Wednesday, September 17, 2014

Big Win for BC Liberal Government

The full details of the tentative agreement between BCTF and the government have not been divulged, but based on what we know, my sense is that:
- the government got the upper hand on all major issues: salary, signing bonus/grievances, and class size and composition;
- the BCTF had a small advantage on minor issues: non-salary benefits, concessions demanded by the employer.

In the end, there are about $550-600 M in new money over 5 years for salary, benefits, bonus and grievances. This is close to the $600 M that I was suggesting at the end of my previous post, although since I did not include grievances in the $600 M in that post, this deal is more favourable to the government. As for class size and composition, there is very little additional money right away - much less than what I suggested in late August - but the BCTF can renegotiate the language if it wins the court case. However, I'm highly skeptical that the BCTF will gain a lot more at that point, unless the province's fiscal situation markedly improves.

Therefore, overall, this deal is more favourable to the government that what I was expecting. If you're a BCTF supporter, you could argue that this shows that the government was the inflexible party all along. If you're a government supporter, you could argue that this shows that BCTF's original demands were wildly unrealistic. However, one thing's certain: due to the "re-opener" clause on class size and composition, don't be surprised if the five years of promised labour peace fail to materialize.

Detailed analysis below. Note again that Year 1 was last school year (2013-2014).

Salary
Year 1: 0
Year 2: 2%, and additional 1.25% on January 1, 2015 = $71 M
Year 3: no increase = $84 M
Year 4: additional 1% = $111 M
Year 5: additional 0.5%, and further 1% eight months into the school year = $129 M
5-Year Total: $395 M + 50% economic stability dividend
- August government offer: $356 M* + 50% economic stability dividend
- August BCTF demand: $601 M + 100% economic stability dividend
(The agreement also contains a Year 6, with increases structured like in Year 5.)

This is clearly a clear win for the government: for every dollar that it moved, BCTF moved more than $5. In addition, the government got the term and the size of the economic stability dividend that it wanted. However, the immediate 2% increase allows BCTF to save face.
*A previous post estimated this at $350 M on the basis of July 1-June 30 contract years, but I have now switched to September 1-June 30 school years.

Signing Bonus, Grievances
- A one-time $105 M payment to BCTF.
- Immediate increase of elementary preparation time from 90 to 100 minutes, and further increase to 110 minutes on the last day of the contract. (Cost = $9.6 M/year)
- Preparation time for secondary school teachers and adult educators to be examined by a committee.
5-Year Total: $143 M
- August government offer: None (but potentially large grievance liability)
- August BCTF demand: A one-time $375 M payment ($150 M signing bonus plus $225 M grievance fund) and $270 M worth of preparation time (not counting interaction with salary increase) = $645 M

Again, this is a clear win for the government. In fact, one might argue that teachers might be better off with holding out for court-ordered grievances, but that could take years.

Class Size and Composition
- Fund for teacher hiring: $80 M per year (except $75 M in 2014-15, and $85 M in 2018-19). This fund replaces the LIF, which was used for both teacher hiring as well as other improvements.
- Some sources suggest that there's another $80 M (total, or an average of $16 M per year) for other improvements, such as teachers' aides.
- Court case: After it is resolved, either side can reopen class size and composition provisions. Confusingly, they're supposed to bargain from the restored language (if any), but the default until a new deal is reached is the current language.
Average per year: $80-96 M + "re-opener" clause
- August government offer: $75 M per year LIF, and any language restored by the court only applies to past contracts (i.e. would lead to a grievance payout, but no ongoing costs)
- August BCTF demand: $225 M annual fund in addition to LIF, and any language restored by the court takes effect immediately in current contract (costed at $1.6 billion per year by the government)

This is a likely win for the government. Until the court case is resolved (and thereafter if BCTF loses, as I don't think the government would re-open the contract in that case even though they could), it will spend $5-20 M per year more than its original offer, which is much less than the $225 M demanded by BCTF. After a BCTF victory in court, the government would likely be in a position of strength in bargaining: as long as it does not agree to new language, the default is the current language rather than the restored language. Therefore, the government is insured against losing control of its budget.

However, BCTF can rejoice about two things:
- a guarantee that most of the money goes to hiring teachers rather than other forms of improvements, which was not there with the LIF; and
- if it wins the court case, and the fiscal situation has improved by that time, the province would likely agree to put more money into class size and composition. Of course, it is basically impossible that the government will agree to the 1998-2001 language, but at least the door is open to mid-contract improvements.

Other Benefits and Teachers on Call
According to BCTF's letter to members, the ongoing cost of benefits will be $11.85 M per year at the end of the contract, but these benefits will be phased in rather than immediate. There is also an increase in pay for teachers on call somewhat less than $4.6 M per year (which was the August demand).
- August government offer: None
- August BCTF demand: $24.4 M per year (not counting interaction with salary increase)

Here, the two sides met near the midpoint of their original positions, though the final ongoing cost appears closer to the BCTF demand.

Concessions Demanded by Government (Union Leave, Evaluation, Calendar)
All withdrawn, so a win for BCTF, but these are relatively minor issues.

Monday, September 15, 2014

BCTF vs. BC Liberals: Why Neither Side Has Been Reasonable So Far

The ongoing negotiating blitz is cause for optimism, but up until the parties got together for the current round, neither was being reasonable. (Of course, due to the media blackout, we don't know if either is currently being reasonable.) Here are the main problem areas:

Government
- The court ruled that the teachers have a right to bargain over class size and composition. The government's interpretation of "bargain"? "Accept our offer, which merely asserts the current illegally imposed language." It's not surprising that the BCTF views this as a slap in the face.

BCTF
- The court ruled that the teachers have a right to bargain over class size and composition. Because the 1998 language was the last negotiated language, it got retroactively inserted into past contracts. But the court never ruled that the teachers had the right to keep the 1998 language in future contracts, and in fact explicitly expressed an expectation that class size and composition would be subject to future bargaining. Despite that, BCTF's binding arbitration proposal seeks to avoid bargaining on these issues. Why? If it wins on appeal, the court might decide to insert the 1998 language not only into past contracts, but also into the 2013-2018/9 contract. BCTF is therefore attempting to circumvent the bargaining process and set education policy for the province without the input of BC's duly elected government.
- BCTF demands a $5,000 bonus after going on strike for a month. 'Nuff said.

I have to say that both sides' wage and benefits offers are reasonable. The government's sub-inflation 7% over 6 years offer is obviously stingy, but given the other settlements so far and the massive surplus of teachers (note that there's a surplus even in Ontario, where class sizes are quite small), this is a good-faith offer. Meanwhile, the teachers' demand of 8% over 5 years, which may not even outpace inflation, is obviously modest. It's true that their benefit demands (equivalent to a further 4% increase in compensation) are somewhat expensive, but as far as bargaining tactics go, these proposals are not outlandish and probably just there as bargaining chips.

Sidenote: While there's a surplus of teachers in BC, our teachers are indeed paid less than teachers west of Québec. How can this be? Simple: other provinces, like Ontario, are grossly overpaying their teachers, to the point that a 35-year-old teacher is likely to make as much as a 35-year-old professor. (Professors' wages have more room to grow after that, but they had to give up several years of pay to earn their Ph.D.)

It looks like the following need to occur for a settlement to happen (some of these are from my post from August 31):

1. BCTF needs to accept language on class size and composition that is not as good as what they were given by the NDP in 1998. They need to realize that a right to bargain is very different from a right to keep copy past clauses and paste them in future agreements. Imagine if the government wanted to roll their nominal wages back to 1998 levels!

2. The government needs to make concessions on class size and composition. Their E80 proposal can't be a mere statement of what they illegally legislated. This can come in the form of a meaningful increase to the LIF (not just the $15 million increase in the latest public proposal), or specific language on class size and composition. As I've explained in a previous post, research shows that class size reduction is best targeted at lower grade levels (K-3).

3. BCTF needs to drop their bonus demand. I certainly don't see the government giving more than the $1,200 on offer in June. In fact, the government may well feel that any bonus would send the wrong signal and encourage future strikes.

If they get past these obstacles, I think they can come together on wages and benefits. As detailed in my August 31 post, the government is offering $350M over 5 years, while BCTF is demanding $600M over 5 years in wages, $150M in signing bonus, and $125M per year in benefits. Perhaps the sides can agree on something around $600M over 5 years in total compensation, which equates to about 1.3% per year, or 0% in Year 1 and 2% in each of Years 2-5.

Or at least, once they settle on class size and composition, the government might be more receptive to binding arbitration - the risk to the budget from the court case would become much smaller (just grievances).