Andrew Shaw, Client Executive, Kapnick Insurance

By Andrew Shaw, Client Executive and Education Practice Expert at Kapnick Insurance

Welcome to that time of year where schools are chin-deep in budgets, working through the craziness of COVID, and planning for next year which includes employee negotiations. It is a crazy time for school leaders as they navigate future goals and challenges while still focusing on educating children and running a school district. As you plan and prepare for negotiations and educating employees on their benefits, it’s important to keep in mind the concept of total compensation.

As a school leader in preparation for negotiations, you most likely have many thoughts rolling through your head. Considerations such as:

  • Do we need to address language?
  • Is this a year we can afford a pay raise?
  • Can we simply extend the contract for another year?
  • Should we offer a multi-year contract and what is the risk of a multi-year contract?

And the list of options of what to do just keeps growing, while you are also thinking about strategies for when you are at the table.

One of the most important questions to ask while you plan through your options is whether you take time to educate the team that is going to the table with you in addition to the team you are negotiating with. It’s important the answer is yes because it will provide foundational clarity to those with knowledge of the district’s history, capabilities, and future. It is all about the why! Why you do what you do. Why you need to change this language. Why you can only offer this compensation or that. By taking time to educate and communicate the why you can dig deeper into the concept of total compensation and its value for an individual or a group of employees.

Total compensation is the total amount of money a school spends on an employee. It typically includes:

  • Hourly wage or salary
  • Benefits (health, short term disability, long term disability, dental, vision, and life insurance)
  • FICA
  • Retirement
  • Longevity
  • Bonuses

As district leaders you know, schools usually spend about 80% to 85% of their annual budget on employees, and school leaders inherently use this information to inform their many decisions, yet employees don’t often fully understand this. Employees should understand that a school employee who has a $60,000 salary will usually have a total compensation package of $95,000 to $110,000 (depending on benefits provided through the contract and if the employee takes insurance or not). If the district has an annual budget of $10,000,000 this one employee represents roughly 1% of the total cost of the budget; ten employees from the same group, who have the same salary, with a similar total compensation represent roughly 10% of the total budget. This is powerful information to share. By taking the time to educate your employees on total compensation you will be providing them the knowledge they need to have as you navigate different opportunities and challenges your District will face in the future.

If you have any questions about how to present total compensation packages, methods for employee education, or benefits, please don’t hesitate to reach out to me at andrew.shaw@kapnick.com or 517.266.6572. As a former Superintendent in Michigan who began my second career with Kapnick after retirement, I have been in your shoes and would be happy to help you navigate these conversations and provide further insights. After all, as we all know, knowledge is power.