Wisconsin Budget Repair Bill Implications for Public Sector Employers

On February 11, 2011, Wisconsin Governor Scott Walker released the details of his budget repair bill directed at addressing the state’s budget crisis. The details of the bill have been highly publicized.

Irrespective of one’s political bent, there is no question but that the bill, if adopted, will significantly change the landscape of public sector employment in Wisconsin. It will take time for covered employers and employees to adjust to the changes mandated by the bill. However, the bill, if made law, will require covered employers to rapidly implement its provisions.

Axley Brynelson law firm has a long history of representing public sector employers throughout Wisconsin in all facets of labor and employment matters. Our Public Sector Employment team closely monitors current developments so that we can help our clients navigate through any changes that may occur. The following are some key provisions of the bill in its present form from a public employment standpoint, excepting public safety employees.

Collective Bargaining

• Limits collective bargaining to the subject of base wage
• Limits base wage increases to a percentage no greater than the percentage change in the consumer price index
• Prohibits collective bargaining on matters not permitted under the Wisconsin Municipal Employment Relations Act
• Requires an initial certification election in April 2011 to determine whether a majority of bargaining unit employees still want to be represented by an existing union. If a union receives less than 51 percent of votes from all bargaining unit employees, then at the expiration of the current collective bargaining agreement the union would be decertified. Certification elections of organized public sector employers would be held thereafter on an annual basis.
• Limits union contracts to one year in length
• Prohibits covered employers from collecting union dues through salary deductions. A union would have to collect its dues money directly from employees
• Allows employees to stay in a union without paying union dues
• Eliminates collective bargaining for employees of the University of Wisconsin System, UW Hospitals and Clinics Authority, and certain home care and child care providers

Retirement

• Requires participating employees to contribute one-half of all actuarially required retirement contributions as determined by the Employee Trust Funds Board
• Prohibits covered employers from paying any employee required contribution

Group Insurance

• Prohibits covered employers from paying, after 2011, more than 88 percent of the average premium cost of plans offered in the tier with the lowest employee premium cost

Strikes and Work Stoppages

• Authorizes covered employers to discharge any state employee who fails to report to work as scheduled for any three unexcused working days during a state of emergency or who participates in a strike, work stoppage, sit-down, stay-in, slowdown, or other concerted activities to interrupt the operations or services of state government, including mass resignations or sick calls

According to Governor Walker, these changes are necessary to avoid massive public sector layoffs. His office has supplied the following statistics in support of the bill:

• In 2001, taxpayers contributed $423 million dollars toward state employee health insurance premiums. In 2011, taxpayers contributed more than $1 billion dollars. In 2011, state employees contributed $64 million toward their health insurance, or about 5.6 percent of the total cost.
• From 2001 to 2010, taxpayers spent more than $8 billion dollars on state employee health care coverage. State employees contributed about $398 million for their coverage. Public employers contributed almost $1.37 billion to the state’s pension fund in 2009 on behalf of their employees. The employees contributed about $8 million, or about 0.6 percent. From 2000 to 2009, taxpayers spent about $12.6 billion on public employee pensions. During the same period, public employees contributed $55.4 million.
• Wisconsin taxpayers currently make nearly a 100 percent payment for the employee portion of the public sector pension contribution. Illinois and Indiana taxpayers contribute the entire employee portion as well. Iowa, Michigan, Minnesota and Ohio pay 0 percent of the employee contribution.
• Taxpayers spent $733 million of general purpose revenue on fringe benefits for state employees in fiscal year 2010.
• Fringe benefits made up 25.6 percent of school district expenditures in 2008-09.

The full text of Wisconsin Senate Bill 11 can be found here.