Blog Post < Previous | Next >
Guy
How much of a raise can Miller Creek teachers get?
The Miller Creek School District (MCSD) and its Teachers' Union (Union) have been stuck for over a year on agreeing what raise their teachers should get in the current school year ending June 30, 2025. As a result, MCSD is the only local School District that currently pays its teachers using the salary level for the 2024 school year.
The MCSD and its Teachers' Union (Union) are entering upcoming mediation on May 2nd. At this stage the two parties are wide apart. MCSD proposes a salary raise for teachers of 0.75% for the 2025 school year. Meanwhile, the Union demands a $6,000 raise in the 2025 school year and another 6% in the 2026 one. Please note that teachers get automatic raises associated with their year of service. These currently average about 1.4%. Thus, even if teachers get no raise in salary at all, they still get the 1.4% per year because of an additional year of service.
To provide additional context to this issue I will share more information in the Appendix regarding salary comparison with other School Districts in Central and Southern Marin. As you will see when factoring local costs, and local per capita income the MCSD teachers are already fairly well paid as is without any raises beyond their stepped up 1.4% per year.
I am not advancing that MCSD's teachers' salaries are keeping up with inflation. I am advancing that given differentials in local cost and per capita income in Central and Southern Marin, they are actually well paid vs other School Districts.
In my comparisons I will use the following Districts:
Mill Valley School District (MVSD)
Larkspur - Corte Madera Elementary (LCM)
Ross Valley School District (RVSD)
Kentfield Elementary (Kentfield)
Next, let's review the MCSD financials including forecast. Next, we will model how the Union proposal would affect the forecast.
MCSD financials including forecast
The table below shows MCSD financials for its General Fund going back to the 2020 school year. It also includes projections from the 2025 to the 2028 school year. This table is hard to read. So, I would encourage the audience to copy and enlarge this picture.
To render the key data shown above more visual, let's first look at a graph of the Net Surplus (Deficit). The latter is simply the difference between Revenues and Expenses. In the graph below, the years to the right of the red line represent projections.
As shown above, the MCSD projections show that as is its Budget projections are on an unsustainable path. It shows that MCSD is incurring recurring yearly Net Deficits since the 2024 school year until the 2028 one. As a result, its General Fund Balance as a % of Expenses is dropping precipitously as shown on the graph below.
On the graph above, see how the General Fund Balance as a % of Expenses is expected to steadily drop from 22.4% in the 2023 school year to only 7.9% in the 2028 one.
This "General Fund Balance as a % of Expenses" is the most important financial metric for a California School District because it has severe regulatory implications. If this ratio falls below 3%, a School District is deemed not adequately solvent and can be taken over by the State. Back in 2024, this still seemed like a most unlikely outcome. By 2028, that ratio would have dropped by - 65% from its peak.
7.9%/22.4% -1 = - 65%
And, beyond 2028 if continuing on the same financial path this key regulatory ratio could fall below 3% by 2031. That's only 6 years away. As is, is the MCSD cutting too close?
As we will soon see the Union proposal would cause MCSD to fail the 3% reserve ratio by 2026. That's just a year away.
The Union proposal impact on MCSD's financials
The $6,000 salary increase in the 2025 school year represents about a 8.5% salary increase. The table below factors the impact of this 8.5% and 6.0% salary increases in the first two years of the forecast. These salary increases affect the "Certified Salaries" line that represents the teachers. It also affects the Employee benefits line. The latter per existing Budget projections typically amount to about 62% of Certified Salaries.
As shown above the Union proposal would cause the MCSD General Fund Balance to fall below 3% of Expenses almost immediately or by the end of the 2026 school year.
If MCSD was to concede and adopt the Union proposal it would have to radically cut all "Other" expenses between typically $2 to $3.5 million per year or reducing them by - 24% to - 45%. And, this would be just to get back to MCSD's baseline projections.
As reviewed earlier the latter are already on a precarious path.
But, they would at least give MCSD some time to shore up its General Fund Balance to avoid MCSD being taken over by the State. The Union proposal takes all this time away and triggers an immediate financial crisis associated with the MCSD potentially being taken over by the State by June 30, 2026.
Below I am exploring various scenarios with salary increases ranging from 0% to 8% in the 2025 school year and from 0% to 4% in the 2026 school year. Notice all these scenarios are lesser than the Union's proposal at + 8.5% in the 2025 school year and + 6.0% in the 2026 one.
Below see the resulting General Fund Balance in % by the end of the 2028 school year. All the scenarios highlighted in red indicate the ones failing the 3% regulatory minimum.
The next set of scenarios show by how much MCSD would have to reduce its yearly "Other" expenses in either $millions or in %.
As is the MCSD is already in a pretty precarious situation. And, if it concedes and accepts the Union proposal it will experience an immediate financial crisis.
Appendix: Salary comparison
I will compare the salary of teachers at the midpoint of teachers' credentials in year 1 and year 5. I will also scale such salaries vs local per capita income and median rent.
The table below shows the relevant data for teachers in year 1.
Source: Districts, US Census, Zillow
Just as you would not expect a white collar professional in Detroit to make as much as one in New York, the same underlying wage differential mechanism should play out at the local level. Thus, one should not expect a teacher working in a much lower cost area such as San Rafael to make as much money as one working in Kentfield.
Once you grasp that concept, you observe that the MCSD teacher in year 1 is doing surprisingly well. It has the second highest salary among the 5 Districts even though it has by far the lowest local per capita income, and the lowest median rent.
Once you look at salary after rent, MCSD has by far the highest salary among the 5 Districts. The percentage of salary dedicated to paying rent is far lower than for the other Districts.
When scaling the salary to local per capita income, MCSD's teacher salaries are again way higher than for the other 4 local Districts.
Let's redo the exact same analysis for a teacher at midpoint credential level in year 5. Now, the MCSD teacher salary ranks 4th out of 5.
Source: Districts, US Census, Zillow
When looking at salary after rent and salary as a % of local per capita income, again the MCSD teachers are doing very well.
For teachers in year 5, only MVSD teachers' have a salary slightly higher than the MCSD ones. However, as a percent of local per capita income, the MCSD teachers come way ahead of the MVSD ones.
As a side note, the MVSD conceded to their teachers' Union back in 2023. The teachers got a 10% salary increase in 2024 and a 4% one in 2025. As a result, they have experienced a pretty serious financial crisis. In their projections, they include reducing their staff by close to - 15%. And, they have budgeted 0.0% salary increase for the next 3 school years. That's clearly not fun to do. But, that is what it is going to take for the MVSD to avoid being taken over by the State.
In summary, for MCSD to attempt to chase MVSD's teachers' salaries is a really bad idea from a financial standpoint.
Gaetan Lion is an independent researcher with expertise in economics, econometrics, investments, risk management, statistics, and quantitative analysis. His areas of interest include demographics, economics, investments, Climate Change, health care, sports, and politics.