Legislative Update – December 6

Commission on School Funding: The leaders of the Wisconsin State Legislature on Wednesday announced creation of a Blue Ribbon Commission on School Funding that does not include any classroom educators.

“As educators, we are a steady voice for a solution to Wisconsin’s broken school funding system,” said WEAC President Ron Martin. “It’s alarming that no classroom educators are included on the Commission because teachers and support staff know firsthand how the inadequate and inequitable funding impacts learning every day.

“It’s time for Wisconsin leaders to move from promises to action when it comes to living up to their responsibilities to our students, and that starts with including educators’ voices in the mix.”

While the concept of the Commission was floated earlier in the Legislative session, membership was just named. Leaders of the commission are Rep. Joel Kitchens (R-Sturgeon Bay) and Sen. Luther Olsen (R-Ripon). The commission will examine how tax dollars are distributed to schools and make recommendations to better meet the needs of students across Wisconsin. Read the GOP leadership’s news release

Senator Stroebel appointed to Joint Finance Committee. Senator Duey Stroebel is the newest member of the Joint Finance Committee. Stroebel, of Saukville, replaces Sheila Harsdorf, who is the new secretary of the Wisconsin Department of Agriculture, Trade and Consumer Protection. He also was one of three Republicans who issued a series of veto demands to Governor Scott Walker before agreeing to support final passage of the budget. Stroebel is also a key author of AB324/SB190 (currently in committee), which increases the minimum age requirement under WRS and changes the way earnings are calculated. Stroebel will serve the remainder of the 2017-18 term.

Child Labor Permits. Senate and Assembly committees are recommending passage of a bill (SB-420 / AB-504) to allow a minor to be employed without a child labor permit by a family business.

Literacy Grants. An Assembly committee is recommending passage of AB 541 (companion bill SB 449). This bill requires the Department of Health Services to distribute grants to the Children’s Health Alliance of Wisconsin to support the early literacy program known as Reach Out and Read Wisconsin. The bill would provide $200,000 in 2018 and $300,000 in 2019.

County jailers and the WRS. A fiscal estimate was received for AB 676 (companion bill SB 577), which would classify county jailers as protective occupation participants under the Wisconsin Retirement System and under the Municipal Employment Relations Act. While the bill would likely not have a cost impact on the Wisconsin Employment Relations Commission, there is insufficient knowledge as to whether this bill would increase or decrease county costs.

Legislative Update – June 5

WEAC Legislative Update

Sign up for updates at www.weac.org/budget.

Current WEAC Action Alerts

Ask committee to oppose referendum restriction bill


Tell your legislators to make public school funding a priority in the budget


Ask your senator to protect the WRS



While public education advocates were expecting the Joint Finance Committee could take up some measures relating to the K-12 budget soon, things seem to be at an impasse. The panel had not issued any official notices for meeting, so there’s no telling how long it will be before they take up education funding. We will continue to monitor the schedule and alert you of any developments.

The delay comes from a stir around school funding caused by the Assembly Republicans again floating the idea of creating their own education budget, which could cut about $90 million from the budget proposal currently on the table. Senators continue to push back hard, saying they will work off the original plan. Read more.

The Assembly and Senate are expected to hold floor sessions again on Wednesday, June 14.

Also making headlines is WEAC President Ron Martin, who penned an op-ed to underline the groundswell of support for neighborhood public schools – and let legislators know parents and educators are paying close attention to what happens in Madison. Read the column.

By the Issues
Community Schools. SB 282, creating community school start-up grants was introduced and referred to the Senate Committee on Education. Under this bill, the DPI would award competitive grants to school boards for community schools, as matching funds from the community. The bill defines a “community school” as a public school that focuses on improving student learning, strengthening families, developing healthier communities, working with community partners to provide additional services to the surrounding community, and providing wrap-around support services to pupils and their families but does not include independent charter schools or charter schools that are not an instrumentality of a school district. The bill specifically requires a portion of the grants to go to rural schools, high-poverty schools and to transform low-performing schools. The grants would be for five years, with opportunities to renew.

Higher Education.

  • SB 289 (companion bill AB 373): Requiring University of Wisconsin System schools to offer degree credit internships for each academic major. Referred to Committee on Universities and Technical Colleges.
  • SB 290: Three-year bachelor’s degree statements for University of Wisconsin System universities. Referred to Committee on Universities and Technical Colleges.

Coming Up:

Wednesday, June 7

  • Public hearings on two bills (SB-300 and SB-304) regarding student testing are scheduled.
  • The Assembly Financial Institutions Committee will meet to act on AB-280, which would require the incorporation of financial literacy into the curriculum of public schools.

Tuesday, June 13

  • The Joint Finance Committee has scheduled a meeting to decide on the self-insurance contracts from Gov. Scott Walker’s administration, which the JFC co-chairs said the committee will reject.

Wednesday, June 14

  • Assembly and Senate floor sessions.

 

Legislative Update and Action Alerts – May 19

Current WEAC Action Alerts

Tell your legislators to make public school funding a priority in the budget

—————

Ask your senator to protect the WRS

Legislative Update

The Legislature’s budget-writing Joint Finance Committee will continue meeting next week, taking up a number of areas including the University of Wisconsin System. K-12 public education is expected to be taken up the week after. This week, we saw several companion bills introduced to existing proposals, including one to alter the WRS and another that would punish UW students who violate a campus speech policy. 

WRS. AB 324 was introduced, a companion bill to SB 190. The proposal calls for increasing the minimum retirement age under the Wisconsin Retirement System and determining final average earnings for the purpose of calculating Wisconsin Retirement System annuities, for new employees entering the system. The assembly bill was referred to the Assembly Committee on State Affairs. No public hearings on either bill are scheduled. See details and fiscal estimate.

Special Education Funding. SB211 and companion bill AB319 call for state funding of special education at 33 percent. View Senate Bill History and Assembly Bill History, along with fiscal estimate and some additional notes.

School board candidate signatures. SB-260 was introduced regarding the signature requirement for nomination of candidates to school board in school districts that contain territory lying within a second class city (a population of 39,000, but less than 150,000). The bill was sent to committee.

Campus speech. Senate Bill 250 was introduced, a companion bill to AB 299. The bills would require the UW System adopt a policy on freedom of expression and suspend or expel those who violate the policy twice. Republicans say the bill is needed to ensure people can listen to constitutionally protected speech from speakers on campus, no matter how controversial they may be. But others say the bill creates a safe space for racists. See details.

Don’t see something in the wrap-up? Looking for more information? Contact Christina Brey.

Legislative Update – April 24

Special education funding. This bill (SB 211) increases state aid to school districts for special education and school age parents programs provided by the school district to no less than 33 percent of the school district’s certified, eligible costs. It is referred to the Senate Education Committee. Learn more.

WRS bill. This bill (SB 190), introduced this week, combines two proposals introduced by Sen. Duey Stroebel into one bill, which would raise the early retirement age from 50 to 52 for protective services employees and from 55 to 60 for general employees.  Furthermore, the bill would change the calculation for a participant’s final average earning from the highest 3 years to the highest 5 years.  Both of these changes would apply to new employees hired after the passage of the bill. Read more and see the bill history. The bill was referred to the Senate Committee on Government Operations, Technology and Consumer Protection, which Sen. Stroebel chairs.

Matching funds for deposits to school long-term capital improvement trust funds. This bill (SB 192), part of a package of bills relating to limits on school district funding referendums requires the Department of Public Instruction to provide matching funds for deposits that a school board makes to a long-term capital improvement trust fund. Under the bill, if a school board increases the levy limit for operating costs or capital costs, the school board is required to refund to DPI any matching funds it received during the 10 school years immediately preceding the resolution. If a school board fails to refund the amount of the matching funds to DPI within 12 months, DPI must reduce the school district’s state aid to cover the amount due. Learn more.

Referendum restrictions on local control: voting by common, union high school districts. (SB 191) prohibits common and union high school districts from voting on a resolution to exceed the revenue limit of a school district at a special meeting. Learn more.

Referendum restrictions on local control: number of years a school boards can go to voters. Under this bill (SB 195), a school board would only be able to seek approval from voters in the school district to increase the revenue limit for five consecutive school years. Learn more.

Referendum restrictions on local control: When a board can schedule a vote. This bill (SB 194) limits school boards to schedule a referendum for the purpose of increasing the school district’s revenue limit only concurrent with a spring election or with the general election and only if the election falls no sooner than 70 days after the date on which the board adopts and files a resolution to that effect. Learn more.

Referendum restrictions on local control: What a board must include on referendum ballot. This bill (SB 187) requires a school board to include specific financial information on a referendum ballot, including the total amount of debt to be issued, the total amount of interest and related debt service costs to be incurred, and the sum of the principal, interest, and related debt service costs. Read more.

ESSA & the WI Legislature. The state Department of Public Instruction is working on a plan it needs to submit to the feds to comply with the new federal education law, the Every Student Succeeds Act, requiring participation by educators and other stakeholders. A bill, AB 233, received a public hearing this week and would require DPI to first submit its plan to the Assembly and Senate education committees for approval by May 15, letting lawmakers propose changes before it goes to the federal government for approval. See the bill history.

Final Joint Finance Committee Budget Hearing. The Legislature’s budget-writing panel concludes public hearings this week, and then is expected to debate the final version through May during which time the panel votes on budget items. The governor continues his statewide tour to tout his K-12 education budget.

Coming Up in the Legislature

April 24

  • Senate Committee on Education. The panel will hold an executive session on bills related to recovery charter schools and a mental health training program. Click for the agenda. Here’s a summary of the bills:
    • AB 11 authorizes the director of the Office of Educational Opportunity in the University of Wisconsin System to contract for the operation of a recovery charter school, insurance coverage of mental health treatment provided by a recovery charter school, and making appropriations.
    • AB 6 authorizes the director of the Office of Educational Opportunity in the University of Wisconsin System to contract for the operation of a recovery charter school, insurance coverage of mental health treatment provided by a recovery charter school, and making appropriations.

Recent Developments

April 20

  • Tech ed equipment grants. A fiscal estimate was received for SB 125, which provides technical education equipment grants for school districts, provides an exemption from emergency rule procedures, and grants rule-making authority. View Bill History

Don’t see something in the wrap-up? Looking for more information? Contact Christina Brey.

WRS participants to see payment increases

From the Department of Employee Trust Funds

The Wisconsin Department of Employee Trust Funds has announced annuity increases for the nearly 200,000 retirees of the Wisconsin Retirement System. The Core annuity adjustment is 2.0% and the Variable annuity adjustment is 4.0%, effective May 1.

This is the fourth consecutive year of positive Core annuity adjustments.

By design, the WRS does not provide guaranteed cost of living adjustments, or COLAs. Instead, annual Core annuity adjustments (dividends) are based on trust fund investment performance and actuarial assessments to fund current and future WRS retirement benefits.

The State of Wisconsin Investment Board reported final investment returns for 2016 of 8.6% for the Core Fund and 10.6% for the Variable Fund. Approximately 75% of WRS benefits paid come from investment earnings generated by SWIB, which manages WRS trust fund assets.

To limit wide swings in retiree pensions from year to year, gains and losses in the Core Trust Fund are spread (“smoothed”) over a five-year period. This year’s 2% Core annuity adjustment reflects investment results from 2012-2016. Smoothing also helps keep annual changes in WRS employer and employee contribution rates stable.

WRS Facts:

  • The WRS paid nearly $4.9 billion in retirement benefits in 2016. More than 85% of WRS retirees live in Wisconsin.
  • The average annual pension of WRS retirees is approximately $24,700, as of December 31, 2016.
  • With approximately $98 billion in assets, the WRS is the 9th largest U.S. public pension fund and the 25th largest public or private pension fund in the world.
  • Core annuities will be increased if there is an annuity reserve surplus of at least a 0.5% increase, or reduced if there is an annuity reserve shortfall of at least a 0.5% decrease.
  • Annualized annuity adjustments for the Core and Variable Trust Funds, as of December 31, 2016, are as follows:
    • Core, 5-year: 1.4%
    • Core, 10-year: 0.5%
    • Core, 20-year: 2.6%
    • Variable, 5-year: 6.5%
    • Variable, 10-year: 0%
    • Variable, 20-year: 1.5%
  • CPI
    • 5-year: 1.4%
    • 10-year: 1.8%
    • 20-year: 2.1%

Legislative Update – February 3

February 2

  • Senator Jon Erpenbach (D-Middleton) announced 12 upcoming listening sessions across his district.
  • Republican leadership announced plans to hire outside lawyers to represent them in an ongoing redistricting lawsuit, which drew swift opposition by Democrats.
  • The Wisconsin Legislative Children’s Caucus announced a series of informational meetings, Community Efforts to Strengthen Families, across the state which will feature local, invited speakers who focus on primary prevention and serve at-risk families. The Children’s Caucus describes itself as a bi-partisan group with the purpose of cultivating a legislature dedicated to advancing promising, evidence-informed public policy that improves the life of every child.

February 1

  • The governor unveiled his plan to provide $66.5M in additional rural schools funding, and some school districts are weighing in on it. The governor will again refer to this during his budget address on February 8.

January 31

  • The State of Wisconsin Investment Board (SWIB) posted an open letter in response to criticism leveled against it by the Legislature’s Joint Audit Committee.
  • Representative Jim Ott (R-Mequon) and Senator Alberta Darling (R-River Hills) began to circulate a bill (LRB-1378) to repeal the school start date in Wisconsin.

January 27

  • A federal appeals court ruling on the state redistricting case ordered that Wisconsin to produce new maps, pass them through the legislature, and have the governor sign them no later than November 1, 2017.

Don’t see something in the wrap-up? Looking for more information? Contact Christina Brey.

Retirement Security forums being held throughout the state

The Wisconsin Alliance for Retired Americans, in coalition with many groups, is presenting information about Retirement Security at a series of forums throughout Wisconsin.

Medicare, Social Security, the Wisconsin Retirement System, Private Sector Pensions and Retirement Savings Accounts are sure to be at the forefront of political attacks over the coming years. It is imperative that we become educated and organize to protect our collective interests.

The alliance is working with the WI State AFL-CIO, area labor councils, the Wisconsin Coalition for Retirement Security, and Protect Our Wisconsin Retirement Security to educate and mobilize retirees across the state to protect and expand the ability to retire with dignity. WEAC is a partner with the Wisconsin Coalition for Retirement Security.

Please see the schedule below and let your friends and neighbors know about these events. More dates and locations will be added to the list below. If you would like a forum in your area, please reach out to the alliance Executive Director, Greg Neil at 608-556-9521 or exec.dir@wi-alliance.org.
RST Flyer Print - White Background

Private retirement system modeled after WRS would help Wisconsin citizens build secure futures, Kippers testifies

TrustFund_250pxCreation of a Wisconsin Private Retirement Security Board modeled after the highly successful Wisconsin Retirement System for public employees would help build a more financially secure future for Wisconsinites, “which means less reliance on social programs, a stronger economy and a more vibrant Wisconsin,” WEAC President Betsy Kippers said Thursday in testimony before a Senate committee.

Kippers spoke in support of Senate Bill 45, which would create the private retirement board and provide for the State of Wisconsin Investment Board to assist the board in managing and investing the assets of the fund and the assets of the accounts of participants in the plan and provide for the ETF board to assist the board in administering the plan.

“Senate Bill 45 would deliver a uniquely Wisconsin product.  It applies lessons learned from our successful Wisconsin Retirement System (WRS) to create retirement options for private sector employees, leading to greater financial independence for Wisconsinites,” she told the Senate Committee on Labor and Government Reform.

“Why should the Wisconsin Retirement System serve as a model for a private retirement security option?” Kippers asked. “In answering this question, I am reminded of the lyrics to a hit song recorded by Tina Turner.  It’s because the WRS is ‘simply the best, better than all the rest,’ as the song goes. Wisconsin can take pride that the WRS is one of the best managed and funded systems in the nation. In short, the WRS is working for Wisconsin, to which the educators across the state can attest. And with this bill, the WRS can serve as a model.”

Read Betsy Kippers’ entire testimony:

No Title

No Description

 

Milwaukee Public Schools takeover plan weakens WRS, causes unfunded retirement liabilities

Contributions to WRS could be cut $2.5 million in first biennial period, hundreds of millions thereafter

From the Wisconsin Coalition for Retirement Security

the red rectangle buttonReferencing annual reports by the Wisconsin Department of Employee Trust funds, as well as a study of the Wisconsin Retirement System ordered by Governor Walker in 2011, the Wisconsin Coalition for Retirement Security warns that the proposal to privatize Milwaukee Public Schools – currently under consideration by the Legislature’s Joint Finance Committee – will have serious repercussions for state retirees and taxpayers.

WRS participants in MPS contribute about $36.75 million to the WRS each year, or about 2% of the entire system. Turning over neighborhood public schools to the private charter industry would destabilize the retirement system nationally recognized as the best in the nation.

“This is a system which has worked for decades under the leadership of Republican and Democrat Governors, why put that at risk in the current budget?” asked Rob Golla, a jailor in Stevens Point.

If today’s Milwaukee school employees are no longer part of the WRS, it will cause an unfunded liability of at least $210 million over the next 30 years. This money would have to be made up through increased taxes, or will be borne by the employees who dedicated their careers to public service.

“Taxpayers could end up on the hook in the long run, said Rob Hansen, Vice President of the Greenfield School District, which has about 400 WRS members. “The dirty secret is that those costs will be transferred to the rest of the state in the long run, so it’s  going to drive up all our costs, it’s not just Milwaukee’s problem,” he added.

###

WEAC President Betsy Kippers said the report from the Wisconsin Coalition for Retirement Security is another reason for the Legislature to reject the proposal to take over some Milwaukee Public Schools.

“School takeovers are never in the best interest of students or the community,” Kippers said. “Look at Detroit and New Orleans, where taxpayers are paying the price for failed attempts to turn public schools private. This bad idea is even worse when you consider it could destabilize the state’s retirement fund and end up costing taxpayers even more. Educators call on politicians to reject this foolish idea and instead explore the Community School model for education improvement.”

We must ‘carefully watch’ the state retirement system, Vinehout says

Changes in the autonomy of the Investment Board makes it doubly important the public and the Legislature keep a close eye on the money invested and those doing the investing, State Senator Kathleen Vinehout writes in a new column.

In what Vinehout says is a “highly unusual” process, the 2011 state budget gave the State of Wisconsin Investment Board power to create staff positions and set its own budget. “At the recent hearing, members quizzed SWIB officials about rising operating and investment costs, increased risky and expensive investments and poorer performance as measured by one-year and three-year returns compared to nine other states’ pension investments,” she writes. “We’ve got to carefully watch what happens here.”

Here is Vinehout’s entire column:

Kathleen speaking during a committee meeting.“What’s going on with the state retirement system?” the retired woman asked me. She’d started a business but needed retirement income to keep things going. “Wisconsin’s system is the best funded in the country,” I told her. “But we’ve got to carefully watch what happens there.”

More than one out of ten Wisconsinites participates in the Wisconsin’s Retirement System (WRS) either as a current or former state or local government employee. Countless more family members depend on a well-run system to keep their aging relatives out of poverty.

As reported by the La Crosse Tribune in June of 2012, “Wisconsin is the only state in the nation to receive high marks for its public employee pension system.” The article commented on work of the Pew Center for States. Over the years Pew has released several reports analyzing states’ obligation to their employees. Many states have a large funding gap but not Wisconsin.

Much confusion exists as to why Wisconsin is so far ahead of other states. The La Crosse Tribune article reminds us, “The ‘solid performer’ ranking is for fiscal year 2010. That’s before Republican Gov. Scott Walker and the Legislature required public employees to contribute more to their pensions.” Some of the action to protect funds happened late in the last decade despite the recession.

The answer to why Wisconsin is so far ahead of other states in funding retirement lies in the unusual ‘self-righting’ WRS formula that adjusts based on investment returns. Another success factor is the strict discipline WRS follows in collecting contributions. A third factor is action taken in 2003 when the Governor and Legislature authorized General Fund bonds to eliminate the WRS unfunded liability.

Cost to taxpayers is kept low – according to a 2012 state report – “the portion of state and local government budgets allocated to retirement costs was only 1.26%”. Compare this to 2.9% nationally using US Census Bureau data.

Recently the Audit Committee, of which I am ranking minority member, held a public hearing reviewing the agency that manages money in the state’s retirement system. We learned details of an important but relatively unknown part of government that oversees investments known as the State of Wisconsin Investment Board or SWIB.

The Investment Board is to – by law – “manage investment assets with the care, skill, prudence, and diligence that a prudent person would exhibit acting in a similar capacity with similar resources, and for similar types of funds.” As of calendar year 2013, SWIB had an operating budget of $34.9 million and managed assets totaled $101.3 billion. This is by far the largest fund in any part of state government.

Because the retirement system is a ‘mature’ system – meaning the number of retirees is expected to be increasing – the money in the system is necessarily very large. WRS funds make up most of the fund SWIB manages. WRS funds total $93.7 billion.

The role of the Audit Committee in overseeing the activities of the Investment Board took on new meaning when the Governor and the Legislature reduced legislative oversight of SWIB. Those voting for the 2011 budget gave SWIB power to create staff positions and set its own budget. This is highly unusual.

At the recent hearing, members quizzed SWIB officials about rising operating and investment costs, increased risky and expensive investments and poorer performance as measured by one-year and three-year returns compared to nine other states’ pension investments.

Money going to salaries, bonuses and other expenses comes out of investment earnings. SWIB saw a 55.7% increase in operating expenses over a 4 year period (from 2009 to 2013). This increase was during the Great Recession when many public employees saw no raises, took unpaid furloughs, and retirees took deep cuts.

A large part of the increase in the operating budget was due to increases in bonuses – one totaled $660,400! Officials argued that keeping good employees requires an investment.

I’d argue investing in good employees includes helping them through retirement. Changes in the autonomy of the Investment Board makes it doubly important the public and the Legislature keep a close eye on the money invested and those doing the investing.

Comment on the WEAC Facebook page:

 

Comment and share on your Facebook page:

[fbcomments]