An inflation-based spike in the minimum wage will cost the Payson Unified School District some $125,000 by causing a ripple of raises throughout the pay schedule for the district’s 150 classified employees.
However, several board members questioned the need to give almost all the non-teaching and non-administrative employees a raise based on the 5.6% boost in the minimum wage.
Board President Joanne Conlin said, “What I don’t agree to is blowing it up through the salary schedule. I don’t find that acceptable. You’re looking at $125,000 we cannot afford.”
Arizona voters four years ago not only phased in a big increase in the minimum wage — they indexed it to inflation going forward.
In September, the district learned that inflation this year totals 5.6%, triggering an additional roughly 65 cent increase in the hourly minimum wage.
Fewer than 30 of the district’s more than 300 employees make minimum wage, said finance director Kathie Manning.
However, when voters first approved the proposition that phased in a near doubling in the minimum wage over three years, the district overhauled its classified salary schedule to work the increase into every category. Workers get a raise of about 3.75% when they move into a position requiring more experience and 1.75% for each year they’re with the district. However, the district had frozen these skill and longevity increases during periods of budget crisis. Gibson said this created equity issues with new hires and warped the schedule.
As a result, the district completely overhauled the classified salary schedule to ensure the higher skilled, longer-serving employees were still making more than minimum wage.
“We fixed that,” said Conlin. “We did what was right for everybody. Perfect. But I don’t believe that we should have to carry that blow to the salary schedule every time there’s a minimum wage increase.
Last year, inflation came to just 1.5%, which made so little difference that the district didn’t adjust the salary schedule. This year’s 5% will have a much bigger impact.
However, Conlin objected to automatically spreading future, legally-required inflation-based adjustments in the minimum wage throughout the salary schedule. Workers will get anywhere from 65 cents to $1.50 an hour increases for the period from December to June. That works out to 2.5% to nearly 3% for the six-month period.
Gibson said the adjustments will ensure every employee is treated fairly. Moreover, she said the district can afford the increase. She noted the district can transfer the $125,000 out of the $3 million in operating and capital contingency reserves. Both an enrollment increase and millions in federal pandemic funding have bolstered the reserve funds.
“Yes, we can afford it because our enrollment has increased,” said Gibson. The district lost about 400 students last year during the pandemic, but more than 300 of those students returned with the resumption of in-person classes this year.
She said the district needs to raise classified pay to recruit good employees in an economy with a 4.5% unemployment rate that’s suddenly developed a labor shortage.
“These folks in these positions who are making less money — we struggle to get quality applicants. Almost every employer has ‘we’re hiring’ signs. We have a low applicant pool,” said Gibson.
Manning agreed. “Almost every restaurant has a sign in the window saying they’re paying $16 an hour. It’s very hard to recruit and retain our employees.”
Conlin countered that the district’s excellent health and retirement benefits ought to still attract workers.
But Human Resources Director Charles Savvy said minimum wage workers are focused on getting through to the end of the month — not retirement.
“A lot of people in these salary ranges are struggling to put food on the table. They’re not worried about the pension. They just can’t afford it.”
Board member Barbara Underwood said she originally expected the increase to cost the district a few thousand dollars for the handful of workers making minimum wage, but understood the value of adjusting the whole salary schedule.
“To be fair and equitable we probably do need to take this money out and blow it through the schedule.”
In the end, even Conlin reluctantly voted to adjust the schedule.
“I do believe we need to firm up the process. I don’t like this. I’m telling you right now, I don’t like it. I can see this going on and on and on and all of a sudden we’re having to freeze everyone again. Arizona’s almost the lowest in the country when it comes to education funding. We’re not getting any money from the state. Once the ESSER (federal pandemic) money is gone, we’ll blow through the money and then where will we be?”