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PA school districts: Prevailing wages too costly

By   /   March 22, 2012  /   6 Comments

Unions oppose changes that could cost workers higher pay on public works
By Eric Boehm | PA Independent
HARRISBURG — School districts are in a fix.
Costly regulations drive up construction and maintenance expenses, while lower tax revenue and flat-funding from the state have district business managers looking for help.

They say more cash from the state government would help, but they aren't expecting it, because Gov. Tom Corbett has made clear he will not spend more than the state takes in.
Instead, districts are looking for help from Harrisburg to save and stretch their dollars a little further through possible changes to Pennsylvania’s more than 50-year-old prevailing wage law.
Jeff Mummert, business manager at Southwestern School District in York County, has first-hand experience with the added cost from the prevailing wage law that requires higher wages for all public construction projects — exceeding $25,000 — that are funded with public money.
Last year, when the district was accepting bids to fix a leaking roof in one of its schools, the estimated cost was $84,000, without the prevailing wage attached. When the district realized the bid was submitted in error and the state wage law applied, the final cost jumped to more than $125,000, Mummert said.
“It was the same exact scope of work and the same exact workers,” Mummert said. “If you had to get your roof fixed, and it cost $20 per hour, you wouldn’t want to pay $30 per hour because of a state law.”
The prevailing wage law has created, some say, an unnecessary burden to the stressed budgets of state and local governments, particularly where recent population growth has required new buildings.
The Twin Valley School District straddles the border between Chester and Berks counties. In the past 25 years, the student population has jumped from 2,200 to 3,500, resulting in the district undertaking seven new building projects since 1990, said Alan Lontz, the district’s business administrator.
Lontz said the district has spent more because of the prevailing wage law, but, in retrospect, it’s not possible to determine how much could have been saved.
"There definitely would have been savings, because not all of the bidders have been unions, but they all have to pay prevailing wages,” Lontz said.
The same is true for Southwestern School District, which built two new schools in recent years due to population growth. The total cost was about $26 million. But, Mummert said, taxpayers could have saved $2 million without the prevailing wage requirement.
Advocates for changing the law say savings would range from 5 percent to 30 percent, depending on the cost of the project and its location.
Even assuming only 10 percent saving would bring the total in excess of $200 million. 
Unions and most Democratic lawmakers oppose the changes because eliminating the requirement would hurt workers by taking away the higher wages attached to public jobs. 
Local government groups and the Pennsylvania School Boards Association, which represents school district governments, support the changes as a way to create more budget flexibility at the local level.
Pennsylvania’s prevailing wage law was passed in 1960 and imposed a county-based wage system determined by the state as a function of collectively bargained wages in the same region.
Depending on the type of project and the county, the prevailing wage ranges from 25 percent to 70 percent higher than the average wage for the same work in the same location, according to data collected by the Pennsylvania State Association of Boroughs, a local government advocacy group.
Even on small projects, the prevailing wage threshold of $25,000 is easily reached, said Don Jennings, business manager for Stroudsburg School District in Monroe County.
He recalled a project several years ago in which the district was replacing carpeting with tile flooring in a few classrooms.
“When we looked at it, we knew that if the project cost $24,900, then it’s going to be $24,900. But as soon as you hit the $25,000 threshold, it’s now going to cost you $30,000,” Jennings said. “That’s coming right out of the taxpayers' pockets.”
In Harrisburg, a group of Republican lawmakers are pushing legislation that would increase the threshold for prevailing wage projects to $185,000 — equal to the pace of inflation since the $25,000 limit was set in 1960. Others want to see the prevailing wage law eliminated, as 10 other states have done in the past three decades.
Even the increase in the threshold would please budget managers like Jennings and Mummert, because it would allow more projects to be done with less funding.
“I don’t view it as a union issue, and I wouldn’t consider myself anti-union,” Mummert said. “I think it’s just a common sense, financial issue.”