Minimum Wage Law
I will assume that most of you reading this post, like me, applauded Governor Brown’s September, 2013, decision to sign into law a bill that will raise California’s minimum wage from $8 to $9 beginning on July 1, 2014, and then to $10 beginning on January 1, 2016. And I will also assume that most of you figured the primary beneficiaries of this decision would be minimum wage workers – like the folks who say “Welcome to Walmart” or “Do you want fries with that?”
While a minimum wage increase certainly creates pressure to move everyone up the pay scale, my own non-scientific assessment (based on conversations with purely subjective colleagues) leads me to believe that the majority of our after-school workers make more than $9 per hour, and so I didn’t perceive any immediate fiscal impact from this new policy.
The Impact
But what I didn’t know, until recently, is that an increase in the minimum wage also impacts the salaries of full-time “exempt” employees – professional staff who are exempted from overtime compensation. Here is an excerpt from California Labor Code (Section 515):
“The Industrial Welfare Commission may establish exemptions from the requirement that an overtime rate of compensation be paid pursuant to Sections 510 and 511 for executive, administrative, and professional employees, if the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.”
The organization I work for, THINK Together, along with several other community-based organizations operating after-school programs under contract with local education agencies, employs full-time exempt Site Coordinators. This has been identified as a best practice to ensure effective articulation between the instructional day and expanded learning time.
Offering full-time positions to Site Coordinators helps to professionalize our field while also serving as a valuable retention strategy. The current minimum salary for full-time exempt employees in California is $33,280 (or $16 per hour X 40 hours per week X 52 weeks per year). Beginning in July, this rate will increase to $37,440. On January 1, 2016, it will raise again to $41,600, a total gain of 25% over an eighteen month period.
This is good news!
I believe wholeheartedly that our Site Coordinators deserve a starting salary comparable to that of a classroom teacher. However, without commensurate increases in program revenue, it would be impossible for most providers to accommodate these increased salaries.
Our state funding source, the After School Education and Safety (ASES) Program, sets limits on the grant amounts each site can receive, based on a daily funding formula of $7.50 per student. Sites are also required to staff programs at a ratio of not more than 20 students to one employee, and, again, best practice dictates that Site Coordinators serve outside of that supervision ratio. It is not uncommon for ASES programs to allocate more than 80% of grant funding to personnel costs, leaving very little room for supplies, materials and other operating expenses.
The increased minimum wage, therefore, creates an unfunded mandate for after-school programs.
If not addressed, it will necessarily result in staffing reductions and/or reductions in services to students, neither of which were intended by the lawmakers who supported, and continue to support, this policy.
When you do the math on increasing the minimum wage just one dollar, the typical elementary school program (receiving $112,500 to serve 85 students) could incur up to $10,000 in increased personnel costs. The aforementioned full-time Site Coordinator would cost (with full benefits estimated at 25%) an extra $5,200 per year, and four part-time program leaders making an additional dollar per hour would cost another $4,800 (with payroll taxes and insurance estimated at 15%). Therefore, in order to maintain an equivalent level of service, programs would need be funded at $8 per student/per day (calculated at $122,500/85 students/180 school days) to offset the difference.
On February 3, Senator Mark Leno introduced a bill (SB 935) that would raise the minimum wage incrementally to $12 by 2017 and tie it to inflation thereafter. Let me repeat myself. This is good news! But with no mitigating action taken by the Legislature, it is clear that ASES programs will quickly become financially untenable.
A Solution
One simple and reasonable solution to this problem would be to index the ASES funding formula to the state’s minimum wage.
For every dollar the minimum wage increases, the ASES funding formula would increase by fifty cents. School site grant limits and the total ASES appropriation would increase proportionally. This would translate to approximately $36.6 million in additional funding for every dollar the minimum wage raises above its current level.
Members of the California Afterschool Advocacy Alliance (CA3) are engaged in an informational campaign to make lawmakers in Sacramento aware of this issue. With the full-throated support of California’s expanded learning field, we hope to see a fiscal solution implemented as part of the FY 2014/15 budget process. Key legislators with influence over this process are:
Senator Darrell Steinberg (Senate Pro Tem)
Senator Mark Leno (Budget Committee Chair)
Senator Marty Block (Budget Sub-Committee on Education Chair)
Senator Carol Liu (Education Committee Chair)
Assemblymember John Peréz (Assembly Speaker)
Assemblymember Nancy Skinner (Budget Committee Chair)
Assemblymember Al Muratsuchi (Budget Sub-Committee on Education Chair)
Assemblymember Joan Buchanan (Education Committee Chair)
This blog post is intended to raise awareness among our expanded learning community, and to enlist your support in promoting our proposed solution.
For breakfast this morning, I had coffee and an English muffin topped with almond butter.