Policy Documents

Wisconsin’s Act 10: Saving Schools from the Fiscal Cliff

December 11, 2012

Wisconsin Gov. Scott Walker’s Act 10 is working.

Since its implementation in July 2011 to reduce state spending, the state budget has been balanced, property taxes have been reduced, and state revenue collections are surging, all for the first time in a decade or more. Dozens of school districts were able to balance their budgets with virtually no layoffs for the first time in recent memory. Some districts even have surpluses and are hiring more teachers and reducing class sizes.

Despite Act 10’s success, it’s been a modern-day trial by ordeal for the survival of the legislation ever since it went into effect, just as it was before it became law. And the ordeal is not over yet.

As Walker put together the budget for fiscal years 2011–12, his first budget since his election in November 2010, Wisconsin faced a $3.6 billion deficit. As discussed in this paper, this was nothing new. But the state was fresh out of one-time fixes.

Nearly half of the $28.3 billion state budget was largely untouchable because it consists of entitlements such as health care and welfare. State funding for local school districts amounted to more than 15 percent of the budget, and pension costs for public employees took up 13 percent, leaving only 22 percent for other state spending. It was thus impossible to reduce state spending without cutting education and pension costs unless taxes were increased. And Walker had campaigned on a promise not to increase taxes.

Act 10’s solution was two-pronged. It reduced state funding for local school district K-12 education by about $749 million. But it also gave school districts tools to reduce their spending on salaries and benefits, detailed below, particularly by limiting the subject matter of collective bargaining.

Opponents of Act 10 predicted the law would have dire consequences for educational quality: fewer teachers, larger class sizes, program cuts, and worse. In all but a handful of districts, however, the dire predictions have not come true. Where teacher layoffs have taken place, it’s been almost exclusively in districts in which union contracts have not yet expired and hence the Act 10 spending reductions are not yet in effect.

Essentially, Act 10 was designed to break the stranglehold public employee unions have had on state and local spending, which is, of course, funded by taxpayers. Act 10 limits collective bargaining and requires public employees to pay small percentages of the cost of their health care and pension benefits. The public employee unions recognized early on their very survival was at stake. They launched attacks on the legislation on multiple fronts.

First, Act 10’s opponents--mostly union members--took to the streets of Madison and invaded the capitol building itself in demonstrations both profane and destructive aimed at stopping passage of the bill. That didn’t work.

So then they went to the ballot box, gathering enough signatures in late 2011 to force the June 5 recall election of Walker. He won handily, defeating Milwaukee Mayor Tom Barrett by a margin slightly greater than Walker’s defeat of Barrett in the 2010 election (which put him into office originally).

While all this was going on, the unions went to court with four lawsuits, of which three are still pending. There they have been slightly more successful. But that’s attributable more to an accident of geography than any meritorious legal arguments. And the limited success is, in all likelihood, subject to reversal on appeal, as discussed below.

At this writing, key provisions of Act 10 have been declared null and void by a judge in Madison, and similar rulings could come in other cases. That would be a tragedy.