How Scott Walker’s reforms are saving Milwaukee Public Schools

Written by . Posted in 2014 Campaigns, 2016 Campaigns

Published on August 19, 2013

WIAs long as we’re discussing Chris Christie and Rand Paul, how about the most underrated 2016 contender? Wisconsin Gov. Scott Walker has receded from the limelight since he beat the 2012 recall election, but he’ll have a great story to tell if he pulls the trigger on a presidential run.

Here’s the Education Action Group describing with hard numbers how Milwaukee’s public schools — not exactly a hotbed of conservatism — used his controversial union bill (Act 10) to stave off unsustainable cost increases, the ticking time bombs created by previous teachers’ union contracts. This excerpt looks just at retiree health care, but it’s worth clicking through to read the part about pensions as well:

Costs for the [retiree health insurance] program rose from $268 per pupil in 2004 to $831 in 2011, and were expected to increase to a whopping $2,135 per pupil by 2020.

Multiplied by an estimated student enrollment of 63,695, that means retiree health insurance costs were scheduled to jump from about $52 million per year in 2011 to about $135 million per year in 2020.

Why was retiree health insurance so expensive?

It’s because many teachers have been retiring in their 50s, well before they qualify for Medicare. Provisions in union contracts allowed them to continue to collect the same health coverage they had when they were working until they reached 65 and could sign up for Medicare. They simply had to reach the age of 55 with at least 15 years of service to qualify.

The insurance coverage was very generous, with premiums completely paid for by the district and low deductibles, co-insurance and co-pays, according to the Fordham report. Retirees only had to pay the cost of insurance premium increases over time, meaning they paid very little, according to the report.

“The program’s main expense is for those retirees younger than 65, who continue on the same health plan they had when they were employed,” the report said.

Luckily the district’s board of school directors had the good sense to utilize Act 10 in November of 2011 to address retiree health care costs. They voted to increase the minimum retirement age and time of service to qualify for retiree health care benefits, and significantly increase the amount charged for deductibles, co-insurance and co-pays, the report said.

Suddenly the future looked a bit brighter.

Instead of retiree health insurance costs rising from $831 per pupil to $2,135 in 2020, they are now only expected to increase to $1,079 per pupil, according to the report.

Without Act 10, Milwaukee’s schools would be staring down the barrel of massive teacher cutbacks or a bailout, or worse. For all the acrimony it created at the time, the law was designed just to give Wisconsin a fighting chance.

The thing about Act 10 is that it was never expected to usher in a new Golden Age — rather, it was designed to prevent the total disaster that Detroit and a number of smaller California municipalities are now experiencing. Thanks to Walker, that won’t happen — at least not as quickly.

This contrast with Detroit, along with the running tally of savings that will continue as long as Act 10 is in effect, provide Walker with something he can show off if he makes it past 2014 and decides to run for higher office.