father of two, teaches science at Gray Station Middle School in Jones County. He’s so far avoided the layoffs hitting teachers across the state, but he’s lost the supplement he once was paid for earning an advanced degree, and was furloughed last year, losing six days of pay.

“I put everything into my career,” said Thomas. “Early on I realized that this was my calling. These kids need good teachers, and somebody has to do it.”

Those somebodies, though, are getting fewer. And as teacher layoffs ripple across Georgia, the cuts mean financial stress among thousands of households, but also trouble for the larger economy.

The equation is simple — and circular: Layoffs and pay cuts reduce government costs, but also undermine the spending that produces the taxes that government relies on for revenue.

The precise impact is hard to calculate. The state is cutting jobs while slashing its contributions to hundreds of school districts that make their own cuts. No one seems to know how many slots statewide will disappear.

“This is part of the story,” said Sarah Beth Gehl, deputy director at the Georgia Budget & Policy Institute. “Nobody has a grip on how much of an effect layoffs are having on state and local employees.”

A half-percent hit?

The broad outlines of the crisis are clear: Last fall, Georgia had 117,560 certified teachers, according to the state Department of Education. But in classrooms this coming school year, there may be more than 8,000 fewer teachers.

Those still on the job will face shrinking paychecks as school districts mandate furlough days and slash pay.

That won’t spin the economy back into recession, but it’s enough to hurt: Because of government cuts, roughly 30,000 jobs will be lost, including those of teachers, said Mark Vitner, senior economist for Wells Fargo.

“I would say that we are looking for combined state and local budget cuts of around $900 million over the next year,” he said. “The number of job losses might be smaller than this because of furloughs and reductions in hours.”

Those cuts will reduce the state’s growth by about a half-percentage point from what it would otherwise be, he said.

Unlike the federal government, both state and local entities must balance their budgets. With the economy still struggling, many households hurting and tax revenues weak, they face an impossible choice, said Jeff Humphreys, director of the Selig Center for Economic Growth at the University of Georgia.

“You either have to raise taxes or you have to cut,” he said. “It is not that cutting doesn’t hurt the economy, but it doesn’t necessarily hurt any more than raising taxes. The bottom line is that government will be restraining Georgia’s economic recovery.”
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Once in demand

Ordinarily, teachers might seem to be among the work force’s luckier ones, their paychecks often higher than the median income in the state. And it was only a few years ago that Georgia had a teacher shortage and people in other professions were being recruited to fill the void.

Beginning teachers typically start at about $33,000 a year. But with decades of service, advanced degrees and national board certification, a teacher could aspire to annual pay of $80,000. The most recent Census Bureau report shows the state’s median household income is slightly above $50,000.

That ceiling has dropped. National board-certified teachers have long received a 10 percent salary supplement, but that was cut in half last year. This year, lawmakers ended the supplement entirely.

There are many two-teacher families who have been able to combine earning power for a decent living. Of course, when cuts come, those households take a double hit.

But even as a raft of gubernatorial candidates pledge to add jobs if elected this fall, the cuts are sweeping across the state, crimping incomes and spending.

Because teachers don’t make extravagant salaries, they spend most of their paychecks each week, and the effect of their spending multiplies as it spreads through their communities.

But multipliers can also work in reverse, said Vitner: Every dollar cut from those salaries effectively subtracts about $1.30 from the overall economy.

Stimulus ebbing

Teachers are not the only government employees losing jobs, facing pay cuts and being furloughed. They’re just the most nu merous.

Clerks and cops, firefighters and librarians — all have been caught in the cross hairs of public budget-cutting. But as state and local governments continue struggling, education ends up the most common target for the commonest of reasons: It’s where more of the money is.

In the past, state government has typically paid about 60 percent of local school budgets. But that share has slid below one-half as the state slashes its own budgets. For the past eight years running, state spending on education has been trimmed from the level required by its own formula. As the recession intensified two years ago, so did the cost-cutting.

Some of the pain last year was softened by federal stimulus money that protected teacher jobs, but there is less padding this year, said Herbert Garrett, executive director of the Georgia School Superintendents Association.

Including help for schools, Georgia had received $2.04 billion in federal stimulus funds through the first quarter of this year, according the government’s tracking Web site.

This year, the state budget will get a federal injection of about $125 million, far less than what is needed to hold the line, Garrett said. “When that money goes away, the state government budget cuts will become very real.”

Because teachers are paid by the day, perhaps the most commonly used method to slash costs is to reduce the number of school days — while extending teaching time each day to meet legal requirements.

“I am not aware of a single system in the state that has not cut at least some of the teacher days,” Garrett said.

Murray County is cutting its school year from 180 to 160 days. Peach County w ent to a four-day week — 144 days — and Haralson County will do likewise, he said.

In Cobb County, the coming school year will be chopped by five days, and the teachers will take furloughs, said Gaye Shin, a special needs teacher at South Cobb High School. “It will be like a 9 percent pay cut over the past two years.”

Long-term effects?

These job and pay cuts might have an even harsher long-term impact.

For instance, if they damage education and the quality of Georgia’s work force, the cuts would undermine the state’s economic development.

They could also be reshaping the labor market in ways that are, at least for now, not measurable.

Some young teachers or teachers-to-be will look to other careers. Some laid-off teachers will become stay-at-home parents. Some will seek second jobs or even full-time work in other fields — especially if the market improves.

And some will stay in the schools, while squeezing every penny.

“I could get out of teaching,” said Danny Kofke, a father of two and special education teacher at Gum Springs Elementary School in Jefferson. “Or we could have my wife, Tracy, go back to work. And we don’t want to do that.”

But Kofke says he loves teaching.

So he searches constantly for ways to bump up his $39,000 income slightly while living less large, like teaching four weeks of summer school. And Kofke — who has written a book about living frugally — zealously pursues savings.

“I bring leftovers for lunch very single day,” he said. “Maybe a sandwich and a piece of fruit a nd I am good to go.”