Policy Documents

Milwaukee: Saved by Act 10...For Now

July 19, 2013

[Below is an excerpt from the latest Thomas B. Fordham report. The Big Squeeze: Retirement Costs and School-District Budgets, conducted by Robert Costrell and Larry Maloney, analyzes how big an impact the pension and retiree health care obligations will have on the budgets of Milwaukee Public Schools.  For the full report, please click on the PDF link above.]

"Taking pension costs and retiree health together, we calculate that Act 10 will save Milwaukee Public Schools (MPS) $1,588 per pupil by FY20. The lesson from Milwaukee—and Wisconsin more generally—is that the difficult problem of rising retirement costs faced by school districts is not entirely beyond the system’s control. Act 10 gave MPS the authority to act without the constraint of collective bargaining. MPS used that authority quickly and responsibly, approving changes that will dramatically shift costs from the district to the member for health benefits of future early retirees, i.e., those who retire before Medicare kicks in at age 65. Together with Act 10’s requirement that employees actually pay the employee contribution to pension plans, these actions mean that MPS faces a more manageable future."

Fordham has also provided a summary report by Dara Zeehandelaar and Amber M. Winkler, based on three technical analyses conducted by Robert Costrell and Larry Maloney.