The housing market collapsed in 2008 -- but property tax bills didn’t. In fact, property taxes continued to rise in many parts of the country by 40% or more.
Why? One big reason: Increasing school costs, including growing pay packages for school superintendents now at record levels, putting a strain on taxpayers and school budgets.
A growing number of school superintendents are now the highest paid government employees in the country, earning gold-plated compensation in the mid-six-figure range. That pay is often ten times what their teachers get paid—and often double the salaries governors get to run entire states. School superintendents get paid more than governors in a dozen states: New Jersey, New York, California, Ohio, Connecticut, Illinois, Michigan, Pennsylvania, Wyoming, Nebraska, Oklahoma, and Washington, FOX Business has found.
The rising pay for school supers is happening as states and school districts are slashing budgets in the face of record deficits. Unfunded retiree liabilities for government workers also continue to climb, to an estimated $1.38 trillion, says the Pew Center on the States.
Meanwhile, school districts continue to struggle with poor student performance. The U.S. education system gets a C-minus grade from Education Week, based on student scores and fiscal accountability, among other things.
FOX Business has dug into school, state and local records with the help of FOX News information specialist Brandy Zadrozny. The findings: Many of the worst offenders are found in places that have failing schools, including New Jersey, New York, California, Ohio, Illinois, Michigan and Nebraska. Five of these states, California, New York, New Jersey, Ohio and Illinois, are struggling with high taxation and hyper-regulation.
Moreover, a growing number of school districts are increasingly paying their superintendents based on corporate pay models used for CEOs. In fact, a growing number are now called “CEOs,” as they are in, for example, Paterson, N.J., Chicago, Columbus, Ohio, and Atlanta.
However, it’s becoming increasingly typical for school superintendents to get super pay packages larded with retention or ‘longevity’ bonuses, lucrative health care, annuities, and retiree benefits that pay up to 80% of salary. They can also win additional perks like money for their child’s college education, doctorate degrees, cars, parking garages, cell phones, travel, membership fees, even for unused vacation days.
A 2007 analysis shows that more than 80% of the superintendents in eastern Massachusetts got perks like cars and longevity bonuses, with an average value of $11,000. The Dublin, Ohio, school superintendent earned $349,000 in compensation in a recent year, which included pay for his travel, phone, membership fees and costs for professional organizations.
School super compensation is inexorably rising despite efforts by a handful of states, including New York and New Jersey, to cap their pay to no more than the governor’s salary. School districts typically don’t cap school administrator pay, and states, cities or towns do not regulate these pay packages, despite the fact that typically state and local property taxes fund them.
Moreover, a growing number of school supers are retiring early to double dip, meaning they retire, pocket their pensions, and then quickly get rehired elsewhere as school supers, “consultants” or administrators, earning double pay. That practice is rampant in Ohio and New Jersey, where nearly four dozen supers have already made this move, reportedly to avoid the state cap on their pay, reports show.
The defense of super pay for school supers is that they oversee a huge workforce and administer multimillion-dollar budgets, not unlike a Forbes 500 CEO. Plus, good school districts typically raise local property values, school administrators maintain.
However, corporate CEO compensation is scrutinized by Wall Street, shareholder activist groups and institutional investors like pension funds. School superintendent pay is often not subject to the same rigorous oversight. Moreover, CEOs are paid by private companies -- school superintendent compensation is paid for by taxpayers. School superintendents, too, are supported by a ballooning staff of school administrators.
The super pay comes as taxes continue to rise. Federal, state and local taxpayers paid $525.5 billion for public elementary and secondary education in fiscal 2010, the latest data available. State and local taxes came to $521.5 billion of that sum, with property taxes making up 43.8% and state taxes 43.5%
“Superintendent pay deserves an extra level of public scrutiny,” says The Mackinac Center for Public Policy, which monitors fiscal issues.
Overall, the state’s school system got a B-minus grade from Education Week. But it pays dearly, $15,360 per student, fifth highest in the nation. Lots of that money goes towards paying school supers -- including double dippers.
About 80 school supers made more than $200,000 as of 2011, with the median pay for superintendents up more than 46% since 2001. That pay was more than what Governor Chris Christie annually earns, $175,000, and higher than the nationwide average of about $162,000 in base pay for school supers, according to the Educational Research Survey.
Governor Christie has noted that there were school districts where superintendents were “paid more than $200,000 to supervise only a few hundred children.”
Superintendent salaries in New Jersey were costing state taxpayers more than $100 million a year, even though the governor said “no direct link exists between high pay for superintendents and high test scores for students.”
For example, the school district of cash-strapped Camden, N.J., with 14,000 students, was paying its superintendent an annual salary of $245,000.
But Camden High School, with an enrollment of 1,200 students, has less than a 40% graduation rate, even though the district spends $23,356 per student, more than twice the national average. Trenton, the third most expensive district in the state ($20,663 per student), has a 41% graduation rate; it was paying its school super $185,000 a year.
New Jersey enacted salary caps in February 2011 for the state’s 360 superintendents at $175,000 yearly, equal to Governor Christie’s salary, depending on the district’s performance.
“It is not acceptable for superintendents in districts with fewer than 1,000 students to be paid salaries of $150,000 and greater,” said Governor Christie. The move aims to save taxpayers nearly $10 million annually, to end “abuse of property tax dollars” and to “put tax money in schools where it belongs,” not in inflated superintendent pay, the governor added.
However, to get around that cap, New Jersey school administrators are increasingly double dipping to increase their pay, retiring to get their pension payouts, but then getting rehired in other school districts, pocketing that pay, too.
New Jersey Watchdog, a group that monitors fiscal issues, found 45 school retirees have worked as interim superintendents so far during a recent school year.
In the process they are getting more than $4 million extra annually from the state Teachers’ Pension and Annuity Fund, in addition to executive pay from the school districts, New Jersey Watchdog estimates. “Some districts wind up with a revolving door of well-connected temporary chiefs who get two public paychecks, not just one,” it says.
The brunt of this practice falls on the state’s cash-strapped pension plans, data from watchdog groups and state disclosures show. New Jersey faces $123 billion in unfunded government retiree liabilities, Pew says.
The retirees blew through a loophole in state pension law that is supposed to help school districts fill openings with experienced administrators. The loophole lets retired administrators work for up to two years in interim positions without losing any benefits.
New Jersey Watchdog notes that Thomas Butler retired as a superintendent in New Jersey 18 years ago. But since then Butler has held 23 jobs as an interim or temporary chief at public school districts in eight different counties.
It says as he continues to draw six-figure salaries from taxpayers, he has pocketed $1.2 million in state pension checks.
Butler has reportedly said he saves the school district money as it searches for a permanent head. “I’m in this just to help the district out,” he is quoted as saying.
New Jersey Watchdog says that in Bergen County, Karen Lake gets $108,230 a year for working part-time -- three days a week -- as interim superintendent of Mahwah schools.
But she also collects $131,964 from her pension as retired superintendent of Hillsborough Twp. schools in Somerset County.
Meanwhile, New Jersey has more teachers and administrators per student than the national average, says the National Center for Education Statistics, 12 students for every teacher, and 217 students for every administrator.
The biggest fat cat superintendents are in New York, specifically, Long Island, where state and local taxes rank among the highest in the country. Property taxes steadily rose even through the housing crash, with median property tax payments on Long Island up nearly 35% since 2005.
Overall, the state’s school system got a B grade from Education Week. But state taxpayers, too, pay dearly, $16,230 per student, fourth highest in the country, with plenty of tax money going towards school supers.
Overall, more than 40% of New York State’s superintendents got compensation of at least $200,000 annually in salary and benefits, says the office of Governor Cuomo.
Two superintendents on Long Island made more than half a million dollars in fiscal 2011 to 2012, more than double what New York state pays its governor, Andrew Cuomo, $179,000.
The state has lots of teachers and administrators per student (13 students for every teacher and 220 students for every administrator) versus the national average of 15 and 212 students per administrator, says the National Center for Education Statistics.
Meanwhile, the state faces $156.6 billion in pension liabilities, says the Pew Center for the States.
Likely the highest paid school superintendent in the country is Dr. William Johnson, superintendent of the Rockville Centre Union Free School District. His recent compensation: more than $321,700 in base pay, and more than $567,200 in total compensation to oversee seven schools with 3,540 students, where there are just 10 students for every teacher, according to town reports (see here and here).
What increased Johnson’s pay package? A veteran of more than two and a half decades, he got a crack at $300,000 in retirement pay, but opted to work for four years without pay raises, according to reports.
Johnson gets paid more than the head of the biggest school district in the country. New York City Schools chancellor Dennis M. Walcott earned more than $212,600 annually to oversee 993,903 students.
New York City ranks seventh on the Census Bureau’s most expensive school district ($19,150 spent per student). Property taxes in the city have steadily risen even through the housing collapse, up nearly 50% since 2005.
Also on Long Island, Syosset Central Schools superintendent gets more than $405,200 in base pay to oversee ten schools with 6,600 students, where there are just 11 students for every teacher, according to reports.
“I applied for that job,” New York governor Cuomo has joked.
Moreover, five school districts on Long Island paid their superintendents more than $300,000 in 2010-2011, including Levittown at $383,594 (ten schools with 7,500 students, 11 students for every teacher).
Another 45 set their salaries between $250,000 and $299,999. Supers for schools in Jericho (five schools), Levittown and Bay Shore (seven schools each) will earn a total compensation package worth more than $400,000, town records show.
Elsewhere in New York state, 53 other superintendents will collect upward of $300,000 in all, state records show.
"We have $500,000 school superintendents,” Governor Cuomo said. “Why they get paid more than the governor of the state I really don’t understand.”
The Los Angeles Unified School District is the second-largest public school system in the U.S., only surpassed in size by New York City.
Los Angeles Unified pays its superintendent nearly $330,000 a year in base pay, roughly five times the salary of the average teacher in the city, state records show. That super pay is more than what the governor Jerry Brown earns, $165,702, to run the entire state.
The super pay has been defended because the super oversees more than 930 schools, 667,000 students, more than 45,470 teachers and 38,490 workers, not an 8-to-5 job.
Still, the state is in need of more teachers, not administrators. California averages 20 students per teacher (21 in L.A.), statewide. For kindergartners, the ratio is 22, though the state does better in keeping administrators down, 301 students per administration, versus the national average of 211. The state’s school system got a C grade from Education Week.
Meanwhile, although property taxes in Los Angeles have doubled over the last decade, the city faced a total $2.7 billion deficit the past five years, and has laid off more than 12,000 teachers and staff positions. Many schools are struggling to lift their student’s grades beyond just the passing grade.
California faces a yawning $516 billion in government retiree liabilities, with 78% funded. Not only does California face the largest unfunded government retiree liability of any of the 50 states, but it’s almost triple the next biggest unfunded liability in Ohio, at $175 billion.
Michigan school districts have some of the highest paid superintendents in the country, too, despite the fact their schools are also struggling. The state also has an estimated $77.85 billion in government retiree liabilities, the report from the Pew Center on the States says.
Michigan is in need of teachers, with on average 18 students per teacher, higher than the national average, but about the same number of school administrators as the average nationwide, says the National Center for Education Statistics. The state’s school system got a C+ grade from Education Week.
What are school superintendents there getting paid to oversee?
Total compensation for the superintendent in Kalamazoo: more than $214,600 in base pay, an estimated $349,180 in total compensation to oversee 28 schools, according to the city’s fiscal 2013 budget and the Mackinac Center. Kalamazoo has a $1.6 million deficit, with $87.9 million in debt outstanding.
In Utica, the school super gets paid $300,789. The Rockford school super gets $290,445. The super for the Detroit City School District gets $250,000 per year, while Detroit is insolvent.
Meanwhile, in Chicago, the “CEO” of its public schools gets $250,000 a year to oversee 642 schools with more than 405,600 students. Chicago’s public schools face a $665 million budget deficit.
That’s more than what the governor of Illinois gets in base pay, $177,412 (similarly, some 21 Washington state school administrators got paid more than the governor – $199,038 – in 2010, studies show).
Elsewhere, an increasing number of Chicago school officials get six-figure pay. Forty school superintendents in Chicago's six-county region made more than $200,000 during a recent school year, versus 27 the year prior, government data show. The state’s school system got a C+ grade from Education Week.
Chicago’s superintendent pay is actually at the low end of what other supers get in the state. The top 100 highest-paid school administrators in Illinois had salaries ranging from $205,600 to $380,200, data show.
Meanwhile, the state has about the same number of students per teacher and school administrators as the national average, says the National Center for Education Statistics.
Chicago taxpayers have seen their property taxes go up, too. Property rates are still below what they were in 2002, according to the city’s 2012-2013 budget. Still, the median property tax payment is up $731 or 30% from 2005, records show.
Also, Illinois has one of the most underfunded pension systems in the U.S., with total funding levels at 40% versus the national average of about 75%. The state faces $138.8 billion in government worker pension liabilities, says the Pew Center for the States.
Education Week recently gave Illinois schools a C+ grade, one of the worst in the country.
While the state’s school superintendents are doing quite well, Nebraska schools aren’t doing so great. The state’s school system ranks 46th in the country, with a C minus grade, says Education Week.
Former Bellevue, Nebraska Superintendent John Deegan had demanded $800,000 in severance pay in October 2010, nearly quadruple his base pay, local reports indicate. The school board finally gave him nearly $418,000, still a lot of money, the reports show. Total schools in the district: 21, with 9,880 students and a student/teacher ratio of 15 students per teacher, about the national average.
The World-Herald newspaper in Nebraska says it analyzed 20 similar school contracts in 2011 and discovered half a dozen similar instances in which the school “CEOs” got at least $10,000 a year more than their base salaries due to retention bonuses, performance bonuses, annuities and other add-ons like longevity pay or a cash out option for unused vacation.
Separate from that, the paper says base pay alone for these school officials has risen by nearly 75% since 1999-2000. That's more than double the rate of inflation, even without factoring in extra benefits.
Omaha Public Schools Superintendent John Mackiel got a total $413,607 in compensation in 2011; of that, base salary was $258,107. But that $155,500 in extra pay was nearly triple the amounts other area superintendents got.
The state has more teachers and school administrators per student versus the national average, says the National Center for Education Statistics (13 students for every teacher, 181 students per administrator).
Nebraska has an estimated $63.9 billion in government retiree liabilities, a report from the Pew Center on the States says.
Like New Jersey, Ohio is seeing rampant double dipping by school officials, meaning, they retire early, pocket benefits, then get rehired elsewhere.
“One in four public school leaders in Ohio's 614 districts brings home the bacon twice,” the Plain Dealer estimated in 2010.
It found roughly 32,000 double-dipping state and local employees collected more than $1 billion in pension payouts in 2009 on top of their paychecks. Three-quarters of those payouts went to members of the State Teachers Retirement System, it said.
More than 150 of the state's superintendents also got paychecks and pensions at the same time, the Plain Dealer found.
A Brookings/Greater Ohio Policy Study Center report had criticized Ohio for spending more taxpayer money than the other 49 states on administration, while spending less than other states on actual classroom instruction. Ohio ranked 47th out of the 50 states for putting money into classrooms, while coming in the top ten at number nine in terms of tax dollars spent on administration. The state’s school system got a B minus grade from Education Week.
Brookings also reported that Ohio's share of spending on administration was 49% higher than the national average.
It used to be that, prior to 2000, before state law was changed, teachers and supers in Ohio had to wait a year and a half to return to public service. Then that time period was cut to two months, in keeping with other public employees, reports indicate.
Since then, the state has still seen a big increase in the number of double dippers, with supers and teachers returning to full- and part-time work in the schools, as ‘consultants’ or “adjunct professors” at universities, local reports indicate.
About 1,100 pocketed on average $67,000 in pension pay while returning to work to make $70,000 to $100,000 in their post-retirement jobs at school districts, the Plain Dealer found. It also discovered 299 “retirees” got more than six figures in annual pay, while receiving a pension check of more than $80,000 on average, it says.
Meanwhile, the state has an estimated $175.4 billion in government retiree liabilities, a report from the Pew Center on the States says. The state is in need of teachers and administrators, with 16 students per teacher and 248 students per administrator, higher than the national average, says the National Center for Education Statistics.
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007.
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.