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The Truth About
Wisconsin
by Jacob Laksin
Last week’s Republican primary in Wisconsin was not the biggest battle
in the Badger State. That will come this June, when Wisconsin
Democrats, backed by the raging might of state and national government
unions, will attempt to recall Republican Governor Scott Walker in a
fiercely contested general election.
It will be a difficult fight for the embattled governor. That stems in
large part from the boldness of Walker’s 2011 budget reforms, which
made him a hero to conservatives even as they turned him into a hate
figure for unions and the left. First, Walker ended the unions’
automatic collection of dues from members’ paychecks, cutting off a
major source of union funds. Next he required state workers to
contribute a modest 5.8 percent of their salaries toward their pensions
and to cover 12.6 percent of their health insurance premiums, thus
bringing Wisconsin closer in line with private sector and national
averages and giving the state a chance to get a grip on its spiraling
finances. Most controversially, he restricted most public unions’
collective bargaining to salaries, canceling a corrupt and fiscally
unsustainable cycle that saw unions negotiate generous perks with the
same politicians they helped elect.
None of this has gone down well with the unions. If early signs are any
guide, they will do everything they can to paint the reforms as a
failure. As they push ahead with the recall, Walker’s opponents claim
that he has presided over the “destruction of public education;” that
he has forced thousands of teacher layoffs; and that he has triggered a
“political and governing crisis.” The evidence, though, shows
otherwise. Not only have Walker’s reforms not brought calamity upon
Wisconsin, but there is a growing body of data that they have succeeded
in precisely the policy areas that unions charge them with destroying.
Public education is a prime example. So far from being destroyed, the
state’s public school districts have benefited from a wealth of savings
made possible by Walker’s reforms. By limiting collective bargaining,
Walker freed school districts to set contracts without union pressure
for the first time in decades. The benefits have been significant. As
the Wisconsin Policy Research Institute’s Christian Schneider points
out in City Journal, collective bargaining produced contracts that
forced the state’s school districts to purchase health insurance from
WEA Trust, a non-profit tied to Wisconsin’s largest teachers union, the
Wisconsin Education Association Council. But after Walker’s reforms
limited collective bargaining, districts could strike that requirement
from their contracts and put the provision of health insurance up for
bid in a wider market.
The result was savings. Schneider notes that when the Appleton School
District put its health insurance contract up for bid, the WEA Trust
“suddenly lowered its rates and promised to match any competitor’s
price.” Thanks to the lower costs, Appleton is expected to save $3
million in the current school year. Appleton is not an anomaly.
According to a report by the MacIver Institute, a free-market Wisconsin
think tank, following the reform of collective bargaining, at least 25
school districts in Wisconsin reported switching health care providers
or plans or opening insurance bidding to outside companies. The
institute found that the measures will save the districts $211.45 per
student. And the savings were not hypothetical. The institute found
that, as of last September, certain school districts already had
savings of $162 million dollars, or approximately $507 per student, as
a result of Walkers’ reforms. If more school districts followed their
example, the institute calculated, Wisconsin could see savings in the
hundreds of millions of dollars.
The savings were particularly embarrassing for Walker’s political foes.
After Walker’s budget passed, Milwaukee’s Democratic Mayor Tom Barrett,
a potential challenger in this summer’s recall, hysterically warned
that the governor’s cuts in state aid would make the city’s structural
deficit “explode.” Not only did that not happen but because the city no
longer had to negotiate health-care benefit changes with unions – a
direct result of the curbs on collective bargaining – the city actually
posted a $11 million net gain for its 2012 budget. But then that wasn’t
the kind of “explosion” Barrett had been threatening.
As a consequence of the savings, many of Wisconsin’s school districts
have been able to avoid the kind of painful layoffs that teachers
unions had warned were imminent. For instance, the Wauwatosa School
District faced a $6.5 million shortfall and the prospect of cutting 100
jobs. But because the teachers union abided by Walker’s budget and
agreed to pay a higher percentage of health insurance premiums and
contribute to their retirement plans, the school was able to save all
of the jobs. Similarly, the Kaukauna School District was able to
transform a $400,000 deficit into a $1.5 million surplus, allowing the
district to hire more teachers and even to set aside money for merit
pay, something teachers unions’ had long opposed. Indeed, as the
governor’s office notes, new teacher hires outnumber layoffs and
non-renewals of teaching jobs by 1,213 positions. That’s not to say
that there have not been layoffs. The governor’s office points out,
however, that nearly 70 percent of those layoffs have come from the
three school districts that rejected Walker’s reforms.
There are also growing signs that decreasing the burden of the public
sector has allowed Wisconsin’s private sector to revive. In January and
February alone, Wisconsin gained nearly 20,000 private sector jobs,
even as its unemployment rate was around 6.9 percent – the lowest in
the state since 2009. From a budget deficit, Wisconsin is projected to
post a budget surplus in fiscal year 2012. Rather than “ruining”
Wisconsin, as Walker’s union detractors maintain, he may have sown the
seeds of its economic recovery.
It does not follow from these achievements that Walker has accomplished
everything he set out to do. Private sector job growth remains
sluggish, despite the recent upturn, and Walker is still some distance
from making good on his campaign promise to create 250,000 jobs. Still,
it’s hard to see how these challenges will be overcome if the state
reverts to a status quo ante that saw public-sector unions and
Democrats join forces to run up a $3.6 billion deficit and unleash the
kind of budget crisis that made Walker’s austerity reforms necessary.
Wisconsin’s voters seem to be coming around to that view. Although the
state remains deeply polarized, Walker’s favorability ratings are on
the rise. A recent Marquette Law School poll showed Walker in a
statistical dead heat with his possible Democratic challengers. The
bigger problem for Democrats is that the reforms they are intent on
demonizing have resulted in cost savings and jobs rather than the
crisis that their union allies had predicted. If that becomes more
widely known in the months ahead, that truly would be a disaster for
Walker’s opponents, albeit not of the kind they had been warning about.
Source: FrontPageMag
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