Jul 07, 2010

Teacher Bailouts - A Bad Idea


The Obama administration is pressuring Congress to spend $23 billion to rehire the more than 100,000 teachers who have been laid off across the country. Before Congress succumbs, it should know about the unfolding fiasco in Milwaukee. Wisconsin is a microcosm of the union intransigence that's fueling the school funding crisis in so many cities and states and leading to so many pink slips. It also shows why a federal bailout is a mistake.

Because of declining tax collections and falling enrollment, Milwaukee's school board announced in June that 428 teachers were losing their jobs—including Megan Sampson, who was just awarded a teacher-of-the-year prize. Yet the teachers union, the Milwaukee Teachers Education Association, had it within its power to avert almost all of the layoffs.

The average pay for a Milwaukee school teacher is $56,000, which is hardly excessive. Benefits are another matter. According to a new study by the MacIver Institute, a state think tank, the cost of health and pension benefits now exceeds $40,000 a year per teacher—bringing total compensation to $100,500.

The current health plan costs taxpayers $26,844 per family, compared to the typical $14,500 cost for a private employer family plan. The plan does not require teachers to pay any premiums toward the cost of the health plan—a situation that is all but extinct in private employment. In the spring, the school board offered a new health plan that would reduce costs to $17,172 per family. The plan would have saved money by requiring co-pays.

AFP/Getty Images

US President Barack Obama, alongside US Secretary of Education Arne Duncan

Many Milwaukee teachers have been quoted in the local press complaining that union officials never offered them a choice to make health-care concessions, and many say they would have been willing to go with reduced benefits to avoid the firings. The school system superintendent, William Andrekopoulos, says he was "surprised" how uninterested the union was in negotiating a reasonable cut to prevent the firings.

So why were these teachers considered expendable by the people who are supposed to protect their jobs? This brings us back to Mr. Obama's $23 billion teacher bailout.

The Milwaukee Teachers Education Association was immovable on benefits in part because it placed a bet on its Democratic friends in Washington rushing to the rescue. "The problem must be addressed with a national solution, a federal stimulus package that will restore educator positions," Pat Omar, the union's executive director said in June. The union's strategy in recent weeks has been to stage rallies demanding a federal bailout, and it used hundreds of school kids at those rallies as political props.

Milwaukee's experience suggests that the $23 billion bailout fund is meant to provide a federal life raft to keep afloat the unsustainable, gold-plated compensation packages that unions negotiated when states and cities were flush with cash. The citizens of Wisconsin have rejected tax increases to avoid layoffs, and they're right to have done so.

It is hardly sensible to force taxpayers in Mississippi, Colorado, New Hampshire and elsewhere to step in and save the union's bacon. A federal bailout only further entrenches bad policies—especially unaffordable benefit packages—that led to the school funding crisis in the first place and leave every child behind.

Mr. Moore is senior economics writer for The Wall Street Journal.

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