Kaukauna School Board and Scott Walker have something in common…budgeting is not about the money – it’s about union busting

The Kaukauna School District has been put on display by the Walker Administration recently as a shining example of how the passage of Act 10 (curbing collective bargaining rights for teachers) has saved Wisconsin Public Schools. The story has received national attention, being cited by right-wing talk show host Rush Limbaugh, and Byron York in the Washington Examiner. The near miraculous shift from a $400,000 deficit pre – Act 10, to a $1.5 million surplus post – Act 10 seems almost too good to be true. While the  numbers are true; the actual story of where the deficit came from, the actions of the School Board during “negotiations,” and the effect on the people involved have conveniently been ignored by Walker and the GOP, and unreported in the media – until now. Badger Democracy has received email communications from Teachers Union Representation to District Administration outlining concessions offered to assist the District in balancing its budget – which went virtually ignored. A School Board member, speaking on condition of anonymity, has also informed Badger Democracy that a small faction of the Board and Administration colluded to ignore the offer and wait for Act 10 to take effect – potentially violating State Open Meetings Law, and weakening the Union’s ability to bargain and represent its members. The District’s budget process also reveals a method of creating a non-existent deficit – giving the appearance of a fiscal emergency, where none exists.  

The forecast Kaukauna 2011-2012 budget (page 5) cites a revenue loss of nearly $2 million from state shared revenue  – a result of Governor Walker’s budget impact on public school revenue cuts. Conveniently, this impact has been ignored as a basis of the deficit “crisis” facing the District. The District also faced an $840,000 loss in Open Enrollment (page 10) from students enrolling outside of the district and subsequent shared revenue adjustments. The summary shows a nearly $3 million deficit in revenue to expenditures before any adjustments are made (page 12).  After the proposed cuts in spending, including layoffs of certified teachers, and closing an Elementary School, the District projects a $33,901 surplus. The budgeting process also ignores the transfer of a 2010-2011 $345,000 surplus to the current year, which would have alleviated some of the deficit. School Board President Todd Arnoldussen, in a phone interview, stated that had it not been for the passage of Act 10, the District would have faced “increased deficits” in coming years. He also stated that deficits have been an issue in previous years – so much so, the District could have potentially become insolvent had something  not changed. He specifically cited the strain from Teacher Salaries and Benefits, stating that Disrtict teachers are “among the highest paid in the state.” A comparison of the current and previous Budgets shows his statement to be misleading and patently untrue. The budget deficit, in fact, has been created by District Accounting practices.

In the 09-10 Budget, Kaukauna began the practice of “Level 2 Budgeting.” Simply stated, the District now includes future fixed costs in its CURRENT budgeting cycle. Arnoldussen cited the Districts’  post-retirement benefit liability at “around $22 million a year.” The problem with this number, is that it includes all present and FUTURE staff retirements. Normally, a District would express that number as a future expense, balancing it with future revenues – such a future obligation would have no negative fiscal impact on a School District. Unless it includes a portion of that obligation in its current year – which is exactly what Kaukauna has done. The annual expenditure for post-retirement benefits was $1.05 million per year (2009-2010). The District added an additional $500,000 per year as a “Level 2” expenditure – for the future. The District did the same accounting for Computer “Infrastructure” at $300,000 per year (in spite of already budgeted expenditure in this area), and building  “maintenance” at almost $1 million per year (again, in spite of current improvements already in the budget). $1.8 million in additional expenditures – not for current, but future spending. In the 2011-2012 budget, the district reduces some of this “Level 2” spending in Computer and Building Maintenance. The future consideration is still nearly $1 million, almost 50% of the lost state revenue. This practice creates the appearance of a “fiscal emergency,”  especially to citizens who look only at the bottom line. True accounting of the current year’s expenses would have cut the deficit nearly in half, but would have had much less impact on shaping opinion.

In response to the Kaukauna Schools budget situation, and to preserve teacher’s jobs in the face of layoffs, the Teachers Union offered a concession to the District in early April. Here are the initial proposed concessions:

          2 Year Extension of the current contract

·         KEA Pays Share of the Pension (5.8% the same amount Act 10 would require)

·         KEA Pays 12.0% of Health Insurance Premium (the same amount Act 10  would require) if District chooses insurance carrier providing the same benefits as the WEA Trust 2010-2011 Plan

·         KEA Pays 12.0% of Health Insurance Premium if the District keeps WEA Trust, plus the difference in cost between what the District’s choice would have cost, and the actual cost of WEA Trust

·         KEA Accepts a Total Freeze of the Salary Schedule for 2 years (KEA Members stay at their 2010-2011 salary, step, and lane)

·         District controls start/end times, providing it includes a continuous 7.5 hour day plus a 30 minute duty free lunch

·         KEA would agree to be flexible on calendar, enabling district to consolidate half-days into full days.

The estimated savings to the district was estimated to be $1.6 – $1.8 million. These concessions, combined with the $345,000 surplus  from the previous year, and return to current year budgeting, would have created a surplus in the Districts Operating Budget. On April 13, the KEA leadership was led to believe their offer was close to being accepted. A meeting was planned that day with Mary Weber, District Administrator:

From: Geoffrey, Jim
Sent: Wednesday, April 13, 2011 10:17 AM
To: Meyer, Patrick; King, Tony
Cc: Weber, MaryKay
Subject: Meet with Mary

Patrick and Tony,

Mary will be meeting with the board leadership team (Todd and Giovanna) tom=rrow morning.  It would be very helpful to have the document we’ve been =orking on.  If you are availably, Mary can meet today at 11:45 or after sc=ool.

Please reply to this message (I’m copying Mary) to set up the appointment=if you can meet today.

-Jim

On April 14, the KEA was advised to reserve the school auditorium, in the event a vote on the concessions was needed. This request came from Mary Weber, District Administrator and was acted on by a KEA Teacher’s rep:

From: Geoffrey, Jim
Sent: Thursday, April 14, 2011 6:27 PM
To: King, Tony; Meyer, Patrick
Subject: KHS Auditorium Reserved

I have reserved the KHS Auditorium after school next Tuesday, April 19th an= next Wednesday, April 20th in case it would be necessary. We have no scho=l the 21st-25th.

-Jim

After submitting good faith concessions, which would have given the School District the “tools” it needed to balance the budget and keep good will with the teachers, the School Board outright rejected the offer on April 19. With no explanation or counter-offer, the School Board claimed to have voted “unanimously” to reject the offer (although no record of this vote exists), and wait for Act 10 to take effect:

From: Meyer, Patrick
Sent: Tuesday, April 19, 2011 8:44 AM
To: KEA Members
Subject: Negotiations Update

Fellow KEA Members:
Approximately two weeks ago, the KEA Negotiations Committee met to discuss =he concessions we would consider proposing to help close the district’s =rojected budget deficit of nearly $3.9 million.  We created the following =roposal and submitted it to the district leadership last week for consider=tion during closed session on Monday, April 19, 2011.
Proposal for Extending the 2009-2011 KEA Master Agreement
(see above listed concessions)
Early this morning, Tony King, Jim Geoffrey, and I met with the school boar= president, Todd Arnoldussen, Mary Weber, and Bob Schafer to discuss an ex=ension to the KEA Master Agreement.  Todd explained that the board careful=y considered our proposal, but in the end decided, via a unanimous vote, t= reject our proposal and continue their budget deliberations and changes u=der the assumption that the current collective bargaining law will remain =n place.
Please know that your negotiations committee and the KEA leadership will co=tinue to explore all options to enable us to maintain the rights that we h=ve struggled to achieve.  As more information becomes available, we will k=ep you informed.
Sincerely,
Patrick D. Meyer
KEA Negotiations Co-Chair

There was no meeting scheduled for April 18 or 19, nor does any record exist of such vote, bringing into question the potential violation of State Open Meetings Law. Board President Arnoldussen has “no memory of that meeting.”  Additionally, a School Board Member (speaking on condition of anonymity) confirmed for Badger Democracy that a faction of Board Members (including President Arnoldussen) and the District Business Manager (Bob Schafer) intentionally set aside the concession offer – motivated by the imminent passage of Act 10 crippling the union, their ultimate ideological goal (Bob Schafer reportedly keeps a portrait of Rush Limaugh in his office). The source stated the motivation for speaking out being the negative impact of the budget on teachers, the divisive actions of the Board President, and concern that people in the community didn’t fully understand the nature of the Board’s actions.

As went Scott Walker’s Budget, so goes the Kaukauna School District Budget. The process was never about a fiscally responsible budget – but about breaking the union. The real impact will undoubtedly be felt in the community, as teachers facing an 8.4% pay cut spend less in the community, or leave for other communities. In the end, the children and families who rely on public education will suffer, as will the entire state – as happens when ideology trumps responsible governance. The mainstream media has again missed the real story. The human impact of this budget fiasco – which, upon further review in the Kaukauna case, is still a disaster.