Act 10 Saves Milwaukee Public Schools Over $100 Million Annually

Act 10 is still working – just ask Milwaukee public schools, which are saving well over $100 million a year and thousands of teaching jobs as a result of Act 10.

Act 10, which reined in collective bargaining in Wisconsin, has allowed Milwaukee public school officials to take the necessary action to ensure taxpayer money is used as efficiently as possible. Prior to the passage of Act 10, the Milwaukee public school (MPS) system was facing increasing employee retirement costs that would eventually become unsustainable, leading to cut backs in school budgets and staff.

In 2011, MPS’s annual retirement costs were at $1,860 per pupil and projected to almost double to $3,512 per pupil by 2020, an increase of $1,652 per pupil. Now, with Act 10 in place that cost is slated to rise to only $1,924 by 2020, totaling $1,588 in savings per pupil thanks to Act 10.

According to a study by the Fordham institute, the MPS’s total projected savings under Act 10 will reach upwards of $100 million in savings for Milwaukee public schools. The study also found Act 10 will save over 1,000 jobs in the MPS school system by 2020, almost 25 percent of MPS teaching positions.

Act 10 allowed the MPS to make two needed reforms to the MPS retirement benefits program.

First, Act 10 allowed some of the costs of MPS employee retirement benefits to be shifted from the MPS to the employees receiving such benefits. Previously, the MPS typically covered the entire cost of the state and city employee retirement plans. MPS employees now will actually pay for a portion of their state and city retirement plans. This shifted part of the burden of financing such costs from the MPS to its employees, freeing up millions of dollars of MPS resources.

Additionally, by removing benefits from collective bargaining, Act 10 allowed school districts to modify district-specific retiree benefits. For instance, Act 10 gave MPS the authority to control the skyrocketing costs of its supplemental pension plans for teachers who retire early. The MPS was able to close the supplemental pension plan for new hires and freeze the pension plan for existing teachers starting in fiscal year 2014 until the increasing costs of the plan become financially feasible.

The reforms to the Milwaukee public schools are not the only school district capitalizing on the benefits of Act 10. On a smaller scale, Stevens Point Area School District in Wisconsin has also experienced savings in the millions from Act 10.

Unlike the MPS system, which is the largest school district in the state with 20 high schools, Stevens Point in Portage County Wisconsin is home to only one high school, two junior highs and a handful of elementary schools. With a population of just over 70 thousand, Portage County has fewer inhabitants than the MPS system has students enrolled.

Despite its size the Stevens Point Area School District has experienced huge savings totaling $1.5 million as a result of Act 10. As pointed out by an article in the Stevens Point Journal, due to the district’s ability to partner with a new healthcare provider, “the Stevens Point Area Public School District will save almost $1.5 million in health insurance premiums and other costs for the 2013-14 school year.” According to the district’s Director of Human Resources Keith Williams, the district “was set for an increase of around 10 percent in its premiums.” The $1.5 million in savings would not have been possible without Act 10 because the district would have
been otherwise relegated to whatever the Wisconsin Education Association (WEA) thrust on them.

Before Act 10 was passed, Wisconsin public school districts were facing massive budget shortfalls that would have inevitably led to reductions in school resources and teaching positions. Now, just a few years later Milwaukee public school districts have been able to save hundreds of millions in costs and thousands of teaching jobs that otherwise would not have been possible without Act 10 reforms. The results are obvious – Act 10 is still working, and thanks to Act 10, Wisconsin will continue to see such benefits for years to come.