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Pay no attention to the people behind the curtain

Monday, December 18, 2006

The QEO and all that

'Tis just before Christmas,
And all through the house,
The QEO draws attention
From man and from other man.


(There's no way to make that rhyme without being rude. Sorry.)

Here's the short story on the QEO: Back in the early 1990s, when Tommy Thompson, et al., did their part to appease the anti-taxers regarding school costs and property taxes, they implemented a trio of reforms. The QEO (qualified economic offer) law allowed school districts to impose a 3.8% cap on increases in public school teacher salaries and benefits without bargaining, given that bargaining first comes to an impasse. The second reform placed caps on how much revenue districts could raise from the local levy. The third was a promise--not a statutory requirement like the other two--that a full two-thirds of funding for schools would be paid out of the state's general fund, also to keep property taxes low.

District administrators and school boards hate the revenue caps; teachers hate the QEO; the legislature (when Republican-flavored, anyway) hates the 2/3 promise. And I'd bet 98% or more of the rest of the state probably couldn't even tell you what any of the three things are.

But the QEO is the most common target for criticism, mostly because my union has one of the loudest lobbying voices in the state. If the state's Association of School Boards had our budget, people would be talking about the revenue caps all the time. And the 2/3 promise is an issue for exactly how long it takes to pass the budget every other year.

The problem is that the trio of reforms has ultimately not done what was promised a decade and a half ago. School costs aren't down, property taxes haven't fallen, and the state's ability to keep up with the spending is rapidly diminishing. The problem is that the legislature went at the problem backwards; the silly geese in the legislature capped our ability to pay rather than engage in any serious cost-control efforts, and that's why we're in this mess.

Not coincidentally, that is also the primary flaw of any "Taxpayers' Bill of Rights" or whatever you want to call the contemporary genuflections to the anti-taxers: Such legislation hampers our ability to pay without decreasing costs. It would put us--much as the school-funding trio has done now almost fifteen years later--in the unenviable position of cutting services to stay within arbitrary spending limits. (I've a full-length TABOR post here.)

But, Jay, I hear you thinking, isn't the QEO a cost-control measure? And a reasonable question it is. But the answer is, not really. From the Wisconsin State Journal article linked above:
The QEO law exempts school districts in labor negotiations from going into arbitration--which can force schools to accept unwanted contract provisions--as long as they offer wage and benefit increases that total 3.8 percent or more. [. . .]

To avoid arbitration, the QEO mandates that districts maintain the same increasingly costly benefits for teachers, [Doyle spokesman Dan] Leistikow said. "Districts are put in a terrible box," Leistikow said. "Repealing the QEO will give school districts more flexibility in managing their benefits cost."
I've written before that the QEO is a double-edged sword, in that it provides incentives for both unions and district officials to hammer out bargains agreeable to both parties. For the teachers, it's a no-brainer that they would like to see something above 3.8%, so they'll keep doing what they can to avoid having the QEO applied. Which, when done in the past, has literally led to teachers having to pay money to districts in extreme cases. Such things have also been threatened (up to $3000 of paybacks in one case), and many teachers (one example) have seen their salaries decrease from one year to the next because of the QEO.

For districts, as the article quoted above indicates, imposing the QEO means that any expensive benefit plans have to remain in place. So if administrators have their eye on finding something cheaper, they have to do it with the cooperation of their teachers at the bargaining table, or else, by imposing the QEO, they'll be stuck with the expensive plan they don't like. In the examples I linked to in the previous paragraph, I doubt sincerely that any of the administrators actually relished demanding giant paybacks from their teachers. (If they did, they shouldn't be doing that job. Maybe if Alan Lasee succeeds in getting the death penalty back, they could sign up to flip the switch.)

So the QEO, in practice, has little effect on costs. Much of that, of course, is due to a particular quirk of the American Way, which is that our health care system (best system in the world!) has seen cost increases at many, many times the rate of inflation, well above 3.8% annually. There is nothing school districts or teachers unions can do about that. Hampering our ability to pay (as revenue caps do, as TABOR would) doesn't solve the problem.

But a national (even state-wide) solution to the health care crisis is just one part of the answer to this puzzle. The rest of it comes in a re-working of the school-funding formula. The people involved in Wisconsin's schools recognize that; both the WEAC and WASB representatives quoted by the WSJ call for broader reform than just nibbling at the edges with a QEO repeal. But Liestekow, Doyle's spokesman, doesn't get it. Incoming Assembly Speaker Mike Huebsch (R-West Salem) doesn't talk broad reform, either, though that may just be selective quoting or questioning on the part of the reporter.

Bottom line, though, is that the QEO has had a noticeable effect on Wisconsin's teachers. More from the WSJ:
Salaries for Wisconsin teachers in the 2003-04 school year averaged $42,882 and were 8.3 percent below the national average, according to a [Wisconsin] Taxpayers Alliance analysis. But the estimated value or cost of their benefits was 39.2 percent higher than the national average, ranking as the fifth-highest in the country.
Dad29, the "another man" linked above, siezes on this paragraph, with some supplemental data about Wisconsin's overall median income, to insist that the QEO doesn't need to go. We'll come back to that in a minute, but we should talk about those numbers anyway. The WisTax press release announcing their study back in September lacks the full context, but you can dig up a lot in other places.

This AFT study (.pdf), for example, is full of scary-but-true facts about Wisconsin's teachers. For example, we have the lowest salaries--and starting salaries--in the Midwest (page 25). Our starting salaries are, in fact, lowest in the nation (page 33), and barely above pay for the private sector (page 34). Do you think this has an effect on who decides to teach in this state? It probably does (see also pages 35-36). The trend is bad, too: Wisconsin's pay fell to 27th in 2003 from 23rd in 2001 (page 26) and 16th in 1993 (page 27), which makes us third-worst in the total percentage change in teacher salaries nationwide over the last decade.

We're also below average (27th) in our ratio of teacher salary to private sector salary (page 28), which makes us dead-frickin'-last in the percentage change of how well we've kept up with increases in private-sector wages (page 29). So when Dad29 complains, for example, about Wiconsin's teachers earning only 8% less than the median income in the state, it sounds a bit hollow. It also rings hollow when he tries to compare our salaries to the average Wisconsin salary--by far lower--of $36,660. Consider, for example,
As a work force, teachers are highly educated compared with the general public.
  • Twenty-four percent of Wisconsin’s working population holds a bachelor’s degree or more compared with nearly 100% of teachers.
  • Only 8% of the state’s work force holds a graduate degree, compared with 57% of teachers (U.S. Census Bureau 2003, “Status of the Wisconsin Public School Teacher 2004”).
Census Bureau data which measure earnings by educational attainment show that teachers are underpaid compared with private sector workers who have similar levels of education:
  • The average full-time worker nationally with a bachelor’s degree over age 25 earned $60,664 in 2004—that’s $17,782 more than Wisconsin teachers, who earned an average of $42,882 (U.S. Census Bureau, “Earnings by Educational Attainment,” NEA “Rankings and Estimates”).
  • The average full-time worker nationally with a master’s degree earned $73,024 in 2004—that’s $30,142 more than Wisconsin teachers earned who have a master’s degree and 10 year’s experience (U.S. Census Bureau, “Earnings by Educational Attainment,” WEAC salary data).
  • Education Week magazine found that Wisconsin teachers earned $10,000 less than other workers in the state with college degrees (“Quality Counts 2000”).
  • Wisconsin teachers with a master’s degree earned $17,250 less than other Wisconsin workers with the same degree (“Quality Counts 2000”).
There's more at the link. Let's compare apples to apples, shall we? A highly-qualified, well-educated Wisconsin teacher does not easily compare to your average worker. (First person who says "but you get summers off" gets smacked; I haven't had a summer off since I was 16.) There's also this:
Several types of analyses show that teachers earn significantly less than comparable workers, and this wage disadvantage has grown considerably over the last 10 years.
  • An analysis of weekly wage trends shows that teachers' wages have fallen behind those of other workers since 1996, with teachers' inflation-adjusted weekly wages rising just 0.8%, far less than the 12% weekly wage growth of other college graduates and of all workers. [. . .]
  • A comparison of teachers' wages to those of workers with comparable skill requirements, including accountants, reporters, registered nurses, computer programmers, clergy, personnel officers, and vocational counselors and inspectors, shows that teachers earned $116 less per week in 2002, a wage disadvantage of 12.2%. Because teachers worked more hours per week, the hourly wage disadvantage was an even larger 14.1%.
  • Teachers' weekly wages have grown far more slowly than those for these comparable occupations; teacher wages have deteriorated about 14.8% since 1993 and by 12.0% since 1983 relative to comparable occupations.
  • Although teachers have somewhat better health and pension benefits than do other professionals, these are offset partly by lower payroll taxes paid by employers (since some teachers are not in the Social Security system). Teachers have less premium pay (overtime and shift pay, for example), less paid leave, and fewer wage bonuses than do other professionals. Teacher benefits have not improved relative to other professionals since 1994 (the earliest data we have on benefits), so the growth in the teacher wage disadvantage has not been offset by improved benefits.
  • The extent to which teachers enjoy greater benefits depends on the particular wage measure employed to study teacher relative pay. Based on a commonly used wage measure that is similar to the W-2 wages reported to the IRS (and used in our analyses), teachers in 2002 received 19.3% of their total compensation in benefits, slightly more than the 17.9% benefit share of compensation of professionals. These better benefits somewhat offset the teacher wage disadvantage but only to a modest extent. For instance, in terms of the roughly 14% hourly wage disadvantage for teachers we found relative to other workers of similar education and experience, an adjustment for benefits would yield a total compensation disadvantage for teachers of 12.5%, 1.5 percentage points less.
Notice that this study compensates both for "time off" and makes an honest comparison of benefits, too.

Look, when it comes to repealing the QEO, I'm for it only in the sense that we need an absolute do-over when it comes to school reform. Picking off one element of the trio at a time will not ultimately solve anything. But to suggest, as Dad29 does, that teachers are demanding something unreasonable (the ability to freely negotiate the terms of our employment? Gasp!) is ridiculous.

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