Collective Bargaining and Pension Reform in Wisconsin
When Wisconsin passed Act 10, a collective bargaining reform bill, in 2011, the nation watched closely. It wasn’t just for the drama or the political intrigue, but because states all over the country face similar looming budget troubles in the years ahead. Without reform, pension obligations in states like Illinois or California threaten insolvency and even raise the specter of federal bailouts.
But with Act 10, Wisconsin showed that another way was possible. The collective bargaining reforms saved the state billions of dollars and staved off insolvency for many Wisconsin school districts. But rather than being welcomed with open arms, Act 10 became one of the most controversial pieces of state legislation in a generation.
Seven years after passage, Act 10 has been the subject of a number of academic studies. Despite fears that teacher retirements would hurt students, a 2017 study found academic performance seemed to improve in the immediate aftermath of the reform. Teachers are adjusting and even flourishing in a new marketplace that competes for their skills, not their seniority. And class sizes and gross teacher salary were not impacted by the law relative to neighboring states that did not implement the reform.
Still, the impact of Act 10 on students remains controversial. A 2018 poll found that majorities of Wisconsin Democrats and independents believe Act 10 had a negative impact on students. The law is often scapegoated in efforts to secure new education funding. But a new peer-reviewed study from the Wisconsin Institute for Law & Liberty (WILL) finds that the impact of Act 10 on student achievement has not been negative. In fact, the law appears to have actually led to higher test scores.
Open records requests to every school district in Wisconsin provided the data necessary to determine when a district implemented Act 10. Using control variables, WILL was able to isolate the district-level impact of Act 10 on standardized test scores and graduation rates. Test scores improved in math as a result of the law (a change in the reading test made fair comparisons impossible). And graduation rates, already some of the highest in the country, were not impacted by Act 10.
This effect was consistent throughout Wisconsin’s rural and suburban districts, though urban districts showed less of an impact — perhaps because many, such as Madison — dragged their feet on implementing the law.
The results are likely to surprise both critics and proponents because Act 10’s impact on public education in Wisconsin has been largely misunderstood. Act 10 fundamentally altered education in the Badger State by providing local government with a new policy toolbox. Superintendents were liberated to make staffing and budget decisions that best served students and schools. A marketplace emerged that rewarded quality teachers. Ineffective teachers could be removed from the classroom for the first time. Teacher quality, not seniority was now rewarded. And schools were unshackled from administrative and bureaucratic handcuffs that had long restricted innovation. In sum, all of this empowered schools to refocus and prioritize the needs of students.
Wisconsin showed that a state could balance their budgets and reform public employee pensions and benefits without tax hikes, layoffs, or cuts in services. And as this new report shows, undertaking these reforms had the added benefit of reforming public education and reprioritizing students. Iowa passed its own similar reform in 2017, limiting collective bargaining for public employees to base wages. Early results are showing significant savings. So, while fears abound about cuts to critical services and federal bailouts in places like Colorado, Connecticut, Illinois, Kentucky, and New Jersey — states that have less than half the assets they need to cover their looming pension obligations — Wisconsin has offered a way out and a way forward.
Collin Roth is the Director of Public and Engagement and a Policy Analyst at WILL. Will Flanders is the Research Director at WILL.
