A 5% Pay Raise?

In Belton ISD, personnel costs make up 81.8% of the budget ($55,240,723). A five percent salary increase would amount to an additional $2,762,036 to the budget or would take that much away from some other expenditure. If the total budget did not change, this increase would raise the total percentage expended on personnel costs to over 85%. If the budget was expanded to include the increase in personnel costs the percentage of personnel would raise to 82.5% (total budget of $70,293,482.)  Of course a raise in the total budget would require an increase in the tax rate. Currently in Belton, one penny of tax effort will raise approximately $216,064. To pay for the pay raise through a simple tax increase without reduction in other expenditures would require a tax increase of over 13 cents.  Of course there would be positive impacts of a 5% pay increase. First, morale of staff would be positively impacted along with our ability to remain competitive with neighboring larger districts. We would also be able to attract more high quality applicants and the increase in disposable income would, theoretically help the local economy through “the income effect.” This might also lead to a positive impact on the local tax base as a large increase in pay might allow employees to afford homes of increased value in the boundaries of the district. However, there are numerous and serious possible negative impacts of such a  large increase in pay. First, the increase would result in a larger percentage of the budget being expended on personnel to the possible detriment of other expenditures such as instructional supplies. The resultant increase in the percentage of budget spent on salaries might also cause the district to exceed TEA guidelines for the allowable percentage of budget spent on personnel.  Additionally, such a pay raise might be difficult to justify in a struggling economy when others in our community are losing jobs. Finally, a pay increase of this magnitude might require a tax increase to fund it and might cause animosity from taxpayers. In an economy that is suffering and refusing t grow for so long, a pay raise of this nature would be difficult to sustain – especially in this uncertain economic atmosphere.