Act 10 & It's Working Wisconsin MI Research

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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