Reflections on Wisconsin

Several months ago, Wisconsin teachers and their union supporters protested a budget proposed by Wisconsin governor Scott Walker. They staged walkouts from their classes, encouraged students to join them in the protests, closed schools, and occupied the state capitol building. The fight, fueled by union and Democrat activists, was angry and bitter. The protests were against particular provisions of the budget – some public employees (including school teachers) would lose collective bargaining rights, they would have to contribute to their own retirement funds, and they would have to pay a higher percentage of their health insurance premiums.

Democrats, ever-loyal supporters of unions, screamed that Walker’s budget would be disastrous for the state. But in at least one case, a school district turned a $400,000 deficit into a $1.5 million surplus. That’s great in and of itself, but the reasons for the turnaround are revealing.

In the past, teachers and staff of the Kaukauna School District paid nothing toward their pensions; it was all paid by the state. Now they will have to contribute 5.8% to their pensions. They also paid only 10% of their health insurance premiums. They will now have to pay 12.6%, less than employees in the private sector pay on average. Obviously, getting public employees to pay part of their own insurance and pension saves money.

What’s interesting is that the total cost of their insurance coverage, as a result of Walker’s budget, went down. Here’s why.

As part of the teachers union collective bargaining agreement that had been in place, the school district was required to buy health insurance from a company set up by the Wisconsin teachers union. The district was forbidden to negotiate with anyone else. This company, the WEA Trust, charged rates higher than the competition, and had informed the district that there would be a “significant increase” in premiums this year.

With the implementation of Walker’s budget, and the end of collective bargaining, the school district was able to shop around for the best deal. Lo and behold, the WEA Trust notified the district that it would match the lowest rate.

There is much more to the story, which can be found here. What this illustrates is that in direct contrast to what Democrats and union activists claimed would happen, in at least one case Wisconsin taxpayers have benefited greatly, along with the students in the classrooms. The union had negotiated conditions that worked against taxpayers, and which were designed to line the union’s pocket with inflated prices. The union's demands were like a festering wound that was killing the patient. Heal that wound, and the patient immediately returned to health.