In last week’s debate and elsewhere, Scott Walker has displayed less then total recall on many things. Among these are the role of the Qualified Economic Offer (QEO) and the 2009 repeal of the QEO in shaping teacher compensation in Wisconsin. He doesn’t want to remember and he doesn’t want you to remember because it undermines key parts of the case he has made for (all but) eliminating collective bargaining for public employees, especially those parts related to health insurance costs. According to Walker one of the main reasons Act 10 was necessary was that collective bargaining allowed teacher unions to force taxpayers to pay inflated rates to WEA-Trust. From start to finish, this story is full of holes.
For me the start is 1993 and the bi-partisan creation of the QEO under Republican Tommy Thompson. The QEO was one third of the “three legged stool” of school finance (the other two were 2/3 state funding and revenue caps…only the last remains). It was the leg designed to hold down costs by establishing a 3.8% total teacher compensation package floor and ceiling for districts wishing to avoid arbitration. Very few districts imposed the QEO, but it defined the playing field for contract negotiations.
The key part the Walker forgets is that between 1993 and 2009, under the QEO health insurance rates had little or no impact on contract costs and therefore taxpayers. In effect, the QEO gave teachers the 3.8% increases and allowed them to choose the proportion that would go to salaries, and the proportion that would go to benefits. In the years the QEO was in place, health insurance costs (via WEA Trust and everyone else) rose considerably and as a consequence much of the total package increases went there and not to salaries. That was the choice unions made via collective bargaining under the QEO. So the first thing Walker wants forgotten is that for the majority of the last two decades savings from teacher health insurance would have had little or no impact on costs or taxes.
The second thing he wants you to forget is that under the QEO unions did have the incentive to limit health care costs. According to the Wisconsin Association of School Boards, a majority of unions sought some health insurance savings under the QEO:
Q: Does the QEO law prevent school boards and teachers unions from negotiating lower cost health insurance packages?
A: No. School boards and teachers’ union can voluntarily bargain changes to their health insurance coverage and frequently do. In fact, having the QEO law on the books has sparked serious negotiations on health insurance. Over 80 school districts have changed health insurance carriers and a majority of school districts have changed deductibles, medical provider co-payments and prescription drug co-payments.
Guess what Scott Walker, teachers — like everyone else — don’t want to pay too much for their insurance.
The repeal of the QEO, under Jim Doyle by Democratic controlled Senate and Assembly (for the record, I’ve always thought repealing the QEO in the absence of comprehensive school finance reform was bad crazy), combined with general economic conditions, smaller than usual revenue limit increases and the (at that time unprecedented) cuts to state school aid, led to even more unions agreeing to changes in health insurance. As Matt DeFour reported at the time, at 3.75%, “compensation contracts” were “on track to be the lowest in more than a decade” resulting in new pressures to find insurance savings. Where unions were not amenable to changes, the lack of a QEO put arbitration back in play for some districts. Citing changes won through post-QEO arbitration in Milton. Walker cheerleader Patrick McIlheran crowed that this “could mean the end to the costly market dominance of WEA Trust, the health insurer owned by the Wisconsin Education Association Council.” A strategy memo on post-QEO bargaining from the law firm Boardman and Clark backs this up, noting that due to rising health insurance costs arbitrators were moving away from quid pro quo in this area and recommending consideration of seeking changes in “Health Insurance / Carriers.” So there were tools in place well before Scott Walker took his knife to collective bargaining. Scott Walker also wants you to forget that without the QEO there was no floor either, unions could no longer count on 3.8% increases and that increases in both salary and benefit costs were trending down when he took office.
Last, Scott Walker wants you to forget that he campaigned on restoring the QEO. Forgetting this aids the big lie that we all should have expected the bomb that was ACT 10. His 2010 education packet stated:
The Qualified Economic Offer (QEO), which helped hold down local school costs for more than 15 years, will be restored and tied to revenue caps to align each district’s expenses with their revenues. Mediation and arbitration changes will also be needed to ensure that local economic factors are considered along with other common sense factors when arbitrating teacher contracts.
That doesn’t sound much like Act 10. Walker wants you to forget that he campaigned on very different things than he enacted.
For more information on related things:
David Wahlberg, “Walker’s claim on health insurance savings for public schools questioned.”
Dave Umhoefer, “”Act 10’s effect on school districts a mixed bag.”
WEA Trust, “Response to Governor Walker’s Statements.”
Tom Kertscher, “Behind the rhetoric: The WEA Trust and school health care costs.”
WEAC, “Do the facts matter to the Wisconsin Policy Research Institute?”
Thomas J. Mertz, “Where is the QEO?” and “Where’s the QEO? (again).”
Now the real important stuff.
HOW TO HELP RECALL WALKER
Six days and counting…
If you have money to donate, there are many good places to give, but I’d recommend Students for Wisconsin, a PAC formed by Madison West High School students. You can donate here, read about them here and here, and definitely should watch (and share) their video:
To volunteer check in with We Are Wisconsin or United Wisconsin.
DO SOMETHING! There can be no regrets on June 6.
Thomas J. Mertz
AMPS 