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A $930 Million Misunderstanding Over Walker's Budget Repair Bill

2:01 PM, Feb 24, 2011 • By JOHN MCCORMACK
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Madison, Wisc.
Over the past week, we've heard Wisconsin teachers' union members say that they're willing to compromise with Governor Walker and Republicans in the legislature. While they say they are willing to pay 12.6 percent of their health insurance premiums (up from about 6 percent) and contribute 5.8 percent of their salary to their pension (up from almost nothing), they want to keep all of their collective bargaining rights intact. But Senate majority leader Scott Fitzgerald says that the Budget Repair Bill's health insurance and pension provisions do not apply to teachers employed by local school districts.

A 0 Million Misunderstanding Over Walker's Budget Repair Bill

“The 5.8 [percent contribution for pensions] and the 12 [percent contribution for health insurance premiums] is on the state employees, not county employees, not school employees at the local level, not on municipal employees," Fitzgerald told me during an interview Wednesday evening. "It’s only on correctional officers, DNR," he continued, "state employees, so anybody who falls into that category, which are obviously many of the AFSCME employees, and the SEIU.”

Just to be clear, I asked Fitzgerald to confirm that the $300 million saved by the Budget Repair Bill doesn't count changes to teachers’ benefits.

“Right,” he replied.

"If that's true, why is this the first time I've heard it?" one school district's union representative told me last night. "That's not our understanding at all," Paul Hambleton, executive director of Wisconsin's West Central Education Association, told me this morning.

Here's how many teachers and reporters (including myself and others) have understood the Budget Repair Bill: It would require all public employees, including teachers, to pay 12.6 percent of their health insurance premiums and contribute 5.8 percent of their salary toward their pensions. The savings from this measure would total $300 million over two years, as the New York Times reported on February 11. Then, in his yet-to-be-released biennial budget, Governor Walker is going to announce reduction in state aid to local school districts rumored to be about $930 million--or $500 per pupil. Walker is believed to be getting rid of collective bargaining so local school districts would have the "tools" to achieve the $930 million in additional savings.

So what would the bill actually do? Cullen Werwie, a spokesman for Scott Walker, confirms that $300 million in savings over two years would come solely from state employees, not teachers employed by school districts. But Werwie clarifies that the 5.8 percent pension contribution would apply to all public employes, including local teachers, because they pay into the statewide pension fund. So Fitzgerald seems to be mistaken on that point.

But Werwie also says that the Budget Repair Bill would not require teachers to pay more of their health insurance premiums. It gets rid of collective bargaining for benefits so that school districts merely have the option of changing health care benefits. (School districts would have the discretion to achieve needed savings through other means, such as a tax increase if approved by local referendum.) The governor's office sent out a press release yesterday claiming that the state's 424 school districts would achieve $976 million in savings over two years if teachers contribute 5.8 percent of their salaries toward their pension and pay (a little less than) 12 percent of their health insurance premiums. 

This is, obviously, in the weeds. But it's also kind of a big deal. Here's why: Teachers' union members say the debate is "not about the money," but of course, in the short term, it is largely about the money. They've been willing to concede the pension and health benefits contributions in order to preserve collective bargaining, which would protect them somewhat from a feared additional and imminent $930 million in cuts in state aid to schools. But now it appears there won't be an additional $930 million in cuts. According to the governor's office, school districts will save more than that amount if teachers pay 5.8 percent for pensions and about 12 percent of their health care premiums. "Governor Walker’s budget, which he will introduce next week, will reduce state aid to local units of government by less than the savings they will realize from the budget repair bill," says Walker spokesman Cullen Werwie.

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