1. Bruce D. CampbellJames A. Dugan Campbell, Durrant, BeattyPASBO RCL Palombo & Miller, P.C.Arbitrator/Labor Consultant 555 Grant Street, Suite 3101274 Edward Street Pittsburgh, PA 15219State College, PA 16801 412-395-1260814-235-1948 phone/fax 412-395-1291 FAXjdugan1@aol.com bcampbell@cdblaw.com IT’S NOT BUSINESS AS USUAL

2. Pennsylvania school districts have not experienced the negative effects of the poor economy, beginning in 2008. * State aid and stimulus funds provided a protective cushion * Collective bargaining continued as usual * Governor Rendell was education friendly 1

3. MAJOR ISSUES IN COLLECTIVE BARGAINING 1.WAGES 2.RETIREMENT INCENTIVES 3.HEALTH INSURANCE (Including by out of spousal coverage) 2

4. Teacher contract raises (including steps) from 1/10/09 - 8/4/10 POST RECESSION SETTLEMENTS: 2009 - 2010average raise 3.9% or $2,137 2010 - 2011average raise 3.8% or $2,195 2011 - 2012average raise 3.9% or $2,308 2012 - 2013average raise 3.8% or $2,329 Sources: Pennsylvania State Education Association, settlements from 1/10/09 - 8/4/10 3

5. CONSUMER PRICE INDEX - URBAN CONSUMERS FOR DECEMBER, 2010 U.S.PHILADELPHIAPITTSBURGH 12 months1.51.41.9 CAUTION:FOOD & ENERGY EXCLUDED FROM CORE INDEX Sources: U.S. Department of Labor, Bureau of Labor Statistics PSBA website - January, 2011 4

6. PENNSYLVANIA BUDGET FORECAST FOR 2011 - 2012 PROJECTS A DEFICIT OF $4 BILLION TO $5 BILLION. *FEDERAL EDUCATION JOB FUNDS ESTIMATED $337,816 MILLION WERE PROJECTED TO CUSHION REDUCTION IN SUBSIDY FOR 2011 - 2012 (a) *GOVERNOR CORBETT HAS DIRECTED THAT THESE FUNDS OFFSET REDUCTIONS IN BASIC SUBSIDY FOR 2010 - 2011 (a) *NO SCHOOL DISTRICT WILL RECEIVE LESS THAN ORIGINALLY INCLUDED IN THE BUDGET FOR 2010 - 2011, BUT NO STIMULUS FUNDS FOR 2011 - 2012 (a) *PROPOSED $550 MILLION REDUCTION IN BASIC SUBSIDY FOR 2011-2012 (b) * PROPOSED $484 MILLION REDUCTION IN ACCOUNTABILITY GRANTS AND REIMBURSEMENT FOR LOSS OF STUDENTS WHO TRANSFER TO CHARTER SCHOOLS (b) Source: (a) 1/28/11 letter from Secretary Zogby to Appropriations Committees (b) Governor Corbett’s budget proposal 5

7. TAX LIMITS ACT 1 INDEX Average of the percentage increases in Statewide Average Weekly Wage (SAWW) and the Employment Cost Index (ECI) 2008 - 20094.4% 2009 - 20104.1% 2010 - 20112.9% 2011 - 20121.4% 6

8. PSBA ESTIMATES THAT MORE THAN HALF OF THE 500 SCHOOL DISTRICTS MAY FILE TO SEEK EXCEPTIONS TO ACT 1 LIMITS. ESTIMATES MAY CHANGE AS DISTRICTS ADOPT PRELIMINARY BUDGETS Source: The Daily Item Sunbury, PA 2/17/11 7

9. THE COST OF HEALTHCARE IN 2010, THE AVERAGE FAMILY PREMIUM FOR PRIVATE SECTOR EMPLOYES WAS $13,770. 2020 PROJECTED COSTS:$23,342 - $29,000 INCREASE OF 79% + Sources: Business Round Table - Firedog Lake.com 12/30/10 The Commonwealth Fund - Firedog Lake.com 12/29/10 The Kaiser Family Foundation website 9/2/10 8

10. HEALTHCARE IN 2009/10, 77% OF REPORTING DISTRICTS HAVE COST SHARING OF HEALTH BENEFITS (EMPLOYEE CONTRIBUTIONS) - PSBA website (No $ amounts specified) AVERAGE WORKER CONTRIBUTION - NATIONWIDE FOR FAMILY COVERAGE:$333/MONTH ($3997/ANNUAL) Sources: The Kaiser Family Foundation - website FEDERAL EMPLOYEES CONTRIBUTE 25% (FAIR SHARE) TOWARD HEALTHCARE COVERAGE AND ARE SUBJECT TO A TWO YEAR WAGE FREEZE. 9

11. RETIREMENT ISSUE HOUSE BILL 2497 RE-AMORTIZED PSERS ACTUARIAL ACCRUED LIABILITIES, BUT DID NOT SOLVE THE RETIREMENT CRISIS. PSERS CONTRIBUTION RATES 2010 - 115.64%2015 - 1623.66% 2011 - 128.65%2016 - 1724.50% 2012 - 1312.19%2017 - 1825.27% 2013 - 1416.69%2018 - 1926.24% 2014 - 1521.18%2019 - 2026.96% 10

12. AVERAGE STARTING/MAXIMUM SALARIES IN 2009 - 10 STARTINGMAXIMUM BACHELORS$39,439$66,352 MASTERS$42,490$72,693 Source: PSBA website 1/24/11 WHAT IS THE EDUCATIONAL VALUE OF A TEACHER MASTERS DEGREE TO STUDENT PERFORMANCE? ANSWER:“NOT MUCH, IF ANY”! 11

13. U.S. SECRETARY OF EDUCATION, ARNE DUNCAN: “MASTERS DEGREE BONUSES ARE AN EXAMPLE OF SPENDING MONEY ON SOMETHING THAT DOESN’T WORK”. BILLIONAIRE BILL GATES: “…IN WASHINGTON STATE, MORE THAN HALF OF OUR TEACHERS GET IT (MASTERS). THAT’S MORE THAN $300 MILLION EVERY YEAR THAT DOESN’T HELP KIDS…” UNIVERSITY PROFESSOR, DAN GOLDHABER STATES THAT HIS RESEARCH DATING BACK TO 1997 HAS SHOWN THAT STUDENTS OF TEACHERS WITH MASTERS DEGREES SHOW NO BETTER PROGRESS IN STUDENT ACHIEVEMENT THAN THEIR PEERS TAUGHT BY TEACHERS WITHOUT ADVANCED DEGREES. HE CONTINUED THAT SINCE THAT TIME, REPEATED STUDIES HAVE CONFIRMED THESE RESULTS. Source: Centre Daily Times State College, PA 11/24/10 12

14. 1.SCHOOL DISTRICTS PAY FOR CREDITS FOR TEACHERS TO EARN MASTERS DEGREES. 2.EACH YEAR THE TEACHER MOVES UP ONE STEP ON THE SALARY SCHEDULE (until he/she reaches maximum step) 3.THEN WHEN THE TEACHER EARNS HIS/HER MASTERS, HE/SHE IS MOVED ACROSS THE SALARY SCHEDULE FOR HIGHER PAY ECONOMICALLY, THIS PRACTICE IS “THREE STRIKES AND YOU’RE OUT”! ADD INSULT TO INJURY, THE DISTRICT THEN SPENDS HUGE SUMS OF MONEY ON PROFESSIONAL DEVELOPMENT ACTIVITIES TO IMPROVE TEACHER PERFORMANCE (including those teachers with advanced degrees). WHAT DID THE MASTERS GET US? HOLD THE LINE ON INCREASES FOR ADVANCED DEGREES! 13

15. THINGS TO CONSIDER RE: TEACHER WAGES: 1.WAGE FREEZE - INCLUDING STEP MOVEMENT 2.HALF-STEP INCREASE EACH YEAR (a) 3.DROP A STEP/ADD A STEP 4.ANY INCREASE IN WAGES MUST BE OFFSET WITH SAVINGS IN BENEFITS OR STAFFING LEVELS. TAKE ADVANTAGE OF SAVINGS THROUGH ATTRITION - RETIREMENTS, RESIGNATIONS, ETC. 5.CREDIT FOR YEARS OF SERVICE IN ANOTHER DISTRICT (and step placement) SHOULD BE THE SOLE DISCRETION OF THE BOARD. (a) Recently, some Fact Finders have recommended half-steps. 14

16. RANGE OF FUND BALANCES FOR 501 SCHOOL DISTRICTS IN 2008 - 2009 (RECOMMENDED RANGE BETWEEN 5% - 10%) # DISTRICTS% DISTRICTS BELOW 0.00% (No Fund Balance) 14 2.79% 0.00 - 4.99% 42 8.38% 5.00 - 9.99% 100 19.96% 10.00 - 14.99% 122 24.35% 15.00% - over 223 44.5% Source: PSBA website 2/16/11 15

17. RANGE OF OPERATING POSITION 501 SCHOOL DISTRICTS IN 2008 - 2009 THE OPERATING POSITION IS THE DIFFERENCE BETWEEN ACTUAL REVENUE AND ACTUAL EXPENDITURES IN THE SAME YEAR# DISTRICTS BELOW 0.00% 156 31.14% 0.00 - 4.99% 276 55.68% 5.00 - 9.99% 59 11.78% 10.00 - 14.99% 7 4.40% 15.00% - over 0 0.00% MANY DISTRICTS ARE SPENDING DOWN AVAILABLE FUND BALANCES. IN 156 DISTRICTS, EXPENDITURES EXCEEDED REVENUES. SUCH A PRACTICE IS NOT FINANCIALLY SUSTAINABLE. Source: PSBA website 2/16/11 16

18. 70% - 80% of District Budgets are comprised of personnel and benefit costs: *ARE YOUR STAFFING LEVELS REALISTIC? *HAVE YOU OBSERVED TEACHER SCHEDULES, CLASS SIZES, ETC? *VISIT THE SAME CLASSROOM SEVERAL TIMES DURING THE SAME DAY TO GET THE REAL PICTURE. *CONDUCT SIMILAR ANALYSES FOR SUPPORT STAFF POSITIONS *SPECIAL EDUCATION TEACHERS MUST DEAL WITH CLASS SIZE AND CASE LOAD, BUT ARE THE LISTS AND NUMBER OF STUDENTS ACCURATE? *ONLY REPEATED OBSERVATIONS WILL CONFIRM THE ACCURACY OF THE LISTS PROVIDED. *WHO PREPARES THE INFORMATION AND WHO REVIEWS IT? 17

19. SPECIAL EDUCATION IEPs. *WHO PREPARES THE IEPs AND WHO REVIEWS THEM? *ARE IEPs PREPARED TO MEET THE NEEDS OF THE STUDENTS OR THE COMFORT WISHES OF STAFF MEMBERS? *HAVE THE DUTIES OF SPECIAL EDUCATION AIDES BEEN REVIEWED AND THEIR JOB PERFORMANCES OBSERVED? *HAVE THE REGULATIONS ASSOCIATED WITH ALTERNATIVE FUNDING SOURCES SUCH AS ACCESS AND IDEA BEEN REVIEWED FOR ACCURACY? *IF THERE ARE MORE ADULTS IN THE CLASSROOM THAN STUDENTS, PERHAPS A REVIEW IS IN ORDER! 18

20. DUE TO ECONOMIC CLIMATE: *DISTRICTS MAY BE NEGOTIATING CONTINUOUSLY *UNIONS MAY PUSH FOR LONGER TERM CONTRACTS *CONTINUE UNDER CURRENT COLLECTIVE BARGAINING AGREEMENT AND MAINTAIN “STATUS QUO” 19

21. STATUS OF NEGOTIATIONS IN PENNSYLVANIA 20082009201020112012 School districts Negotiating109127152130124 School districts Still negotiating 1 4 53124124 Source: PSBA website 2/16/11 20

22. IN A RECENT DECISION, ARBITRATOR JOHN SKONIER HAS RULED THAT STEP MOVEMENT IS NECESSARY TO MAINTAIN “STATUS QUO” IF TEACHERS HAVE STARTED WORK FOR THE NEXT SCHOOL TERM BEFORE THE CONTRACT HAS EXPIRED. DISTRICTS MAY WISH TO CONSIDER CHANGING THE EXPIRATION DATES OF SUBSEQUENT CONTRACTS TO JULY 1. 21

23. RISKS OF MAINTAINING “STATUS QUO” “… THE LAST ACTUAL PEACEABLE AND LAWFUL NON- CONTESTED STATUS WHICH PRECEDED THE CONTROVERSY…” PENNSYLVANIA SUPREME COURT FAIRVIEW SCHOOL DISTRICT V UNEMPLOYMENT COMPENSATION BOARD OF REVIEW 454 A. 2d 517 (1982) “… ALTERING CLASS SCHEDULES FOR ONE SCHOOL BUILDING OUT OF 10, WHICH DID NOT RESULT IN A CHANGE IN THE LENGTH OF THE WORKDAY, CONTRACT TIME WITH STUDENTS AND THE LIKE STILL RESULTED IN A “STATUS QUO” VIOLATION…” COMMONWEALTH COURT NEW CASTLE AREA SCHOOL DISTRICT V UNEMPLOYMENT COMPENSATION BOARD OF REVIEW 24 PPER 24182 (1993) 22

24. GENERAL RULE OF THUMB REGARDING “STATUS QUO” DO NOT TAMPER WITH ANYTHING!!!!! MEET WITH AND ADVISE ADMINISTRATORS 23

25. CONTROLLING HEALTHCARE COSTS *BE REALISTIC IN PLAN DESIGN - $5.00 AND $10.00 OFFICE VISIT CO-PAYS AND $25.00 - $50.00 EMERGENCY ROOM VISIT CO-PAYS ARE OUT! *REVIEW YOUR CLAIMS EXPERIENCE - WHAT SERVICES ARE DRIVING COSTS AND ARE THERE ALTERNATIVES? *REVIEW YOUR MEDICAL AND PHARMACY BENEFIT PLANS - PERFORMANCE ENHANCING DRUGS (VIAGRA, CIALIS, ETC) AND STERILITY TREATMENT/DRUGS SHOULD NOT BE COVERED. *ESTABLISH THREE PART FORMULARIES: GENERIC, PREFERRED BRAND AND NON-PREFERRED BRAND WITH APPROPRIATE CO-PAYS. * EMPLOYEE CONTRIBUTIONS THROUGH A SECTION 125 PLAN REDUCES THE PAIN 24

26. *REGULAR REVIEW OF CLAIMS EXPERIENCE AND IDENTIFICATION OF COST DRIVERS WILL ENHANCE DEVELOPMENT OF WELLNESS PROGRAMS *KEEP THE UNION INFORMED - IF EMPLOYEES ARE GOING TO CONTRIBUTE, THEY SHOULD KNOW THE FACTS *THE GOAL IS TO ENCOURAGE EMPLOYEES TO BETTER MANAGE THEIR HEALTH CARE DOLLARS. HIGHER CO-PAYS FOR INDIVIDUALS WHO USE THE SERVICES MAY BE MORE PALATABLE THAN ACROSS THE BOARD NETWORK DEDUCTIBLES. OR PERHAPS A BLENDING OF THE TWO STRATEGIES WILL BE APPROPRIATE. *EXPLORE AND SHOP AROUND. CHECK OUT PA RX FINDER FOR DRUG COSTS AT DIFFERENT PHARMACIES. CONSIDER SERVICES OF A PHARMACY BENEFIT RISK MANAGER TO ENSURE THAT YOUR PROGRAM OPERATES AS INTENDED. THIS PROGRAM WILL NOT RUN IN NEUTRAL. 25

27. CONSIDER THIRD PARTY OPTIONS TO SETTLE AGREEMENTS *FACT FINDING UNILATERAL REQUESTS BY APRIL 10 BILATERAL REQUEST OR MEDIATOR SUPPORT REQUEST AFTER APRIL 10 *NON-BINDING ARBITRATION SOUDERTON (MONTGOMERY COUNTY) AND SPRINGFIELD (DELAWARE COUNTY) ARE EXAMPLES OF NEGOTIATED NON- BINDING ARBITRATIONS ISSUES WITH THESE OPTIONS: *TIME CONSUMING WITH RESPECT TO PREPARATION *TIMELINES INVOLVED IN PROCEDURES *DEAL WITH STATUS QUO CRISIS BUT, PROCESS MAY PROVIDE A FOUNDATION FOR NEGOTIATED SETTLEMENT. 26

28. SUBCONTRACTING SUPPORT STAFF WORK (TRANSPORTATION, FOOD SERVICE, CUSTODIAL, ETC) THE GOAL SHOULD BE TO REDUCE COSTS - NOT BREAKTHE UNION. BEFORE CONTRACT NEGOTIATIONS BEGIN - SOLICIT REQUESTS FOR PROPOSALS (RFPs) ADVISE THE UNION OF DISTRICT’S INTENTIONS AND THAT RFPs WILL BE SHARED WITH THE UNION. THE DISTRICT IS OBLIGATED TO NEGOTIATE IN GOOD FAITH! 27

29. CASES CITED FOR REVIEW: *UPPER MOORELAND TOWNSHIP SCHOOL DISTRICT SUBCONTRACT MAINTENANCE, GROUNDS, CUSTODIAL AND TRANSPORTATION *REYNOLDS SCHOOL DISTRICT SUBCONTRACT CAFETERIA MONITORS *LAKE LEHMAN SCHOOL DISTRICT NON UNION INDIVIDUALS OPERATING RECEPTION (FOOD SERVICES) THAT HAD PREVIOUSLY BEEN OPERATED BY BARGAINING UNIT MEMBERS *NESHAMINY SCHOOL DISTRICT TIMING OF SUBCONTRACTING AND RESULT OF FACT FINDING (Review article in PASBO Report (August, 2010) by Paul Minotti, Director of Facilities at Neshaminy School District) Source: Jeff Sultanik, Esquire Fox Rothchild, LLP PASBO webcast 1/28/11 28

30. WILL POLITICIANS ACT? *GOVERNOR CORBETT AND REPUBLICAN LEGISLATURE MAY CONSIDER REQUESTS TO REVIEW TEACHER TENURE, ELIMINATE SICK DAYS/SABBATICAL LEAVE FROM THE SCHOOL CODE (items for collective bargaining) AND PERMIT FURLOUGH OF PROFESSIONAL STAFF FOR ECONOMIC REASONS. *GOVERNORS CHRISTIE (New Jersey) AND CUOMO (New York) ARE LOOKING AT SIMILAR CHANGES. IN ADDITION, THEY ARE LOOKING TO RESTRICT THE LONG STANDING UNION POSITION OF “LAST IN, FIRST OUT” REGARDING TEACHER FURLOUGHS. *OHIO LEGISLATURE CONSIDERING BILL TO LIMIT ITEMS (SUCH AS HEALTHCARE AND RETIREMENT) FROM COLLECTIVE BARGAINING. 29

31. GIVEN THE FACT THAT THESE THREE STATES BORDER PENNSYLVANIA, ANY CHANGES IN TEACHER STATUS COULD HAVE REPERCUSSIONS IN PENNSYLVANIA. *WISCONSIN LEGISLATURE CONSIDERING VOTE TO REMOVE TEACHER CONTRIBUTIONS TO RETIREMENT AND HEALTHCARE FROM COLLECTIVE BARGAINING PROCESS. STATE WOULD UNILATERALLY SET THE RATES. 30

32. COLLECTIVE BARGAINING - HOW TO PROCEED? WHAT ARE DISTRICT OBJECTIVES? SELECT YOUR TOP FIVE GOALS. IF YOU ACHIEVE TWO OR THREE - CONSIDER NEGOTIATIONS A SUCCESS WHO WILL MAKE UP DISTRICT TEAM AND DO THEY HAVE BOARD SUPPORT? MOST DIFFICULT PART OF BARGAINING MAY BE DEALING WITH YOUR OWN SIDE! 31

33. THINK LONG TERM! IN MOST CASES, THESE ISSUES DID NOT DEVELOP AS THE RESULT OF ONE CONTRACT AND IT IS UNLIKELY THAT THEY WILL BE RESOLVED IN ONE CONTRACT. REVIEW OF COLLECTIVE BARGAINING ISSUES SHOULD BE AN ON-GOING PROCESS. CIRCUMSTANCES AND PRIORITIES CHANGE. A CRISIS MAY DEVELOP IN THE MIDDLE OF A CBA. THAT IS WHY MOUs WERE CREATED. FILE MEDIATION NOTICE EVERY YEAR! DISTRICT SHOULD ADOPT RESOLUTION DESIGNATING LOCAL HOLIDAYS WITH EACH YEAR SCHOOL CALENDAR 32