Tag Archives: Act 10

Jury Rules Against Retired Teachers

Good. This is an important case.

WEST BEND –  A lawyer for 90 retired Germantown teachers asked a jury Monday to award them more than $9 million in damages from their former employer, who the retirees say took their affordable long-term care insurance in a political power play after passage of Wisconsin’s Act 10 law.

The district’s attorney urged jurors to reject liability under all three of the plaintiffs’ theories. “They ignored it (a warning that the insurance plan could terminate) and now they want to blame the school district,” Kevin Pollard said.

The lawyers’ closing arguments came after a weeklong trial, but it took the jury just an afternoon to decide the district owed nothing to the retirees.

Basically, here’s the deal… nearly 20 years ago, the Germantown school district agreed to give the employees long-term care insurance. As part of that, employees who retired were allowed to continue to purchase the same insurance at the same rate as current employees. After Act 10 empowered the school board, they revised their benefits package and eliminated the long-term care insurance option, thus also eliminating it for retirees. The insurance company, WEA Trust, would allow the retirees to maintain their insurance if they paid all of the premiums up front – about $35k – but many of the retirees couldn’t afford it continue the coverage.

The retirees’ argument was essentially that once a benefit was granted, the school board and taxpayers were obligated to continue that benefit for all time. Obviously, if the retirees were successful in their argument, it would severely limit the ability of school boards to make adjustments to benefit packages over time to manage costs and expectations. Such a ruling would have also hurt future employees because it would have discouraged school boards from ever offering additional benefits. After all, would you want to offer a creative new benefit if you knew that it would obligate the taxpayers to pay that benefit for eternity? Also, if a benefit granted can never be rescinded, school boards would have a hard time replacing one benefit with another one that the employees want more.

Thankfully, the jury had some common sense.

White House Taking Lessons From Wisconsin

Good!

Walker said he spoke with Vice President Mike Pence during his Friday visit to the White House about his 2011 move to sharply limit collective bargaining for most public workers in Wisconsin, known as Act 10.

The governor said he and Pence talked about “what we’ve done here in Wisconsin, how they may take bits and pieces of what we did with Act 10 and with civil service reform, and how they could apply that at the national level” for federal workers.

“It’s something that they’re interested in. The vice president has brought up before,” Walker said. “It’s certainly something we’re willing to offer our assistance on, particularly if it helps improve not just the nation, but in turn helps improve the ability to be better stewards of the taxpayers’ dollars here in Wisconsin.”

Another Act 10 Case Settled

Excellent. Hopefully other districts will follow Neenah’s lead.

NEENAH – The Wisconsin Supreme Court has declined to review a case brought by Neenah teachers over a change in retirement benefits.

The court’s denial ends a process that has lasted nearly four years, the district said in a news release Friday.

After Act. 10 was passed, Neenah was prohibited from bargaining or contractually agreeing to any provisions other than base wages, according to a state Court of Appeals document.

“In response, Neenah drafted an employee policy manual, which established policies and procedures to address benefits and the terms and conditions of employment that had previously been addressed” in the collective bargaining agreement, the document states. Neenah then voted to change the retirement benefit plans, which applied to those retiring on or after Oct. 2, 2012.

The new plan significantly reduced retirement benefits.

The teachers argued that the original retirement plan was promised to teachers in return for lower salaries and benefits.

A Winnebago County Circuit Judge dismissed the case, a decision the state Court of Appeals for the Second District upheld, though on different grounds.

Managing Under Act 10

The Milwaukee Journal Sentinel is running a pretty good series about the impact of Act 10 now that we’re 5 years into it. It points out some of the consequences that some people argue are positive and some argue are negative. For example, since Act 10 teacher turnover has increased as districts compete for the better teachers and/or teachers who teach a specialized subject. Some argue this is bad because it creates more turmoil in the district that loses good teachers and that poorer districts struggle to attract those good teachers. I argue it is a good thing for a freer marketplace for teacher labor to exists because a freer marketplace allocates scarce resources in the most efficient and equitable manner possible. And as the marketplace drives up wages for needed skillsets, it will attract more teachers into that field.

Another example is how 40% of districts have implemented some form of merit pay for teachers. Some perceive that as a bad thing because they believe that merit pay is untenable in an education setting. I think it is a good thing because compensation is the best way to drive the behavior you want. My only lament is that the other 60% of school districts have not moved forward on some form of merit pay.

In any case, many folks, including myself, are frustrated that school administrators have failed to take more advantage of the power given to them in Act 10 to improve outcomes for students and control costs. It occurred to me today… I don’t think many of them know how to manage in this environment.

Before Act 10, school administrators did not really control 80%-85% of their budgets because they were dictated by the union contracts. They never had to create and actively manage compensation plans, incentive plans, performance, recruiting, retention, staffing, etc. At least, their range of decision-making was severely limited. For some of these school administrators, they have been working in schools for 20+ years and truly are just ignorant of how managers function in the private sector. They aren’t more actively using the tools of Act 10 because they flat out don’t know how.

I would encourage school boards to push their administrators to get management training or exposure from the private sector. It also wouldn’t hurt to hire a few administrators who haven’t spent their entire careers in education. Good leadership and management skills transcend specific industries. Yes, there will be a learning curve, but there’s already a learning curve for lifelong educators in this new environment.

Just Scratching the Surface

Act 10 allowed local governments a lot more flexibility to manage their affairs in order to control costs while providing services. Many of us have been saying for years that almost none of our local governments have been using the full power of Act 10. Some have been better than others, but I can’t think of one that is doing everything it can.

Here is one example. The West Bend School District has actually been better than most school districts at using Act 10. They have done things like add a wellness clinic to provide convenient care to their employees and lower costs and implemented merit pay for employees. But I notice this in the West Bend Daily News:

A family plan now has an added cost of $20 a month. A single plan is at $5.

“Our families have never contributed to the dental plan,” Elliehausen said.

Really? Nothing? When something is free, people lack the incentive to use it judiciously. And it is virtually universal in the private sector that employees contribute to their dental plan. This is a small step to normalize compensation plans that Act 10 allows the School Board to unilaterally make, but the West Bend School District has failed to implement it until now.

Act 10’s Effect on the Teacher Workforce

Interesting findings from The Wisconsin Institute of Law and Liberty.

Some of the findings include:

  1. When compared to neighboring states, Act 10 had no significant impact on the number of students per school teacher.  Put another way, changes in classroom size did not differ significantly from changes in neighboring states.
  1. When compared to surrounding states, we did not find any significant effect by Act 10 on school district spending on teacher gross salaries (incl. bonuses, some pay for performance, and stipends).  We did find an effect by Act 10 on base salaries.  We suspect that this reflects the new marketplace for teachers post-Act 10 where districts are moving towards pay-for-performance, bonuses, and stipends, as described in a previous WILL study.
  1. There was little difference in the change in average teacher experience before and after Act 10.
  1. There was little difference in the change in racial makeup of the teaching workforce before and after Act 10.
  1. Wisconsin’s teacher decline began well before the implementation of Act 10.

‘stallis School District Shortchanges Teachers

Well, this stinks.

West Allis-West Milwaukee, which has been digging itself out of a $14 million deficit over the past year, alerted teachers in an email last week that those who normally take their summer pay in a lump sum in June would receive just a fourth of their expected paychecks Thursday, with the balance to come a week later.

What’s more interesting than the actual impact is the reason for it. Yes, it stinks that the teachers will not receive their pay as scheduled, but they will get it all a week later. It’s an inconvenience, but it’s not the end of the world.

Also, the way the school district handled it looks pretty poor.

She said many teachers were blindsided by the news, which was buried in a “budget update” emailed to district employees June 9, the last day of school.

That’s poor management. Whenever something changes that impacts people’s compensation, the organization has a responsibility to REALLY emphasize it so that people can make arrangements. Burying it in a budget update, assuming that’s an accurate reflection of the communications, is bad form.

The Union immediately jumped to blaming this on Act 10:

Steve Cupery, the Wisconsin Education Association Council representative for West Allis-West Milwaukee teachers, said the district has agreed to work with individual teachers who can demonstrate a hardship.

But he blasted the delay as a byproduct of Act 10, the 2011 state law that eroded the bargaining rights of public employee unions.

“It’s just one more example of the consequences of Act 10, how it hurts people and will dissuade people from going into the profession,” Cupery said.

But the truth is that the district has been horribly mismanaged for years and the bills for that mismanagement are coming due.

West Allis-West Milwaukee’s issues appear to stem from a series of costly financial decisions made under then-Superintendent Kurt Wachholz, who retired unexpectedly in the summer of 2014. Among them, according to Chromy: the purchase and renovation of a new building, cost overruns on staffing and benefits, and several facilities projects.

The largest piece of that — about $5 million — was for a debt payment related to a yearslong lawsuit over a risky investment scheme that cost West Allis-West Milwaukee and four other districts a total of $200 million a decade ago, Chromy said.

“Since the verdict had come, there was some anticipation by our legal team that that payment would come in … to offset that cost,” but that didn’t happen, Chromy said.

According to an audit released late last year, the district had overspent its 2013-’14 and 2014-’15 budgets by a total of $14 million, wiping out its entire reserves.

A good description of the financial decisions that led to that huge debt payment can be found in the NY Times, but the gist is this: in 2005, several school districts, including West Allis, needed money to fund their huge pension obligations to retirees. In order to make money, they borrowed money to invest in some risky investments. The thought was that the money received from the investments would be enough to pay back the debt with interest and still have more money left over. It would be like you getting a cash advance on your credit card to buy Powerball tickets with the hope that your winnings from the Powerball would be enough to pay back the credit card company and leave you with a profit.

The districts’ luck was bad and the investments went belly up, leaving the districts with a big loan to pay back for which they had no alternate source of income to fund the payments. Thus, they are having to take money out of the operating budget, which is supposed to be used for things like paying teachers, and use the money to pay off debt so that the district doesn’t default, thus destroying their ability to borrow in the future. The district won a lawsuit over this, but the award has not been paid yet.

On top of that bad decision, the district went on a building spree and racked up a myriad of other bad decisions.

The teachers are getting the short end of the stick here, but it has nothing to do with Act 10 or a lack of funding. It has everything to do with extremely poor management by an incompetent school board and administration.

Teachers Unions Focus on Community

Here’s another great byproduct of Act 10.

But the influence of unions has diminished in Madison. WEAC spent about $2.3 million on lobbying in the two legislative sessions leading up to the passage of Act 10. But by 2013-14 the union spent just $175,540, and so far has spent $93,481 in 2015-16.

Union leaders say they instead are focusing on local communities. The associations also invest in training and other support services for members.

“We offer professional development for things like license renewal, classroom management or teacher effectiveness,” said Cathey, who also is a Wisconsin representative on the National Education Association’s board and was in Washington, D.C., last week. “In the past it was more about politics, but now it’s more community oriented.We want to talk about our schools and share who we are with the community.”

Despite drops in membership numbers, Cathey said GBEA is more active than before Act 10.

For a lot of union members, they are getting better services from their unions. The unions have to provide better services for their members in order to justify their existence.

Act 10 Saved Wisconsinites Billions

Wow. That’s a lot of cash.

Five years ago, Gov. Walker and the Republican legislature started their odyssey that resulted in the signing of Act 10, a milestone law that has saved Wisconsin taxpayers $5.24 billion, according to a new analysis by the MacIver Institute.

The analysis found that Wisconsin saved $3.36 billion by requiring government employees contribute a reasonable amount to their own retirement. The analysis also estimates local units of governments saved an additional $404.8 million total by taking common sense steps like opening their employees’ health insurance to competitive bidding. Milwaukee Public Schools saved $1.3 billion in long-term pension liabilities, and Neenah saved $97 million in long-term pension liabilities in addition to other savings.

These taxpayer savings are only possible thanks to Act 10.

Act 10 Leading to More Competitive Pay for Teachers

Excellent.

Whereas nearly all teachers were once paid based on experience and education level, some Wisconsin school districts are experimenting with new ways to pay teachers.

In the Oregon School District, for example, technology education teachers receive $10,000 in supplemental pay annually for four years and a $2,500 annual retention bonus after that to remain in the district for four years.

School boards are also developing new compensation plans that take teachers’ evaluations or leadership qualities into consideration when figuring raises. Those new pay plans can cost a district more in salaries in some cases.

It’s great that school districts have the latitude to adjust their compensation plans to their needs instead of having a blanket tiered structure that doesn’t reflect the reality of the labor market.

But of course, here is the real reason that there was so much consternation over Act 10.

Meanwhile, the influence of teachers at the state Capitol has diminished. The state’s largest teachers union, the Wisconsin Education Association Council, spent $2.5 million and $2.3 million in the two legislative sessions leading up to the passage of Act 10. But by 2013-14 the union spent just $175,540, and so far has spent $93,481 in 2015-16.

Follow the money… so teachers with skills that school districts need are benefiting from the flexibility afforded in Act 10, but the union (read: special interest group) doesn’t have as much money to lobby. Why are we supposed to be upset?

 

Act 10 – Five Years Later

MacIver Institute is kicking off a month of celebration. I don’t think Healy is overstating just how important Act 10 was for Wisconsin.

“Act 10 has proven to be one of the most important public policy ideas ever introduced in Wisconsin and clearly the most successful,” said Brett Healy, president of the MacIver Institute. “Big labor and its special-interest allies all tried to scare the Wisconsin public, claiming the sky would fall if Act 10 passed. They were wrong, and Wisconsinites deserve special credit for standing up to the labor bosses and seeing through their lies.”

“Wisconsin taxpayers owe Governor Walker and the legislators who voted for Act 10 a special debt of gratitude for all the abuse they took,” Healy continued. “If Governor Walker and the Republican legislators had not stood their ground, if they had not blocked out the threats and verbal abuse from the professional protesters, the Wisconsin taxpayer would be billions of dollars worse off today – billions of dollars!”

“Now, thanks to Act 10, government employees in Wisconsin contribute a modest amount towards their health insurance and their retirement,” Healy said. “School districts can competitively bid out their health insurance business, personnel decisions are based on merit instead of seniority, and teachers with expertise in sought-after fields are seeing a greater demand for their services and their salaries are on the rise.”

“That’s why we’re celebrating February 11 – March 11 as ‘Wisconsin Taxpayer Appreciation Month.’ That time of turmoil yielded a long period of budgetary calm that Wisconsinites will enjoy for as long as they continue to elect fiscally responsible leaders,” Healy said.

Judge Dismisses Lawsuit Stemming from Act 10

It is good to some common sense in the courts. Employers, including school districts after Act 10, are entitled to modify benefits. The notion that once a benefit is given that it must be maintained for all eternity is the kind of delusional thinking that only seems to make sense in a union hall.

 Six Neenah teachers will appeal after a Winnebago County Judge dismissed their case against the Neenah Joint School District last week.

[…]

The school district changed its retirement benefits after Act 10 to avoid more than $100 million in costs over the next 22 years. The decision reduced annual employee stipends and health insurance coverage from a possible $300,000 per employee to $99,000 or less per person.

The school board is pleased with Key’s decision, board president Scott Thompson said in a statement.

“Tough choices don’t make everyone happy, but it would be impossible to operate the district if we got sued every time someone disagreed with our decisions,” he said. “We modified the retirement plan to allow the district to continue a healthy financial state while maintaining an early retirement plan — in addition to the state mandated retirement benefits — for our teachers.”

Also, notice the numbers in the health insurance coverage. Here’s a better explanation about what they changed:

The district has long offered an early retirement plan, separate from the state’s pension fund. Benefits could total $300,000 or more for each employee.

According to the district, the plan cost taxpayers almost $5 million annually. It also meant the district had a more than $184 million unfunded liability.

Back in October, the school board changed the lucrative plan for qualified employees. The new plan got rid of yearly stipends and health insurance.

Instead, teachers were offered payments of $99,000 or less. That decreased the district’s liability to just more than $100 million.

What the teachers are suing over is a change in their lavish secondary retirement plan on top of their already generous state pension plan.

Whenever I look at the details of how out of control some of these local units of government were (and still are), I am filled with another wave of gratitude for Act 10.

Dane County’s Gift to Union

Idiots. The Dane County supervisors have intentionally tied their own hands and limited their ability to manage the county.

As their years-long holdout against Wisconsin’s 2011 collective bargaining law ends this month, thousands of public-sector workers in Dane County will lose union protections. But some significant and unusual non-union rights will replace them.

In consultation with employee union members, the county board has adopted rules that greatly limit the authority it could have claimed in deciding disciplinary matters and employee disputes over pay, benefits and working conditions.

Instead of being able to decide those things unilaterally as Act 10 allows, the county passed an ordinance and employee handbook that allows employees to bring in impartial arbitrators whose awards can be rejected by the county board only in limited circumstances.

County and union officials say the rules are meant to re-create, to the extent legally possible, the union rights taken away by the controversial state law that banned collective bargaining and payroll dues collections for most public employees.

Neenah Cuts Pay for Underperforming Teachers

The fact that it is news that three – THREE – teachers in the entire state are only now seeing a reduction in compensation due to poor performance is an indication of just how cushy their compensation plans were. This is something that happens on a regular basis in other parts of the economy.

Three teachers in the Neenah Joint School District received pay cuts this year, a first in the post-Act 10 era for educators who formerly had one of the most lucrative salary-and-benefits packages in the state.

The educators had less-than-satisfactory job performances during the 2013-14 school year, said Jim Strick, the school district’s communications manager. They are now on an improvement plan, but Strick said he cannot comment on what could happen if the teachers don’t make progress.

Madison School District Sued for Illegal Contracts

This lawsuit appears to be more about making a point than anything else, but it is a point worth making.

A conservative legal group sued Madison’s school district, school board and teachers union Wednesday over what it calls illegal labor contracts the district continues to honor.

The lawsuit was filed by the Wisconsin Institute for Law and Liberty on behalf of David Blaska, a well-known conservative blogger living in Madison, according to Dane County Circuit Court records.

The suit alleges the district’s contracts with Madison Teachers Inc. for the 2014-15 and 2015-16 school years violate Act 10, Gov. Scott Walker’s signature 2011 legislation that all but eliminated collective bargaining rights for most public employees. Blaska requests a declaration that the contracts are illegal and void, and an injunction to prohibit the contracts from being enforced, according to a copy of the lawsuit provided by WILL.

Act 10 Created Teacher Marketplace

Heh.

“The great irony is that Act 10 has created a marketplace for good teachers,” said Dean Bowles, a Monona Grove School Board member.

Fellow board member Peter Sobol said though the law was billed as providing budget relief for school districts and local government, it could end up being harder on budgets as districts develop compensation models that combine their desire to reward good teachers and the need to keep them.

No, it’s not ironic at all. It is what naturally happens when a market is liberated from the shackles on union bondage. Good and great teachers will thrive under Act 10 while crummy ones will find new careers. It is great for the students.

As for it being more difficult for district managers to adapt to a competitive labor market… good. As with teachers, good administrators with thrive in such an environment. Bad ones with move on. Anyone who has worked in a competitive industry knows how this works.

All Act 10 did was introduce a smidgen of the free market to public schools and it is doing wonders to improve education.

Municipal Spending Down

Good.

The Wisconsin Taxpayers Alliance issued two reports this week, one showing municipal spending per capita declined 3 percent as Walker’s public union reforms and first state budget took effect, and the other measuring the state’s business climate.

According to the group’s annual MunicipalFacts report, cities and villages with at least 2,000 residents spent on average $823 per capita in 2012, down from $848 the year before. Per capita spending grew 2.2 percent on average in the previous six years. Spending dipped 1 percent in 2009, which was the first decline in more than a decade.

Curt Witynski, assistant director of the League of Wisconsin Municipalities, chalked up the reduction to a combination of factors, including “good management of public dollars by municipal elected officials, Act 10, strict levy limits and several other changes included in Gov. Walker’s first budget, such as the repeal of language requiring municipalities to maintain certain minimum spending thresholds on libraries, police and fire protection” and “the reduction in shared revenue and other intergovernmental programs like transportation aids.”