How Walker’s Proposal Affects (City of) Madison Employees

From a memo from City Attorney Michael May. So . . . sigh . . . for what it is worth. I never know if he’s given political or legal advice. The most important part is in 3 . . . and, ask yourself, why are municipal employees impacted, what do they have to do with the state budget crisis. These changes won’t help the state budget . . . which is why Walker is doing this, right?

On Friday, February 11, 2011, Governor Walker released his Budget Repair Bill. The Bill, if enacted, contains far-reaching changes for the payment of compensation and benefits for all public employees, and for the rights of public employee union members. The Governor has asked that the Legislature act on the Bill this week.

This memo will summarize the most important changes that impact the City of Madison. The Bill is 144 pages and this analysis is based on our best interpretation of it at this time. It is possible that some of my analysis of the Bill is flawed due to the short time to review it. Nor does this memo look at each provision of the Bill that could impact the City or its employees.

1. Payment of Health Insurance Premiums for those in the State Plan.
A. For represented general employees:
The provisions apply to any Collective Bargaining Agreement (CBA) that is inconsistent with the law on the first date, after the effective date of the Bill, that the CBA expires, or is terminated, extended, modified or renewed. Subject to that provision, at least as of January 1, 2012 (and perhaps earlier, see below), the City could pay no more than 88% of the premium of the lowest plan available to an employee (section 101 of the Bill). The employee must pay the rest of the premium. Based on our quick analysis of current rates, this will require employees to pay about $60-95 more per month for single coverage and $150-235 more per month for family coverage.

B. For represented protective service employees:
Represented police and fire employees may bargain for the employer to pick up more than 88% of the premium of the lowest available plan for employees.

C. For non-represented employees:
At least as of January 1, 2012, and perhaps as early as April 1, 2011, the City may pay no more than 88% of the premium of the lowest plan available to employees.

D. Potential earlier application:
Another provision of the Bill (section 89) appears to make these provisions effective immediately. A separate non-statutory section requires State employees to pay portions of their health insurance premiums immediately. Our analysis to date does not confirm whether these provisions apply only to State employees or municipal employees in the State’s plans. The City’s HR Department had a conversation with the State ETF Division, and ETF indicated they believed these provisions would be effective as of April 1, 2011.
It should also be noted that the State is directed to study other ways to reduce costs of health insurance in the future, including increasing the co-pays of covered employees.

2. Payment of Contributions to Wisconsin Retirement System (WRS).
A. For represented general employees:
The provisions apply to any Collective Bargaining Agreement (CBA) that is inconsistent with the law on the first date, after the effective date of the Bill, that the CBA expires, or is terminated, extended, modified or renewed. Subject to that provision, effective immediately, the City may only pay one-half of the combined contribution to the WRS. Employees are required to pay the other one-half. This one-half to be paid by employees amounts to approximately 5.8% of wages. Thus, for an employee making $40,000 per year, this would require an additional deduction from pay of about $89 per pay period.

B. For represented protective service employees:
Represented police and fire employees may bargain for the City to pay the entire contribution to the WRS.

C. For non-represented employees:
Effective immediately, the City may pay no more than one-half of the contributions to the WRS, and the employee must pay the other half. This one-half to be paid by employees amounts to approximately 5.8% of wages. Also, the City is prohibited from establishing its own defined benefit pension plan to mirror the WRS unless its employees pay at least one-half the required contribution to the plan.

3. Public Employee Collective Bargaining Rights.
Collective bargaining rights for protective service employees remain essentially as they are now. For general employees, collective bargaining is all but eliminated. The City may only bargain over base wages, and any increase in those base wages may not exceed the Consumer Price Index (CPI), unless a referendum is held. This prohibition on wage increases exceeding the CPI appears to cover general employees (except managers, supervisory and executive positions) even if they are not in a union. (Secs. 150, 223).

The Bill eliminates interest arbitration for general municipal employees. There appears to be no method other than voluntary mediation to settle disputes between the City and the unions for general employees. (Secs. 214-215).

Current prohibitions on the right to strike remain in the law.

Municipal employers may not collect union dues on behalf of the union for general employees, and members of a union may not be required to pay such dues. (Secs. 197 and 205).

Future CBAs may only be for one year. (Sec. 216).

Unions will be required to be recertified by a vote on an annual basis, and the first recertification must be made in April, 2011. (Secs. 220 and 9132). Existing CBAs are to be terminated “as soon as legally possible.”

There are two areas of the law that are less than clear. First, police and fire supervisors may engage in negotiations with the City, but they generally are not considered to be unions and the agreements reached are not considered to be CBAs. Whether the general exceptions in the Bill for protective service employees are broad enough to cover these protective service supervisors is not clear.

Second, Federal law relating to transit funding requires an agreement to maintain certain collectively bargained protections (called the 13(c) agreement). We understand that states with employee rights comparable to those provided for in this Bill still are able to obtain Federal transit funding under special treatment of the 13(c) agreements. We have yet to determine the details of that issue.