“So far, the impact of the bill that ended collective bargaining for anything other than wages which are still subjected [sic] to cap based on inflation for public school teachers has been insignificant in the classroom.”
—Paul Sojkowski, a teacher at Meadowview Elementary School and chief negotiator for the Oak Creek Education Association.
Franklin School Board President Janet Evans’ latest blog post includes a link to the Franklin School District’s first draft of its 2012-13 budget.
FIJ has reviewed the draft to determine what financial impact, if any, Act 10 had on the district’s 2012-13 budget. We have found that conservatively, the District and therefore Franklin taxpayers will save approximately $775,000 in 2012-13 compared to the previous year’s budget Here are the savings that are attributable to Act 10:
The District bid out its health and dental insurance for 2012-13 and consequently replaced WEAC Trust, an insurance company affiliated with WEAC, the Wisconsin teachers union, and contracted with Humana, which reduced the district’s health insurance rates by 10.22% or approximately $775,000 for 2012-13 (Benefits, page 7). This savings not only benefits Franklin taxpayers, but the District ‘s union employees, as well; here is why.
Prior to Act 10 these employees were required to pay on average approximately 6 percent of annual health insurance premiums. Act 10 requires that state employees pay at least 12.6 percent of the average cost of annual premiums which is now 10.22 percent less than with WEAC Trust. This $775,000 reduction in health insurance costs is a win-win for taxpayers and district union employees.
Act 10 requires changes to the plan design necessary to reduce current premiums by 5 percent. Local employers participating in the Public Employers Group Health insurance would be prohibited from paying more than 88 percent of the lowest cost plan.
The draft budget also notes that the general Wisconsin retirement system (WRS) rate will increase for 2012-13. However the District will enjoy a rate reduction based on paying off its debt service liability. This is estimated to save the District almost $300,000 even with the rate increase from WRS.
This $300,000 saving is not attributable to Act 10, but to a one-time payment of $1 million the District received from the federal government in 2011-12 to help stabilize the budget (Significant Expense or Revenue Changes, page 8).
The draft budget notes that the District will soon begin negotiations with represented (union) groups regarding wages and that due to the nature of negotiations, the anticipated percentage increase in this category is not listed. The District goes on to state "It should be noted that most employees have taken a 7% to 11% cut in net pay due to the provisions of Act 10 related to retirement payments and the increased health insurance premium contributions." (Salaries, Page 6).
In our eyes, it is is misleading to characterize this "benefits" change as a "cut in net pay." Pay or wages, whichever word you prefer to use, have not been removed from collective bargaing under Act 10.
The District's statement "that due to the nature of negotiations, the anticipated percentage increase in this category is not listed.."
The fact is that Act 10 has linked employee raises to the CPI-U (Consumer Price Index), most commonly nown as the cost of living rate. The CPI-U that applies to employee contracts starting in July 2012, is an increase of 3.1 percent (CPI, page 6). Therefore the District is able to come up with a very good estimate of its 2012-13 wage increase for union employees by simply multiplying 3.1 by the 2011-12 total wages.
Act 10 made various changes to limit collective bargaining for most public employees to wages. Total wage increases could not exceed a cap based on the consumer price index (CPI) unless approved by referendum.
The draft budget also states "It should be noted that the total revenue for the general fund is about $500,000 (1.1%) less than in 2011-12."(Significant Expense or Revenue Changes, page 8).
Without this $1 million bailout from the federal government, the general fund would in all likelihood not have a fund balance of $500,000.
Act 10 requires that employees of WRS employers, and the City and County of Milwaukee contribute 50 percent of the annual pension payment. The payment amount for WRS employees is estimated to be 5.8 percent of salary in 2011—more savings to taxpayers.
In 2011-12 and unrelated to Act 10, the District received a one-time payment at the closing of a City of Franklin Tax Incremental District (TID) of $376,000 which it will not receive in 2012-13.
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