Chicago's New Teacher Contract Shows Why Scott Walker Got It Right

Last month, Chicago Public Schools (CPS) teachers returned to work after a two week strike. The deal that ended the strike entailed the city acquiescing to virtually every union demand — from higher teacher pay to smaller class sizes to hundreds of new nurses, social workers, and librarians. This was also a deal that took CPS’s grim fiscal situation and made it worse.

For teachers, the deal is remarkable. It will boost Chicago teacher compensation — already among the highest in the nation — 16 percent higher over five years, raising average teacher salaries to nearly $100,000. (By contrast, the median Chicago household earns $52,000.) Teachers will now be permitted to bank an incredible 244 sick days (up from 40) and claim full pension credit for those days upon retirement, creating new demands on a teetering pension system. And the deal keeps teachers’ retirement contribution at just two percent of annual salary while slashing health care copays.

The contract will cost up to $1.5 billion over the next five years, in a city whose debt burden is already a staggering $119,110 per capita. The pay increases and pension commitments mean the costs will ripple out for decades to come, and even before the deal, the teacher pension fund faced an astounding $11 billion shortfall (CPS’s annual budget is $6 billion). In all, the deal looks less like a tough-minded settlement and more like a legally sanctioned heist.

This is all disheartening but hardly surprising. After all, the last time Chicago teachers struck, then-mayor Rahm Emanuel traded a 17 percent pay raise for the concession that student test scores could be used in teacher evaluations — a practice that was already mandated by state law. We’re not kidding. That was all the reputedly tough-as-nails Emanuel was able to get: permission to do something the state had already directed him to do.

There’s a reason that Chicago city officials keep getting steamrolled in these negotiations. It’s because in Chicago, as in so many locales, their union counterparts are organized, politically powerful, and savvy. It’s because local elected officials and school superintendents are reluctant to be seen as unsympathetic or anti-teacher, and because they want to get teachers back in schools quickly. And it’s because collective bargaining rules lead unions to make exorbitant demands on pensions and healthcare and municipal officials to make concessions and kick-the-can on costs — since the bill will only come due long after current officials have moved on.  

Here’s the catch: It’s possible, if politically fraught, to put these negotiations on more level footing. That requires the will, the political strength, and the courage to bring some equilibrium back to the collective bargaining process.

Wisconsin offers a different vision of how this can work.

In 2011, about when Emanuel was getting rolled in Chicago, Wisconsin governor Scott Walker faced down a ferocious onslaught from public employee unions to pass Act 10, which dramatically narrowed collective bargaining rights. The bill still allowed unions to negotiate over wages, but not pensions, healthcare coverage, hours, or vacation time. The act also mandated that public employees begin contributing to their retirement benefits, while allowing schools to shop around for the best-value healthcare plans, meaning they could no longer be forced to buy the union-endorsed plan.

The result? Wisconsin’s MacIver Institute has calculated that these changes saved the state’s schools $5 billion over the first half-decade of Act 10, with most of the savings gleaned from modulated pension obligations and more competitively-priced health care plans. This means billions more dollars for classrooms. As former Obama administration education official Chad Aldeman has observed, despite the apocalyptic predictions about the impact of Act 10, teacher turnover, salary growth, median years of experience, and retirement rates “all look pretty much in line with long-term trends.” Nor has Act 10 had any ill effects on student outcomes: Since 2011, Wisconsin’s performance on the National Assessment of Education Progress has mirrored or modestly exceeded the nation’s.

Back in 2011, of course, Walker and the Republicans who stood with him were vilified. Union members occupied the state capitol. Protesters compared him to Hitler. Arne Duncan, Obama’s secretary of education, went out of his way to opine, "For [Walker] to go in that direction after the leadership that the union had shown simply made no sense to me. It was nonsensical." Joe Williams, president of Democrats for Education Reform, wrote, "How do we keep the political focus on providing a quality education for all students at a time when some Republican leaders appear to be primarily salivating at the chance to whack a significant political opponent?"

Fast forward nearly a decade, and Chicago illustrates why the Walker approach was neither “nonsensical” nor “political” — but was the one approach calculated to yield lasting change. It turns out that, unless the rules are reset, local districts just aren’t willing or able to face down the unions. What did Chicago win in this latest negotiation, you might ask, for its $1.5 billion outlay? Well, the CTU did abandon its demand for more affordable housing. That’s about it.

Look, there are plenty of places, like recent strike states West Virginia and Oklahoma, where one can reasonably argue that teachers are underpaid and schools are underfunded. It’s tough to make either case when it comes to Chicago. Rather, Chicago shows what happens when blue, big-city mayors and superintendents can do little more than beg and plead with union leaders to play nice. The result isn’t good for the city, for taxpayers, or, most importantly, for the kids and families that the schools serve.

Elected officials should want to both pay teachers well and ensure that school funds are spent responsibly. For a better model, Chicago need only look about 50 miles north.

Frederick M. Hess is director of education policy studies at the American Enterprise Institute. RJ Martin is a research associate at AEI.