One-time teacher pay increase could cost Hawaii millions

(The Center Square) – The Hawaii House of Representatives will consider a bill that would give teachers a one-time pay increase based on their years of service.

If passed, Senate Bill 2819 could cost the state $94 million, according to an estimate from the Senate Education Committee. The money would go to about 8,000 teachers, according to the Hawaii State Teacher’s Association, which backs the bill.

The legislation also has the support of the the State Public Charter School Commission and the Hawaii Department of Education.

“The Department agrees that addressing the pay compression issue will positively impact both teacher recruitment and retention and looks forward to having meaningful discussions with stakeholders about this important endeavor,” said Keith T. Hayashi, interim superintendent of education, in written testimony submitted to the House Finance Committee before a hearing Friday.

But the director of the state’s Department of Budget and Finance (B&F) told the House Finance Committee in written testimony he has concerns about the bill.

“This measure appropriates unspecified amounts for fiscal year 2023 for the Department of Education and Charter Schools to fund teacher compensation as negotiated and executed in separate memoranda of understanding between the Superintendent of Education/State Public Charter School Commission and the Hawai‘i State Teachers Association, Bargaining Unit 5, for an experimental modernization project pursuant to Section 78-3.5, HRS,” B&F Director Craig Hirail said in his testimony.  “B&F has serious concerns because this bill ‘puts the cart before the horse.’ Appropriating funding for cost items before negotiations are complete and agreements are reached could adversely impact the collective bargaining process.”

The bill could also cost the state’s retirement system millions, said Thomas Williams, executive director of Hawaii’s Employees’ Retirement System (ERS).

“The proposed salary adjustment would cause a substantial increase of approximately $376 million in the ERS’s Unfunded Actuarial Accrued Liability due to the larger than anticipated salary increases for approximately 8,700 experienced teachers,” Williams said in his testimony. “The system’s contribution levels or funding period (the estimated number of years it would take to pay off the current UAAL) may need to be increased if current funding progress is to be sustained. As monies are being allocated to cover additional pay, we would encourage that funds be identified and allocated to offset the expected increase in our plan’s UAAL (approximately $376 million) resulting from the pay increase.”

Not only would the costs be “alarming,” the bill would set a precedent if passed,” said  Ryker Wada, chief negotiator for the Hawaii Office of Collective Bargaining (OCB).

The OCB believes this measure will set a precedent. Other bargaining units are aware of this measure and will be expecting the same treatment next year. Colloquially, “if you give to one you should be prepared to give to all.”

The bill passed the House Finance Committee on Friday, which was the final hurdle before consideration by the full House. The Senate approved the bill March 8.