Collective Bargaining Curbs Save Wisconsin Schools Millions

Published March 13, 2012

The very legislation that nearly provoked riots inside Wisconsin’s capitol saved many school districts from financial ruin or having to fire significant numbers of teachers, concludes a new report from the Education Action Group.

The Wisconsin legislature and Gov. Scott Walker (R) passed Act 10 in early 2011. It sparked a weeks-long, raucous protest in Madison’s streets and the capitol building, plus a recall effort against Walker, his lieutenant governor, and four state representatives. The law limits most public-sector collective bargaining to salaries, not benefits, and caps public employees’ annual raises at the rate of inflation.

“Act 10, or at least some form of it, was desperately needed,” the report quotes Glenn Schilling, superintendent of Hartland-Lakeside schools, as saying. “Collective bargaining is outdated. Things that made sense 20 or 30 years ago no longer make sense. But to get things out of the contract and make needed changes was impossible.”

Budget Emergency
Facing a $3 billion budget deficit, Walker cut state school spending by $555 per student, advocating the collective bargaining restrictions as a door to balanced budgets for districts that had to cover shortfalls.

Act 10 also let districts require public employees to contribute up to 12.6 percent of their salaries to health insurance and 5.8 percent to pensions. Both figures are just below the averages of what private workers in the state pay for the same benefits.

Because of these requirements, just the ten school districts that saved the most this fiscal year together saved $85.6 million, according to figures from the MacIver Institute.

“Hundreds of school districts saved a great deal of money,” the report says, “which helped them absorb the blow of reduced tax revenue. Those savings would not have occurred without Act 10.”

Freedom for School Districts
Before Act 10, unions could negotiate with districts on nearly any detail of school organization or spending. The report details how pre-Act 10 arbitration systems locked school districts into unwanted, unwieldy practices and high spending.

“The tools given to us were absolutely necessary,” New Berlin finance director Roger Dickson told the report authors. “We could have been facing cuts in programs, increasing class sizes, and a watered-down curriculum.”

In New Berlin, the teacher salary schedule was set so that teachers could move from a $38,000 salary to $78,000 annual salary in nine years. Union officials refused to revisit the schedule or an expensive early retirement program, even though the school district was broke—until Act 10 went into effect. Using the act as leverage, the school board was finally able to renegotiate.

Union Budget Obstruction
Since 1998, teacher benefits more than doubled statewide, to $27, 053 per year, while teacher salaries increased by approximately one-quarter, from $37,897 to $50,627. Both increased every year, despite the recent recession, according to the Wisconsin Department of Public Instruction.

“Arbitrators could force school districts to give their union employees large raises without strongly considering whether the schools or local taxpayers could afford such an expenditure,” the report notes.

The report lists many instances across the state of union officials obstructing school boards’ efforts to balance budgets, keep taxes low, and maintain education quality for students. It also discusses many bargaining agreements that required schools to purchase expensive, union-affiliated health insurance rather than shopping around.

During the current school year, despite cuts but with the new ability to negotiate health care costs and other benefits, districts had 1,799 more new hires than teachers they laid off or saw retire, according to the state Department of Public Instruction.


Concessions Wisconsin Teachers Unions Refused Despite Tight School Budgets

  • Milwaukee: Cash-strapped district wanted to drop insurance coverage for Viagra, which cost taxpayers $786,000 per year.
  • Milwaukee: Switch to a less expensive employee healthcare plan at no cost to employees, saving $48 million and 480 teaching jobs.
  • New Berlin: Contract proposal with pay increase one year and wage freeze another to help eliminate $2.1 million deficit and save 27 teaching jobs.
  • Milton: Switch employee health insurance carrier. Employees would get comparable coverage and the district would save about $450,000 each year.


Learn more:
“The Bad Old Days of Collective Bargaining,” Education Action Group, March 2012: