UPDATE: Act 10 Savings up to $2.7 Billion

October 24, 2013

[Madison, Wisc…] An in-depth analysis by the MacIver Institute of local and state savings brought on by Wisconsin 2011 Act 10 has found that tax payers have saved $2.7 billion since the law was enacted.

Act 10, which limited collective bargaining for most state employees, was signed by Governor Scott Walker in February 2011 and sparked months of protests from Big Labor and others on the left saying the sky would fall. However, a MacIver report last year showed that Wisconsin taxpayers had saved just over $2 billion.

Savings continued to increase over the last 12 months and now total just under $3 billion. The analysis did confirm $2.7 billion in continued savings from Act 10, but it could be even more.

A majority of state and local savings were due to state employees contributing half of their pension contributions and a minimum of 12.6 percent of their health insurance premiums.

These minor changes for state employees have helped Wisconsin not only balance its budget, but cut income taxes by nearly $650 million and property taxes by $100 million over the next two years.

School districts around the state saw some of the biggest savings under Act 10. A report from the Fordham Institute found that Milwaukee Public Schools (MPS) will save $101 million in the year 2020 thanks to Walker’s reforms. In total, MPS is on track to save $1.37 billion in long-term retiree health and life insurance benefit liabilities.

The Eau Claire Area School District is slated to save $2.3 million by switching health care providers. The Stevens Point School District is expected to save $1.5 million by getting competitive bids for health insurance, as well.

The state saw major savings from a drop in overtime pay. In 2011, overtime cost the state $63.1 million, but that dropped to $49.4 million, a savings of 22 percent.

The City of Milwaukee also saved on overtime, though Mayor Tom Barrett refuses to admit any of the city’s savings were from Act 10. Milwaukee saved about $7.3 million on overtime in 2012 and restructured its pension plan to save $93 million long term.

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Act 10 not only saved the state, schools, and local governments billions of dollars, it also opened the door to new innovations.

In the Hartland-Lakeside School District, they implemented a new merit pay system for teachers that would have never been possible prior to Act 10. Instead of automatically increasing a teacher’s pay just because they have been in the district for one more year, Hartland-Lakeside transformed their system to pay teachers based on performance.

This type of private sector model would have immediately been shot down by the teachers’ union in years past. Now parents and students will know that the best teachers are being rewarded, while failing teachers will likely be replaced.

Public workers were also given a choice when it comes to joining a union. All across Wisconsin, public unions were required to take an annual recertification vote to continue representing members and taking monthly dues from their paychecks.

The Kenosha Education Association (KEA) was the largest teachers’ union to decertify since Act 10 passed. It was reported at the time that only 37 percent of members voted to recertify, however the union claimed to have never scheduled a vote. Either way, teachers in Kenosha will no longer have an automatic deduction for dues and can choose if they want to contribute to the union.

This is the case as long as the KEA decides to follow the law. They may, however, try to recertify without a vote based on a recent court ruling.

That ruling came from Dane County Judge Juan Colas as he continued his assault on Act 10. Colas found the law to be unconstitutional last year and has now held Commissioners at the Wisconsin Employment Relations Commission in contempt for requiring public unions to take a vote to recertify.

Judge Colas’ original case is expected to go to the Wisconsin Supreme Court this November, with a decision expected sometime next spring. Until then, groups will continue to try to skirt Act 10 with claims that the rulings from Colas allow them to.

In any case, Governor Walker’s reforms continue to save counties, local school districts, municipalities, and the state. Savings will continue to grow for years to come and taxpayers should be proud of Walker’s reforms.