Act 10 & It's Working Wisconsin MI Research

August 6, 2018 | By Ola Lisowski

Since Act 10, School Districts Have Saved $3.2 Billion in Benefits Costs

To say that the landscape for public sector health insurance has changed since Act 10 would be an understatement. Since the landmark bill’s passage, Wisconsin school districts have saved more than $3.2 billion in benefits costs.

Districts found savings by opening up bidding to new insurers for the first time in years, while others increased required employee contributions towards insurance plans. Overall, since 2011, districts have largely moved to more taxpayer-friendly health plans – freeing up more money for the classroom.

On the other hand, employees at more than 100 districts – approximately one-quarter of Wisconsin’s 422 public school districts – paid less than 12 percent towards their monthly health insurance premiums in the 2017-18 school year. Still, that’s a far cry from 2010-11, when 43 percent of all districts paid the the entirety of their employee premiums on single plans every month. Today, just 6.4 percent of districts pay employee premiums in full.

Across all districts, employee contributions towards premiums average 11.61 percent for single plans and 11.75 percent for family plans. Twenty-three school districts around the state, including Wauwatosa School District, New Berlin, and both districts in Lake Geneva, do not require employees to contribute anything to monthly premiums in either their single or their family plans.

That’s according to a new Department of Administration database, which consolidates district health plan information – the first time this information has been collected in one place. The dataset includes figures for 2017-18 employee health insurance plans, including employer and employee contributions towards premiums, deductibles, co-pays, and even out-of-pocket maximums for both single and family plans.

Introduced in 2011, Gov. Scott Walker’s landmark legislation required that public sector employees contribute at least 12 percent towards health insurance costs. Those “costs” were most commonly defined as insurance premiums, though increasingly popular high deductible HSA plans were also accepted under the spirit of the law.

Ultimately, the goal was to lighten the load on taxpayers, and that’s exactly what happened, according to the DOA. Its estimates show Act 10 saved taxpayers $3.2 billion on K-12 benefits plans alone, primarily in health insurance. That’s with only 74 percent of school districts complying with the 12 percent rule for premiums.

Figuring out who’s actually complying with the law has not always been easy, because the 12 percent covers total health care cost – not just premiums. However, using the state’s new database, it’s clear one-fourth of all school districts in Wisconsin offer healthcare plans that require employees to pay less than 12 percent of their monthly premiums. Three-quarters of all school districts require employees to pay 12 percent or more each month.

Of the 111 districts where employees pay less than 12 percent on premiums, 73 had reported their insurance data to the state in 2010. About two-thirds of those districts increased their required monthly premium contributions since Act 10 was passed. The rest kept the same levels, or in a handful of cases, lowered their required monthly premium payments for employees.

For example, in the 2010-11 school year, Middleton-Cross Plains Area employees paid zero percent towards their premiums. As of 2017-18, they pay 12 percent every month, or $72 under a single plan and $181 under a family plan. Employees receive a 3 percent reduction on premiums if they take an annual physical and health risk survey.

No matter the exact method of how districts get their employees to contribute towards their own healthcare expenses, taxpayers no longer shoulder the burden of covering premiums upwards of $1,000 for every district employee, every month, through their careers and into retirement. Prior to Act 10, benefits costs to districts had been increasing by 4.3 percent annually – a trend that, if it continued, would have taxpayers paying almost 60 percent more today.

That kind of money adds up, and in many cases, such as in Wauwatosa School District and Milwaukee Public Schools, freed up dollars went into the classroom, to building renovations, and to salary increases.

Even so – despite what organizations such as WEAC may say – these taxpayer-funded plans are still very generous. Many districts, including New Berlin and Port Edwards, make regular contributions to employee HSAs. Ten districts continue to have employees pay nothing towards monthly premiums, as they did in 2010.

Of the 111 districts where employees pay less than 12 percent towards their monthly premiums, 23 cover premiums in full every month for both single and family plans. More than half of those districts also offer high deductible health plans, which are typically coupled with health savings accounts (HSA). In those cases, employees set aside their own money, pre-tax, to spend on healthcare. That still meets the intent of Act 10 by ensuring public employees contribute towards their own health costs, saving taxpayer dollars and bringing standards closer in line with the private sector.

Other large districts whose employees pay less than 12 percent towards premium include Beloit, Madison Metropolitan, Milwaukee, Kettle Moraine, and several others.

As the MacIver Institute has previously reported, both Madison and Milwaukee Public School (MPS) employees use sliding scales for premium contributions. MPS employees pay between 2 and 14 percent, depending on salary and type of plan. In Madison, employees pay a percentage based on their role. Food service employees and educational assistants, for example, pay 1.25 percent of their monthly premiums, while teachers pay 3 percent. Administrators pay the most, at 10 percent. The only time employees may reach 12 percent is if they fail to take a district-required annual physical. Failing to do so adds a 7 percent penalty.

Some school districts are continuing their generosity at taxpayer expense by contributing to employee deductibles instead of monthly premiums. Thirty-five percent of districts contribute to deductibles, ranging from $150 on a single plan in Weston, to $13,900 on a family plan in Baraboo. On average, districts pay $624 towards single plan deductibles and $1,248 towards family plan deductibles, including all the districts who pay nothing.

Still, in the grand scheme of things, only a minority of districts seem to be testing the limits of the 12 percent rule. Two hundred and twenty school districts in the state – more than half – require employees pay between 12 and 13 percent of premiums. Of those districts that reported their health plans in 2010, just two of 145 had the same or higher employee premium levels back then.

Others require employees to pay beyond what Act 10 requires. Employees on Wilmot Union’s family plan pay 28 percent of their monthly premiums, while those in Westfield pay 22 percent and those in Neenah Joint pay 25 percent. All three school districts offer various levels of compensation for employees who participate in health screenings or who don’t use tobacco.

Health screenings or other wellness incentives are common in school districts. Dozens of districts use some type of wellness assessment to create a premium differential. Those incentives and how they’re structured also vary by district.

DePere, for example, uses a “carrot” approach: the district waives its required 12 percent premium contribution for employees and their spouses if they participate in a health risk assessment. Oshkosh Area, on the other hand, uses less of a carrot and more of a stick. Employees there pay 5 percent more if they don’t complete the health assessment.

Two-thirds of the districts that contribute to employee deductibles require that those employees pay more than 12 percent of their premiums.

Overall, 61 percent of all school districts offer one insurer, and 39 percent offer multiple insurers. Nearly three-quarters of districts are fully-insured, while 14 percent are jointly self-funded and 11 percent are self-insured. Preferred provider organization plans are the most popular, with 36 percent of all districts offering them. High deductible plans are the next most common, at 23 percent, followed by health maintenance organizations at 17 percent.

WEA Trust is the most common provider by far, covering 100 school districts. WCA Group Health Trust, Security Health, and Dean SSM Health are the next most popular providers.

In all, had health insurance spending continued along its trend prior to Act 10, taxpayers could be paying billions more for public sector health insurance and other benefits that far outpace private sector compensation. While certain gubernatorial candidates are running on increasing school employee benefits to their pre-Act 10 levels, taxpayers may want to take a look at how the game has changed.

Indeed, as the numbers show, the sky is not falling. In places like Wauwatosa School District, premiums have fallen by 0.32 percent in the past seven years, and the district still covers all of those premiums for their employees. Compare that with the so-called Affordable Care Act’s premium increases – a staggering 44 percent in 2017.

Healthcare in America is far from a free market. But as it turns out, opening up that market to even a little bit of competition has done wonders for district pocketbooks, and in turn, for all of Wisconsin’s taxpayers.

July 30, 2018 | By M.D. Kittle

Wisconsin Government Retirees Still Benefitting Big From Unused Sick Pay

MADISON – While tens of thousands of Wisconsinites wonder how they’re going to cover their escalating health insurance costs, scores of former government workers in the Wisconsin Retirement System may not have to worry about paying for their health care bills for the rest of their lives.

The highest sick leave balance in 2017 topped $907,000 for a 69-year-old public employee with 27 years creditable service at a top annual salary of $290,000. That’s equal to more than three years of the retiree’s peak salary.

Thanks to Wisconsin’s generous sick leave conversion system, some retirees have banked hundreds of thousands of dollars they can use to pay for post-retirement health insurance premiums in the Wisconsin Group Health Insurance Program.

The top 10 highest sick leave balances total nearly $7.1 million alone, according to a data from the state Department of Employee Trust Funds (ETF) provided to Wisconsin state Treasurer Matt Adamczyk.

MacIver News Service obtained and analyzed the data, which includes the 25 highest sick leave account balances for employees that retired over a five-year period between 2013 and 2017.

The highest sick leave balance in 2017 topped $907,000 for a 69-year-old public employee with 27 years creditable service at a top annual salary of $290,000. That’s equal to more than three years of the retiree’s peak salary.

Ranking second on the list was a 63-year-old retiree with nearly $841,000 worth of unused sick leave, equal to more than three years of salary. The retiree had 29 years of creditable service, earning a peak salary of $270,000.

The 2017 list includes the 37 highest sick leave balances. Even the retiree at No. 37 boasted a sick leave balance of more than $348,000.

State employees retiring in 2016 converted more than $168 million worth of unused sick leave, according to ETF.

As previously reported by MacIver News, Wisconsin allows state workers to convert their unused sick leave into health insurance payments at retirement. State workers earn 16.25 sick days a year. The typical public employee in the system uses just over eight days based on 2016 averages. The unused days carry over year-to-year and accumulate throughout the employee’s career.

Sick leave is calculated using the employee’s highest rate of pay. Similar to higher pension benefits, employees with higher value sick leave account balances tend to have a higher rate of pay, work longer and are older than the average retiree.

Every state worker is enrolled in ASLCC (Accumulated Sick Leave Conversion Credit Program). That program takes the number of unused sick hours an employee has and multiplies it by their highest basic hourly pay rate.

Employees who have worked for the state for over 15 years are also enrolled in SHICC (Supplemental Health Insurance Conversion Credit Program). This program takes the employee’s ASLCC amount and matches a certain portion of it.

Upon a retiree’s death, surviving spouses and dependents are eligible to use credits from both programs. Sick leave credit conversion accounts have no cash value and do not accrue interest over time.

But they sure do add up – to the tune of $3 billion in obligations, as MacIver News Service reported last year.

The state Department of Employee Trust Funds, the agency which oversees public employee post-retirement benefits, insists the sick leave conversion programs are pre-funded based on a percentage of payroll recommended by the ETF Board’s consulting actuary and through the issuance of pension obligation bonds by the state of Wisconsin.

“As a result of the bonding, the state has paid off the majority of the unfunded liabilities of the programs,” according to ETF.

But the massive dollar figures continue to raise questions.

“I think the obvious question is, are we giving too much sick leave?” Adamczyk said.

Lawmakers certainly thought so in 2011, when sick leave conversion payments soared 13.5 percent, in the wake of a glut of public employee retirements during the Act 10 debates. One Republican lawmaker described the unused sick leave figures as jaw-dropping. The Speaker of the Assembly at the time promised reform.

But nothing has ever come of it.

A Senate bill that would have prevented state lawmakers from accruing unused sick leave passed out of committee, but went no further.

Rep. David Steffen (R-Green Bay) co-sponsored the bill. He told MacIver News at the time that it’s difficult to reform a program when lawmakers themselves benefit so greatly from it.

“The reality is when I tried to end this little known health care golden parachute, it was not well received by my colleagues,” Steffen said.

“The reality is when I tried to end this little known health care golden parachute, it was not well received by my colleagues. I put this legislation out in my first term because I felt this benefit lacked transparency to the public and encouraged long-term tenure of elected officials,” Steffen said.

The total cost of the benefit has steadily increased since 2011.

One retiree posted more than $1.17 million in sick leave balances. The 66-year-old former public employee retired in 2016 with 41 years of creditable service. At a peak salary of $330,000, the retiree earned the equivalent of nearly four years’ pay in unused sick leave. ETF does not provide identifying information of those in the retirement system.

Three other retirees had more than $900,000 in converted sick leave balances between 2013 and 2017. Nearly 100 posted sick leave balances north of a half million dollars over the period.

Adamczyk said it’s time the Legislature revisit Wisconsin’s government sick leave conversion system.

“Should we have an overall cap in the dollar amount, or look at not giving three weeks and two days off per year (in sick leave)?” the treasurer said.

July 24, 2018 | By M.D. Kittle

For Some State Pensioners, Retirement Is 'Like Winning the Lottery'

UPDATED on July 26 to include comments from Employee Trust Fund Secretary.

MADISON – Big government types like to paint a picture of the dedicated civil servant toiling away day after day doing the people’s business for a meager reward.

One retiree in the system collected $751,127 in annuity payments in 2017 – a five-fold increase from the $140,000 salary the former employee took home at the peak of service.

But for many government employees, there’s a comfortable retirement waiting at the end of their government service. For some, their state pension jackpot pays out the kind of retirement income that many Americans can only dream of.

A small percentage of retirees in the Wisconsin Retirement System are collecting retirement checks well over their highest annual earnings, according to a data review conducted by the state Department of Employee Trust Funds (ETF) for Wisconsin state Treasurer Matt Adamczyk.

MacIver News Service obtained and analyzed the pension documents. Of the 52,184 retirees’ annual annuities analyzed between 2013-17, 183 of the highest earners posted annual pension benefits higher than their average highest earnings.

Adamczyk requested information on the highest earnings and benefits amounts over the period. There could be many more state employees on the lower end of the income spectrum earning more in retirement than they did while on the job. These data analyzed include the most glaring numbers.

One retiree in the system collected $751,127 in annuity payments in 2017 – a five-fold increase from the $140,000 salary the former employee took home at the peak of service. The retiree was 87 at the age or retirement, and had nearly 50 years of creditable service.

Compare that pension windfall to the $32,000 median annual household income among all retirees, according to a survey released last year by Transamerica Center for Retirement Studies.

Another retiree in Wisconsin’s taxpayer-funded state pension system received retirement annuity payments totaling $466,745 last year, four times greater than the $110,000 the 83-year-old earned at the peak of 52 years creditable service working for the government.

One 80-year-old retiree booked $302,010 in annuity payments in 2017, twice the $150,000 salary the former employee pulled down at the highest earnings point of a 42-year state government career.

The higher-than-earnings payouts are thanks to calculations under ETF’s money purchase method, which does not use final average earnings to compute annuity payments but applies contributions to the pension fund over time and accrued interest.

“In many ways it’s like winning the lottery,” Adamczyk said of the hefty retirement payouts.


Indiana’s Hoosier Lottery offers a “Set For Life” game that pays winners $10,000 a month for 25 years. That’s on par with one 69-year-old state retiree who collected $121,000 in pension payments last year, $41,000 more than the employees’ highest average earnings. And that $10,000 a month in pension payments should only grow in coming years as the retirement investment fund grows.

“I don’t think it’s fair people are making double or triple their highest salary average,” Adamczyk said.

The state treasurer, who has spent much of his one and only term in office tracking wasteful government spending (Adamczyk campaigned on the elimination of the treasurer’s office), says there’s nothing wrong with public employees making a modest retirement. One of the enticements of government work is a generally generous pension. But Adamczyk said there’s no reason government employees need to earn in retirement more than they made at work – a luxury that many in the private sector will never know.

And the hefty pensions are compliments of taxpayers. For a long time, up until Gov. Scott Walker’s Act 10 required public employees to pick up half of their pension contributions, government employees received their defined benefit payments gratis. That generally amounts to 6.7 percent of the paycheck. The employer (you, the taxpayer), picks up at least that amount, depending on the employee’s status – general or protective class.

Even after Act 10, Adamczyk said, some public employers, particularly school districts, have found ways to offset the required employee pension contributions.

ETF does not identify pension recipients or the positions they held, only noting age at retirement and years of service. At 87, the retiree pulling down $750,000 in pension payments has outlived the average U.S. life expectancy of 78.7 years. But the individual could still live several more years. If the person collected the pension payout for five years, under the state retirement system’s guaranteed payouts for life option, the retiree would collect a total of $3.75 million.

The pension system offers a five-year guarantee payout and a 15-year payout, for only slightly less monthly retirement income. Other options include:

  • Joint and Survivor Annuity, 75% Continued to Named Survivor
  • Joint and Survivor Annuity, 100% Continued to Named Survivor
  • Joint and Survivor Annuity, Reduced 25% on Your Death or the Death of your Named Survivor
  • Joint and Survivor Annuity, 100% Continued to Named Survivor with 180 Payments Guaranteed

So a 70-year-old retiree locking in a 15-year guarantee at $175,000 a year, for instance, could collect for 10 years, pass away, and a named beneficiary, typically a spouse, could collect the hefty pension payment for another five years – guaranteed. That’s a $2.6 million-plus retirement over 15 years.

Most people are familiar with the traditional formula method of funding government pensions. It’s based on the employee’s three highest years of earnings, a formula factor based on the individual’s employment categories, years of creditable Wisconsin Retirement System service and any “applicable age reduction factor for early retirement,” according to ETF.

“For most members, this (retirement income) is 70% of the final average earnings,” ETF notes.

Retirements are calculated using both calculations – the formula and money purchase methods. The retiree receives the higher benefit.

The contributions – now from the employee and from the employer – are invested by the State of Wisconsin Investment Board. SWIB boasts nearly $100 billion in assets and ranks as the ninth largest public pension fund in the U.S. More than 620,000 current and former state and local government employees and their families are part of the Wisconsin Retirement System.

Of course, longevity in public service pays off. The longer you work in government, the bigger the retirement check. The state system’s average retirement age is 61. The average retirement age of retirees pulling in annual pension checks higher than their final salaries is 72. The group boasted an average of 43 years of creditable service compared to the average retiree’s tenure of 21 years, according to ETF.

Among the 25 highest active employees, retirement account balances ranged from $2.74 million to $5.2 million, with a median account balance of $3.05 million, according to ETF. Median final average earnings for the employees was $180,000, with an average age of 77.

ETF Secretary Robert Conlin seems to take exception to Adamczyk’s characterization of the big pension payouts.

“While I appreciate the Treasurer’s interest in the WRS and his focus on a very small subset of WRS retirees, I can assure him that the WRS is not a lottery,” Conlin wrote in a statement issued late Wednesday, following Adamczyk’s press releases on the data. “Benefits are based on salary, career length and age. Pension amounts are limited by both state and federal law and the benefits are prefunded with employer and employee contributions.”

Many state employees won’t see Lottery-like payouts from their state pensions. ETF’s sample formula annuity calculation for a teacher retiring at 57, with final monthly earnings of $3,250 and 25 years of service shows pension payments of north of $15,000 per year. Add Social Security annual earnings of more than $16,000 and the sample teacher is close to the national median. That doesn’t take into account potential income from defined contribution offerings like 401(k) or self-investment mechanisms such as IRAs. The average pension in the Wisconsin Retirement System is about $24,700 per year, according to ETF.

But there are scores of former government workers earning more in retirement than they did on the job. Some just a few thousand dollars more, others banking two or three times more than their highest salary average.

Conlin attributes the hefty pensions in part to the fact that WRS “covers many public employees that earn professional salaries, like doctors, investment professionals, university faculty, lawyers and judges.”

“It should be no surprise that these folks sometimes receive commensurate pensions in retirement, a benefit for which contributions have been regularly paid over the employee’s working career,” Conlin said.

But, again, should public employees earn more in retirement than they did while working at their taxpayer-funded jobs, some significantly more? Tax dollars, after all, are seeding the retirement accounts. The ETF notes on its website that the system “provides a modest retirement income” to public employees. An ETF official did not respond to MacIver News Service’s follow-up questions.

Adamczyk says it’s more than time for the Legislature to look at caps on runaway pensions. While Wisconsin boasts one of the best-funded state pension systems in the nation, times and financial circumstances are always subject to change.

“If you take one of the larger number retirees, a person younger than 64 who worked for 30 years making $364,000 a year in retirement, at a minimum that person could easily live another 20 years. That person would take in $7.2 million,” the treasurer said. “That is an awful lot of money and taxpayers are the ones who are funding this basically.”

May 25, 2018 | By Chris Rochester

Wheels Have Fallen Off Liberals’ “Minnesota Is Utopia” Argument

Minnesota and Wisconsin have been the subject of considerable debate over the past seven-plus years. Ever since the two states parted ways sharply by their respective choices of governors in the 2010 elections, partisans have been claiming that Wisconsin lags progressive utopia Minnesota. But a deeper look at the data shows that Wisconsin does NOT trail Minnesota miserably as some would have you believe, forcing one left-leaning think tank to massage the data to produce their favorable but misleading talking points.

The two states – similar in size and demographics, geographically close, and starting from a deep fiscal hole following the Great Recession – are indeed an interesting case study in the fiscal conservative versus fiscal liberal policy debate. Also handy for this comparison is the fact that Gov. Mark Dayton of Minnesota, a liberal, and Gov. Scott Walker of Wisconsin, a conservative, both took office in 2011. Unfortunately for partisan hacks trying to pull a fast one on the mainstream media and the Wisconsin people, there is now plenty of evidence that the conservative fiscal policies enacted under Gov. Walker have pushed the Badger State right past Minnesota since 2011.

The claim that Minnesota has done better than Wisconsin over the past eight years is simply untrue, a blatant partisan attack buttressed by massaged and cherry-picked economic data.

A recent study by the left-leaning Economic Policy Institute claims that Minnesota has outperformed Wisconsin in key economic measures like unemployment and economic growth. “The results could not be more clear: by virtually every available measure, Minnesota’s recovery has outperformed Wisconsin’s,” EPI declares.

Closer to home, Citizen Action of Wisconsin executive director Robert Kraig in particular never misses a chance to peddle the canard. The experience of the two states provides, “a complete debunking of the whole conservative economic program,” he told The American Prospect in a May 17 article.

EPI arrives at their sweeping conclusion by massaging the data, starting their analysis an entire year before Walker and Dayton took office. The Center of the American Experiment, a Twin Cities-based free market think tank, was the first to debunk the EPI’s claims point-by-point by matching the data to each governor’s actual tenure in office.

The CAE report exposes EPI’s sleight of hand. EPI’s data starts with Wisconsin’s peak unemployment rate (9.2 percent) in January 2010 and Minnesota’s peak (8.1 percent) in June 2009. But comparing the two states from the same starting point – December 2010, the month before both governors took control – Wisconsin has clearly outpaced Minnesota in reducing unemployment.

In that month, Minnesota’s unemployment rate was a full percentage point lower than the Badger State’s 8.1 percent, and it had peaked six months earlier than Wisconsin’s. But the latest figures show that under Walker, Wisconsin’s rate is now at a historic low of 2.8 percent, 0.4 percent lower than Minnesota’s 3.2 percent rate.

Under the policies of a fiscally responsible governor and Legislature, Wisconsin unemployment has dropped by 5.3 percentage points since December 2010. Over the same time, Minnesota’s has dropped by 3.9 percentage points – a 26 percent smaller reduction than the Badger State.

The latest numbers, announced last Thursday, see the trend continuing. While Minnesota’s unemployment rate stayed at 3.2 percent, Wisconsin’s dropped again to 2.8 percent.

Comparing apples to apples reveals the fact that unemployment in Wisconsin has improved more since 2011 than Minnesota. Less unemployment means better opportunities for Wisconsinites.

“Simply put, Gov. Walker inherited an unemployment rate a full percentage point higher than Gov. Dayton did, and has got that down to a rate nearly a third of a percentage point lower. If we’re scoring, this is a clear win for Gov. Walker,” writes CAE economist John Phelan.

The suspect EPI study also cites wage data, but their analysis omits key context. Over the period starting in December 2010, just before Walker and Dayton took office, earnings have actually grown faster for Wisconsinites.

Average Wisconsin hourly earnings in Wisconsin are up 3.5 percent compared with 3.2 percent in Minnesota, Phelan writes. This contradicts EPI’s assertion that, “After Walker and Dayton assumed office…wages in Minnesota have taken off, while in Wisconsin, they have stagnated.” Once again, the liberal advocacy group distorts the truth by focusing on a small piece of the larger economic prosperity picture.

It’s true that Minnesota wages – which differs from earnings – are still higher than in Wisconsin. The median hourly wage in Wisconsin in May of 2017 was $17.81, while in Minnesota is was $19.84.

Wisconsin clearly has more work to do to pass Minnesota in this measure but recent trends are encouraging.

While Minnesota is home to 18 Fortune 500 companies including UnitedHealth, the largest health insurance company in the country, Wisconsin is home to just nine, but the recent decision by Foxconn and Haribo to build their first North American mega plants in Wisconsin is a positive sign.

Foxconn and Haribo could have put their facilities anywhere in the country, including Dayton’s Minnesota. But they chose Wisconsin.

In addition, real household incomes have grown in Wisconsin across the board between 2011 and 2016, with the fastest growth occurring in the 25th percentile of incomes. Income in the bottom 10th percentile also grew faster than the top 10th, according to Census Bureau data. Wisconsin’s performance in reducing its unemployment rate likely contributed to wage growth, especially at the lower end. Even the EPI study acknowledges a fundamental reality of free market economics: “As unemployment goes down, employers have to bid up wages in order to hire and retain staff.”

EPI also tries to conclude that Minnesota’s economic growth has outperformed Wisconsin’s. But as CAE’s Phelan points out, the study again uses data that span all of 2010 and end with 2016 when it could have used a more accurate data set – the fourth quarter of 2010 through the end of 2017. Using that date range, a much more honest picture of the two governors’ tenures come through. According to Phelan, Wisconsin’s per capita GDP has grown by 9.8 percent, far outpacing Minnesota’s per capita growth of 5.5 percent over the same time period.

While per capita GDP is the best measure of economic well-being, overall economic growth in Wisconsin is also greater than in Minnesota – 11.9 percent versus 10.9 percent over the same date range. EPI’s analysis cherry picks the dates it uses in order to maximize its narrative, but the fact is that Minnesota’s GDP has not grown faster over Dayton’s and Walker’s time in office.

Not only are Gopher State residents experiencing slower wage and economic growth, Minnesota’s middle class has also taken a beating thanks to the state’s full embrace of Obamacare and its Medicaid expansion. Premiums headed into 2017 were expected to increase by a staggering 50-67 percent, as opposed to Wisconsin’s 16 percent hike. As a result, Minnesota was forced to come up with $300 million to bail out 123,000 struggling Minnesotans who did not qualify for federal Obamacare subsidies.

The bloodletting of Minnesota taxpayers didn’t stop there. The following year, the Minnesota legislature spent an additional $542 million to establish a reinsurance program to hold down costs. Wisconsin recently enacted a similar reinsurance program, but the cost to state taxpayers is expected to be a fraction of that, $34 million. Walker administration officials are confident the bill can be paid for by finding savings in the state’s behemoth Medicaid program.

Walker and legislative Republicans did the right thing in rejecting a state Obamacare exchange and the “free” Medicaid expansion money, saving taxpayers a fortune. Minnesota, on the other hand, made a costly mistake. And despite the huge difference in costs between the states, a key measure of effectiveness is the same. According to the Kaiser Family Foundation, the rate of uninsured in Wisconsin (7 percent) is virtually identical to Minnesota (6 percent), both below the national average of 9 percent.

Progressives concerned about wage earners usually ignore the tax burden, the one piece of an individual’s paycheck politicians have a direct impact on.

Another key difference between the states is that Walker has consistently worked to actually reduce tax rates. Wisconsin’s personal income tax rates of 4 percent at the bottom and 7.65 percent at the top are lower than Minnesota’s rates of 5.35 percent and 9.85 percent. Wisconsin also taxes middle class income less than Minnesota, and in 2013 Gov. Dayton signed into law a $2.1 billion income tax hike. By contrast, in 2014 Gov. Walker signed a $500 million tax cut into law, and cumulative tax reductions over Walker’s tenure add up to $8 billion. Walker has also frozen property taxes, so the taxes on a median valued home have held steady over his tenure.

Seven years after Wisconsin and Minnesota parted ways so sharply, the new Wisconsin is poised for success in the 21st century. That’s clearly evident by the $10 billion Foxconn project, the largest economic development deal of its kind in the history of the United States. Minnesota might have a history of being home to Fortune 500s, but Wisconsin is now attracting major projects while Minnesota looks on.

The claim that Minnesota has done better than Wisconsin over the past eight years is simply untrue, a blatant partisan attack buttressed by massaged and cherry-picked economic data. By many measures, Wisconsin is in fact outperforming Minnesota, a trend that’s likely to continue with Walker and Dayton in charge of their respective states.

April 16, 2018 | By Chris Rochester

WEAC Suffers Worst Revenue Decline in Nation - Again

State teachers’ union decline continues, new report finds

Wisconsin’s largest teachers’ union suffered a decline in revenue of nearly 19 percent between 2014-15 and 2015-16, the largest decline of any teachers’ union in the country, according to a new report by the Education Intelligence Agency.

The Wisconsin Education Association Council’s (WEAC) revenue dropped from about $9.8 million to $8 million over that time, an 18.8 percent drop over just one year. That put it in a $239,077 operating deficit.

The new numbers – the latest available – reflect an ongoing trend for the union of declining revenue. In 2014, WEAC collected $12.4 million in dues, in 2015 it collected $9.25 million, and in 2016 it collected $8 million. Before Act 10, it was collecting $23.5 million a year in dues.

WEAC’s declining fortunes this year continue a bad streak for the union – last year, the union posted a dropoff in revenue of more than $3 million, also the worst among all state teachers' unions.

The drop in revenue mirrors a sharp decline in membership as teachers, now free to opt out of union membership thanks to Act 10, continue to vote with their feet.

WEAC had 46,388 members during 2015 to 2016 – a 4.8 percent drop from the year before, the seventh sharpest drop among the 25 state teachers unions that lost membership. In 2014, WEAC’s total membership was 53,983. In 2010, membership was around 98,000.

The data comes from IRS disclosure reports and internal membership data.

The trend of declining teachers’ unions continues at the national level. Twenty-two state unions reported declines in revenue from 2014-15 to 2015-16 in addition to the 25 that saw drops in membership.

Gov. Scott Walker’s signature law, known as Act 10, allowed Wisconsin’s public employees the freedom to decide whether or not they want to join a union and pay dues. In 2015, Wisconsin became the twenty-fifth state to enact a Right to Work law, extended that freedom to all workers.

Public unions must now also hold annual recertification votes. In order to become recertified, a majority of union members must vote yes.

April 16, 2018 | By M.D. Kittle

Wisconsin Lawsuit Could Give Union Pension Fund Right to Private Non-Union Information

Big Labor is pushing its weight around again, this time filing an expensive lawsuit against a service-disabled, veteran-owned electrical contractor company.

Flaugher said the union pension plan administrators are going after his company with everything they’ve got – all in an effort to get the names, addresses, and Social Security numbers of nonunion managers and administrative staff.

The litigation, wending its way through federal court in Milwaukee, is part of a union trust fund harassment and intimidation campaign against Colgate-based Veterans Electric and its nonunion employees, according to company owner Scott Flaugher.

Flaugher said the union pension plan administrators are going after his company with everything they’ve got – all in an effort to get the names, addresses, and Social Security numbers of nonunion managers and administrative staff.

It’s a power play that Flaugher and his labor law expert attorney say violates Wisconsin privacy law. More so, if big labor prevails in the Badger State, it could open the door to union harassment nationwide.

Flaugher, a veteran of the first Gulf War’s Operation Desert Storm, has no intention of surrendering.

“I think they are shocked that I’ve fought them this far,” he said.

The lawsuit was filed in the United States District Court, Eastern District of Wisconsin by the administrators of the various trust funds for Veterans Electric’s union employees, represented by the International Brotherhood of Electrical Workers Local 494.

In 2016, the funds overseers requested, through their accounting firm, a routine audit of Veterans Electric’s employee records, according to court documents. The audit was completed on May 30, 2017. Auditors found a minimal underpayment of $252.30 to the union health and welfare plans, and the company “promptly issued payment.”

The company gave fund managers exactly what was required under the collective bargaining agreement with Local 494: records of employees who are members of the union.

But the funds administrators wanted more. They sought information on non-union employees – managers and office staff. Flaugher agreed to provide redacted information, removing personally identifiable information from the nonunion employee records. The trust funds demanded a full release, and sued.

They claim, without apparent evidence, that Flaugher is somehow hiding some employee who should be a member of the union and, thus, entitled to benefits contributions by the employer.

Flaugher repeatedly has denied the accusations, and he’s not sure how to prove to his adversaries that he doesn’t have “secret employees” on the payroll short of giving them the prohibited documents they seek.

Robert Rayburn, a trustee of the funds, could not be reached for comment. Another official at the Milwaukee office of the Electrical Construction Industry Health and Welfare Plan did not return MacIver News Service’s requests for comment.

The question before the court is whether the trustees of the benefit plans have the authority to demand access to Veterans Electric non-union employee records, “even though those employees are not participants in the … Trust Funds,” according to court documents.

Flaugher and his attorney, Andrew Newell, argue the union pension trustees have no such authority. The nonunion employees, Flaugher said, asked him not to turn over their private information, and Wisconsin’s privacy laws are very clear on companies protecting employee privacy.

Flaugher is concerned that the trust funds will turn over the non-union employee information to the IBEW local and it will be used to target and harass the employees.

And the defendants point to a U.S. Supreme Court case that found, while there is no artificial limit on a trustee’s audit authority, the scope of that authority has to be agreed upon in the collective bargaining agreement. The existing contract between Veterans Electric and the union, however, limits audited information to only records of union employees with the company.

Newell said on the eve of Wisconsin’s right to work law going into effect, the union, “which is separate from the trust funds in theory,” sent out a newsletter reminding their members that Local 494 had their names and would be happy to publish them in a future newsletter, should they wish to leave the union.

“Viewed in that lens you can understand why a union representative, who also serves as trustee on a trust fund, would want the names and addresses of management, if some day there were a vote of employees to decide whether they want to stay in the union or not,” the attorney said. “It also set the precedent that they (the trustees) are entitled to this information, so next year when they audit they will get the names, Social Security numbers and addresses of anyone who is left in the union.”

The union fund overseers are using the central tool of litigation to get what they’re after, seeking personal information through the discovery process. Veterans Electric has filed for a judgment on the pleadings, attempting to curtail what it sees as a legal trick by the plaintiffs to uncover information it does not have a right to possess.

Pension fund trustees have argued that they need immediate access to the personal information, insisting that the company is delinquent in contributing to the funds. The facts in the case dispute that contention, showing there is no grounds for the lawsuit, Newell said.

The attorney pointed to a similar case – Sullivan v. William Randolph Inc. – decided by the U.S. Court of Appeals for the Seventh Circuit. The court upheld a lower court ruling in favor of the defendant, a construction company, awarding it $56,000 in attorney’s fees.

Big labor in the Sullivan case also argued that they had to sue to discover whether the construction company owed contributions to a union pension fund, because the business refused to cooperate with an audit. There was, however, nothing to back up that claim in the court record.

“They have confused assertion with evidence,” the court wrote of the plaintiffs. “One cannot sue, without courting sanctions, unless one has grounds to believe that one has been injured by a wrong committed by the person who wants to sue.”

Flaugher, Veterans Electric founder, estimates he has spent about $30,000 so far defending himself in the lawsuit. But there’s much at stake, not just for his company.

“If Veterans Electric were to lose this case no former union members would be safe from having a union know where they live, what they make, and do with that information what they want,” Newell said. “I think that’s really what it’s about for the union. I think the union is driving the bus on this litigation. They want the option to intimidate and harass people, giving them the leverage to keep them in the union.”

Flaugher, a war veteran who has built his contracting firm through long hours and hard work, has no intention of backing down.

“The way I’ve looked at this from the beginning, I built this business. It’s my money that started this business. It’s me putting in 16-hour days for no pay,” he said. “Then I have this union always letting me know I don’t really have any control of my business, that they’re the ones who are going to dictate how my business is run, and that’s a big bur in my saddle.”

March 12, 2018 | MacIver News

It’s Working Wisconsin – Moving From Welfare To Independence

In 2015, Governor Scott Walker started a pilot program to help transition people from government dependence to independence. Since then, over 25,000 people have found jobs thanks to Wisconsin’s FoodShare Employment Training (FSET) program. The left argues it’s cruel and counter-productive to make people on benefits participate in job training. These successful graduates might beg to differ. Watch the original DHS videos here.

February 28, 2018 | By M.D. Kittle

Supreme Court Hands Big Labor Another Act 10 Loss

MADISON, Wis. – Big labor was handed another big loss Wednesday when the Wisconsin Supreme Court reversed a lower court decision in a union certification case.

Once again, the state Supreme Court has ended another litigation ploy by big labor.

The ruling is another in a long line of court wins for Gov. Scott Walker’s 2011 public sector collective-bargaining reform law known as Act 10, which has faced a litany of lawsuits from organized labor and their allies.

In its 5-2 decision, the court found that the Wisconsin Employment Relations Commission did not exceed its authority in requiring labor groups to file petitions for certification elections in a timely fashion. It also upheld the constitutional authority of government agencies to promulgate rules in support of laws.

“Thus, we reverse the decision of the court of appeals and reinstate WERC’s orders dismissing the Unions’ petitions for election,” concludes the Supreme Court majority opinion, written by Justice Annette Kingsland Ziegler.

The court’s big labor-backed liberals, Justices Shirley Abrahamson and Ann Walsh Bradley, dissented.

Ultimately, the decision is more instructive than restorative. The unions continued to represent members during the appeals process and filed petitions before the deadline the following year. They lost nothing in the bargain but, once again, the Supreme Court has ended another litigation ploy by big labor.

The court’s conservative majority rejected the argument by the Wisconsin Association of State Prosecutors and Service Employees International Union that WERC’s administrative requirements were “invalid” because they “irreconcilably conflict” with state law requiring annual public employee recertification votes.

SEIU and WASP made their arguments after they were tardy in filing petitions to be named as collective-bargaining representatives on 2014 certification ballots.

SEIU and WASP made their arguments after they were tardy in filing petitions to be named as collective-bargaining representatives on 2014 certification ballots. WERC subsequently voted not to accept the unions’ petitions because they were not filed in a timely manner.

The unions sued, arguing that they shouldn’t have to file a petition in the first place because, as the sole unions already representing their respective employees, they are required under Act 10 to go through an annual recertification vote. In essence, they shouldn’t need to file a petition and that the requirement is invalid to begin with. Further, the “absence of a statutory requirement … means that the legislature did not intend for there to be any requirement.”

Milwaukee County Circuit Court Judge John J. DiMotto agreed with the unions, declaring WERC’s petition rules invalid and overturning the commission’s decisions not to hold certification elections for the unions.

DiMotto decided that WERC had “neither express nor implied power to impose a condition precedent to its statutorily mandated duty; and that such a requirement was unnecessary because an incumbent labor organization has a ‘real, de facto and legal interest in continued representation.’”

An appeals court agreed with DiMotto.

The Supreme Court doesn’t share those interpretations of the law.

WERC has “express authority” under Wisconsin Statute Chapter 111 to “promulgate rules that require a demonstration of interest from labor organizations interested in representing collective bargaining units.”

“Consequently, we reinstate WERC’s orders dismissing the Unions’ petitions for election as untimely,” the opinion states.

Wisconsin’s enabling statute, giving agencies the ability to create rules, “need not spell out every detail of the rule. If it did, no rule would be necessary.”

“Accordingly, whether the exact words used in an administrative rule appear in the statute is not the question,” the ruling states.

As for the petition requirement, the decision notes that WERC necessarily must determine which labor organizations have an interest of being on the certification ballot. The unions’ argument is a presumption – that they would continue to be the only collective-bargaining agent for government employees they had previously represented. WERC is not allowed under law to assume such things.

“(T)here is no statutory indication that past representation triggers a presumption of interest in future representation,” the Supreme Court ruling states.

“In this regard, we reject the argument that the rules were not necessary because a current representative has a continuing interest in representing the bargaining unit.”

Wisconsin unions have repeatedly tried - and failed - to bring down Act 10 in the courtroom, losing at the state and federal levels. #wiright #wipolitics CLICK TO TWEET

James Daley, chairman of the Wisconsin Employment Relations Commission, said the decision underscores the Legislature’s authority to entrust WERC to “execute their wishes in regards to collective bargaining in Wisconsin.”

Daley said the expectation of unions filing required paperwork in a timely fashion is no different than candidates for office – incumbents or newcomers – expected to file nomination papers on time.

Wisconsin unions have repeatedly tried – and failed – to bring down Act 10 in the courtroom, losing at the state and federal levels. That hasn’t stopped the endless litigation.

“Our goal is to create an election atmosphere for collective-bargaining elections that is respectful and takes every voter into account,” he said. “This is a simple case where the union failed to apply in a timely manner.”

That hasn’t stopped the endless litigation.

Wisconsin unions have repeatedly tried – and failed – to bring down Act 10 in the courtroom, losing at the state and federal levels. That hasn’t stopped the endless litigation.

Earlier this month, the state Supreme Court rejected an argument by Madison Teachers Inc. that they should be allowed access to voter names while a union certification election is going on. The union, which has filed other lawsuits against Act 10, claimed it wanted to make sure WERC was fairly administering elections.

The court, again in a 5-2 decision, ruled that WERC did not violate Wisconsin’s open records law in denying access to the names until after the voting period concluded.

“[T]he public interest in elections that are free from intimidation and coercion outweighs the public interest in favor of open public records under the circumstances presented in the case before us,” Chief Justice Patience Roggensack wrote in majority opinion.

Operating Engineers of Wisconsin Local 139 and Local 420 recently filed a lawsuit moving to kill Act 10, this time using the Janus v. AFSCME case in the U.S. Supreme Court as a pretense.

Organized labor is hurting in the wake of laws that have given workers the right to choose whether they want to be in unions. Many are taking a pass.

Following the enactment of worker freedom laws in Wisconsin, overall union membership in Wisconsin has declined from 354,882 members in 2010 to 218,233 in 2016, a drop of 38.5 percent.

February 26, 2018 | By Chris Rochester

Desperate Unions Revive Another Failed Attempt to Overturn Act 10

MADISON, Wis. – Wisconsin unions just can’t seem to let go of their dead-end quest to undo the most important government reform we have seen in decades – Act 10.

The unions, Operating Engineers of Wisconsin Local 139 and Local 420, see an opportunity to clog up the court system with yet another doomed challenge to Act 10 using the Janus v. AFSCME case in the U.S. Supreme Court as a pretense.

Two other cases brought by unions to bring down Act 10 failed in 2014 when the landmark reform was found constitutional by the Seventh Circuit Court of Appeals and the Wisconsin Supreme Court.

“Unions want the government to force citizens to join their organization because the unions know that if citizens are given the freedom to choose, most will choose to tell the union to leave them alone,” said MacIver Institute President Brett Healy.

The numbers prove it. Following the enactment of worker freedom laws in Wisconsin, overall union membership in Wisconsin has declined from 354,882 members in 2010 to 218,233 in 2016, a drop of 38.5 percent.

The voluntary exodus from unions isn’t stopping their over-the-top rhetoric. “Public employees’ livelihoods have been under attack for seven years under Act 10,” said IUOE Local 420 Business Manager Mark Maierle in a press release.

Act 10 required government employees to pay just 6 percent towards their retirement and 12 percent of their platinum health insurance.

“Only unions would have the audacity to say their rights have been violated because they are now required to regularly ask their members if they want a union,” Healy said.

“These unions are desperately clinging to the hope that somewhere, somehow, a like-minded judge will finally get tired of the endless lawsuits and appeals and just give in,” Healy said. “The highest courts in the state and nation have made it clear: Act 10 is constitutional. Not only is it constitutional, but it’s a taxpayer-friendly reform that has saved hard-working Wisconsinites more than $5 billion and helped our state enjoy budget surpluses for years. More important, Act 10 put taxpayers back in charge of our government,” Healy said.

February 13, 2018 | MacIver Report

The MacIver Report: Wisconsin This Week – Seven Years Of Act 10 (And A Silly Season Update)

Team MacIver celebrates the seventh anniversary of the introduction of Act 10 with a walk down memory lane and fond memories of throngs of protesters taking over the Capitol in 2011. But back here in 2018, it’s another kind of Silly Season at the Capitol with plenty of new spending schemes. Speaking of silly, the team also talks about some outlandish statements by liberals running for governor. That, a look at the new bill to open an investigation into the John Doe investigators, and a look at the packed Capitol calendar in this week’s MacIver Report!

February 12, 2018 | By Chris Rochester

Remembering Act 10: Seven Years Later, More Than $5 Billion Saved

MADISON, Wis. – Seven years ago, Wisconsin’s newly elected governor, Scott Walker, introduced his plan to reform collective bargaining for public workers and turn the state’s fiscal picture around. That landmark reform came to be known as Act 10. Despite the ensuing turmoil, the law has been instrumental in reversing Wisconsin’s financial fate.

MacIver was there throughout the Act 10 riots. Lest we start to forget, take a walk down memory lane with some of our top video stories from seven years ago.

On Feb. 11, 2011, Walker first introduced his proposal to limit collective bargaining for government workers and require them to contribute to their own insurance and pensions.

As protesters flooded the Capitol, they were joined by students whose teachers cancelled class and brought them to protest – but the students MacIver talked to seemed unaware of why they were really there.

We also discovered a group of men and women in lab coats purporting to be doctors who were handing out medical excuse notes to government workers skipping out on work to protest, without examining the ‘patients.’ Within the next two years, most would receive reprimands from the state and some would lose up to $4,000 from their jobs at UW.

More than a week into the riots over Act 10, protesters still hadn’t left. In fact, they had set up camp inside the state Capitol and formed their own self-contained society and government. Some public officials were embarrassed by this situation, but as more people began to see what was really going on at the Capitol, public support for the occupiers eroded.

Public education was crippled and schools shut down as teachers skipped class and threatened to go on strike at the protests’ peak. Teachers admitted on camera that they were doing it for themselves at the expense of their students. The statewide closings added to mounting public disapproval of the protesters.

When Act 10 passed, the occupation ended, but the protests continued for next year and a half. The union movement was dealt a deathblow in the summer of 2012 when Governor Walker became the first governor in US history to survive a recall election. Some people, however, couldn’t accept it was all over. Here is a classic MacIver video of one protester’s reaction.

Despite all the turmoil, the steadfastness of Walker and legislators paid off for Wisconsin taxpayers. In 2016, a MacIver Institute study found Act 10 had saved a cumulative $5.24 billion over the previous five years, a number that has surely grown in the years since.

Watch our complete video coverage in chronological order here.

August 29, 2017 | By M.D. Kittle

Kooyenga: ‘Wealth Tax’ Hits Middle Class, Too

[Madison, Wis…] They call it the “wealth tax,” but Wisconsin’s alternative minimum tax is ensnaring more middle-income earners.

And state Rep. Dale Kooyenga (R-Brookfield) is on a crusade to kill what’s left of the AMT.

“I’ve been working on this for seven years, and so now is the time to get rid of this tax,” Kooyenga, a member of the Legislature’s Joint Committee on Finance and the celebrated “CPA Caucus” told MacIver News Service this week.

Kooyenga believes “the future is now,” but it appears a few Republican senators want to hold onto the approximately $6.7 million per year the alternative minimum tax still sweeps up.

As noted by Kooyenga and Sen. Howard Marklein (R-Spring Green) in their 2015 column, “Wisconsin’s Tax Code: The Good, The Bad, & The Ugly,” Wisconsin remains one of just six states with the tax system. Those states include some of the most notorious tax-and-spenders, such as California and Connecticut.

The AMT, a kind of second income tax, adds normally tax-free money back into an individual’s adjusted gross income. The tax uses a different set of rules than the standard income tax to calculate taxable income after allowable deductions. Some things can be deducted under AMT, but some things can’t. In fact, its purpose and pursuit is to make sure “certain taxpayers” don’t use tax incentives to escape the state income tax.

Taxpayers affected by the AMT “pay the higher of either their tax calculated under regular income tax rules or their tax calculated under the alternative minimum tax rules,” the Tax Policy Center states on its website.

While the majority of AMT payers post higher gross earnings, the law is spreading its taxing talons into the incomes of retired teachers, the elderly, and those hit with high medical costs.

The Tax Policy Center has described the AMT as “the epitome of pointless complexity.”

Kooyenga noted a retired Wisconsin school teacher whose state pension was caught in the AMT after her husband passed away and she had to sell his business under duress. The tax code generally allows a loss reported on the sale of a business to be carried forward to lower taxes on other income categories, like a school teacher pension.

“People think this (the AMT) is for wealthy businesspeople. Here’s a retired school teacher, and a retired school teacher who is getting a higher tax because of the alternative minimum tax,” the lawmaker said.

In another case, an elderly man lost the majority of his savings – a half million dollars – investing in his son’s failed startup. That net operating loss was eligible to be carried forward to lower his taxable income, but his financial circumstances triggered the AMT.

“So once again here’s an elderly individual that’s living on his Social Security and investments and he gets caught in the alternative minimum tax because he had a business loss,” Kooyenga said.

The federal alternative minimum tax, supposedly “fixed” by Congress in 2012, is impacting middle-income earners everywhere.

“While the AMT hits a much larger percentage of million-dollar households, those who earn less than $200,000 actually account for a much larger number of people who actually pay the alternative tax,” wrote Jeanne Sahadi of CNN Money in 2015.

The Tax Policy Center notes AMT is more likely to hit taxpayers with large families, those who are married, and those who live in high-tax states. In 2017, families with two children are almost three times more likely to pay the AMT than childless couples, according to the center. Families with three or more children are four times more likely to pay the tax than those without children.

“Taxpayers can deduct state and local taxes under the regular income tax but not the AMT. Thus, in 2017 taxpayers in high-tax states are more than twice as likely to be on the AMT as those in low-tax states,” the Tax Policy Center states in its latest briefing.

Kooyenga’s plan pays for the elimination of Wisconsin’s alternative minimum tax through the elimination of a tax credit. Businesses that have operations in Wisconsin and other states – not including border states with tax reciprocity agreements – receive a dollar-for-dollar tax credit on those outside tax payments. The same holds for Wisconsin residents working in other states not covered under reciprocity. That would end under Kooyenga’s proposal. The elimination of the tax credit would save the state $20.3 million over the biennium, according to a legislative omnibus motion on state tax policy.

“We’re subsidizing other states with higher taxes,” Kooyenga said, pointing to high-tax states such as California and New York.

A decade ago the tax credit didn’t cost much. Wisconsin’s tax rate was higher, so the credits were nearly negligible. But several rounds of income tax cuts since Gov. Scott Walker took office have led to rising tax credit costs through the state reimbursement program.

The Legislature has made strides over the years in limiting the AMT’s impact. At one point, the tax grabbed north of $100 million in revenue over the budget cycle, Kooyenga said.

But a few senators, according to Kooyenga, may be pausing at full elimination. He said he’s not sure who is shooting it down in the “small room” of the Senate Republican caucus, but he thinks passage could be in jeopardy. If it’s a question of optics – that the left will complain Republicans are offering more tax breaks to the rich – Kooyenga said lawmakers need only look to the total impact of a tax that is complicated at best, inequitable at worst.

Maintaining the alternative minimum tax, even with the relatively tiny revenue it generates today, sends the wrong message from a state that has been cutting taxes over the past six years, Kooyenga said. Just last week, the Joint Finance Committee moved to eliminate the state forestry mill tax.

“There’s a lot of states out there that have no income tax. Wisconsin has two of them,” he said.

April 26, 2017 | By M.D. Kittle

Act 10 Battle: What We Have Here Is a Failure To Comply

[Madison, Wis…] – Call it a communication gap, but 12 percent has suddenly become contentious again.

Some public school officials are upset with a carrot and stick in Gov. Scott Walker’s 2017-19 budget that ties additional state aid payments to compliance with a key component of Act 10 – Walker’s 2011 law that reshaped the negotiating relationship between the taxpayer and public employees.

Act 10, among other reforms, prohibits local government employers that health insurance through the state’s Group Insurance Board to pay more than 88 percent of the “average premium cost” of plans in the program. Those general government employees are required to pay at least 12 percent of the premium cost.

The exception includes law enforcement personnel, firefighters and transit workers.

Walker’s budget calls for $649 million in increased state public education spending, but districts with health insurance plans outside of the state Group Insurance Board system would have to comply with the 12 percent premium provision in order to pick up additional per-pupil aid. Currently, the 12-percent requirement does not apply to those districts on independent plans.

The Madison Metropolitan School District has been in a lather over missing out on $16 million in state aid if it continues to absorb more employee health insurance obligations than would be allowed.

Madison’s progressive school board had long resisted making employees pick up their premium costs, instead asking taxpayers to foot the bill. Last year, teachers began paying 3 percent of their premiums.

Mike Barry, budget director for the Madison school district, told the Wisconsin State Journal that the district found ways to offset the cost of covering employees’ required share. Barry described it as “the Madison Way.”

The Madison Way calls for yet another property tax increase ($94 on an average home), at least under the recent “balanced budget” proposal presented by Madison School District Superintendent Jennifer Cheatham.

Cheatham’s plan seeks an $8.4 million increase over this school year’s $389.7 million operating budget.

While the district is contemplating following the 12 percent compliance provision, it again intends to do so in “the Madison Way.”

“The budget for next school year also could require district employees to pay 12 percent of their health insurance premiums — though the budget plan recommends doing it in a way that wouldn’t actually take any more money out of district employees’ pockets,” the State Journal reported. “Instead, the district could find cost savings and use them to raise wages and salaries.”

Republican supporters of Walker’s compliance requirement argue that the law is the law, and that it shouldn’t be difficult to follow.

But some contend that the 12 percent requirement is too rigid, particularly in a highly competitive world of teacher recruitment. More so, districts that cut costs elsewhere to make up for covering more than 88 percent of employee health insurance premiums shouldn’t be penalized, they argue.

The potential bigger problem, according to a Wisconsin Legislative Council memo obtained by MacIver News Service, is the broader compliance language in Walker’s budget. It states that any district that receives the pledged additional per-pupil state aid must require its employees to pay at least 12 percent of “all costs and payments associated” with employee health care coverage plans.

That raises questions about the intent of the bill.

“This language is similar to, but does not precisely overlap, the Act 10 requirement for local public employers who are participating in the state’s program to pay no more than 88% of the average premium cost of plans offered in the program,” states the March 1 Legislative Council memo.

The broader “all costs and payments” could be “interpreted as being more expansive than applying only to premiums and like contributions,” the memo states.

What about the variety of health plan designs operating outside of the basic premium model? What about cost sharing of deductibles, co-payments, or co-insurance? Health savings accounts? Are these areas included, the Legislative Council memo asks. If not, is there a disparity in public employee/employer payments under the compliance language?

Among other possible revisions, the council proposes the new requirement provide a “similar effect,” including only traditional premiums and like contributions and excluding high deductible plans and out-of-pocket costs.

Walker earlier this week said he hopes the Legislature keeps some of the measure in.

“If they want to tweak it slightly, that’s fine,” the governor said Monday.

Members of the powerful budget-writing committee have said they plan to keep intact the governor’s $649 million increase for K-12 schools, but he believes the funding hike should come with accountability requirements like the Act 10 compliance proposal.

School districts would have to certify that school employees are paying the required percentage of health care coverage costs, a requirement known as the “Act 10 compliance provision.”

Accountability has been a sore spot. The MacIver Institute has conservatively estimated Act 10-related savings at more than $5 billion, but that information has been extremely difficult to come by. Savings stem from employee contributions to health care premiums, state pensions, and limits on wage increases, among other public sector collective-bargaining reforms.

“I just believe that when we’re putting more in, whether it’s K-12 or technical colleges or the University of Wisconsin System, that we should have some degree of assurance that it’s going to be in performance, that it’s actually going to deliver the promises made,” Walker said. “And in this case, I think using the tools that were given to school districts under Act 10 ensures that those dollars will go into the classroom where they’re intended to show student success.”

February 8, 2017 | By Ola Lisowski

Walker’s Education Budget: Act 10 Compliance Required for Per-Pupil Funding Boost

The Governor’s 2017-19 budget proposal for education puts hundreds of millions more dollars into K-12 and higher education, and ties additional per-pupil revenue to Act 10 compliance

[Madison, Wis…] Gov. Scott Walker introduced his 2017-19 budget proposal on Wednesday, and as expected, the document includes massive spending increases for education. The proposal calls for $648.9 million in new state aids for K-12 education and more than $100 million more towards the UW System. Increases to per-pupil aid will be sent to school districts under the condition that they certify to the Department of Public Instruction that they met pension and healthcare savings made possible in Act 10.

Some school districts – most notably, Madison Metropolitan School District – do not currently require their employees to contribute towards their healthcare premiums. Under the proposal, MMSD and other districts not currently in compliance would need to adjust those requirements in order to receive the bump in per-pupil spending. Employees would need to start paying roughly 12percent of their healthcare premiums and 6 percent of their pensions for school districts to receive the extra dollars.

All told, the $11.5 billion education proposal is the largest investment in K-12 education Wisconsin has ever seen.

In the past several months, the governor has repeatedly stated that he hopes to send more money to public schools in this budget. The new spending – nearly $649 million – is more than three times larger than the 2015-17 budget’s increase, which grew public school spending by $203 million overall.

The proposal includes a $509.2 million increase in per-pupil state aid across the biennium, including a $200 per-pupil increase in fiscal year 2018 (FY18) and a $204 per-pupil increase in

Gov. Walker’s 2017-19 budget proposal sends $648.9 million more to K-12 schools and over $100 million to the UW System. FY19. Similar to his 2015-17 proposal, the per-pupil increases will go into categorical aid funding rather than the general fund.

The 2015-17 budget increased funding by $150 per-pupil in FY16 and by $250 per-pupil in FY17 for a total of $338.1 million. In November, DPI requested a total of $460 million for per-pupil aid, meaning that the Governor’s proposal allocates an additional $49.2 million more than DPI asked for.

The K-12 proposal puts state funding at 64.6 percent in the second year of the biennium, the highest level since FY09, when state K-12 contributions amounted to 65.8 percent of funding.

In line with state law, students who use vouchers for their education would receive a per-pupil increase of $217 in each year. The budget proposal does not make any other significant changes any of Wisconsin’s parental choice programs.

Focus on Milwaukee

The budget proposal offers significant investment in Milwaukee Public Schools (MPS), including a new $5.6 million incentive fund for which failing public, charter, and choice schools will be able to compete. This performance-based funding is the latest in a line of ideas about how to reform Milwaukee’s troubled schools. Gov. Walker said that he would opt to improve schools by introducing more market competition rather than by making changes to MPS’ governance, such as reforming its school board.

Under the proposal, Milwaukee would also receive $2.8 million for its summer school program, including $1.4 million in each fiscal year for grants to schools that have plans to increase student achievement in summer school. Another $500,000 is allocated for FAST, a mental health initiative that addresses family functioning, abuse, delinquency, and maltreatment issues at home. All told, nearly $9 million is targeted directly towards Milwaukee.

Mental Health Initiatives

The Governor’s proposal also creates a new categorical aid program for school social workers. Under his proposal, the new program receives $3 million. Another $2.5 million is allocated for Mental Health Expansion, a new grant program that helps districts connect students with mental health professionals. Finally, $1 million is included for mental health screening and training opportunities for district employees.

Workforce Development

In line with his workforce development initiatives, Walker proposes putting more than $10 million in training for students, keeping in line with his viewpoint that students must begin preparing for their careers at an earlier age. The brand new Early College Credit Program would get $2.9 million to help students receive college credit while in high school. The Special Education Transitional Jobs Program would receive $7.6 million towards awards for school districts who help students with disabilities successfully obtain employment.

Rural Schools

In the last few months, Walker has said that he would focus on rural schools in the coming budget. Indeed, his proposal offers massive commitments towards rural areas through sparsity aid, which is funding for small rural districts with fewer than 745 pupils and a population density of less than 10 pupils per square mile of district attendance. Walker’s proposal increases Sparsity Aid by $20 million, bringing the fund to $55.4 million over the biennium, or $12.3 million more than DPI requested. The 2015-17 budget allocated $35.3 million to Sparsity Aid across the biennium.

The proposal increases per-pupil reimbursement rates to $400 per-pupil for districts that previously qualified for Sparsity Aid. In order to address this particular aid “cliff,” created when districts tip just over 745 pupils and thus no longer qualify for any additional aid at all, Walker’s proposal creates a new tier of Sparsity Aid funding for districts with 746-1000 pupils at $100 per-pupil.

Rural school districts would see a 100 percent reimbursement from the state in the High Cost Transportation Aid program, which provides additional transportation funding to districts with a density of 50 pupils per square mile or less and transportation costs that total more than 150 percent of the state average. Currently, this fund is reimbursed at about 60 percent. Walker’s proposal offers $25.4 million over the biennium, an increase of $10.4 million over the previous budget. At $92,000 across the biennium, DPI’s budget proposal for pupil transportation is fully funded under Walker’s proposal.

As expected, the proposal offers significant funding for broadband and technology advancement – $13 million more is added to the Broadband Expansion Grant Program and $22.5 million is allocated to Teacher Training Grants through Technology for Educational Achievement (TEACH). TEACH lets schools apply for grants and reimburses districts for improving information technology infrastructure. Another $3 million is allocated over the biennium for the Teacher Training Grant Program, which awards grants to districts to train teachers in new educational technology.

The proposal also offers a few provisions that would aim to help rural school districts with regulatory obligations – school districts would be allowed to share or jointly provide certain specialists rather than be required to have specialists on staff at each district. By law, each district is required to hire individuals for roles such as reading specialist, emergency nursing services, guidance and counseling, and attendance officer.

Finally, the budget proposal adds another $1 million for the Fabrication Labs grant program, paid through the Wisconsin Economic Development Corporation.

University of Wisconsin System

In line with his announcement that his administration will not only freeze tuition at the UW System, but cut it this budget, the Governor’s proposal includes a 5 percent tuition cut for resident undergraduate students in the second year of the biennium. The 5 percent tuition cut “costs” an estimated $35 million, which Gov. Walker will pay for by increasing the UW’s general purpose revenue funding. The $35 million for the tuition cut is in addition to a planned $100 million increase in state commitment to the UW. The proposal includes a tuition freeze in the first year of the biennium.

The other major news for the UW System is a proposed new requirement that schools come up with plans for students to complete Bachelor’s degrees in three years. Under the proposal, the UW System will have to create pathways to three-year degrees for 10 percent of programs by January 1, 2018, and for 60 percent of programs by the start of 2020.

Last budget, the UW received $2.05 billion in state funding. This budget, the System receives $2.2 billion in general public revenue across the biennium, a 7 percent increase.

Some of the funding will come in the form of performance-based grants totaling $42.5 million. Rather than simply cutting schools a blank check, the universities will get to receive money based on how well they do on certain metrics. The grants would be distributed by the Board of Regents to the different UW System institutions based upon performance on improving affordability, work readiness, and other state priorities.

UW students would be allowed to opt out of allocable segregated fees, which provide support for student activities such as clubs and organizations. Under the proposal, the UW System would be required to outline plans to allow students to complete their bachelor’s degrees in three years.

The Governor’s proposal offers several new pots of money for research at the UW System. Alzheimer’s research at UW-Madison would receive $100,000 across the biennium, and $200,000 is allocated for the Wisconsin Rural Physician Residency Assistance program.

Make sure to keep following the MacIver Institute for updates as the state budget continues to take shape.


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