By Ryan Ekvall | Wisconsin Reporter
MADISON – The public education establishment likes to serve its anti-school voucher program message of doom and gloom with a side of scare over looming teacher cuts and building disrepair.
But it’s hard to make such a dire case in Milwaukee and Racine, home to Wisconsin’s two private school voucher school districts, given the public school system’s past budget priorities.
The two districts, and Milwaukee Public Schools in particular, made so many unfunded promises to employees in the pre-Act 10-era, that taxpayers today pay more in retiree benefits in the two districts than the entire statewide cost of educating the nearly 25,000 students in the voucher program.
“We have a very high cost model to deliver education,” Rep. John Klenke, R-Green Bay, said this week to Tony Evers, superintendent of the state Department of Pubic Instruction, at the Legislature’s Joint Finance Committee hearing on Gov. Scott Walker’s budget proposal.
Evers urged lawmakers to forsake Walker’s proposal to expand Wisconsin’s voucher program. “I’m not seeing anybody come forward to say how they’re going to change that high cost model of education in a new era.”
“We will be paying, through our retirement system, for 1.5 people outside of the classroom for every one person in the classroom, if we don’t change,” Klenke said. “I’m not seeing paying for 2.5 teachers in the classroom as sustainable.”
Klenke was referring in part to the pensions in the Wisconsin Retirement System, where prior to Act 10, Walker’s controversial collective bargaining reforms, taxpayers footed nearly the entire funding bill – nearly 12 percent of covered payroll – year to year.
In addition to the state’s generous pension plan, however, MPS contributed $92 million last year to funding the trust fund of its other post-employment benefits, or OPEBs. The benefits include health and life insurance for retirees.
The infusion came after Milwaukee’s public school board took drastic measures that slashed $1.4 billion in future OPEB costs, saving the district $117.2 million in fiscal year 2012, according to the district’s Comprehensive Annual Financial Report.
MPS’ total budget is around $1.1 billion.
Even with the changes, which bumped the eligibility age for health benefits from 55 up to 60 for most current employees, the unfunded liability for future retires is $1.4 billion.
Last year, MPS’ nearly 7,000 retirees and their spouses spent $67 million on life insurance and health care costs, which allowed the district to build up a nearly $30 million balance in the trust fund. The cheerier financial picture was the result of the timing between required contributions versus spending.
Traditionally, MPS has strictly stuck to a pay-as-you-go system. Now the district tries to fund closer to the actuarial amount. The bottom line: taxpayers spent $92 million to fund the trust, but retirees only drew $67 million last year, a figure that changes year to year based on retiree health care costs.
Looking at that spending from another perspective, it costs taxpayers more to subsidize each of the health care benefits of an MPS retiree or their spouse than each pupil in a choice school.
Racine Unified School District contributed nearly $8 million to OPEBs last year, $2.7 million short of actuarially calculated amounts to fund future costs.
The voucher program for 500 students in Racine costs around $3 million.
Racine’s unfunded liability – or amount actuaries expect future taxpayers will have to pay — for all current and previous Racine Unified employees is nearly $85 million. In Racine, most employees can still retire at age 55 and qualify for OPEBs.
The entire budget for the Milwaukee and Racine voucher programs was about $158 million last year. For comparison, Racine Unified, which has about 21,000 students, will spend some $314 million this year.
Evers has pushed for more traditional funding for K-12 public schools, asking lawmakers to forego a proposed middle-income earner tax cut and boosts in education spending to load more money into the public education system.
Evers said he was at the hearing to “advocate for a budget that reinvests in our public schools.”
Walker’s budget proposal instead adds $129.2 million to state equalization aids, while keeping revenue limits flat, money that essentially goes back to property taxpayers. His education funding plan also includes another $100 million or so for new competitive grant programs, data systems and teacher resources and assessments.
“No new textbooks or computers. No additional reading or career and technical education teachers,” Evers explained in a statement following the release of Walker’s budget proposal. “No additional interventions or services.”
Evers is a vocal critic of Walker’s proposed voucher program expansion plan, which could add up to nine new districts in addition to Milwaukee and Racine next year, if the Legislature buys in. Walker has also called for an increase in per-pupil spending in the voucher program, which currently pays up to $6,442 of costs per student.
Evers isn’t the only agency head looking for increased funding this year.
“At this time of year, it seems everybody is asking us for more money,” said Sen. Glenn Grothman, R-West Bend, at the hearing.
He, too, suggested school districts could find savings in changing their health care benefits, like the Milwaukee school board has done only recently, more than twenty years after it was alerted to the growing problem in 1989.
According to the nonpartisan Employee Benefits Research Institute, 37.5 percent of large, private employers (over 1,000 employees) offer OPEBs to early retirees and 31.5 percent offer OPEBs to employees past Medicare eligibility.
About 77 percent of local governments offer OPEBs to early retirees and 63.2 percent continue that coverage past Medicare age.
Contact Ekvall at firstname.lastname@example.org