School Districts Benefit Costs $366 Million Lower in 2012
WISTAX Offers First Look At Impacts of Act 10 and State Budget on School Finances
Wisconsin school districts reduced benefit costs $366.3 million in 2012, with most of the savings coming from districts no longer paying the employee share of retirement. The reductions were in response to a $451.2 million cut in state-imposed revenue limits in the 2011-13 state budget, according to a new report from the Wisconsin Taxpayers Alliance (WISTAX). The study, “After the Storm: School Funding in 2012,” offers the first in-depth look at school district budgets, revenue limits, benefit costs, and staffing following passage of controversial Act 10 and the 2011-13 state budget.
Of $366.3 million in reduced benefit costs, $240.7 million, or 65.7%, was from retirement contribution savings. In Wisconsin, there is both an employer and employee retirement contribution. Prior to 2011, most public-sector employers paid both the employee and employer share. In 2011, lawmakers changed the law, reducing local government costs by requiring public-sector workers to pay the employee portion of retirement.
New laws also removed benefits from public-sector collective bargaining. As a result, many school districts were able to increase health insurance copayments, require higher cost sharing by employees, or change health insurance providers to reduce district costs. In 2012, public school health insurance costs fell $90.7 million, or 24.8%, from 2011 levels, WISTAX said.
Total school spending dropped $584 million in 2011-12, with 63% of that coming from benefit savings. Lower salary costs saved districts $124.9 million (21.4% of the spending reduction), while other cost-cutting totaled $93.1 million (15.9%). Reduced salary costs were due to a combination of staff retirements and layoffs. In 2012, school districts employed 2,312 fewer staff than in 2011. The 2.3% reduction continued a trend from 2010 and 2011 (-1.3% and -1.5%, respectively).
The actions driving these changes were state reductions in revenue limits by 5.5% and state aids by 8%. Both were part of efforts to balance the 2011-13 state budget and were on top of retrenchment in the 2009-11 state budget, when school aids were cut for the first time ever and revenue limit increases slowed from $275 per student to $200.
The new WISTAX study shows that the effects of the last two state budgets and related legislation varied widely. In 2012, revenue limits fell between 5% and 10% in more than half of all districts, while declines were larger in another 17. Due primarily to referenda, revenue limits rose in 15 districts.
Changes in health insurance costs varied even more. In 92 districts, they rose in 2012. Districts with labor contracts in place when the new law took effect had few cost-cutting options. In 96 districts, health costs fell 5% or less, while in 95 they dropped more than 15%.
The new study also found that school districts varied in how district health costs were lowered. Among 128 districts responding to a survey: 62% had lower premiums in 2012 compared to 2011; 78% increased the share of premiums paid by employees, with 43 increasing it at least 10 percentage points; and 85% used a combination of lower or slower-growing premiums and increased employee premium sharing to reduce health insurance costs to the district. The survey is conducted annually by the Wisconsin Association of School Boards.
Individual district information on enrollment, revenue limits, benefits, and staffing is available on the WISTAX website (www.wistax.org/facts).
A free copy of The Wisconsin Taxpayer, “After the Storm: School Funding in 2012,” is available by visiting www.wistax.org; emailing firstname.lastname@example.org; calling 608.241.9789; or writing WISTAX at 401 North Lawn Ave., Madison, WI 53704-5033.