Walker’s Bargaining Limits Save Millions; Some Districts Still Short

Walker’s Bargaining Limits Save Millions; Some Districts Still Short
July 28, 2011

Alicia Constant

Alicia Constant (alicia.constant289@gmail.com) is a freelance journalist. (read full bio)

Wisconsin Gov. Scott Walker’s collective bargaining limits enacted earlier this year are saving some school districts millions of dollars by requiring teachers to work more and contribute to pensions and health insurance.

Act 10 limited collective bargaining to salary negotiations when Walker signed it March 11. Now, several months later, 67 of the state’s 424 school districts reported saving more than $140 million because of it. More than 150 districts rushed to preclude the law’s effects by concluding union contract negotiations beforehand, but if all districts employ Walker’s proposals they could save more than $451 million, estimated Wisconsin’s MacIver Institute for Public Policy.

To address a $3 billion state deficit, Walker cut school budgets by $555 per student and limited collective bargaining to help districts make up shortfalls. Though most districts that agreed to follow Walker’s proposals have been saving money, not all are in good financial shape.

“We could see [financial difficulty] was coming and did not have to make many reductions this year,” said William Hughes, superintendent of Greendale School District. Greendale was able to save about $3 million in health costs this year because Walker’s changes allowed it negotiating flexibility. “Next year we’ll be struggling like a lot of districts.”

New Negotiating Rules
In most districts, the state formerly chipped in 11.6 percent of teachers’ salaries for pensions. Many teachers will now contribute 12.6 percent of their salaries to health insurance and 5.8 percent to pensions. The law also allowed districts to net more work per salary paid: teachers in Kaukana School District, for example, must now teach six hour-long periods per day instead of five and work 40 hours per week instead of 37.5.

Districts can now also save money by changing health insurance providers. Formerly, a union contracts would require districts to use WEA Trust, the union’s health insurance carrier. Before the bargaining limits, WEA Trust had warned districts to expect premium increases next year. When districts were able to shop around for bids, WEA Trust decided to offer the lowest, saving $3.1 million for the Appleton Area School District alone.

“Now that [WEA Trust has] to be competitive, they’re ‘playing nice,’” said Christian D’Andrea, a MacIver education policy analyst. “Even if districts are staying with the same company, just by the bidding process they’re saving hundreds of thousands of dollars.” 

In the 2010-2011 school year, the average Wisconsin teacher’s salary was $51,264 with $27,000 in fringe benefits, according to the Wisconsin Department of Public Instruction. An analysis by the Center for Union Facts states public-sector employees, on average, earn 5 percent more in wages and benefits than their private-sector counterparts.

District Holdouts
While many districts required teacher contributions toward pensions and health insurance, some—most notably Milwaukee and Kenosha—did not. In addition to losing state money, Milwaukee no longer had $90 million in federal stimulus money nor Kenosha $6.8 million. Milwaukee has announced it will lay off 519 employees, including 354 teachers. Kenosha is laying off 350 teachers.

“There’s no doubt significant cuts will have to be made,” said Michele Hancock, Kenosha’s superintendent. “The largest portion of any budget is personnel costs—salary and benefits. This is no exception for KUSD.”

When both districts tried to renegotiate their contracts, the unions refused.

“They’re saying, ‘What’s done is done,’” D’Andrea said. “Instead they’re going to have to turn to layoffs... It’s tough to understand the logic there.”

A Milwaukee Public Schools spokeswoman told the Milwaukee Journal-Sentinel a 5.8 percent pension contribution could still restore 200 teachers’ jobs.

It’s a different story in LaCrosse, which falls $4.9 million short. Before Act 10, the district already required its employees to contribute 10 percent of their salary to health care. Raising contributions to 12.6 percent will only save the state $700,000. After pension contributions, school officials still expect to fall at least $1.2 million short.

As young teachers get laid off because of Wisconsin’s seniority system, D’Andrea predicts that talent will drain from public schools to private schools, choice schools, and districts like Kaukauna, where officials predict a $1.5 million surplus from Act 10. The district is hiring new teachers, lowering class sizes, and instituting a $300,000 pool for merit pay.

Alicia Constant (alicia.constant289@gmail.com) is a freelance journalist.

Alicia Constant

Alicia Constant (alicia.constant289@gmail.com) is a freelance journalist. (read full bio)