Act 10 Saves Elmbrook $5.3M in Benefit Costs

New report says the Elmbrook School District has seen a big reduction in pension and health care costs because of changes in state's collective bargaining law.

The controversial state law that eliminated most collective bargaining rights for school employees reduced benefit costs for the Elmbrook School District by about $5.3 million last school year, according to a report released Monday.

That labor cost savings came close to offsetting the approximately $5.5 million in state cuts to Elmbrook's maximum allowable revenue for the 2011-12 school year, according to the report by the Wisconsin Taxpayers Alliance.

Whether that trend of closing the gap will continue in future years is yet unknown, said Keith Brightman, Elmbrook's assistant superintendent for finance, operations and human resources.

The pension savings will recur annually, but further cuts in revenue authority and aid to public school districts could leave districts back in a hole. The governor will present the next biennial budget, including his educational initiatives and funding, as early as late January.

The Wisconsin Taxpayer Alliance report, which was based on data that public school districts provide to the state Department of Public Instruction, looks back at the first school year following the Act 10 adoption — the 2011-12 year.

Following Act 10 that year, Elmbrook saved about $2.7 million in pension costs and nearly $2.6 million in health costs, the report said.

Those "tools" were offered after the state lobbed about $5.5 million off the total revenue Elmbrook could collect from local school property taxes and other funding sources — a drop from about $79.1 million to about $73.6 million.

Savings split between pension, health costs

In the 2010-11 school year, Elmbrook paid about $3.1 million toward just the employee share of pension costs; in 2011-12 after Act 10, that dropped to about $366,000, the report said.

Elmbrook spent about $13.2 million on health care costs in 2010-11. That fell to about $10.6 million last school year. Elmbrook did not belong to WEA Trust like other districts; instead it saw its savings largely through changes to its health plan to add high-deductible health reimbursement accounts.

Elmbrook did increase the share its staff has to pay toward health insurance premiums, but not as high as the 12.6 percent Act 10 required state workers to start paying.

"We did raise the employee premium share to average about 8 percent," Brightman said. "Our goal was to be near the 12.6 level but we had more employees take the high deductible health plan and we incentivized that with the lower premium share."

The Wisconsin Taxpayers Alliance report is unclear, however, on how much of the savings occurred from Act 10 changes for existing employees versus savings from a large wave of retirements.

Elmbrook reduced its workforce by the full-time equivalent of 35 positions in the 2011-12 school year, from 848 FTEs to 813, the report says. Younger teachers were hired at lower salaries, and the district did not replace many teachers last year.

$366 million saved statewide

Statewide, school districts reduced benefit costs by $366 million this year, according to the report, which the organization says is the first in-depth look at the effect of Act 10 and the 2011-13 state budget on Wisconsin schools.

Most of the statewide savings come from districts no longer paying the employee share of retirement, the group said.

Of $366.3 million in reduced benefit costs, $240.7 million — or 66 percent — was from retirement contribution savings. Before passage of the 2011-13 state budget, most school districts and other governmental entities paid both the employee and employer share of retirement costs. Now public workers are required to pay the employee portion of retirement.

Because employees can no longer bargain over benefits under Act 10, many school districts increased health insurance co-payments, required higher cost sharing by employees or changed health insurance providers to reduce costs.

In 2012, public school health insurance costs fell $90.7 million, or 24.8%, from 2011 levels, the group said.

Other highlights of the report:

  • Total school district spending dropped $584 million in 2011-12, with 63 percent of that coming from benefit savings.
  • Lower salary costs saved districts $124.9 million, while other cost-cutting totaled $93.1 million.
  • Reduced salary costs were due to a combination of staff retirements and layoffs. In 2011-12, school districts employed 2,312 fewer staff than in 2010-11, a 2.3 percent reduction.

Report called GOP 'propaganda'

The report was not without some controversy, however.

Soon after it was released Monday, a group called One Wisconsin Now blasted it as "propaganda" to help Gov. Scott Walker as he "prepares to put Wisconsin’s children and public schools further in the hole by shifting resources to planned tax cuts to benefit the rich and corporations."

“Predictably, as Scott Walker begins making the case to hand out huge tax breaks to the rich and corporations, the corporate front group WISTAX tosses out propaganda to support his case,” said Scot Ross, executive director of One Wisconsin Now. “The Wisconsin Taxpayers Alliance is even more Republican than Wisconsin Manufacturers and Commerce, so this is hardly a surprise and their 'findings' should be taken with a grain of salt as big as Scott Walker's campaign finance report."

One Wisconsin Now said its review of campaign contributions made by board members of the Wisconsin Taxpayers Alliance showed that 92 percent of the $1.4 million in  donations went to Republicans.

DICK STEINBERG November 14, 2012 at 05:24 PM
Mark. your story cites "a report" which is from WTA whose Board of Directors consist of lawyers from Foley & Lardner and some insurance companies. It looks like these savings are paper transactions for money not to be spent. if so, where does the money not spent go to ? the general fund or another program or source ?
Born Free January 24, 2013 at 10:59 PM
The dead don't pay taxes. Even if we the living, employed or not, don't like it a percentage of our tax dollar goes to federal and state government employee unions. In Wisconsin (2010), 1 of 6 employee's has a local, state or federal government job yet their unions are wealthy and powerful enough in government to dictate policy over the other 5 (83%), and wealthy and powerful enough in government to dictate policy on the entire population of this state that is still alive. Extorsion? Absolutely. Taxation w/o representation? Absolutely. Is that TYRANNY? Absolutely! This is the Democrats and the unions version of Democracy, an elimination of the system of 'Checks and Balances' (Republic). People in WI can't be stupid enough to assume that corporations and wealthy people don't support Democrat politicians. Off the top of my head I can think of 9 corporation entities operating in WI that support Democrates, AT&T (a monopoly), and every public and private union, PBS, Journal/Sentinel, GM, Well Point (Blue Cross), by now every bank/S&L, Harley Davidson, Kohls and almost every TV/Radio station. That only scratches the surface and of course they all have CEO's and CFO's etc.. Also, it would be hard to imagine that the lions share of lawyers shrinks and psychologists in this state aren't Democrats.


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