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Wisconsin’s Reforms Are Working

The bruising battle in Wisconsin a year ago to curb the powers of public service unions was finally won by Governor Scott Walker and the Republicans in the state legislature. But, as a result, a judge of the Wisconsin Supreme Court faced a determined attempt to oust him from his seat (he survived), six state senators faced recall elections (four survived and the two losers had issues that would probably have cost them their seats regardless) and, this year, the governor himself faces a recall election.

I wouldn’t bet against him. The reforms have kicked in and the results are dramatic.

The reforms did a number of things. They ended the automatic collection of union dues by the state, causing an immediate drop in union income and the laying off of numerous union employees. They required that state employees kick in 5.8 percent of their salaries towards their own pensions and to pick up 12.6 percent of their health insurance premiums, bringing public employees more in line with private employee realities. Most important, it limited collective bargaining to salaries (and even that bargaining is limited by the rate of inflation).

For the first time in decades, school administrations are now actually able to administer their districts without union interference, and the savings have been huge. The MacIver Institute, a Wisconsin think tank, reports that of the 108 school districts that completed contracts with employees, 74 of them, with 319,000 students, have reported savings of no less than $162 million. If this is extrapolated out to all districts, it would amount to savings of nearly $448 million.

The biggest area of savings have been in health insurance. The teachers union insisted that districts use the union’s own health insurance company to provide coverage. No longer forced to use a monopoly provider, districts have either switched providers or used the threat of switching to force the union health insurance company to dramatically lower premiums. Savings have averaged $730,000 in districts that have switched providers or forced competitive bidding.

As a result of these dramatic savings, districts that have been able to benefit immediately from the reforms (some districts are locked into long-term contracts and cannot) have been able to avoid laying off teachers despite a significant drop in state aid and to avoid raising school taxes. Indeed, school tax bills that went out last December had an average increase of only 0.3 percent.

It is hard to imagine that with results like this, Governor Walker has anything to worry about.

 


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