Governor Freeze
This article originally appeared in the May 17, 2010, issue of NR.


Josh Barro

Last month, Bergen County Education Association officials sent out a memo that closed with a jokey prayer for New Jersey governor Chris Christie to die.

What raised the ire of the BCEA’s leaders? Christie’s proposal to balance the state budget without tax increases by cutting $11 billion in spending, including $820 million in funding for local schools — and his call for teachers to accept a one-year pay freeze so that the funding cuts don’t result in program reductions.

A freeze might sound draconian, but the data support Christie’s position, especially in New Jersey, where teachers are especially well paid. Garden State teachers made an average of $60,000 per year in 2007, plus generous health and pension benefits, for working approximately 80 percent of the number of days that most full-time workers do. Only in California and Connecticut do teachers make more.

In the past decade, New Jersey school districts have seen sharp increases in payroll costs. From 2001 to 2009, the costs associated with wages and salaries grew 43 percent. While school enrollment grew only 3 percent over this period, school employment grew 14 percent. New Jersey schools added one new teacher for every two new students. Teachers’ wages grew slightly faster than those in the private sector, and benefit costs soared. From 2001 to 2006 (the latest year for which data are available), school-employee benefit costs increased 115 percent, in part due to sharply rising health-insurance costs. Unlike most workers in the private sector, New Jersey teachers generally did not bear any of the rise in health-insurance costs, because 100 percent of their premiums are paid by school districts.

Without a freeze, most New Jersey teachers can expect a raise on the order of 4 percent this year. If they did not receive raises, and if a just-passed reform requiring teachers to contribute toward health insurance were implemented immediately, the state would save $765 million, almost enough to offset the funding cut without raising property taxes, laying off teachers, or buying fewer textbooks and less classroom equipment.

The experience of New Jersey teachers is not unique. In fact, most public employees could be excused for not noticing the recession, given the strong employment and wage growth their sector has experienced over the past several years and continues to enjoy. Since the start of 2007, as the number of jobs in the private sector declined by 7 percent, public payrolls have seen a 2 percent increase, adding over 350,000 jobs nationally. New Jersey lost 220,000 jobs in the private sector while gaining 11,000 local-government education jobs.

In the last three years, state and local government-employee compensation grew 9.8 percent, compared with 6.9 percent in the private sector. That’s $1.43 in compensation growth for public employees for every $1.00 in compensation growth for private employees.