Possible recall challenger to Wisconsin Gov. Scott Walker says she cut public employee costs by $10 million

Bracing for a likely recall election in 2012, Republican Wisconsin Gov. Scott Walker tells voters in a TV ad that he saved them "hundreds of millions of dollars" by making public employees pay more toward their pensions and health insurance.

In contrast, one of Walker’s potential challengers, Democrat Kathleen Falk, was asked on a Milwaukee public affairs show that aired Jan. 8, 2012 whether she worries about being perceived as "the public employee union candidate."

Mike Gousha, host of the WISN-TV show, posed the question after alluding to a Milwaukee Journal Sentinel report that said two state union leaders tried to help clear the Democratic field for Falk by discouraging Milwaukee Mayor Tom Barrett from running in a recall.

Falk, who resigned from her post as Dane County executive in April 2011, answered Gousha by saying she’d had her own success in Madison in curbing public employee costs.

"Well, you know what I've done as the county executive for 14 years," said Falk. "When times got tough, I sat down with eight unions and bargained about $10 million in reduction of their salaries and health benefits by them, voluntarily at the collective bargaining table, agreeing to that."

Falk was drawing a pointed contrast. She used collective bargaining with unions to achieve savings on employee costs, while Walker and the Republican-controlled Legislature used legislation to force most state and local employees to pay more for benefits.

But let’s check Falk’s more specific claim -- that she reduced salaries and health benefits of Dane County employees by about $10 million.

We asked Falk spokeswoman Melissa Mulliken for evidence. She provided comments attributed to Dane County director of administration Travis Myren that detailed $9.4 million in reductions, so we decided to contact him directly.

Myren has been director of administration since being promoted from deputy director by Falk in April 2009.

Myren said the $9.4 million in savings were the result of three Falk initiatives that were agreed to by public employee unions and then applied to non-union employees, so that all 2,200 county workers were covered. He also cited a fourth agreement that would put the savings over $10 million.

2009: Temporary pay cut -- $3.6 million

Falk and the employee unions agreed to cut wages 5 percent for six months, saving $3.6 million. The deal was approved by the county Board of Supervisors in June 2009.

In exchange, employees got 48 additional hours of "personal leave" time -- paid time off that had to be taken within certain deadlines. The only way that could create a cost to the county is if employees used that additional leave instead of vacation days, banked those unused vacation days and then were paid in cash for them upon terminating their employment with the county, Myren said.  He said there is no way to estimate how much, if any, such payouts the county might one day make.

So, the county saved $3.6 million with the 2009 pay cut, though it could face some higher cash payouts for vacation days down the road.

2010: Temporary pay cut -- $4.7 million

After the 5 percent pay cut expired, putting salaries back at their previous level, Falk and the unions agreed to cut pay 3 percent for one year, saving $4.7 million. That deal was approved by the County Board in December 2009.

In exchange, the county agreed to no layoffs in 2010 and a number of other benefit enhancements, including 64 more hours of personal leave; increasing by 50 the number of hours employees can bank in sick leave, which can be used to buy health insurance after retirement; and senior employees got three extra vacation days per year.

So, although the county granted some benefit improvements, it saved another $4.7 million in salaries with the 2010 pay cut.

2011: Health insurance changes -- $1.1 million

A new employee contract for 2012 through 2014 require employees to pay more for their health benefits. For example, a co-pay for doctor office visits was created and higher deductibles are imposed for certain services. The changes were approved by the County Board in January 2011.

Myren said the changes reduced the county’s premiums by $900,000 and the additional employee contributions are projected to save another $200,000, for a total savings of $1.1 million for 2012.

In exchange, the county agreed to remove a cap on the pension contributions it makes for employees -- potentially exposing the county to higher pension costs through 2014.

Pension funding for Wisconsin public employees is somewhat complicated. A formula, which changes annually, determines what percentage of an employee’s salary is to be contributed to the pension by the employer and what percentage by the employee. However, Dane County, as many public employers in Wisconsin have long done, makes both contributions; in 2011, the employee portion was 5.8 percent of the employee’s salary.

Under the 2012-2014 contract, the county agreed to eliminate a 6.5 percent cap on the employee contribution that was in the previous contract. So, if the pension funding formula changes and puts the employee contribution higher than 6.5 percent, the county would have a higher pension cost than under the previous contract. State pension figures show the employee contribution for most public employees -- including all non-elected Dane County employees -- was 5 percent from 1989 through 2011, but that it rose to 5.9 percent in 2012 after the Walker-led legislation took effect.

Starting in 2015, after the current contract ends, Dane County employees will be subject to the Walker-led collective bargaining legislation and will be forced to contribute to their pensions.

So, the county is exposing itself to potentially higher pension costs through 2014 in exchange for $1.1 million in immediate health insurance savings.

"Voluntary leave without pay" program

The two pay cuts and the health insurance savings total $9.4 million in reductions in salaries and health benefits -- or, more precisely, the cost of health benefits. That’s just short of the "about $10 million" claimed by Falk. But Myren said another Falk initiative negotiated with the unions -- "voluntary leaves" -- also should be considered.

Voluntary leaves -- which differ from personal leaves in that they are days off without pay -- were created in 2003. Through 2011, personal leaves saved the county $1.45 million, Myren said.

That would put the total Falk-led employee savings at nearly $11 million.

We ran all of this past two of Falk’s political foes on the Dane County Board, supervisors Eileen Bruskewitz and Ronn Ferrell.

They described Falk as a friend of public employee unions, pointing out that under the current contract she negotiated, union employees got 3 percent raises at the end of 2011; and that, unlike other local governments, the county can't use until 2015 the Walker legislation to put a greater share of health and pension costs onto employees. But they didn’t dispute the fact that her agreements with the unions saved about $10 million.

Our conclusion

Falk said she used collective bargaining to reduce Dane County employee salaries and health benefits by "about $10 million." The deals create the possibility that the county will have higher payouts for pensions and vacations in future years, but that is not certain. What is known is that the deals have saved the county more than $10 million in salaries and health benefit costs.

We rate Falk’s statement True.

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Derrick Van Orden

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