refocus wisconsin | a project of the wisconsin policy research institute | 1

Refocus Wisconsin

A project of WPRI — The Wisconsin Policy Research Institute contents

ii welcome Letter from WPRI Chairman and President

History 2 leaving the Middle Behind – Wisconsin’s Turning Point — John Gurda

Government 18 the State Crisis & Need for a New Charter — Stephen Goldsmith with Jayson White and Ryan Streeter 39 sustaining a Great Public University — Michael M. Knetter and Gwen Eudey 46 lessons in Budgeting: Listening to our Founders — George Lightbourn and Christian Schneider The statue atop Education 55 sounding the Alarm: a Wake-Up Call with Directions — Frederick M. Hess & Olivia Meeks the state Capitol 65 Great Schools? Not Without Great Teachers. — Sarah Archibald symbolizes the spirit 77 maybe Elvis Should Have Stayed in the Building — Alan J. Borsuk 84 public Education in Wisconsin: Facing Reality of Wisconsin progress. — Rose Fernandez 97 saving Money and Teachers’ Jobs in One Simple Stroke — M. Scott Niederjohn

Economic development 106 wisconsin: We’ve Got a Problem — John Torinus, Thomas R. Hefty and Sammis White 116 desperately Seeking a New Tax System — Richard G. Chandler 127 Growing Anger Over Free Government Pensions — WPRI Staff

Polling 134 public Voices: Wisconsin’s Mind on Education — Kenneth M. Goldstein and William G. Howell 143 wisconsin’s Great Disconnect – Worried but Still Happy — Kenneth M. Goldstein

— Warren Kozak, Editor welcome Chapter 1

Welcome,

Refocus Wisconsin is an ambitious project born of a love and concern for our state. For more than two decades we at WPRI have witnessed the key pillars of our state deteriorate. Wisconsin’s economy has never fully adjusted to changing national and global trends. We have been losing manufacturing jobs by the thousands, and, worse, we are not creating enough good replacement jobs. In education, our schools are no longer the national leader they once were. Tragically, Milwau- kee is in the process of failing its third generation of children, with no signs of a turnaround. Our once-innovative government has become hidebound. We have come to accept mediocrity from state government that we would never accept from our sports teams. If a pitcher for the Brew- ers had done as well as our recent political leaders, he’d have been taken out in the first inning. We know we need to make changes, but where should we begin? You hold the answer in your hand. To address these concerns, we scrupulously avoided seeking the input of the two groups who are largely responsible for our gloomy condition: politicians and special interests. Instead, we turned first to the people ofW isconsin. In the most extensive issue polling ever undertaken in the state, we asked the citizens about Wisconsin’s problems and an array of possible changes. What History they told us shows a severe disconnect between our leaders and the public. The second group we engaged are some of the best thinkers and writers in Wisconsin and the nation. We asked this all-star collection of thinkers from across the political spectrum to lay out the big ideas that will get our beloved state back on track. In this volume we have included their ideas for Wisconsin, a unique combination of innovation and tough love. Refocus Wisconsin will result in a changed Wisconsin, a Wisconsin marked by a positive attitude built around innovation, commitment and risk-taking. Through this project, we hope to create the road map to a place where our aspirations and expectations will be high and we will relish, rather than shrink from, the prospect of breaking barriers. We hope and believe that years from now, when people ask the question “What turned this state around to the positive place it is today?” they will look to this project as the starting point.

James R. Klauser George Lightbourn Chairman, WPRI Board of Directors President, WPRI ii 2 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 3

well defined. In the popular imagination, the landscape itself. No one who travels Wis- Norwegians were safely ensconced in Westby consin can fail to notice how commerce has and Stoughton, the Swiss in New Glarus, the migrated from Main Street to the edge of town, Germans in a hundred communities through- generally coalescing around big-box retail- out the state, and the resident Indian tribes ers oriented to the nearest four-lane highway. dwelt in picturesque isolation on their reserva- The national retailers offer more goods under Leaving the Middle Behind— tions. There were minorities in the larger cities, a single roof than small-city downtowns can to be sure, but they seldom traveled beyond under dozens, and the state’s historic retail Wisconsin’s Turning Point their home communities. The state’s European districts are reduced to a mix of antique shops, imprint was unmistakable. real estate firms, and the occasional restaurant. By John Gurda In the political arena, we prided ourselves The pattern extends far beyond places like We sent historian John Gurda across the state to size up where Wisconsin is on a tradition of fierce independence and Plymouth and Richland Center. Most of the today, what it is thinking and what it wants. The answer to that last question legislative innovation. Wisconsin was a much- business once done in the center of Green Bay resonates loud and clear from the people he talked to…it’s an answer you will watched and rarely predictable laboratory of has migrated to suburban Ashwaubenon, just hear throughout Refocus Wisconsin. social change, the birthplace of such concepts as much of Stevens Point’s commerce takes as the direct primary and worker’s compensa- place in neighboring Plover. The same scenario Twenty-five years is not a particularly long last quarter-century, tectonic shifts that have tion, school choice and welfare reform—and plays out from Racine to Wausau. time, even by American standards. A quarter- moved the state materially from its traditional the Republican Party. We were the home of Joe Other changes in the landscape are more century is barely enough for a single genera- base. Even 25 or 30 years ago, it was possible, McCarthy but also of Gaylord Nelson, a state subtle. Wisconsin is as large today as it was tion to grow from infancy to adulthood— if you didn’t look too closely, to maintain an whose voters have embraced mavericks from at statehood in 1848, and corn, soybeans, and hardly an epoch in the annals of the republic. image of Wisconsin rooted in the 19th century. Bill Proxmire to Russ Feingold. alfalfa are still ubiquitous in most counties, And yet in that blink of an eye, that snap of the For decades there were nearly as many cows as Wisconsin was, in short, a state that but less and less land is devoted to agricul- fingers, the world can change on a multitude people in the state, and the standard postcard worked: a stalwart member of the Union with ture—18 percent less between 1980 and 2008 of levels. of America’s Dairyland was a bucolic scene a solid economy, a solid citizenry, and a solidly alone. The number of farms supported by that Consider the shifts of the most recent of contented Holsteins grazing in spring-fed distinctive political tradition. land has dropped just as fast, falling from quarter-century. In 1985, unless you were in pastures under a clear blue sky. Wishful thinking and a generous dose of 93,000 in 1980 to 78,000 in 2008. Although the military, there were no cell phones, much But the Dairy State was also a factory state, hyperbole shaped the popular image of Wis- Wisconsin still leads the nation in cheese less cell phones that took pictures. There were a capital of enterprise and innovation that consin, but whatever kernel of truth underlay production, California became America’s larg- no iPods, no DVDs, and the first minivans were gave a waiting world the outboard motor, the the prevailing stereotypes has eroded almost est supplier of milk in 1993. Ironically, more still under warranty. Some fixtures ofA meri- all-steel automobile frame, the rubber-tired beyond recognition. There is not the slight- and more Wisconsin dairy farms are assuming can life have slipped beneath the waves since tractor, the NESCO roaster, and enough beer to est doubt that the Badger State has undergone California-scale dimensions. The average dairy 1985—typewriters, card catalogs, long-distance float a fleet of battleships.W isconsin’s indus- a sea change in the last 25 or 30 years— herd has soared from 40 head in 1980 to 99 in bills—and we have grown accustomed to such trial stronghold was Milwaukee, a quaintly agriculturally, economically, demographically, 2010, and a growing number of farms are clas- new features as Google, bar codes, and Viagra. Socialist enclave of “Old World charm and and politically. On a potentially overwhelm- sified as ConfinedA nimal Feeding Operations, From the technological to the pharmaceuti- New World vigor,” with cozy corner taverns ing number of fronts, Wisconsin is in such a or CAFOs—industrial-sized enterprises that cal, these innovations are global in nature, but serving as communal living rooms for an army different state today that a resident returning milk thousands of cows around the clock in there have been equally impressive devel- of skilled workers who delivered an honest after a few decades away might mistake it for a facilities as large as airplane hangars. opments on the state level. Wisconsin has day’s work for an honest day’s pay. different state. CAFOs are technically still farms, but not in experienced transformative changes in the Wisconsin’s ethnic heritage seemed just as Some of the changes are evident in the any sense that Thomas Jefferson would recog- 4 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 5

nize: The yeomen have become hired men. As the city and perhaps the state. The Thirtieth mattresses, tires, and enough bottles and cans Smith was rocked by the recession of the early the transformation continues, the iconic red Street corridor and its multiple sidetracks to fill a hundred Dumpsters. A handful of the 1980s and practically capsized by the automo- dairy barn of tradition is gradually becoming formed a sort of horizontal trellis on which old establishments, notably Master Lock at tive industry’s switch from steel frames to uni- an architectural antique, filled with horses, scores of enterprises took root and grew. Some Center Street, are still operating, but the pad- body construction. In 1997, the frame business boats, or nothing at all. were national or even global in scope: Miller lock plant employs only a fraction of the 1,300 and the entire North Side plant were sold to Commercial sprawl and a new era of Brewing, Harley-Davidson, A.O. Smith (car workers who once labored there. Some of the Tower Automotive, whose efforts to resuscitate agribusiness have both dramatically altered frames), Evinrude (outboard motors), Cutler- corridor’s smaller shops have been converted the enterprise proved unsuccessful. After the the landscape of Wisconsin, but they are by Hammer (electrical controls), Master Lock to day care centers or churches, while their all-too-familiar progression from layoffs to no means the dominant (padlocks), Fuller-Warren larger neighbors have wage cuts to bank- developments of the last (stoves), Koehring (con- been vacant for years, ruptcy, the plant was quarter-century. Other “As the transformation crete mixers), and Interstate windows gone and shuttered in 2006—the changes are so broad that Drop Forge (industrial forg- roofs collapsing. You largest in a long line of they rise to the level of continues, the iconic red ings). Other companies on might be surprised fatalities along Thirti- social trends, remaking not dairy barn of tradition the corridor manufactured to encounter deer eth Street. only the landscape of the is gradually becoming everyday necessities like and songbirds in this Some valiant at- state but our common life chairs, luggage, ink, doors, urban no-man’s-land as tempts at redevelop- an architectural antique, as a people. bedsprings, light bulbs, nature quietly reasserts ment are under way, Three trends stand out filled with horses, boats, or rope, and paint. Still others its dominion. both within the Smith from the rest: the cata- nothing at all.” turned out what might be In the mile north of Townsend Street, you complex and along the corridor as a whole. strophic decline of manu- considered specialties: traverse a land of fallen giants. The for- The programs, most involving sizable out- facturing, the globalization church statuary, potato mer Evinrude plant is sealed up as tight as lays of public funds, have generated some of Wisconsin’s populace, chips, casket trim, pipe a medieval fort, and likewise the Interstate results, but no one is predicting a return to and the growing gap between government and organs, pool tables, and even burial shoes— Forge shop. Cutler-Hammer (Eaton) still does the glory days of A.O. Smith, Evinrude, and the governed. What they have in common is the slippers, essentially, that were not built for research and development work in its office Cutler-Hammer. As the buildings decay and loss of a shared center, a departure from com- heavy wear. Together these industries, large tower, but the firm’s sprawling factory com- the garbage accumulates, the Thirtieth Street mon experience and civic consensus. Any of the and small, employed tens of thousands of plex now houses a smaller manufacturer. The industrial corridor has a post-apocalyptic feel. major trends would alter the fundamental char- workers. saddest sight of all is the former A.O. Smith An old order has vanished; a new one has yet acter of the state, but together they amount to a Those workers would not recognize the factory south of Capitol Drive. In the years to materialize. quiet revolution. Each merits fuller explanation. Thirtieth Street corridor today. Miller Brew- after World War II, soaring demand for car ing and Harley-Davidson still anchor the south frames and other products swelled the Smith “Available” THE DECLINE OF MANUFACTURING end, but Miller, the last major brewer in the complex to more than 100 buildings on 140 Thirtieth Street is hardly an isolated case. Its Walk with me along Milwaukee’s North city, has merged with Coors and moved its acres of land; the fence tracing the plant’s cir- story, in fact, is a microcosm of what is oc- Thirtieth Street industrial corridor. A single headquarters to Chicago. As you travel north cumference was more than two miles long. The curring elsewhere in Milwaukee and indeed railroad track threads its way from Highland of this historic pair, the scene becomes pro- company’s payroll swelled accordingly, rising throughout the state. The most accurate poster Boulevard to Congress Street, running through gressively bleaker. Ghost signs in various stag- to a peak of nearly 9,000 workers who kept the for Wisconsin’s current manufacturing climate a concrete canyon at first and then at street es of decay proclaim “Cabinet Makers,” “Plate plant humming 24 hours a day. Many of them would feature a closed industrial plant with a level for nearly four miles. With the exception Glass,” and “Dies, Jigs, Molds and Fixtures.” were African-Americans earning, for the first sign out front declaring the property “AVAIL- of the nearby Menomonee Valley, there was Graffiti cover every bridge abutment, and the time, union wages in a union town. ABLE.” Weeds now sprout in the acres of as- once no greater concentration of industry in banks are strewn with garbage: TVs, bicycles, The end came with surprising speed. A.O. phalt surrounding the massive General Motors 6 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 7

complex in Janesville—a factory that once em- Offshore Winds giant owned by the Brumder family, a pillar of their cars, and tuition checks for their children. ployed 7,000 area residents—and the parking The roots of the devolution are not difficult to Milwaukee’s German aristocracy. All of Ap- Generations of workers grew up and grew old lots around the Delphi plant in the Milwaukee trace. Wisconsin’s economy came of age with plied Power’s production took place in a single working for the same employer, starting as ap- suburb of Oak Creek are just as overgrown. the wind at its back. The currents of enterprise factory in West Allis. Today’s Actuant is a prentices fresh out of high school and staying But the job losses are by no means confined and ingenuity flowed directly through the Mid- multi-national, multi-line conglomerate whose until retirement. to the larger cities. From the Crepaco plant in west in the late 1800s, drawing people with sourcing staff in China outnumbers its entire Absolutely no one has those expectations Lake Mills to the Cummins factory in Wauto- little to lose and everything to gain. By 1900, corporate staff in Milwaukee. today. It has taken only three or four decades ma to the NewPage paper mill in tiny Niagara, as hundreds of shops turned promising ideas The wonder is that, even after years of for the possibility of lifetime employment the decline of industry has into prosperous realities, steady attrition, Wisconsin still retains a strong to vanish, but it has vanished forever, and been general and generally metal-bending had become manufacturing base—relatively speaking. The nothing, really, has replaced it. What the last disruptive, if not disastrous. Milwaukee’s most impor- state has lost industrial generation of Wiscon- In 1979, before a recession “Weeds now sprout in tant industry, and manufac- jobs, but other states sinites took for granted that ravaged the industrial the acres of asphalt turers from Beloit to Green have lost them much seems as distant today sector, 583,000 of Wiscon- surrounding the massive Bay to Superior were hiring faster. Although pay- as the era of spinning sin’s workers were engaged workers by the thousands. rolls are a fraction of wheels and kerosene General Motors complex in manufacturing—27 per- Milwaukee proclaimed their former size, Wis- lanterns. Even 25 cent of the total. By 1983, in Janesville—a factory itself the “Machine Shop consin had America’s years ago, some state the state had shed 123,000 that once employed 7,000 of the World,” and Wis- highest concentration residents were at least of those jobs, a drop of 21 area residents…” consin became the western of manufacturing jobs mildly uncomfortable percent in just four years. province of an industrial (15.8 percent) in 2009, with the beer-and-brats Despite an encouraging heartland stretching east and Milwaukee (14.2 image rooted in our rebound that lasted through through Chicago to Detroit, percent) is second only to San Jose among the blue-collar ethnic heritage; it was too lowbrow most of the 1990s, employment began to fall Cleveland, Buffalo, and Pittsburgh. nation’s largest metropolitan areas. Globaliza- for comfort, too déclassé. Now they’d give again in 2000. By 2008, the manufacturing That pattern held, through booms and tion, to coin a phrase, is a global phenomenon. anything to have those industrial jobs back. Le- sector provided 476,000 Wisconsinites with busts, for the next eight decades. Then, not As the world develops a single central nervous gions of dislocated workers have struggled to jobs, and their share of total employment had many years ago, the wind began to blow in system, geography has lost much of its rel- land lower-paying employment, and prevailing fallen to 16.3 percent. a different direction: offshore. Since the late evance, and Wisconsin and Milwaukee are left wages for the manufacturing jobs that remain Metropolitan Milwaukee, the state’s indus- 1970s, local jobs and local dollars have been with larger portions of a shrinking pie. have fallen steadily. In constant dollars, the trial pacesetter for generations, has set the pace migrating to lower-wage producers all over The fact that the dislocations are so wide- average annual wage for Wisconsin produc- for its decline as well. The number of Milwau- the globe, most recently and most notably to spread makes them no less painful. As a maker tion workers dropped from $44,669 in 1978 kee manufacturing jobs plummeted from its China. Once the stuff of think-tank papers of place, nothing trumps the economy. A to $38,007 in 2008—a decline of 15 percent historic high of 220,200 in 1979 to 115,100 in and economic summits, the “global economy” community’s setting might be glorious and its during a period when white-collar jobs were 2009—a drop of 48 percent in three decades. became an established reality. As China sought weather grand, but no one—with the excep- posting impressive gains. The proportion of the metropolitan workforce to become the world’s factory floor, even the tion of the exceptionally affluent—settles there employed in manufacturing sank to 14.2 oldest of old-line manufacturers were drawn without some means of financial support. For The Story of Willie Boston, Jr. percent during the same period—a cataclysmic to its promise of comparable quality at sharply countless Wisconsinites, manufacturing sup- Return with me to the Thirtieth Street indus- fall from its peak of 56.9 percent in 1951. lower costs. The Actuant Corporation, former- plied that means. It was their surest and often trial corridor. If you walk the blocks east of ly Applied Power, was once a hydraulic-tools their only route to the middle class: the source the old A.O. Smith plant, you might see Willie of down payments for their homes, cash for Boston, Jr. sitting on the front porch of his 8 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 9

tidy bungalow. Born in Oxford, Mississippi, Hmong soldiers into battle against the Com- significant Hmong communities in Wausau, Journey House. The near South Side in those Boston is a sharecropper’s son who moved munist forces. When the United States pulled Madison, Sheboygan, Appleton, La Crosse, years was what a later generation would de- with his family to Milwaukee when he was 10. out of the region in 1975, Hmong partisans Eau Claire, and a number of smaller cities—all scribe as “Anglo”—filled with non-Hispanic His father worked in construction, but Boston who had fought in the “secret war” were left established by refugees who helped American whites from a variety of European backgrounds. got a job at A.O. Smith in 1968, beginning as behind and singled out for persecution by the forces in Southeast Asia and suffered exile as The families who used our center were uniform- a laborer but spending most of his career as a victorious Communist regime. Shoua Thao and a consequence. More than 50,000 strong— ly blue-collar, and many of them had moved welder. By the time he retired in 2003, Boston his family were forced to live in the jungles enough people to fill La Crosse and then from elsewhere in Wisconsin—Two Rivers, was earning $23 an hour, with full health of Laos for months at a time, subsisting on some—the Hmong have become the largest Cascade, Sturgeon Bay, Phillips—to take advan- insurance benefits, a solid pension plan, and rice and, when the rice ran out, wild plants. In Asian group in the state. tage of Milwaukee’s abundant factory jobs. six weeks of vacation. His children have not 1978, Thao and an uncle struck out on their fared as well. Willie Boston’s son was passed own, crossing the dangerous Mekong River Burgers to Tacos over by Smith’s hiring department because at night to the relative safety of a camp in More than 30 years later, Sixteenth Street bears he lacked a high school diploma. He became Thailand. almost no resemblance to its earlier incarna- a long-haul trucker, earning far less than his America finally acknowledged its debt to tion. The Driftwood Restaurant, where we used father. Boston’s daughter is a child-care worker these endangered allies. After varying lengths to gather for greasy burgers and chocolate making $7.50 an hour. of time in the crowded camps, most Hmong shakes, is now Taqueria Jalisco. Karpek’s Ac- A father’s opportunities are not passed on refugees were resettled in the United States. cordion Store has become Super Mercado La to his children. The ladder to the middle class Catholic and Lutheran agencies, traditionally Hacienda. Schupp’s Radio Shop—an antique loses its lower rungs. “Entry level” is redefined strong in the upper Midwest, took the lead in even in the 1970s—is now El Tianguis clothing as low-wage, dead-end employment, and, in resettlement efforts. As a direct result, Minne- The Hmong also illustrate a larger point. store. Between Pierce Street and Greenfield the lengthening gaps between jobs, a perma- sota and Wisconsin today trail only California Just as globalization has remade the Wisconsin Avenue, Sixteenth is lined with restaurants, nent underclass grows. What is Willie Boston’s in the size of their Hmong populations. Shoua economy, it is remaking the state’s population money-order shops, and other businesses prognosis for the younger generation? “I feel Thao and a brother were sponsored by a Bea- as well. In the last 25 or 30 years, newcomers with names like El Pollo Feliz, El Punto, Los sorry for ’em,” he says. “You can’t make it ver Dam church group in 1979. They moved have arrived from all over the world, updat- Comales, La Ley, Las Reynas, El Charro, and on $7.50.” to Madison, where Shoua graduated from high ing and transforming our inherited ideas of the biggest, Mercado El Rey—a grocery store school, and then to Green Bay, which has be- ancestry. As might be expected, the trend is and restaurant whose new quarters cover most THE CHANGING FACE OF WISCONSIN come the home of their parents and siblings as most pronounced in Milwaukee. Large cities of a block. From The Happy Chicken to The When Shoua Thao came to Wisconsin from well. As a member of the first wave,T hao has have always been major points of entry for new King, the blocks I knew in the ’70s have be- Southeast Asia in 1979, he was a 15-year-old spent his career helping later arrivals adjust to arrivals, and few cities have received more, in come the Main Street of Latino Milwaukee. A refugee who spoke very little English, had life in Wisconsin, first as an employment spe- proportional terms, than Wisconsin’s metropo- stroll down Sixteenth today is like a visit to the never experienced winter, and had no idea cialist for a state-sponsored refugee program lis. In 1890, immigrants and their children Mexican border. Spanish is the dominant lan- who the Green Bay Packers were. Thao had, in and currently as a bilingual aide for the Green accounted for 86.4 percent of Milwaukee’s guage, and local stores offer a daunting variety fact, never heard of American football; soccer Bay school district. population, making it the most “foreign” city of peppers, piñatas, soccer shirts, and cowboy was the game of choice in the Hmong refugee Shoua Thao is one of an estimated 5,000 in America. In recent decades, the city has hats. In 1996, the street’s name was officially camp where he had lived previously. During Hmong residents in the Green Bay area, but resumed that tradition with an entirely differ- changed to Cesar Chavez Drive, in honor of the Vietnam War, his father, a farmer in the Titletown is hardly the group’s only settlement ent cast of characters. the Mexican-American labor leader. northern highlands of Laos, was recruited by in Wisconsin. His story, or a variant of it, is South Sixteenth Street provides a perfect Although its Latino imprint is most obvi- CIA operatives to fight onA merica’s side. He repeated all across the state. Although Mil- example. In the 1970s, fresh out of college, I ous, Milwaukee’s near South Side is hardly rose to the rank of lieutenant, leading other waukee has the largest concentration, there are worked at a youth center on the street called monolithic. There is a Hmong store on Chavez 10 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 11

Drive, and the surrounding residential areas Burma and Somalia. Stevens Point. The farmer’s market is still go- is global, and the state’s population, no less are a cosmopolitan blend of African, Southeast The suburbs, too, have felt the cultural shift. ing strong, but today’s vendors are more likely than its economy, reflects forces that are in- Asian, Native American, and European ances- The Hindu Temple of Wisconsin opened on a to be Hmong than Polish. Even Madison, a city ternational in scope. How well the natives and tries as well as Hispanic. In 1967, protesters 20-acre parcel in Pewaukee in 2000. After out- whose diversity was once supplied by interna- newcomers are adjusting to each other remains led by Father James Groppi marched down all- growing an old bank building in the Bay View tional students on the University of Wisconsin open to question. There have been relatively white Sixteenth Street to demand an ordinance neighborhood, the Sikh Temple of Wisconsin campus, has developed a demographic profile few incidents of open conflict between the banning residential segregation. More than 40 relocated to Oak Creek in 2007. Shorewood that older residents might find surprising: 6.4 older groups and their more recently arrived years later, open housing on the South Side is and its North Shore neighbors experienced percent African-American, 6.2 percent Asian, neighbors, but there has also been relatively an accomplished fact. the trend even earlier. In and 5.9 percent Latino in 2005. Some of the limited interaction and even less assimilation. The pattern of diver- the late 1980s, when the larger trends of the last quarter-century have For their part, many of the new Wisconsin- sity has become general. Soviet Union began to ease begun to intersect. As Wisconsin’s dairy herds ites are doing precisely what the generations Milwaukee itself became a “…many of the new restrictions on the move- increase in size, there has been a correspond- before them did: getting on with the busi- “majority minority” city in Wisconsinites are doing ment of its Jewish citizens, ing increase in the immigrant labor force. ness of becoming American. Shoua Thao, the the late 1990s. Its African- precisely what the a flood of the disaffected Latinos make up nearly 60 percent of the dairy Hmong refugee who began this account, is a American population—a reached America’s shores. workers on farms with over 300 cows—a total case in point. He now lives on 24 acres near generations before presence since the 1830s— They settled virtually ev- of more than 5,000 people. Denmark, a small town southeast of Green swelled to 37 percent of them did: getting on erywhere an American Jew- The numbers for the state as a whole are Bay. The Danes who established the village the total in 2000, and other with the business of ish community was there revealing. Between 1980 and 2008, African- could not have foreseen such a development, non-European groups have becoming American.” to receive them, including Americans grew from 3.9 percent of Wiscon- but Thao has adapted to his host culture with rounded out the majority. Milwaukee. Nearly 4,000 sin’s population to 6.1 percent, Asians from 0.4 alacrity. He has become, among other things, They include newcomers Soviet Jews started over in to 2 percent, Native Americans from 0.6 to 1 a devout Packers fan. As a self-described “tiny from the Middle East and the metropolitan area, most percent, and Hispanics from 1.3 to 5.1 percent. little guy,” he’s too short to follow the action at Africa as well as Latin America and Southeast of them beginning in Shorewood. They have These traditionally defined minorities account- regular games, but the refugee attends prac- Asia—groups that have broadened the area’s since spread as far north as Mequon, but Rus- ed for 14.2 percent of the state’s population in tices regularly, collects autographed footballs, religious profile significantly.T he Islamic sian is still the dominant language in a number 2008—a sharp increase from 6.2 percent in and owns green-and-gold jerseys bearing the Society of Milwaukee purchased an old public of Shorewood apartment buildings. 1980. You can still celebrate Syttende Mai with names of Aaron Rodgers, Donald Driver, and school on the far South Side in 1982. It has As metropolitan Milwaukee assumes a the Norwegians in Stoughton, observe Cesky A.J. Hawk. Every Friday during the football since blossomed into a full-service institu- broader ethnic identity, the rest of the state Den with the Czechs in Hillsboro, and enjoy season, he wears one of those jerseys to his job tion with two imams (religious leaders) and has begun to look more like Milwaukee. In Oktoberfest with the Germans in Milwaukee in the Green Bay schools. “The kids love it,” a school accommodating 700 students from Jefferson, the self-proclaimed “City of Gem- and elsewhere, but other players have taken says Thao, and so, obviously, does he. kindergarten through high school. In 1968, uetlichkeit,” where the cemeteries have their their place at the table. Milwaukee’s Muslims gathered for the an- share of Moldenhauers and Haubenschilds, at The implications for the state—social, polit- GOVERNMENT VS. THE GOVERNED nual Eid prayers in an apartment. Today the least 7 percent of the population—and more ical, and economic—are still emerging. At the The veteran lobbyist has seen it all. Wiscon- services draw nearly 6,000 people, and the than 12 percent of public school enrollment— very least, the presence of so many different sin’s Capitol has switched from Democratic entire Muslim community is at least twice as is Hispanic. The biggest restaurant on Main cultures is forcing other residents to recalibrate to Republican and back again multiple times large. Its members constitute a virtual league Street is El Chaparral, “House of Authentic their ideas of what it means to be a Wiscon- during his long career, hundreds of legislators of nations, tracing their lineage to Pakistan, Mexican Food.” In Portage County, genera- sinite. The Badger State was once a polyglot’s have come and gone, and the body of statutes India, Palestine, Egypt, Iraq, Lebanon, Syria, tions of Polish farmers brought their produce paradise, but the languages its citizens spoke has grown substantially. But he has never seen Afghanistan, and such disparate locales as to market on the public square in downtown were practically all European. Today’s context anything quite like the current situation in 12 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 13

Madison. “The endgame,” he says, “used to be planned to introduce a resolution commemo- Legislature, but even they are drawn inextri- Progressives placed a similar emphasis on to get the job done, do your business, and go rating the fatal shooting of seven Milwaukee cably into the us-vs.-them polarity. A political moral probity. The result was a squeaky-clean home. Now the endgame is to stay in power.” strikers by state militia troops during the 1886 variant of Gresham’s Law begins to take hold. ethical climate that became normative through- When the lobbyist began to walk the halls of the demonstrations for the eight-hour day. Even Just as bad money drives out good from the out the state and persisted long after the third- Capitol in the 1960s, legislators had other things though the marches occurred nearly 125 years marketplace, the bitterly partisan tenor of state party movements had lost their vigor. to do. The Wisconsin Senate, for instance, met ago, some Republicans took vigorous excep- government discourages people of intelligence Wisconsin’s sky-high expectations have on Tuesdays, Wednesdays, and Thursdays so tion to the proposal. The Democrats then and equanimity from getting involved. The been rudely disappointed in recent years. There that its members could get back to their regular noted that the Assembly parlor contained a current environment seems to favor those with had been earlier lapses, but a perfect storm hit jobs. Unless they were com- portrait of Jeremiah Rusk, fixed ideologies and a taste for combat—and the state between 2000 and 2002. Mayor John mittee chairs, the senators the Republican governor without a nuanced, Norquist of Milwaukee had no offices.F ive of them who ordered the militia patiently cultivated confessed to a “con- shared a single secretary, “During the Gilded Age to “fire on them” in 1886. understanding of how sensual sexual relation- and the members of this of the late 19th century, They requested that the government really ship” with a female august body were paid $300 political corruption was painting be removed from works. staffer. Milwaukee a month. as prevalent in Milwaukee its place of honor, which It goes without say- County Executive Tom The days of the part- drew more howls from ing that these trends Ament and the County time legislator are long and Wisconsin as it was the Republican side. Rusk are not limited to the Board approved a stun- gone, and with them the in most other sections remained on the wall, but Badger State. The pro- ningly generous pen- days of the $1,000 po- of the country…” Democrats received the fessionalization of poli- sion plan for non-union litical campaign. Getting Assembly speaker’s permis- tics, the rise of toxic employees. In Madi- elected—and staying sion to drape the portrait in partisanship, and the son, legislative leaders elected—has become a black cloth. Such political monetization of campaigns are as apparent in Chuck Chvala, a Democrat, and Scott Jensen, full-time job, requiring the support of skilled sideshows may be diverting, but they indicate a 49 other statehouses—and in the U.S. Capi- a Republican, were indicted for putting public staff members, a sophisticated party apparatus, serious inability to get along. tol—as they are in Madison. But Wisconsin’s employees to work on behalf of candidates and constant fund-raising. The professionaliza- climate shows the influence of factors particu- supported by their respective caucuses. Back tion of politics has not necessarily produced Toxic Partisanship lar to the state. The first is a traditionally high in Milwaukee, one alderman faced prosecution better government. The need to stay in power, You have to go back to the 19th century to find expectation of our public servants. During the for misappropriation of federal funds, and two in fact—the need to win at all costs—has been a climate more vituperative. In the 1830s, it Gilded Age of the late 19th century, political more would follow. All of these misdeeds took a major factor in the growing partisan divide was not unusual for one Wisconsin politician corruption was as prevalent in Milwaukee and place in a period of less than two years. The of the last decade or two. Republicans and to blast his opponent as a “whiffling, hypocriti- Wisconsin as it was in most other sections of caucus and pension scandals might not have Democrats line up on either side of the ball cal pimp” and to be castigated in turn for his the country. That changed with the rise of the raised many eyebrows in Chicago, Providence, like football players with a grudge, intent on own “impotence and imbecility.” Office-seek- Socialists in Milwaukee and the Progressives or Atlantic City, but they prompted a massive doing maximum damage to each other. Politics ers questioned each other’s ancestry as well as in Wisconsin. backlash in Wisconsin. Tom Ament and John has become a blood sport, with no quarter their integrity, and disagreements sometimes Victor Berger, the chief architect of the Norquist resigned, seven Milwaukee County given and none asked. escalated to the point of physical violence. city’s Socialist movement, was fond of saying supervisors were recalled, and a number of In this charged partisan atmosphere, even Even if today’s duels are only rhetorical, the re- that honesty was the highest quality to which politicians in Milwaukee and Madison went to symbolic measures take on an emotional turn of partisan enmity has not been a positive a Democrat or Republican could aspire. “With jail. The normally placid waters of Wisconsin weight that may exceed their true importance. development for the state. There are certainly us,” he crowed, “this is the first and smallest politics were roiled beyond recognition, and During a recent Assembly session, Democrats people of talent and vision in the Wisconsin requirement.” Robert La Follette and his fellow the ship of state seemed utterly adrift. A sense 14 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 15

of direction, or at least stability, finally re- Taken together, the forces shaping Wis- and first-rate bratwurst in Sheboygan. You can middle is increasingly difficult to locate.A s turned, but not before many Wisconsinites had consin’s public life have opened a distinct gap still canoe the broad Wisconsin River, stroll polarization grips Wisconsin’s Capitol, middle developed grave misgivings about their state’s between government and the governed. The along the gin-clear waters of Lake Superior, ground of any description is conspicuously political course. divide reflects, to an important degree, the and bicycle on one of America’s most exten- absent. On a multitude of levels, the center has If some public officials have been major culture of partisan competition that has seized sive networks of dedicated trails. The economy, not held. disappointments, so have some public institu- the Capitol—the I’m-right-and-you’re-nuts too, has its share of stand-outs, from Milwau- These matters are, or should be, of grave tions. Wisconsin has traditionally considered school of political discourse that seems en- kee giants like Johnson concern to every Wiscon- itself a state that works, and innovations demic there. State politics in the 21st century Controls and Northwestern sinite, wherever he or she like the Wisconsin has come to resemble a Mutual to the biotech firms resides on the political Idea, which brought gigantic rugby scrum, on the west side of Madi- “State politics in the spectrum. The economic the resources of the with each side push- son. Wisconsin’s distinctive 21st century has come to trends endanger our very university to bear ing blindly toward its blend of landscapes and its livelihoods. Our growing resemble a gigantic rugby on matters of public goal—total subjugation equally distinctive blend of diversity could be en- policy, encouraged a of the opponent— cultures make the state un- scrum, with each side riching, but only if older widespread belief in rather than serving the like any other in the nation. pushing blindly toward its groups see the presence of the efficacy of govern- interests of the people. Wisconsin is not on the goal—total subjugation of new cultures as an oppor- ment. Fewer residents When you add a few verge of collapse, but it is tunity rather than a threat. share that belief today. players flagrantly in the throes of change— the opponent—rather than The political trends imperil In the statewide poll taken for this project, breaking the rules and a stadium showing signs pervasive and fundamental serving the interests the continued health of our 43 percent of those questioned think the state of poor upkeep, the game becomes both grim- change that has forever al- of the people.” civil society. All of these government is doing only a fair job and a full mer and less engaging. Spectators stay away, tered our traditional under- shifts cry out for atten- quarter rated it poor. and even the roster of participants thins to the standings. The pillars of an tion, but we have been, for From exorbitant cost overruns on computer diehard partisans. older order have crumbled. generations, a state short systems to a troubled child welfare system, in- These patterns reflect the more general Our manufacturing economy has shredded, our on urgency and light on outrage. There is a dividual units of state government are patently disengagement from civic life so painstakingly sense of peoplehood is being transformed, and phlegmatism abroad in the land, associated not working, but Exhibit A for the disenchant- analyzed in Robert Putnam’s Bowling Alone, our faith in our democratic institutions and the by stereotype with the solid, stolid burghers ed is the Milwaukee Public Schools. Despite but they are particularly painful to observe people who lead us has eroded. What these and of central Europe who sent their progeny to some individual successes and a number of in Wisconsin. Earlier generations of state other trends of the last quarter-century have America’s heartland. But ignoring the trends exemplary programs, MPS as a whole has residents shared a view of government as a ba- in common is their direction. In ways both will not diminish their impact. In some been unable to turn around its dismal record of sically collaborative “us.” With the rupture of literal and metaphorical, Wisconsin is leaving respects, Wisconsin has come to resemble a di- student achievement and find a sustainable so- trust that has taken place in recent years, more the middle behind. As commerce moves from nosaur that’s grown so large and cumbersome lution to the problems of urban education. The and more Wisconsinites see government as a the heart of our communities to the edges, that its tail is half-eaten before its brain senses system’s leaders resemble a group of mechan- fundamentally predatory “them.” That shift in the middle is left behind. As the state’s farms a problem. The result, later or sooner, could ics watching a vehicle hopelessly mired in the perspective, that loss of faith, may be the most become fewer and larger, mid-sized operations be the extinction of our economic and cultural mud. They can come to only one conclusion: troubling trend of all. are disappearing. As the supply of family-sup- viability, of our capacity to hold our young and “Yup, she’s stuck, all right.” As they continue porting industrial jobs dwindles by the year, look after our old. to pour gas into the tank, the wheels keep spin- SEArCHING FOR THE CENTER our middle class becomes a threatened species. We are left, in the end, with questions. How ning, and the taxpayers at the pump wonder Wisconsin is not on the verge of collapse. You As the state’s accent shifts from a European can Wisconsin preserve the manufacturing jobs what they’re getting for their money. can still find excellent Swiss cheese in Monroe amalgam to a broader Babel, the cultural it has and create new opportunities for the next Chapter 2 16 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 17

generation? As the global economy reshapes In the papers that follow, one theme seems our workforce, how can we avoid the perils to rise above the rest: Wisconsin is in desperate of a permanent underclass? As we become a need of bold, honest, and energetic leaders— state of many peoples, how can we remain one leaders who will put the interests of the state people? Will we be able to enlarge our concept above the state of their campaign funds. Party of the commonwealth to does not matter, gender embrace citizens from does not matter, color does all over the globe? Can not matter; the essentials we forge even the most “In the papers that are a passion to serve and rudimentary political con- follow, one theme seems a long-term perspective. sensus? Will we ever again to rise above the rest: While many of the forces develop statesmanlike cen- transforming our state are trists like Warren Knowles Wisconsin is in desperate global in scope, it becomes and Patrick Lucey—and the need of bold, honest and clear that our politicians climate that nurtured them? energetic leaders…” have been unable to shelter And the biggest question their constituents from the of all: How can Wisconsin storm. Stale thinking and recover its past greatness as uninspired half-measures a stronghold of innovation, a wellspring of cul- have been the order of the day in Wisconsin, tural vitality, and a laboratory of democracy? while leaders elsewhere have moved decisively The state has indeed changed enormously in to meet new challenges and seize new opportu- Government reform the last quarter-century. Old assumptions have nities. It is still possible to build a sound future been upended, and troubling new questions on the solid foundation of our past. The people have been raised. Although Wisconsin’s chang- of Wisconsin require—and deserve—no less. ing ethnic profile presents definite opportuni- ties, the major trends have been experienced by most residents as a movement downward—in their quality of life, in their satisfaction with government, and in their prospects for the future. But the gathering crisis has so far been met with a collective shrug. It is the purpose of this report to call Wisconsinites to awareness and then to action, because it is only through informed awareness and concerted action that our state can reclaim its place in the nation’s vanguard. It is only through knowledge and hard work that we can, after so many years of attrition, make our next quarter-century a time of change for the better. 18 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 19

as allies and advocates of reform. to answer two fundamental questions in order Americans understand the seriousness of to achieve widespread reform. the need for a new approach to government, First, do we have the tools needed so that and Wisconsin residents in particular appear government can once again be “of, for, and by to be even more clued in. Nearly two-thirds the people,” rather than a relentlessly growing of Americans believe that the nation is on set of activities and subsidies fueled by special The State Crisis and Need the wrong track.1 And WPRI’s recent polling interests? Make no mistake: This article is shows a slightly higher portion of Wisconsin’s not about small government per se, nor about for a New Charter citizens believe the state is whether any particular on the wrong track and are public program is appropri- By Stephen Goldsmith WITH Jayson White and Ryan Streeter frustrated or angry with “…do we have the tools ate. Rather, the focus of Stephen Goldsmith, the transformative former mayor of Indianapolis and state government.2 this paper is how to address someone who studies government, offers us some truly innovative ideas on how At the same time, needed so that government the overarching problem of to change and adapt our state government. Based on the polling done for this public servants at all levels can once again be ‘of, the unaffordable growth of report, it could not come fast enough. Wisconsinites want bold innovation. With struggle to cope with a for, and by the people,’ government and runaway charter government, Mr. Goldsmith offers it. corresponding increase in spending. In short, this demand for services and rather than a relentlessly article is concerned with Overview the public sector. decrease in public resourc- growing set of activities ending our addiction to The American political system—with its We have entered a new era of big, muscu- es to solve problems. In and subsidies fueled by expanding government. system of checks and balances and unique di- lar government. Political leaders believe that my 10 years directing the special interests?” Second, how do we vision of responsibilities among federal, state no problem is too complex or too costly for Innovations in American structure a new and better and local authorities—has created the condi- government to address. Citizens, now more Government program at marketplace for high- tions for an unprecedented expansion of per- accepting of government’s rapidly expanding Harvard’s Kennedy School impact policy ideas in the sonal wealth and political freedoms. However, mission, have come to expect far more from of Government, I saw countless examples of delivery of public goods? Effective manage- the recent growth of government’s size, scope the state than they are willing to pay. government innovations that effectively met ment innovations and best practices in public and impact on both the private sector and the As a result, the ability of government to critical needs. But more often than not, these policy spread between jurisdictions and among political process threatens to weaken, and even execute its core tasks efficiently, alongside the innovations improved the quality or quantity of divisions in individual governments far too reverse, these remarkable gains. size of public debt, threatens to compromise a government service but did not address the slowly. Lack of customer pressure and compe- Despite our successful form of government, the quality of life and America’s future pros- structural deficits now facing local and state tition causes governments, unlike successful our prosperity is increasingly endangered by a perity in a fundamental way. What is needed governments. private-sector enterprises, to adapt to the needs public sector that has grown overly expensive, to reverse this is a bottom-up assessment of Elected officials and civil servants who of a changing marketplace. decreasingly effective, less responsive to the how government operates, agreement on the successfully implement innovative reforms Though public innovators have found interests of citizens and excessively controlled national priorities government should address cannot on their own overcome the systemic answers to these types of questions in isolated by special interests. Government bureaucra- in the future, and a realignment of government downward drag that special interests, govern- instances, no single government has put into cies have become ossified and resistant even to resources and activities to efficiently address ment bureaucracy and counterproductive rules practice a full package of innovative ideas that marginal improvement. The types of disruptive these priorities. exert on good ideas and enterprising behavior. recalibrates the public sector to prioritize the innovation in the private sector that deliver But as dysfunctional as government has be- This should not come as a surprise; bureau- general public good over special interests in a increasingly better products at better prices come, it would be a mistake to overlook politi- cracy almost always has a stultifying effect on sustainable way. As a result, rather than being a have become effectively outlawed in most of cal leaders, government workers and citizens innovation. But to solve this dilemma, we need provider of general public goods, government 20 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 21

has too often become a tool of the well con- economic stagnation, our current situation is Constricting economic activity in this way Federalist Paper No. 10, in which he warns of nected, who know how to manipulate its rules even more difficult to resolve.T he growth of constitutes a direct threat to the American way the emergence of “factions,” or citizen groups and bureaucracies for their own interests. And public debt and deficits resulting from unre- of life and the ability of each generation to whose interests do not represent the general elections, which could be seen as the great formed programs with vested interests—be leave to its children a better way of life than it good. In Federalist 10, Madison argued that leveler, have increasingly given more power to they public unions, privileged contractors, enjoyed. in a national government these groups would incumbents—at least until this year. healthcare providers, or whatever—presents Cash-strapped states, now increasingly effectively cancel each other out through the What we need and what we suggest is a new a new challenge to the future of American dependent on federal funds for local proj- workings of constitutional checks and balances “charter” approach to government— one that economic growth and opportunity. These are ects (and likely unable to borrow due to the and representative democracy. But today those prioritizes citizen involvement in decision- not the “evil” special interests that Hollywood decreased availability and interests accumulate rather making, transparency in transactions, account- loves to caricature, but organizations of all increased cost of debt), than providing any mean- ability for results, and the ability to change stripes that behave quite rationally in a system will have nowhere to turn. ingful check on others’ course when things fail to work out as planned. in which their success (and sometimes even States such as Wisconsin “States such as Wisconsin increasing influence.T his An opportunity exists for state and local their survival) depends as much, if not more, that have dramatically in- that have dramatically leads to a situation in which governments to take the lead in constructing on government support as on their relevance to creased borrowing to cope increased borrowing to everyone wins—except the a comprehensive approach to government the private economy. with the economic troubles taxpayer. innovation. Wisconsin, a proven leader in As vested interests incrementally win one of the past decade have cope with the economic Do we have the tools reform, should capitalize on its unique human, battle after another, the rising cost of govern- become reliant on debt as troubles of the past decade to allow government once physical, economic and political resources to ment becomes self-perpetuating. Ultimately, a way of life. Wisconsin’s have become reliant on again to be controlled “of, put such a comprehensive package of reforms and perhaps ironically, this expansive appetite debt nearly tripled over the for, and by the people,” debt as a way of life.” into practice. for the “goods of government” reduces the ca- past 10 years,6 and the habit rather than by a relentlessly This paper will outline the major barriers to pacity of government to provide public goods. of paying for current obli- growing set of activities long-term progress in the public sector, discuss At the federal level, expenditures on man- gations with future earn- and subsidies that benefit a package of reforms capable of overcoming datory spending and entitlements alone (Social ings has only served to delay and make more various “factions”? To some extent we have these barriers and make recommendations that Security, Medicare, Medicaid and debt service) challenging the difficult choices thatW iscon- been seduced by a misunderstanding of the could help make Wisconsin a leader in gov- were slated to surpass all projected revenues sin will now need to make in the near future. concept of collective goods. When government ernment innovation the way the state led the by 20503—even before the financial crisis that The current crisis is not created simply by creates special programs, subsidies and poli- charge to welfare reform in the 1990s. began in 2008. Without massive increases in a lack of money but rather by a system bent to cies for particular groups of people, it effec- taxes, there will be no federal dollars left for the point of breaking. Government consistently tively establishes an equal-treatment principle Introduction: We Cannot anything else—no federal money to mount makes decisions based on the political econ- by which any new group can claim a right to Afford the Government a national defense, support education at any omy rather than the market economy. Politi- tailored services if they can find political lead- We Have Created level, ensure public safety or develop or even cians’ decisions are driven more by political ers to champion their cause. Because claiming Government performance is profoundly threat- maintain our physical and economic infra- considerations—i.e. re-election—than because one’s “fair share” becomes the de facto prin- ening the conditions of future prosperity in structure. According to conservative estimates, market factors have determined the best out- ciple of politics and governance, government ways previously unknown in American history. federal debt will reach 85 percent of GDP by come. This cycle of narrowing interests and naturally expands beyond its necessary size, Unlike the 1970s, for instance, when high tax 2018, 100 percent by 2022, and 200 percent political motives plays a major role in creating cost and core mission. rates, monopolistic government behavior and in 2038.4 This is a severe threat to economic government’s resource scarcity. A good diagnosis of the problem will help unhelpful market interventions such as wage growth, which recent historical research shows This weakness in our political system point the way to a cure. The causes of govern- and price controls significantly contributed to drops on average by 2 percent annually for was anticipated by James Madison in ment’s resistance to reform include: economies with debt loads above 90 percent.5 22 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 23

1) The growth of government programs mayor with a single-minded proposal to install 4) Despite recent improvements in the mittee of the Whole in order to inject fresh itself creates new, vested constituencies. Thus sprinklers in every older building in the city. public availability of government informa- thinking about the issue and allow a broader the very size of government creates its own While this plan would have mitigated the risk tion, the lack of transparency continues to range of perspectives about the public good to momentum for more. Government agencies of fire in some marginal way, the related costs give public officials the upper hand over guide and inform the process. and programs virtually never have an incentive would have rendered worthless a large number citizens. Impressive gains in web-accessible In the early 20th century, the Progressive to work themselves into obsolescence or to of those buildings. The economic drain on the data help taxpayers access the information they era, with its birthplace in Wisconsin, trans- make their own reduction a strategic goal. city or related dangers simply did not touch need to hold government accountable. Yet too formed city, state and federal governments, their mission. often this increased visibility only provides a ending the culture of patronage, nepotism and 2) “Iron triangles” form around those view into government’s hopelessly confusing corruption in the “spoils system” that preceded who corner some particular Similarly, across the country sin- systems. For example, many local officials it. The progressives’ move to formalize proce- government market which gle-purpose taxing districts such claim they have held the line on taxes because dures and professionalize government through precludes the necessary as schools or libraries try to max- they have not increased rates, while they allow rule-based bureaucracy was a critical innova- transformative change that imize resources in their sphere of assessed home values to increase at a rapid tion in its time. But here in the early 21st cen- comes from introducing new control, not merely for parochial rate. Homeowners end up paying more in taxes tury, the very rules that proved so valuable 100 partners or new ideas into the interests but because they are without any clear idea why and with very little years ago have become an albatross around the mix. Bureaucrats naturally tend understandably convinced of the access to information that would help them neck of public leaders. to form a relationship with those priority and importance of their know how to stop it. If we care about future prosperity and prog- whom they fund or regulate work. I battled the Indianapolis ress, it is clear that the time has come to move and with the legislative com- Library Board, which even as 5) Legislative organization has grown to fa- to a post-progressive era that values discretion mittees responsible for their the mayor I did not control, to vor narrow interests rather than the public and problem solving rather than bureaucracy. programs. New entrants need restrain its insatiable appetite for good it was originally established to serve. In the 20th century, where the challenges to be extremely clever or strong property taxes. The library board In state assemblies, city councils and Congress facing government presented themselves at to break through these barriers. was a single-purpose taxing dis- the committee and subcommittee process tends a slower pace, the time lost to red tape and The net result of this dynamic is trict which had few real checks to support the status quo much more rigor- bureaucracy was necessary to insure account- that preferred providers are not on its ability to raise taxes, and ously than it exercises its chief responsibil- ability. forced to improve or innovate so it ultimately waited me out ity to hold accountable the agencies that the In the 21st century social, economic and de- due to their lack of exposure to and launched a new $100 mil- committees authorize and fund. The problem mographic trends create a set of public policy competition and new ideas, the lion library and other expensive starts with earmarking but does not end there. problems that develop much more rapidly than twin engines of progress in a normal market expansions, paid for with tax increases on Earmarks undoubtedly send a clear message our outdated systems can handle. Our bureau- economy. Indianapolis residents. The record of locally to bureaucrats that the legislative branch cares cratic rules, processes and approvals often elected school boards that have the authority to more about using public funds for constitu- aggravate the problem or reduce response time, 3) Government structures often give too raise taxes is similar: They work to maximize ent relationships than it does about squeezing at significant cost. much authority to single-interest agencies resources in areas that they legitimately believe value from each tax dollar. But the problem However, the same technological and social or entities. Well-intentioned professionals will are important. However, as vested interests, goes much deeper, as the legislative subcom- changes that have dramatically altered our always try to maximize results in their area they tend to overpower democracy by allowing mittee insulates the agency from transforma- world in the past generation make it possible of responsibility, especially if the trade-offs their understanding of what is needed to take tive change that even the rest of the Assembly for government to achieve the accountability are not important to them. I remember when precedence over more important student needs, might support. As mayor, I urged the president and professionalism that the Progressive era a dozen fire chiefs from various jurisdictions with essentially no constitutional checks on of the City Council to take large transformative championed without retaining its cumbersome affecting Indianapolis approached me as their activity. projects through a Rules Committee or Com- procedures. We no longer have to choose be- 24 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 25

tween accountability and flexibility, or between will go a long way toward reinvigorating the heavy price. According to a McKinsey study: citizens elect qualified representatives who slow, procedural decision-making and unfet- kind of environment that has made America determine the best procedures necessary for tered discretion by public employees. A new what it is: a place where individual initiative “Data show that productivity in the promoting the common good, and an executive post-progressive approach to government is as and good ideas attract the capital necessary to public and private sectors rose at to ensure the actions necessary for these ideals possible as it is overdue.7 generate more wealth, create jobs, and provide roughly the same pace until 1987, and rules are put into practice. How all of this greater opportunity for when a gap appeared. The private works out then determines the quality of the The Limits of a more people. It is hypocriti- sector’s productivity rose by 1.5 subsequent public debate. Professionalized cal to claim to care about percent annually from 1987 to While the United States has enjoyed Redistribution lower income families 1995 and by 3.0 percent annually remarkable constitutional success, it has also Strategy “Creating wealth rather while supporting govern- thereafter. In contrast, our best experienced the growth of a sophisticated class Ironically, reforming the than redistributing it has ment practices that stunt estimates show that the public of special interests that succeed in elevat- sector’s productivity remained rigidity of progressivism in to be our current mantra.” economic growth and raise ing their interests over those of the general government management the cost of living for ordi- almost flat, rising by just 0.4 taxpayer. In Wisconsin we see this perhaps is a necessary condition for nary families by making percent from 1987 to 1994, when most notably in the disjunction between public successfully implementing goods far more expensive the BLS stopped measuring it. No opinion on education policy and the actual such progressive policies as than they need to be. evidence suggests that since then reforms (or lack thereof) that policymakers are narrowing the gap between the rich and poor. Because progressive policies, which were it has experienced the growth spurt implementing. 8 Our present challenges at the state and federal enacted to protect the rights of those without a enjoyed by the private sector. ” It took years of legal challenges by the level stem not from problems with the goals of voice, have developed into a professionalized Reforming government does more than Milwaukee Journal Sentinel to get the state progressivism but from the institutions, pro- bureaucracy too often removed from meaning- pursue an aesthetic ideal of an “empowered government to identify public workers who cedures, and habits we have created to address ful public dialogue and true accountability, citizen” and save money. It provides a sound made more than $100,000 annually or had them. In addition, progressive goals provided they need to be reconstituted according to foundation for broad economic growth for their driver’s licenses revoked. Madison fought needed welfare supports and other assistance today’s most urgent needs, such as economic individuals and local communities. the request until a court finally forced the state to those in need through a redistributive ap- growth at the household level. In order to bring progressive-era results into to comply. Achieving transparency in govern- proach begun by progressives and dramatically In addition, government has sometimes our post-progressive age, we need to directly ment operations should not be so difficult. expanded through New Deal and Great Society taken on the wrong things for the wrong confront the fundamental problem that pre- The WPRI polling done for this report shows policies. reasons. It has tended to subsidize a specific vents lasting reform. that citizen support in Wisconsin for education We now see that many of the most effective sector of the economy (and specific entities policy ideas such as vouchers, merit pay and interventions relate not to mitigating market within the sector) to achieve a wrongheaded The Fundamental Problem: tax credits for private donations to achieve- or personal failures, but rather to providing goal. Beyond skewing markets through subsi- Special Interests Hijacking the ment-based scholarship programs is higher better opportunities for individuals to become dizing the wrong behaviors, governments have Policymaking Cycle in Wisconsin than in the nation as a whole. self-reliant, productive citizens. Creating also created rule-based systems that promote At its most basic level, the very problem that The minority that opposes these reforms has wealth rather than redistributing it has to be risk-averse behaviors among public employ- worried James Madison now should worry presented these changes. On merit pay, for our current mantra. Without a sober com- ees. Coupled with a media culture that is often taxpayers about what happens in Madison and example, 53 percent of Wisconsin’s popula- mitment to reforming current government eager to expose and sensationalize government other state capitals. Highly organized factions tion supports it, compared to the 33 percent in practices, wealth creation will be too slow to mismanagement, a bureaucratic culture fo- disrupt the policymaking cycle of public insti- opposition. Somewhere in the policymaking meet our needs, not to mention the needs of cused on avoiding mistakes often makes avoid- tutions. Ideally and constitutionally, American cycle, the public’s wishes were subsumed to our children. Ending the connection between ing blame a higher priority than promoting public life is governed by a process in which the interests of the minority position despite self-aggrandizing interests and the public purse citizen wellbeing. Minimizing risk comes at a significant evidence that merit pay improves 26 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 27

student outcomes. The failure to adopt a growth rates above what is actuarially sound, teachers unions. Given a fresh start, charter sufficiently independent and flexible that it can promising policy that is supported by a major- which in turn produces politically acceptable schools can set policy and use a more indi- tailor its delivery system to the needs of the ity of Wisconsinites is evidence of the undue results but prolongs a dysfunctional (and very vidualized, proven curriculum. Because of the student and not the demands of the politicians, influence of a type of “faction” Madison had in expensive) pension situation. need to attract and retain students, charters or unions or bureaucracy. mind when he penned Federalist Paper 10. Evaluation. Ideally, policy related to retire- have an incentive to implement these policies It is also important to consider that the Ideally, however, creative ideas and high- ment adjusts over time to match the needs effectively and evaluate their performance over charter approach is not designed to guarantee impact policy should be established through (and capabilities) of an aging population. But time. Finally, because the interests of teach- success but to increase the chances of suc- wide public debate and then implemented meaningful relief comes with difficulty even ers and parents are more cess. A charter is at its competently by public institutions and subse- for new employees. Modifying even an unaf- effectively aligned in the heart an attempt to create quently evaluated. These evaluations in turn fordable benefit for future employees produces charter model, teachers, an environment in which inform a policy dialogue among stakeholders, significant struggle. students and parents alike “Charter schools are an transformative change is who ensure the replacement of poorly perform- have reason to engage in example of government possible through the kinds ing policies and programs. Dialogue. Fundamentally, average citizens meaningful dialogue about of disruptive innovations cannot easily translate their concern into politi- the best ways to adjust in which flexibility and we have seen work in the Policy cal action. The very political system at their policy and practice for im- greater accountability enterprise marketplace. disposal is beset along the way by obstacles proved school performance Finally, charter schools Implementation Dialogue go hand-in-hand.” erected in large part by the very groups that and student outcomes. create value by creating

Evaluation benefit from the unaffordable results. It is next Some might object that a strong incentive for pa- to impossible for citizens to find the proper comparative studies of rental engagement in their If we consider public pension reform as one forum to express their views about pensions, student achievement in charter versus public children’s education. This creates an impetus example among many, we can see the disrup- given the terms of the debate. We do not sug- schools call into question this idealization of for localized dialogue about policy, curriculum tive affect at each point in the cycle: gest here that this problem is limited to the charter schools. A recent study shows that not design and the allocation of taxpayer dollars in union and public officials involved with pen- all charter schools perform better than public education. Policy. Elected officials involved in diffi- sions. Rather it remains indicative of a broader schools—in some respects the charters do Charter schools involve citizens (e.g., par- cult bargaining contracts face an interesting set of issues. seem to perform worse. So why depict charter ents) by granting them real responsibility and trade-off. Union officials often represent more schools as a model for post-progressive gov- accountability in the process of establishing a retired workers than active ones, and thus they Government that Works: More ernment? public institution (a school). Charter schools often bargain earnestly for increases in pen- Choice and Accountability— Part of the answer is the upward pressure encourage experimentation freed of red tape sions as much as or more than salaries. In turn, Fewer Rules that charters put on the public schools for and bureaucratic status quo, and yet they do so because of the short-term preoccupations and Charter schools provide us with an example performance. In principle, the competition by heightening the emphasis on results. If they the difficult budgets they face, public officials of a publicly funded institution based on a for students and their tuition dollars improves fail, they get shut down. Charter schools are have a nearly irresistible incentive to increase 21st-century, post-progressive approach to performance in public schools. an example of government in which flexibility pension benefits payable by future generations governance. More importantly, charter schools work and greater accountability go hand-in-hand. as a trade-off to a more manageable hit on cur- Charter schools are public schools that when they better align the interests of the par- For this reason, it can be said that they operate rent budgets paid by current taxpayers. combine the responsiveness created by ent as consumer and the schools as producer of more according to market forces than bureau- enhanced parental choice with a much more the public good. cratic forces. Implementation. Budget officials and pension relaxed regulatory environment that helps For a charter school to realize its promise Charter schools also offer an example of managers, in an effort to hold down public parents and school administrators balance out it must elevate the parent and child over the the value of citizen-centered government. debate about unfunded liabilities, often assume both the administrative bureaucracy and the regulatory bureaucracy. The charter has to be Localized responses on a wide range of issues 28 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 29

from terrorism to healthcare are possible—to a sponsible for results. This helped address some Government reacting to market forces will with private entities, reorder incentives for greater degree than most realize. To the extent enduring problems that previously had simply become more entrepreneurial in nature. A public employees and beneficiaries of services, that we learn to reform government in order been taken for granted. For example, the state government with more initiative can predict and streamline the regulatory and operational to relieve it of the impossible duty progressiv- child protective services agency had become problems, anticipate solutions and attack fun- environments of the most important public ism has placed upon it, we can free up public rule-bound and insufficiently connected to the damental social ills. agencies. resources to focus on larger, cross-cutting community, but no one expected it to be any Success would be determined by results, Policy national objectives. different. Our approach encouraged the state to and public employees would be rewarded or Networked Governance

enter into a charter-like contract with the com- reassigned (if not fired) based on performance. Implementation Dialogue Flexibility, Discretion Tech-driven Citizen Oversight A New Charter munity group to provide services to children Vendors could become strategic partners and and Results and Involvement State and local govern- in need, which funda- assessed by results, not inputs. Privileges Evaluation ments can learn from mentally altered the accruing to politically favored providers Structural Accountability the concept of a charter role of the citizen in would be ended. Savings would be returned to in the educational arena the delivery of services taxpayers or reprogrammed to another public The charter approach to government would and consider establish- and made government purpose. thus exploit the incentives of market competi- ing newly chartered accountable to the tion and the pressure of citizens’ demand for governments that better community in ways Citizen-centric: Government structures its better government performance. As a result, align the interests of previously unknown. services today for its own convenience, orga- it would improve the policy process described public services with If we hope to nizing itself around often rigid verticals that above in (but not limited to) the following the consumers of those reform government complicate transacting business with govern- ways: services. “Chartered” more broadly than ment. Citizens should be able to combine government involves situating citizen decision- discrete reforms at this or that agency, we need choice in where they receive services with Policy making and oversight at the heart of govern- to recognize that the only path to success is transparent information about quality, and a In the policymaking process, the charter model ment operations—a more robust notion than to disrupt the elements of the policymaking delivery system aligned around their interests would incentivize legislative and executive of- more familiar ideas about “citizen engage- cycle described above. A “charter” approach and convenience. A charter government would ficials to think outside the traditional, unpro- ment” or “citizen-centric government.” It also to government would produce a more respon- elevate the policy and operational interests ductive roles of government and established involves reforming governing practices so that sive government and better utilize and guide of its consumers, whether they be taxpayers non-profits in order to create the institutional public employees are freed up the market forces that typically produce better in general or teachers or business owners in arrangements best suited to produce public to innovate and be held accountable for results quality. particular. A charter government would ensure goods. In short, public policy would be orient- rather than whether they followed the estab- A charter government would achieve this that schools, public safety, infrastructure, hous- ed toward the creation of partnerships between lished rules. And it naturally involves greater by fundamentally altering the way in which ing agencies and healthcare services operate government and other sectors whenever neces- levels of transparency and accountability and accountability and citizen oversight are institu- in a way that maximizes the productivity and sary and as easily as possible. an improved process of legislative oversight. tionalized. benefit of individuals, businesses, and families. Networked Governance. Since the role of gov- In Indianapolis we emulated this model by These two principles drive charter govern- ernment is to create public value, not public establishing charter welfare agencies. These Competition: Government must be subjected ment to pursue policies and methods that can activity, government leaders should organize agencies essentially worked through communi- to a greater extent to market forces in order to truly be transformative. In order for these key service delivery through networks that provide ty-based centers with contracts from multiple help escape the power of the progressive-era characteristics to become a reality, public lead- value rather than exclusively through vertical state and city agencies that allowed them to bureaucracy and create incentives for both ers need to enact basic structural reforms that institutions. Policy stretches across govern- configure support services according to citizen marginal improvements and disruptive change the nature of decision-making in public ment agencies and levels of government as input and involvement, and then be held re- innovations. institutions, alter how public agencies work well as across sectors. For too long policy 30 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 31

development looked narrowly on how policy allocation of public resources would follow a Just as bankruptcy laws provide for the orderly of the commission’s recommendations have development could be delivered. For example, model of budget allocation in private enter- dissolution of a failed enterprise, a charter become law. in looking at schools, Milton Friedman argues prise—namely, it would proceed according government would have clear rules for the Key elements would include a regular that all schools open to the public are public to clear rules, but with maximum flexibility termination of failing public agencies and ini- review of each agency, supported by a profes- schools and that government-run schools are for managers to change course and customize tiatives. Because a charter government would sional staff of a powerful legislative commit- actually only part of the solution. In a recent responses rather than apply the same formula operate with clear standards of accountability, tee that focuses on efficiency and results, not conversation in New York about public transit, to all scenarios. This responsiveness to the the ability to adapt to changing needs and public activities. Additional accountability it became clear to me that the others in the demands of the public marketplace will help circumstances would be the norm rather than measures involve the use of clear and transpar- conversation limited their definition of public dramatically improve citizens’public trust and the exception. ent performance data. Information on perfor- transit to that operated by the MTA’s buses and confidence in government as an institution Structural Accountability. In this sense, char- mance-based budgeting, strategic planning, subways. Why not enhance the public’s mobil- relevant to their daily lives. ter government would provide a new approach customer surveys and plain-language budgets ity by finding creative ways to leverage in- As noted above, in a paper-based system to holding government accountable for results all help involve the average citizen in the battle creased access to taxis and privately run group governments developed a tight set of rules to and performance. Since government processes for the economic health of their state. van service, which represent a very significant manage the conduct of its line employees and tend to accrete over time, mechanisms need to component of public transit service? nonprofit vendors. In a digital workplace we be built into a new charter that both forces a Dialogue Policy development needs to explicitly can manage those employees whose perfor- review of existing structures and a process for The last phase in this model of the policy- include these strategic partners in its approach, mance does not meet a standard of excellence regular reviews going forward. making cycle is that of citizen-government and a charter approach would begin with the while simultaneously returning discretion to One approach would be to build on the dialogue. Overcoming the influence of special assumption that government must allocate the front lines through sophisticated perfor- lessons of the largely successful Congressional interests will require explicit steps to create resources in a way that takes advantage of a mance and monitoring system. Base Realignment and Closure Commission the means for everyday citizens to gain access network of providers rather than perpetuating For example, officials should be able in real (BRAC), utilized by the United States Depart- to information on government performance. the government’s monopoly on the delivery of time to watch the data collection and decision- ment of Defense and Congress to close excess Not only this, they also need the means to public services. making of every child welfare worker, who military installations. Congress must accept make their voices heard. To be sure, citizen will input all information into a wireless or reject the BRAC recommendations in their engagement is crucial at all stages of the cycle, Implementation device and on the same device receive recom- entirety, thus sharply reducing the influence of but under a charter model, citizens need to be The charter approach to government can also mended interventions driven by sophisticated parochialism. positioned to influence the formulation of new increase the ability of public delivery systems algorithms. Thus, the charter approach to gov- One way states have mimicked this success policy based on the results of ongoing evalu- to execute innovative policy ideas for better re- ernment encourages the use of sophisticated has been the establishment of “sunset” legisla- ation. If they are not involved at this critical sults. Far too often, good policies are repealed management tools to clear the way for excel- tion, which forces the regular re-evaluation of stage, it will be difficult to identify the kinds of and innovative ideas are abandoned because lence in government execution. government programs and institutions. Nearly disruptive innovations needed for continuous government institutions simply fail to execute half of all states have established a process improvement. Without this protection, the odds the policy effectively and efficiently. Govern- Evaluation for regularly assessing and “sunsetting” state that narrow interests will once again start to ment that finds itself situated in a competitive, Building on these new tools, a charter ap- programs. Since 1982, for example, the Texas gain a foothold on the policy process dramati- citizen-centered environment will be more proach to government would provide an en- Sunset Commission, a branch of the Texas cally increase. likely to achieve results. hanced framework for evaluating government legislature, has abolished more than 58 agen- Tech-Driven Citizen Oversight and Involve- Flexibility, Discretion and Results. In ex- policy and projects. Chartered government cies and consolidated another dozen or more, ment. In the same way that technology rein- change for heightened accountability, public would by definition consist of impermanent saving the state over $780 million. Moreover, vents the relationship between management employees and their network partners would be enterprises subject to constant evaluation, im- thanks to the permanent existence of a power- and accountability in public policy, high-tech given flexibility in determining solutions.T he provement and, if necessary, replacement. ful legislative sunset committee, the bulk tools can reinvent the way individuals and 32 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 33

citizen watchdog groups participate in the servants. Beyond reporting problems to public The legislature granted new charters to six cally says: “If you perform you can have more policymaking and political process. In the past, workers, these systems, combined with social of the state’s major governmental agencies, discretion. And the more discretion you have, charrettes have been used to involve commu- networking tools, also have the potential to which allowed them more flexibility in return the better you can perform.” This approach nity representatives on issues of importance provide groups of interested citizens a mean- for a commitment to achieving savings and actually reverses 50 years of ineffective, rules- where residents, often in matters of design and ingful role in solving those problems. better results. They were thus given the latitude based government that distrusted its public zoning, have an opportunity to weigh costs, Real-life examples such as this and others to experiment with new revenue models, employees so much that it brought integrity by suggest alternatives, and show us that pieces of a cost savings and operational efficiencies.T o removing discretion. exercise real veto author- charter government have compensate for this en- Based on its legacy ity. Such well structured been put in place—but hanced expectation of of innovation and good exercises have allowed “Governments must use no state has implemented innovative activity, the government, Wisconsin governments to ensure that new means to create this a full package of these Charter Agencies could could take the national complex issues are resolved new ideas in a way that retain a portion of the lead by modernizing in an orderly way that dialogue involving blogs, truly reforms and redefines budget savings they re- its governance systems approximates the general electronic transparency public policy. Were a state alized for discretionary to both regain control interest. A charter govern- and online public forums/ such as Wisconsin able to use and were exempted of government and ment could build on this institutionalize charters from other aspects in turn make it more town meetings to offer model by moving beyond for various agencies along of the state budget accountable, affordable face-to-face meetings and input on public policy.” these lines, we would see process—including and effective. including a variety of social a strong move to a new time-consuming budget negotiations. networking mechanisms as era of accountability and The Charter Agencies committed to sav- A Charter Agenda for Wisconsin well. progress. ing the state at least $20 million per year. So how could Wisconsin begin to formulate This was, of course, a major risk for agency a charter approach to government? As men- Meaningful reform of issues as fundamental as Charter Government: directors more used to the traditional process tioned above, my work with the Innovations entitlement reform, pensions for public work- Life after Progressivism of ever-increasing budgets divorced from in American Government program has been ers and tax policy require a broader democratic The application of charter principles to performance. aimed at encouraging the replication, adapta- participation involving new technology tools government beyond charter schools is hardly As it turned out, the Charter Agencies saved tion and application of innovative policies. coupled with a highly transparent and elevated unprecedented. The insight was brought to closer to $50 million a year. The Department Iowa Charter Agencies received this award in public debate. light at least as early as when Jack Kemp of Natural Resources reduced the average turn- 2005, so seeing this approach applied in other Governments must use new means to cre- proposed Enterprise Zones that utilized tax around time for permit applications from 187 jurisdictions is part of that institution’s mis- ate this dialogue involving blogs, electronic credits instead of reduced formal regulation days to 30 days. The Department of Correc- sion. transparency and online public forums/town and oversight in exchange for an expectation tions reduced the probation failure rate by 17 Iowa never fully institutionalized its re- meetings to offer input on public policy. For of improved results. And on a more dramatic percent. The Veterans Home, a long-term-care forms because its authorizing legislation was example, Texas Gov. Rick Perry posts office scale, this notion was recently tested—with facility, reduced the fraction of patients expe- allowed to lapse. While the spirit of manage- expenses online to allow taxpayers to hold great success—in a neighboring state. riencing moderate to severe pain by half. The ment reform has been preserved somewhat in officials accountable. In leading cities, 311 In 2003, Iowa Gov. Tom Vilsack tested a Department of Revenue increased the num- Iowa, the legislature did not extend the charter systems have redefined the access citizens have form of charter government when he launched ber of personal income tax filings completed in order to implement the fundamental reforms to government information and transformed his Charter Agencies Initiative, with help from within 45 days from 75 percent to 94 percent. discussed here. the role of the individual in providing real-time lawmakers, creative managers like Jim Chris- By creating a structural change this charter Beyond the application of the charter model information on community needs to public inger and Minnesota’s Public Strategies Group. concept creates a virtuous cycle that basi- to individual agencies and departments, there 34 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 35

are ways to build the concept into cross- also guarantee that every community in the of the state’s existing restrictions with regard preserves public safety while streamlining gov- cutting, government-wide policy. Five specific state can start a charter if it so wishes. Indiana to compensation, personnel and procurement. ernment operations and, perhaps most impor- suggestions follow, which could serve as the as well allows both the mayor of Indianapolis In addition to helping with talent attraction tantly, reducing the time-consuming and costly foundation for a Wisconsin charter reform: and certain state universities to charter public and turnover reduction for the agency, a new process of multiple applications and approvals schools. freedom and focus on an entrepreneurial mis- by private developers. This kind of operational 1. Build on Wisconsin’s success and legacy Without policy that supports charter school sion could ease the critical process of aligning efficiency enhances economic activity by sav- as a leader in the charter school movement. autonomy and accountability, the promise of the state’s economic development strategy with ing taxpayer dollars and encouraging addition- As noted above, the model works best when the the charter model of government cannot be ful- overarching education, workforce development al activity in the private economy. chartered institution operates as independently filled, which ultimately means that students are and other investments. If all agencies were simply granted an as possible, unencumbered by the stifling rules also denied the kind of education their parents’ authority to submit proposals for process and bureaucratic restrictions that cause public- tax dollars should be providing. 3. Introduce all de- streamlining to a state- sector dysfunction in the first place.C harter partments and agen- level review board— reforms should truly form the basis for school- 2. Implement the Iowa charter model cies to the benefits of with the promise that based autonomy and flexibility. comprehensively in agencies strategically charter government. the agency could keep However, charter schools in Wisconsin important to the state’s future growth and Though other agencies, most of the operational suffer from a common problem that occurs prosperity. The agencies and departments that like Commerce, may savings for discretion- when the agency of government that delivers participated in the Iowa program demonstrate be ready for a whole- ary use—creative a service also decides on the rules that control that large bureaucratic institutions can reca- sale transition to the ideas would doubtless its competition. In Wisconsin local school librate quickly and produce better outcomes charter model, not all emerge from across districts, by and large, both operate traditional and substantial savings for taxpayers. Broad managers will have the state government. schools and decide on who gets a charter and authority and clear accountability metrics can appetite or agency cul- This type of approach under what rules. In this scenario, established produce transformative productivity increases ture necessary to fully would create efficien- interests, whether in the bureaucracy or union, by bringing out the best in state employees, implement a charter. In some cases, a legiti- cies in everything from public health and can place a drag on the ability of charters to managers and department heads. mate concern for risk management or public welfare agencies to the statewide university respond to market demands. For example, the Department of Commerce safety could be reason to introduce the concept system, which is itself encumbered by too The result is that our charter schools in would benefit from such an approach. “Be incrementally. Nonetheless, a charter govern- many rules and processes that slow its ability many cases are not performing as well as they Bold Wisconsin,”11 a recent study by Deloitte ment should attempt to introduce as much of to adapt to the 21st century. could—and they are not innovating as much as for Competitiveness Wisconsin, Inc. makes a the model as possible in every agency. they should. This is a serious problem be- variety of recommendations for the state—in- Short of a full-scale agency “charteriza- 4. Build on the legacy of welfare reform to cause when charter school leaders succeed in cluding a series of reforms for the Department tion,” an incentive program could be put in tackle today’s big challenges. maintaining their autonomy, they are often the of Commerce that closely follows the notion of place for allowing all agencies to identify In a critical sense, Wisconsin’s legacy in lead- highest-performing schools in their districts. charter government. opportunities for streamlining government ing welfare reform is a prime example of the Wisconsin might take a few cues from “Be Bold” recommends significantly processes that save money and improve cus- concept of charter government in action. By Colorado, which has created statewide charter revamping the department so that its busi- tomer service. A recent example of the impact seeking enhanced freedom in exchange for the school entities. Such charter operators would ness development and retention functions are of this approach can be found in Wisconsin’s ability to pursue creative, results-based policy not take away the ability of local school transferred to a new body governed by an 2003 Job Creation Act, which dramatically alternatives, the state led the way to a national districts to establish charters. Rather, they independent board appointed by the governor. simplified the permitting process for water policy movement that has moved millions function as alternate authorities that promote This independence could free the economic regulations. The single-permit approach for of American families and communities to a a similar performance culture statewide. They development tasks of the agency from many water-related aspects of a construction process greater level of prosperity and personal free- 36 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 37

dom. Wisconsin-style welfare reform became the past decade while California has been los- strates that traditional regulatory schemes do Public leadership. Creating a post-pro- a major force in the overall urban renewal our ing citizens at a rate of 100,000 per year. Ow- not work to regulate new and complex private gressive, charter-based government requires country enjoyed in the 1990s. ing to its favorable tax structure and regulatory markets. At the same time, government red effective and enlightened leadership. A charter Wisconsin could tackle other issues of environment, Texas is home to America’s top tape sucks nearly a trillion dollars out of the government would need leaders who can crucial national importance, such as reforms to five job-creating cities, while California’s in- economy and, in many cases, cripples the cre- articulate the value that public innovation will federal programs asking for come tax rate—the second ativity of both government workers and their produce, enlist broad cross-sections of the citi- waivers to implement new highest in the nation—and private-sector partners. zenry, and, almost paradoxically, heighten the approaches to HeadStart, its bloated public-sector For these reasons we must regulate better— public’s expectation for improved performance Unemployment Compensa- “Despite their present workforce and regulatory more effectively than the costly command-and- in a way that makes public leadership more tion, Medicaid and other fragile condition, regime are driving away control, inspection-and-punishment model that challenging. tightly controlled federal residents as the state takes we have accepted as the norm today. Targeted In the end, all reforms depend on the quality state governments like programs that impose un- on $25 million in debt per inspections based on risk analysis—namely, of citizen involvement and public leadership. necessary restrictions on Wisconsin’s have some day.12 The main lesson to focusing inspections on areas with the high- Wisconsin has historically been strong in both state creativity. In this way, built-in advantages on be drawn from the dra- est risk—can help identify potential problems these areas. Engaged leaders, facing today’s Wisconsin could become a which to build to move matic differences between sooner and impose a lighter burden. A state crises, will find personal and structural ways seedbed of innovation and California and Texas is can open up its economy by reviewing its regu- to advance the general interest of the citizen new policy for the nation as from the progressive to that policy matters—a lot. lations to ensure that they clearly accomplish taxpayer over the special interests, and in turn, a whole. the charter era.” Government reform, as more in health and safety than the costs they through newly resilient governance structures, proposed in this article, not impose. Regulations that cannot demonstra- produce a better foundation for economic Conclusion: only achieves benefits such bly survive routine cost-benefit analyses need growth. And judging from the findings of the Change Is Possible, as better services at lower to be eliminated. Governments also have a WPRI poll, state leaders who make these bold Play to Your Strengths cost and better public accountability, it also unique power to assemble, convene, and bring changes will find strong support from their What will help create an environment ame- creates an attractive environment for inward people together to focus on common public constituents. nable to the kind of reform for which this investment and migration. By reducing waste issues. While they typically do this through essay calls? How can a state take steps toward through clear performance standards and re- the creation of committees, commissions, and Endnotes ducing the barriers to business and educational task forces, state governments can use their a charter government? Despite their pres- 1 http://www.realclearpolitics.com/epolls/other/direc- ent fragile condition, state governments like success, a state can establish itself as a destina- convening authority to change the nature of tion_of_country-902.html. Wisconsin’s have some built-in advantages on tion for aspiring individuals and enterprises. governance from a rule-based structure to a 2 The WPRI poll done for this project shows that more than half, 58 percent, of respondents in Wisconsin believe the which to build to move from the progressive to network-based strategy, as suggested earlier. state is generally on the wrong track, while only 34 percent the charter era. Convener and referee. If government sets While efforts across the country to engage believe it is on the right track. And 43 percent would grade rules with a clear set of goals and in a fair and citizens on budget matters have often been the state government’s job as “only fair,” while a quarter of all respondents, 25 percent, graded it “poor.” State competition. For starters, the United transparent method, it can not only change how met with a tepid response, governments can 3 http://www.heritage.org/Research/Reports/2008/03/A- States is characterized by the important con- it performs but produce a sound platform for learn from additional efforts to use web and Guide-to-Fixing-Social-Security-Medicare-and-Medicaid. 4 http://budgetreform.org/sites/default/files/Red_Ink_Ris- stitutional reality that states place an implicit growth. A post-progressive, charter-based gov- automated phone survey tools to create regular ing.pdf. check on each other by continuously compet- ernment is not anti-rules or anarchic. Rather, feedback loops. Government occupies a unique 5 http://www.forbes.com/forbes/2010/0208/debt-recession- it would act more as a referee of the public role as convener and can utilize that role in worldwide-finances-global-debt-bomb.html. ing for capital, jobs, educational attainment 6 http://www.jsonline.com/news/opinion/96682334.html. and overall quality of life enhancements. There game. new and flexible ways to secure input and Quote from Lightbourn op-ed: “Our total state debt rose is a reason Texas has added 4 million people in The current financial crisis starkly demon- produce results. by 170% in the last decade, exploding from $3.5 billion to $9.4 billion. Clearly, the governor and the Legislature 38 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 39

responded to the recessions that bookended the decade by borrowing money to give the appearance of supporting an unsupported level of spending.” 7 For more on this, see “Fewer Rules, More Results,” Bet- ter, Faster, Cheaper, July 21, 2010. http://www.governing. com/blogs/bfc/post-progressive-government-fewer-rules- more-results.html. 8 https://www.mckinseyquarterly.com/Boosting_govern- ment_productivity_1514 and http://www.nber.org/papers/ w15323.pdf. Sustaining a 9 http://www.mathematica-mpr.com/Newsroom/Releas- es/2010/Charterschool_6_10.asp. Great Public University 10 http://www.sunset.state.tx.us/faq.htm. 11 http://www.competitivewi.com/Domains/competitivewi/ By Mike Knetter and Gwen Eudey Documents/Wisconsin%20Competitiveness%20Study.pdf. 12 http://www.trends-magazine.com/trend.php/Trend/2047/ Category/55 and http://www.newgeography.com/ Wisconsin School of Business Dean Mike Knetter and University of Wisconsin- content/001211-the-essence-and-future-texas-vs-califor- Madison economist Gwen Eudey advocate regulatory reforms that will increase nia. the value Wisconsin residents can realize from UW-Madison.

Introduction and Summary. efficiency.UW -Madison students and alumni, Wisconsin faces a conundrum: Just when the who, because of their skills and education, are state and its citizens need a research univer- among the main beneficiaries of the recent sity most to attract outside funding, fuel job economic trends, will need to assume greater growth, equip individuals to compete in a more responsibility for the operating costs in the knowledge-intensive labor market, and help future through higher tuition and philanthropy. spawn our own technology-intensive compa- UW-Madison will need greater autonomy to nies—the state is finding it harder to fund the set and retain tuition and manage enrollment, university. There is, however, a logical solu- while being held accountable for preserving tion. Precisely because research universities the core values of educational and research are able to create much more economic value quality, access and affordability that are vital to in today’s economy, they have the potential to a public university. be more self-reliant. This essay describes the Unfortunately, the clock is ticking. Other value of a great research university to the state states facing similar challenges have moved and the regulatory changes needed to enable more quickly down the path of reform, and the growth of that asset without imposing a in several cases, their universities are closing greater burden on taxpayers. ground on UW-Madison. This will eventually The ability of the University of Wisconsin- erode UW-Madison’s competitive position Madison to maximize its contribution to the and thus its ability to attract out-of-state talent state’s economy will require a new partnership and resources that add to regional economic between the university, the state, students, and growth. Aggressive action is needed to give the alumni. The state and university will need to university the flexibility needed to help itself reduce regulations and increase flexibility in and, in the process, help the state. order to reduce costs and improve quality and 40 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 41

The modern public university context and UW-Madison already plays a large, direct Out-of-state tuition revenue at UW-Madison is their external market forces. Consequently, it is the need for reform role in helping to generate high-wage jobs approaching $150 million per year. Private gift important for UW-Madison to be empowered Both technological change and global- related to its academic research. As the knowl- funds typically exceed that amount, and a sig- to make the key strategic decisions needed on ization have, over the last several decades, edge economy has grown in importance, so too nificant fraction come from out-of-state alumni a timely basis to compete in the market for dramatically altered the economic fortunes of have research expenditures on major univer- and friends. Patent and license revenue that higher education. industries, regions, and individuals in certain sity campuses. National Science Foundation accrues to support the university is of a compa- UW-Madison has a historical position of predictable ways. The transformation toward rankings regularly find UW-Madison in the top rable magnitude. All told, UW-Madison easily preeminence in higher education, thanks to a technology-intensive indus- three of all U.S. universities attracts over $1 billion per year in financial history of strong support by the state and, more tries has been evidenced by in total research expen- resources from outside recently, increased rapid innovation and prod- ditures. While Wisconsin Wisconsin that is spent tuition and gift funds. uct development in nearly “A world-class research (ranked third) and Minne- locally to maintain the But its regulatory and every aspect of life. Over university is one of the sota (ranked 14th) are both quality and scale of the financial relation- the last several decades, best attractors for known as great research university and enrich ship with the state has China, India, the countries universities, with annual the state in the process. changed remarkably of Central and Eastern Eu- technology-intensive expenditures over $800 These developments little as its financial rope, and many others have businesses to launch or million per year, Wisconsin have clearly raised the foundation has shifted become part of the global locate in Wisconsin.” exceeded Minnesota by economic stakes for and the competitive en- trading system. In the over $200 million in 2007. research universities vironment has evolved. process they have greatly Wisconsin exceeded Purdue and the states that house Certain aspects of the increased the competitive by over $400 million! The them. They have also very much affected the regulatory environment prevent the university environment in many sectors where developed vast majority of these expenditures come from environment for higher education. from easily capturing the benefits of many economies once led the market—particularly federal grants flowing into the state. Clearly, As the returns to outstanding education cost-saving and revenue-enhancing innova- in manufacturing. Prices, profits, wages, and there are large economic rewards to having a and research have increased, prices have fol- tions. In other words, as other universities have employment in U.S. manufacturing have been top position as a research university. lowed suit, and students have become more had the ability to be more nimble in their pur- under pressure as a result of a broader, global A research enterprise of this magnitude informed consumers of education—comparing suit of opportunities, UW-Madison has been field of competitors. is itself a great producer of technology- and programs, placement records, salaries upon hamstrung by a regulatory and compliance The high-tech sector is where the U.S. human-capital-intensive jobs, and it also completion of a degree, affiliations with indus- system in need of reform. economy enjoys its greatest competitive indirectly creates a ready supply of people who try, and teaching quality, across colleges and State agencies are regulated for a variety advantage and is thus where capital and labor can transition into technology-related startups. universities all over the country and, increas- of reasons, but the most important are prob- returns have been highest. In recent decades The Initiative for Studies in Transformational ingly, the world. ably accountability for performance and cost the earnings of college graduates have risen Enterprises (INSITE), housed in the Wisconsin Just as there will be winners in the mar- containment. The motivation for performance by over 40 percentage points relative to those School of Business, records over 280 start-ups ket for higher education, so too will there be accountability is obvious for any state entity. workers without a college degree. Not sur- whose founders had a direct relationship with losers. Colleges and universities that are not The motivation for cost-containment regula- prisingly, regions with a high density of both UW-Madison.1 A world-class research univer- strongly incentivized to improve their research tion is that most state agencies do not compete technology businesses and college graduates sity is one of the best attractors for technology- or educational offerings are less likely to at- in provision of their services and thus are are doing relatively well. Sadly, Wisconsin has intensive businesses to launch or locate in tract top-notch students, the best faculty, or the not naturally subject to competitive forces to struggled to retain college graduates, falling Wisconsin. most rewarding relationships with high-quality contain cost. For example, the Wisconsin DNR further below the national average in per capita World-class research universities also attract external partners. More than ever, it is critical will not lose its “market” to the Illinois DNR if income. other important sources of outside revenue. for universities to understand and respond to it is inefficient in delivering good service out- 42 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 43

comes. Judicious use of public funds requires Because of its public good aspects and more flexibility will strengthen the incentives to be left behind if we do not make similar, or cost-containment regulation in this situation. ability to be a resource attractor for the state, a to maintain the high quality we have built over ideally even better, reforms of our own. The modern research university context is disadvantage to UW-Madison is a disadvantage decades. At over $1 billion per year in outside Virginia very different. Public colleges and universities to the state. If state government restricts UW- resources, the benefits of keeping the high- The most studied reforms have taken place in provide services to their states, and thus there Madison’s ability to respond to market forces quality equilibrium are high for the state. Virginia, through the Restructured Higher Edu- is a clear role for accountability measures, and opportunities to create value for society, it The Madison Initiative for Undergraduates cation Financial and Administrative Operations particularly with regard to quality and access. will restrict the institution’s quality, scale, and (MIU), adopted for the 2009-2010 year, was Act of 2005 (Higher Education Restructuring Yet public research universities are quite un- positive impact on the Wisconsin economy. clearly a response to new state fiscal realities Act). Public colleges and universities that meet like other state agencies The need for reform of and external market conditions and may prove annual performance targets are granted auton- for, in addition to their the outdated regulations with hindsight to be the beginning of reform omy in management of capital projects, leases provision of a public good, is greater than ever, and for Wisconsin. The MIU imposed a tuition of property, information technology, procure- great research universities “Public colleges and a two-pronged approach surcharge for students attending UW-Madison, ment, human resources, financial operations are also subject to intense universities provide is needed to fix it.F irst, with an offset for students eligible for finan- and management, and the determination of national and international services to their states, and UW-Madison should be cial aid. The MIU surcharge revenue was salaries, tuition, and fees. competition for faculty, given greater flexibility in then managed by the UW-Madison in order to Cyclical fluctuations in state tax collection staff, students, research thus there is a clear role for management of its resourc- pay for faculty, undergraduate advisers, and had produced a revenue stream that was too funding, private gifts, etc. accountability measures, es and revenues. Second, student recruitment. The quid pro quo was a uneven to finance the improvements in quality These competitive forces particularly with regard to it should have greater private pool of aid to offset the higher tuition and accessibility demanded by the state legisla- require universities to be quality and access.” freedom to set tuition for for students with demonstrated need. Student ture of Virginia’s public colleges and universi- nimble and innovative in its various programs. These leaders overwhelmingly supported the plan to ties. executing their strategies two measures will provide raise tuition. They understood the link between Virginia’s Higher Education Restructuring while also showing great the incentive needed for revenue, quality, and long-term opportunity. Act demands greater accountability of public care in managing resources and controlling UW-Madison to minimize unnecessary costs, Students chose the high-quality equilibrium, colleges and institutions, in exchange for a costs. Failure to do so puts them at a huge dis- improve the range of services offered to both even though it meant higher cost for them. more stable revenue stream, but recognizes advantage in attracting research grants, patent business and its student body, and to maintain through the tier system that autonomy is not and license revenues, out-of-state students, and its quality. And perhaps most importantly to The progress of reform in other states possible for all of its public institutions and other important sources of revenue. the state in difficult economic times, this will The need for reform is not unique to Wisconsin that different models apply in different cases. Currently, UW-Madison must in effect serve reduce future reliance on state funding. and UW-Madison—other states have made Virginia Tech, the College of William and two inherently different masters—state regula- It would surprise no one to learn that facul- innovative and sweeping changes to better Mary, the University of Virginia, and Virginia tions and global competitive forces; this puts ty and staff and students themselves are attract- align their systems of higher education with Commonwealth University all have tier-three the university at a great disadvantage com- ed to institutions that demonstrate that they are the changing structure of the economy. In some status. Moreover, the University of Virginia’s pared to other institutions that are free of the exciting hubs of intellectual activity, creative cases, flagship campuses within a system have Darden School of Business was privatized the same degree of state regulation. By subjecting learning, growth, and economic advancement. broken away to become more autonomous and year previous to the Restructuring Act (2004). UW-Madison to all of the cost-containment Failure to keep up could lead to decline, if our have adopted financial systems that are more The School of Business is allowed to raise regulation on generating outside funding, inflexibility leads to a brain-drain of leading flexible with respect to setting and retaining funds, retain tuition revenues, and hire faculty. procurement, construction, and human re- faculty, staff, and students. These dynamics tuition. In some cases that takes place on an In exchange it forgoes its share of state funding sources that states impose on other agencies, between the students, faculty, and institutions institution-wide basis, and in others, only with- and pays central campus 10% of its expendi- we handicap the university’s quest to maintain feed on one another; the trick is to achieve the in the professional schools. Other states are tures for shared services. excellence. high-quality equilibrium. Giving the university making progress, and Wisconsin is very likely 44 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 45

Michigan has developed a model to attain complete • Differential regulatory treatment of flagship it difficult to provide the growth in revenues Public colleges and universities in Michigan self-sufficiency through its F“ lagship 2030” research universities that generate substantial needed to sustain it. are autonomous institutions, and have managed campaign. outside resources but face global competition This essay proposes a solution to this their own finances with modest state oversight South Carolina as a result. dilemma. UW-Madison is a great export since the late 19th century. The University of In 2002 the governor offered higher education • Clear standards measuring both quality engine and net job creator for the state. It can Michigan-Ann Arbor is the flagship university institutions the option to opt out of the state and accessibility that must be met by public help Wisconsin gain a greater presence in in that state, and it uses its reputation to full system and become separate 501C institu- colleges and universities wanting increased technology-intensive jobs and companies, and advantage, charging among the highest out-of- tions. In exchange, the state would guarantee autonomy. the opportunity exists to boost quality without state tuition of any public university nation- the state base appropriation for a fixed term • Less demand for future state-level support for adding to taxpayer burden. UW-Madison is wide, and retaining those export revenues for of years, after which the institutions would institutions granted greater autonomy, freeing capable of shouldering more of the future rev- its own development. One such development is receive no state funding but would continue to scarce resources for other state needs. enue burden because of its extraordinary qual- the University Research Consortium between provide preferential tuition rates for resident • Recognition that public-private partnerships ity and international reputation in education Michigan State University, Wayne State students. between the university and industry encourage and research, the economic benefit its degrees University, and the University of Michigan, Oregon innovation and growth for both. confer to graduates, and the willingness and which coordinates and leverages collective In 2003 the state released public universities • Greater autonomy to set and retain tuition ability of alumni to give back to the institution. ties to business, marketing of innovations and from many of the state’s procurement and across the institution and/or for professional Outdated and unnecessary regulations on costs new technologies, and programs designed to administrative requirements in exchange for schools that produce graduates with above- and revenues have limited growth and hindered attract business to the state, including creation meeting certain enrollment and performance average earning potential. quality and efficiency of the university. Reduc- of technology parks, business incubators, and targets. The state guaranteed six years of • An upper limit on tuition and fee increases ing regulations on cost, increasing flexibility in educational programs designed to reduce the incremental funding growth and put limits on and provision of financial aid in order to generation and use of revenue, while maintain- information costs to foreign firms interested in increases in tuition and fees. More recently, the ensure accessibility. ing standards for performance accountability, producing within the state. University of Oregon president has proposed a can enable UW-Madison to achieve greater Colorado public-private bond flotation that would serve Conclusion scale and quality and enrich the state economy In 2004 the Colorado legislature enacted as an endowment for the university and provide The relationship between the state and the in a more affordable way for state taxpayers. enterprise-status legislation allowing approved a more certain revenue stream over the next UW-Madison is ripe for change. It meets many The value of research universities around campuses exemption from state government three decades; the public contribution would if not all of the conditions that have driven the nation and the world is now widely ap- spending restrictions as well as exemption consist of an up-front commitment of the an- change elsewhere.2 preciated. Wisconsin risks losing out to other from restrictions on the abilities of campuses nual allocation for the next 30 years, matched Global economic forces have created a states and schools that are adjusting more to raise revenue. The University of Colorado, dollar-for-dollar by private contributions. The challenging fiscal environment for the state. quickly to the changes in the economy. It is for example, has not only greater authority state would benefit from a lower, fixed-rate, These same forces have made major research clearly time for bold action. over setting tuition but is also absolved from commitment to the University of Oregon, universities more valuable to their states— traditional restrictions on out-of-state and for- and the university would benefit from a more e.g., UW-Madison attracts over $1 billion per Endnotes eign enrollment shares, thus increasing export certain revenue stream and greater flexibility in year in resources from outside the state. The 1 In addition to creating startups, current UW-Madison revenue to the state and general revenues to the management of its resources. increased value created by research universities corporate partnerships include companies like Harley- the university. At the same time, disbursement has also increased competition in higher educa- Davidson, Briggs & Stratton, Kohler, Mercury-Marine, tion, driving up costs and putting a premium Cummins, Caterpillar, and many others. of funds to each public college or university Lessons for Wisconsin 2 While this essay is specific to the opportunity for UW- depends in part on the ability of each school Reforms have proceeded in other states for the on flexibility to adapt to the environment.T he Madison, other public universities are affected by their to attract in-state admissions, thus insuring the very same reasons they are needed in Wiscon- state faces a conundrum: Just when it needs own regulatory and external market factors and might seek similar kinds of flexibility. accessibility of the university to local resi- sin. Among the common elements of reform a great research university most, it is finding dents. The University of Colorado at Boulder are: 46 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 47

Wisconsin’s territorial years. Some historians What explains the difference? Wiscon- believe Wisconsin’s fiscal discipline played a sin’s constitutional balanced budget provi- role in attracting immigrants to the state, as the sion merely provides that the state balance its state provided more economic certainty to po- books on a “cash” basis; meaning, the revenue tential settlers. This common-sense approach coming in must match the spending going to finances appealed to hard-working, honest out. However, elected officials have become Lessons in Budgeting: immigrants to the new land. expert at circumventing that requirement. They Although the 1846 can seemingly make Listening to our Founders version of the proposed spending disappear and Wisconsin constitution create revenue from By George Lightbourn and Christian Schneider failed the public vote, thin air. To be blunt, WPRI President George Lightbourn and Senior Fellow Christian Schneider with 14,119 votes for imagine the reaction of show us the wrong turns made in managing the state’s finances and how to get it and 20,233 against, the state’s department back to what Wisconsin’s founding fathers envisioned over 150 years ago…a a similar version of revenue if you tried treasury built on common sense rather than magic. passed a year later, and to create this two-tier Wisconsin became a approach with your On October 5, 1846, 125 delegates descended this everyone seemed to be in agreement, and state—with rigorous own personal income. upon Madison to take part in Wisconsin’s first that fiscal responsibility seeped into the ordi- fiscal discipline as a And if it is not allowed constitutional convention. Statehood was still nary lives of Wisconsinites. Chances are you part of its foundation. It would be interest- for the individual—and it is not—why should two years off, but in the next few weeks the remember your grandmother’s sage advice: ing to hear what those original framers might the state be able to exercise this sleight of delegates would debate a number of contro- “Don’t spend more than you earn.” make of the state’s economics today. “Aghast” hand? versial proposals for potential inclusion in the Many parts of that original document is one word that comes to mind. state’s founding document. probably suited your grandmother. The 1846 164 years later, it is clear that the found- Erased Spending In the first draft of the constitution, women constitution provided that all taxes levied in ers’ fears of fiscal mismanagement were well Accountants know well how to erase spend- weren’t allowed to own property outside their the state should be equal; that the treasurer placed. Each Wisconsin budget is now an ing in any year: push it into the future without husband’s name. The conventioneers couldn’t should annually file a statement in the first intricate tapestry of laws meant to unhitch state backing away from the commitment to spend. decide on voting rights for blacks, so they week of January of the debts and expenditures government from the constitutional balanced Let’s look at a couple of tangible examples. punted the question to a public referendum. that the state incurred during the preceding budget requirement insisted upon by the state’s When homeowners opened their property tax The boundaries of the state hadn’t even been year; that the limit of state indebtedness should settlers. As each legislative session passes, bills last December, they saw a tax credit that set yet—delegate William Holcomb unsuccess- be $100,000; and that the Legislature should the governor and Legislature continue to drag reduced the gross amount of tax. Yet the state fully sought to have the western portion of the provide for an annual tax sufficient to defray Wisconsin further away from the original fiscal didn’t have to actually pay for the credit until territory split off into the “state of Superior.” It the estimated expenditures of the year (balance discipline that served the state well for more the following July. This allowed the state to would remain one state...from the Mississippi its budget). than a century and a half. make a commitment in one year while delay- to Lake Michigan and from Lake Superior to Wisconsin was unique. In 1846, it was Take, for example, the two sets of books ing paying for it until the next year. On a cash the Illinois border. unusual for a state’s constitution to be involved Wisconsin keeps. On one set of books, state basis, state government erased the cost of the There were, however, some provisions that in fiscal matters in such a detailed way. But government shows a balanced budget every tax credit from its books. Yet, since the obliga- were not at all controversial, including a strict, the unusual caution in the matters of finance, year. However, a second set of books shows the tion remained, the true set of books shows the almost puritanical provision for how state taxation, and public debt was the result of a real picture: that state government is actually obligation big as life. Another example was a government would manage its finances. On successful economic policy pursued during carrying a $2.7 billion deficit. 2005 maneuver. 48 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 49

Facing a tough budget, the governor and the Legislature passed a bill clarifying that the ment, Wisconsin ranked 40th in the nation in to the budgeters in Madison and one that will Legislature moved a school aid payment date fund was to be an “irrevocable trust.” Just six debt per capita. According to a report issued cost the state’s taxpayers an extra $1 billion in from the firstM onday in May to the fourth years later, needing a one-time injection of by Moody’s Investor Service in August 2010, interest payments over the life of the bonds. Monday in July. Since the state budget year money, the governor and Legislature, ignoring Wisconsin is now 12th in the nation in debt per Debt is now also being used to fund ongo- begins in July, this change seemingly saved the their own designation of irrevocable, moved capita, barely behind notorious big-spending ing state obligations, including Wisconsin’s state $65 million. Of course, it actually saved $200 million into the general fund. One year states like New York, California, New Jersey, state employee pension and health care liabil- nothing and simply meant later, the Supreme Court and Illinois. ity. While the Pew Center on the States praises that schools had to wait basically said “nice try” According to the Moody’s report, Wiscon- Wisconsin for having a well-funded public almost three more months and ordered that the money sin’s $1,720 in debt per capita puts the state pension system, what is forgotten is that this is to receive the payment. “By the end of 2008, be sent back to the fund $423 per capita above the national average, only possible due to the use of borrowed mon- Just for good measure, the Wisconsin had nearly where it belonged. and $784 above the national median of $936 of ey. In 2003, Gov. Doyle and the Legislature Legislature required that $6 billion of outstanding Of course, when the debt per capita. approved borrowing $750 million to pay off school districts treat the July state uses one-time rev- Looked at another way, Wisconsin debt has the unfunded pension liability. While they were payment as if it had been debt to repay—nearly half enues to pay for ongo- risen from 2.8% of personal income in 1998 at it, they also borrowed another $600 million received in the previous the total amount the state ing spending, it creates to 4.6% in 2010. That’s an increase of 64% in to liquidate unfunded liability for retiree health school year, adding insult to spends per year.” a structural deficit in the 12 years, and ahead of every other neighboring care. In total, they authorized borrowing $1.35 financial injury. following biennium. The state. (Illinois is next at 4.4%, while Michi- billion for employee benefits. nonrecurring revenues used gan is at 2.1%, Minnesota 2.4%, and Iowa at Sadly, debt has become a routine funding Instant Revenue to plug the budget hole 0.2%.) The national median is 2.5%. source for the state government’s operating Within the overall state budget, there are a are not available to buttress those spending Just as troubling as the amount of debt is costs. number of discrete pots of money. While most programs in succeeding years. Every dollar of the changing purpose for which it is being big-ticket items are in the general fund, a num- one-time revenue used to pay for an ongoing used. Rather than merely financing capital Fiscal Imprudence: ber of smaller funds exist, e.g. transportation program creates a dollar of structural deficit in projects, state debt is now being used to fund What Difference Does it Make? and natural resources. When the general fund the next biennium. ongoing spending programs, directly contra- “Stories about the state budget deficit make comes up short, rather than cutting spending, vening the spirit of the original constitution, my editor’s eyes glaze over,” explained the vet- oftentimes the governor and Legislature will Expanding Debt further eroding the state’s original charter. eran reporter on why he took a pass on writing move money from another fund on a one-time Those old-time founders back in 1846 were As noted above, between 2003 and 2009, a story about state government’s multibillion- basis. Of course, programs funded from the prescient when they warned of the dangers the governor and Legislature shifted $1.3 dollar deficit. Stories about the dysfunction of donor funds don’t think this is remotely proper. of state debt. By the end of 2008, Wisconsin billion from the state’s transportation fund to state government finances are indeed a tough The most pronounced transfer in recent mem- had nearly $6 billion of outstanding debt to the general fund. To partially make amends sell. In journalistic terms, they just aren’t sexy. ory is the $1.3 billion transferred out of the repay—nearly half the total amount the state with the transportation community, they issued It’s thought that readers will run to celebrity transportation fund between 2003 and 2009. spends per year. $815 million in bonds to make up for much of stories that have zero impact on their lives, Recently, no less an authority than the Prior to 1969, Wisconsin could only issue the lost revenue to the transportation fund. So while something like finance, which obviously Wisconsin Supreme Court issued a strong up to $100,000 in debt, for “extraordinary while the constitution directly prohibits issuing requires more thought and has a direct bearing rebuke for a $200 million transfer from the expenditures.” However, that year, voters debt for ongoing spending programs, Gov. on their wellbeing, is ignored. Patients Compensation Fund—a fund that amended the state’s constitution to allow Doyle was able to complete this end run by Yet, in spite of the paucity of mainstream collects payments from physicians to offset the Legislature to issue bonds, primarily for bonding for “transportation,” and merely shift- reportage, the public has begun to connect the malpractice claims. The fund was created in capital projects and land acquisition. Shortly ing other funds to pay for ongoing programs. It dots and is showing definite signs of inter- 1975 to restrain health care costs, and in 2003, after ratification of the constitutional amend- is a semantic distinction that makes sense only est. They know that things are not right in 50 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 51

Madison, and their misgivings begin with state expansions with the uncertainty surrounding ment in a climate fraught with uncertainty. In a predictable, since businesses, like families, do government’s damaged balance sheet. WPRI Wisconsin’s current economic recovery. recent survey conducted by US Bank, 86% of not flourish in an era of uncertainty.W hat state polling tells us that 47% of the people feel that How does the unbalanced budget add to small businesses believe the economy remains policymakers seem not to understand is the state government needs major reform and that business uncertainty? First, the fact that state in recession—several months after many of fragile nature of most businesses. The typical an astounding 73% of the people feel that the government debt has increased significantly the top economists have declared the recession successful business has an operating margin governor and the Legislature are not capable of and that the budget has a $2.7 billion deficit is to be over. Fewer than 30% say they intend to of 3%-5%, meaning that either an actual or solving the state budget deficit.1 a clear signal that state government is attempt- make capital expenditures in the next year, a an anticipated tax increase will tangibly affect Beyond fueling a rather esoteric public ing to support a level of spending that is not key indicator of business a business’ decision to policy debate, do the fiscal irregularities of supported by existing revenues. Businesses confidence.T his is attribut- expand now or to wait. To state government matter? The answer is a understand that this will inevitably expose able to a sense of uncer- “For businesses that have an extent, Wisconsin has resounding yes. To the extent that state govern- them to a higher tax liability. tainty related to the general earned its reputation as a ment matters—and it does—the embarrassing One needs only examine the tax increases economy and concerns an option of adding jobs high-tax state. (The Tax nature of state government fiscal management enacted in the current state budget to confirm about health care costs and in Wisconsin or elsewhere, Foundation ranks Wis- significantly diminishes the quality ofW iscon- this misgiving. In spite of declining tax rev- taxes.3 all of the signals related consin near the bottom, sin state government. enues, the budget included two-year spending Wisconsin businesses having a tax climate ranked increases of 8.4%. While some of the increase understand that they will to dysfunctional budget 42nd nationally.) When Business Owners Get It… was funded by federal stimulus money, a large be early targets to make will give them a reason to businesses hear elected Economists Don’t share was funded by a substantial increase in up for state budget short- pause before adding those leaders cavalierly discuss Let us first examine the impact on state busi- the tax on businesses. State government passed falls. Even when the law jobs in Wisconsin.” taxing business, the clear ness. After all, business in many ways is the combined reporting, increased the capital gains is unclear, business can signal sent to businesses lifeblood of Wisconsin’s quality of life, since tax, increased the corporate income tax and be subject to the vagaries is that the elected leaders our prosperity is tied to a healthy business added a new top income tax bracket. Wis- of state tax collectors. In in Madison simply do not sector. As John Gurda points out in his his- consin Manufacturers & Commerce (WMC) 2003, the Department of Revenue “legislated grasp how hard it is for a business to succeed torical essay for this project, this is the key to reports that the multitude of increased busi- by audit.” The department has a long history and to sustain success through the economic survival. If the state’s economy fails, people ness taxes will increase the effective state of supporting combined reporting for state highs and lows. will leave the state. This is backed up as people tax on businesses by an astonishing 25%.2 income taxes, which would have made subsid- across the state place jobs at the top of the list Yes, businesses are correct in surmising that, iaries taxable. In 2002, Gov. Doyle proposed Impact on the Public Trust of things about which they worry. Anything owing to Wisconsin’s tradition of unbalanced combined reporting, but his proposal did not Wisconsin’s dubious fiscal maneuvers are also that adversely affects business and job cre- state budgets, businesses are right to plan on a pass in the budget bill (it eventually did pass in affecting the public opinion of government. In ation is troublesome, and state government’s higher tax bill in the future. Individuals should 2009). Instead of waiting until the Legislature school we were taught that, unlike the federal troubled financial condition clearly affects as well. acted, the governor’s Department of Revenue government, state government cannot print business. For businesses that have an option of add- began aggressively asserting that Wisconsin money when it has a fiscal pinch. For genera- The seemingly permanent state budget ing jobs in Wisconsin or elsewhere, all of the law required taxing the income of out-of-state tions we believed that the state budget had to deficit introduces a degree of uncertainty for signals related to the dysfunctional budget subsidiaries, when the legal basis was ques- balance. That bubble has burst, as we have all businesses. Businesses always attempt will give them a reason to pause before adding tionable and the established practice had been seen budget after budget patched together to minimize risk and uncertainty, especially those jobs in Wisconsin. Other businesses, not to do so. with creative debt, shifting payment dates, and when emerging from a recession. It is widely typically small businesses, even if they are tied Ideally, state government would send a an elastic set of bookkeeping rules that are understood that businesses have been reluctant to Wisconsin, will be much less willing to add clear message to the business community that changed by the governor and Legislature when to add permanent jobs or to undertake capital permanent jobs or expand their capital invest- the tax climate is stable and the tax liability is it suits their needs. But the public is catching 52 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 53

on. Here is what the citizens of Wisconsin have dence citizens have in their state government, Eliminate the deficit. In the short term, our more debt piled on over the past four decades said in 2010 polling.4 all actors, especially state workers, must know elected leaders should commit to making the in what may have been one of the most biparti- • 85% believe that, in spite of a balanced bud- their business has integrity. $2.7 billion deficit no worse. Beyond that, the san endeavors since World War II. The leaders get requirement, the budget has a $2.7 billion state should embark on a path to eliminate the of both parties are responsible for the mess we deficit. What should be done? deficit over the next 10 years. find ourselves in.T he most serious question • 73% believe that the elected leaders in Madi- WPRI has been calling for reform of the state Eliminate the use of debt and other one- of our time may be how to right this ship and son are not capable of solving the state budget budget system since 2003, when we issued our time revenues. If spending cannot be sup- correct our course. deficit. first study with the following warning: ported without one-time funding, then spend- In an almost macabre sense, there is likely • 58% question the trustworthiness of the “This study makes a case for overhauling ing must be cut. This simple maxim will serve to be resistance to changing the way budgets elected leaders in Madison. and modernizing budgeting in Wisconsin. No state government well. are constructed. As Stephen Goldsmith articu- • 69% rate the job of state government as fair one would invest in a business that uses the Establish a reserve equal to two percent lates elsewhere in these pages, the key players or poor. fiscal planning and controls used to balance of the budget. The current budget includes a have become accustomed to the predictabil- • 64% are frustrated or angry with state budgets in Wisconsin. It would exceed the risk reserve of $65 million, which amounts to less ity and the political nature of the process. government. tolerance of the most than one-half of one percent. A two percent This includes interest groups, state agencies venturesome inves- reserve—approximately $300 million—would and elected officials.T herefore, even though Impact on the tor. Yet what is more provide a much-needed cushion for the state the current process has yielded results that Quality of important than the budget. satisfy no one, it is unclear that there will be a Government programs funded from Establish a spending goal. The next groundswell to change the process. Finally, an often over- the state budget? The governor should convene a State Expenditure Yet, now is the moment to change the sys- looked impact is inside undependable nature of Commission charged with setting a long- tem, to bring more predictability and certainty government itself. State the state budget jeopar- range spending goal for state government. The into the process, to make the state budget employees have a rich dizes Wisconsin cities, fundamental question for the commission to something on which all Wisconsinites can de- understanding of the schools, businesses, address is how much of Wisconsin’s economy pend. It will require a good deal of innovative fiscal shenanigans elected leaders have used to services to the most vulnerable citizens, eco- should be devoted to state (and perhaps local) thinking, flexibility and statesmanship to de- balance the budget. They know that numbers nomic growth. If the governor and the Leg- government. No such strategic review of gov- velop the long-range fiscal plan that will spell are often manipulated, fiscal rules are changed islature fail to address the long-range budget ernment spending has been undertaken since an end to budgets riddled with debt, deficits and presentations are altered to mask troubling issues, all of Wisconsin should be prepared 1986. It is long overdue. and uncertainty. No changes of this magnitude news. State employees describe state fiscal for more fiscal uncertainty in the future, and Create an Economic Council. Wisconsin have been made for several decades. The op- management as being dominated by politics, maybe even that tax increase nobody wants.”5 should adopt a formal Economic Council com- portunity for reform is clear. regardless of which party is in power. It is ines- Unfortunately, that admonition went posed of financial experts from business, uni- The peril to Wisconsin comes if these issues capable that the routine and thinly disguised unheeded, and our prediction of uncertainty versities and government. The council would are not addressed. fiscal manipulations used to show a balanced and tax increases has come true. The follow- be charged with producing state government budget strongly influence the value system ing fixes are strong medicine and represent a revenue forecasts. Further, the council should Endnotes of state government. In order for state work- seismic shift in Wisconsin’s budgeting culture. translate the long-range spending goals into 1 WPRI public opinion survey, June 2010. ers to know that their industry has integrity, Yet they are guaranteed to provide the certainty parameters within which state budgets would 2 James Buchan, WMC, April, 2010. they must be assured that their leaders are not that job-creating businesses crave, and will go be developed by the governor and Legislature. 3 Paul Gores, Milwaukee Journal Sentinel, July 29, 2010. 4 inclined to play fast and loose with the state’s a long way toward restoring the public’s confi- Data presented here are taken from WPRI public opinion With a touch of irony, Wisconsin’s problems surveys conducted in June and July 2010. books. If there is hope of restoring the confi- dence in their government. are really a microcosm of what has happened 5 WPRI Report, “Reforming Wisconsin’s Budget for the in our federal government as well: more and Twenty-First Century,” April 2003. Chapter 3 refocus wisconsin | a project of the wisconsin policy research institute | 55

Sounding the Alarm: a Wake-up Call with Directions By Frederick M. Hess and Olivia Meeks Frederick Hess and Olivia Meeks of the American Enterprise Institute examine one of the most challenging aspects of education—how to create great teachers. It turns out it is not impossible. And Hess and Meeks explain how this fundamental building block to improving K-12 education can take place…even in a system fraught with problems. There was a time when Wisconsin was a leader In reading, the decline has been even more in school reform, and it wasn’t that long ago. precipitous.1 And all of this has happened in All you have to do is go two decades back, and spite of the fact that statewide per-pupil spend- Education reform the state’s performance on reading and math ing has risen from $7,749 per student in 1990 assessments put its students in the nation’s up- to $10,041 in 2007 (in constant 2007 dollars), per tier. The 1990 Milwaukee Parental Choice proving that just throwing money at a problem Program was heralded as a watershed for will not solve it.2 school choice, and today, it is the nation’s larg- Perhaps the most vexing statistic is the est school voucher program. Wisconsin was racial divide – 93% of white students gradu- also an early adopter of charter schooling, and ated high school in 2009 statewide, compared its SAGE class-size-reduction program gained to only 66% of African-American students.3 national attention in the 1990s. This is a divide that no state or country can In the current education landscape, those tolerate if it intends to remain functioning, let days of innovation seem a long way off. Wis- alone successful. The situation is most grim in consin is no longer mentioned as an education Milwaukee, where only one-third of African- innovator in the same breath as states like American tenth-graders—34%—are proficient Louisiana, Tennessee, or Colorado. Wisconsin in reading compared to 67% among their white has also seen a tremendous erosion of its once- classmates; in math, 19% of African-American impressive math and reading performance. students are proficient compared to 56% of In 1990, Wisconsin outperformed 76% of the white students.4 states in eighth-grade math scores. Today, What will it take for Wisconsin’s poli- Wisconsin has fallen to the middle of the pack. cymakers to improve these dismal statistics 56 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 57

and return Wisconsin to leadership in K-12 • There has to be an improvement in teacher this status quo immediately encounters a buzz shortfalls, but they rarely have the tools to use schooling? Ironically, many of the solutions to quality. saw of opposition from parents and teachers, teachers in smarter, more cost-effective ways right this foundering ship are already avail- • Curriculum has to be strengthened in the core who are drawn to the obvious appeal of smaller as they do so. able today. The problem is that it will demand subjects. classes. The costs of small classes, however, But rather than seeking to compel parents intrepid leadership and innovative thinking to • Schools and teachers must be held are high and not just monetary—they dilute the or teachers, against their preferences, to accept take on an entrenched and beleaguered profes- accountable. quality in the teacher workforce, reduce train- substantially larger classes across the board, sion, and for too long, Wisconsin has lacked • Excellence must be rewarded. ing for individual teachers, and use funds to the “Gold Star Teachers” initiative—in which the bold leaders who are willing to do what is • Discipline and school safety must improve. hire more bodies rather than for higher salaries. highly talented teachers are given the opportu- necessary. • The number of high-quality charter schools Yet surprisingly, the research supporting nity to teach more kids per class—is intended This essay is not just a blueprint for the has to be expanded. across-the-board class reduction is thin, at to reshuffle the incentives, improve instruction, state’s leaders; it is a • Persistently low-per- best. The evidence save dollars, and create wakeup call with direc- forming schools have to be that proponents most a productivity-enhanc- tions. Each of the sugges- either turned around or shut frequently cite—based ing dynamic that puts tions offered here has the “Gold Star Teachers would down. on the Tennessee STAR superintendents and potential to begin changing have the opportunity to Some specific sugges- experiment—is shock- principals in positions the dynamics of Wisconsin become more productive tions on these counts are ingly narrow to base an to better utilize their schooling, so that cost- thoughtfully sketched in the entire theory on. This talented teachers. effectiveness is brought out by teaching more students complementary analyses research suggests that Research suggests, of the shadows, the incen- per class, and would for this project by Alan smaller classes are not and experience shows tives that reward lethargy be rewarded for their Borsuk, Sarah Archibald, a uniformly good idea us, that some stellar and discourage initiative Ruth Fernandez, and Scott and that while dramatic teachers can comfort- increased workload…” are reshaped to instead Niederjohn. Our aim in reductions in class ably handle three dozen reward performance, and this paper is not to review size at first grade and kindergarten could yield students or more. While today’s value-added opportunities are created proposals for teacher pay some benefits, these results were contingent data systems have limitations and while student for outside innovators to better serve all of our systems or tenure reform, but to focus on a on there being no accompanying dilution of performance on reading and math assess- children. However, leaders must also realize few ideas that tend to fall between the cracks teacher quality.5 Of course, in the real world, ments is not a simple proxy for teacher quality, that nothing will end the downward spiral un- and that begin to address the structural barriers these conditions rarely hold. Meanwhile, value-added measures provide a systematic less they choose to act. that impede dramatic leaps in K-12 productiv- international evidence suggests there is no way to identify teachers whose students are Keeping in mind that these suggestions are ity. None are quick-fix solutions, nor do they simple relationship between class size and stu- consistently achieving outsized gains. And off the beaten path, it’s important to also look promise a rapid boost in test scores. Rather, dent achievement. Some nations that excel in these teachers whose students register greater at the more systemic, broad-gauge needs in the they are proposals to start addressing the struc- middle school mathematics, for example, have gains compared to their Wisconsin peers for at sector. None of these points should come as a tural roadblocks that have made deep-seated class sizes in that subject ranging from least two consecutive years would be eligible to surprise to anyone who has remotely looked at improvement so difficult. 40 to 50 students per class.6 participate in the Gold Star Teachers program the problems in education in Wisconsin and, Given the current fiscal crisis inW isconsin, should they so choose. frankly, throughout the country. But taking the Gold Star Teachers class size reduction is on hold—or receding. Gold Star Teachers would have the oppor- necessary steps to correct them is frequently First, an inconvenient truth. The classic method The fact that roughly 55% of K-12 outlays tunity to become more productive by teach- more of a political question that, for a variety for improving education has been reduction in go to salaries and benefits for teachers means ing more students per class, and would be of reasons, our leaders have been either unwill- class size. Smaller classes are always better for that district officials are forced to start reduc- rewarded for their increased workload even as ing or afraid to tackle. kids, the thinking goes, and any challenge to ing the ranks of teachers as they address these the state pockets substantial savings. Teachers’ 58 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 59

continued participation in the program would is fine for those parents whose children are Given the uncertain results, political dan- By creating a bonding authority and clear- be made contingent on their students continu- fortunate enough to get into those classrooms, gers, and unmapped responsibilities of partner- ance facility, the state would make it possible ing to make larger-than-normal gains. Though and among those who know how to work the ing with new providers or allowing the estab- both for the state superintendent and local hard to imagine just five years ago, enforcing system to obtain such a slot, but it creates frus- lishment of new schools, the risks are simply districts to employ these bonded agents. In such eligibility criteria is now feasible given tration among parents whose children do not too great for many state or district officials to accord with state-specified performance pa- today’s technological tools and refined data get into the class of a heralded teacher. countenance. In 2004, Gov. Jim Doyle vetoed rameters and based on the specific agreement collection. Given the choice between a Gold Star Senate Bill 253, which called for allowing the negotiated with the operator, districts could The benefits of Gold Star Teachers would Teacher serving more children and another University of Wisconsin-Madison to authorize set performance standards relating to student flow not merely to the students now able teacher working with fewer, many or most par- five new charter schools in Milwaukee, due to achievement, completion, attendance, and the to learn from these ents will likely prefer his concerns that it would “drain state funds like, while the bonds could be negotiated for talented educators, but the larger class. But it from existing public schools.”11 When the varying periods of time.13 also to public officials, is essential that parents nationally recognized SEED Foundation of The state would need to do four things school district leaders, be given a choice. Washington, D.C., sought to establish an urban to make turnaround bonds possible. First, it and taxpayers. Allow- The logic of the Gold boarding school in Milwaukee, the state’s would need to establish a legal framework for ing a talented teacher Star Teacher program finance committee turned them down even as these bonding arrangements and for districts to instruct, say, 35 is that it is all about advocates raised $3.5 million in private dona- to collect from providers that fail to deliver. students instead of 20 choices—by teachers, tions for the school and the U.S. Secretary of Second, it would need to create a facility for (Wisconsin’s statewide by parents—and not Education voiced his personal support.12 approving bonded providers, including okaying average reported class about fiat. Instead of denying new providers access and then holding in reserve their bonded sums. size today) would due to risk aversion, a more constructive Third, it would need to establish permissible boost a teacher’s productivity by 75% if those Turnaround Bonds response is for the state to create a bonding performance parameters and explicit rules students fared equally well.7 These savings, Despite the growing number of nontraditional system analogous to that used by firms eligible for judging whether providers had met the of course, should be shared by the state with providers, district officials remain reticent or to bid on state capital projects. Turnaround standards in question. In many cases, it will districts and participating teachers to incentiv- downright opposed to turning over schools to bonds would require operators seeking to take be imperative to establish a “judge,” such as ize and reward performance.8 outside providers. But limiting these providers, responsibility for low-performing schools a neutral third party or surety firm, to assess Today, principals often ask good teachers especially those with successful track records, to post a performance bond guaranteeing evidence of performance in cases of disagree- to take on tough roles simply because it’s the impedes the ability of districts to leverage ex- that they would meet specified performance ment. Finally, the state must set parameters right thing to do. When asked to take a few es- pertise in boosting faculty productivity, student goals. Rather than the asymmetrical assurance regarding the amount of the bond. pecially demanding students or a couple extra outcomes, and cost-effectiveness. This state of provided by charter authorizing (where charter The scale of the bond is a question deserv- kids, teachers are not currently rewarded or affairs is especially troubling when it comes operators can lose their charter if they fail to ing careful discussion, but something in the recognized—they’re simply asked to be good to turning around persistently low-performing perform, but otherwise have no “skin in the range of 30 to 35% of annual operational team players. The Gold Star Teacher program schools, as many districts are struggling to de- game”), the turnaround bond would require expenditures would represent a reasonable would change this inequity. liver on their own but remain hesitant to utilize that operators post a substantial, specified compromise—this would amount to roughly What about parents? All things equal, external providers.9 One useful way to start sum that they would forfeit if they failed to $2 million in a Wisconsin school of about 500 parents typically prefer smaller classes. But reassuring district and state officials, and to deliver the promised results. In this sense, the students. Over a three-year contract, that would all is not equal. At every school in Wisconsin, address concerns about unproven or privately turnaround bond would be similar to the bonds require the operator to post a bond equal to involved parents always know who the best operated turnaround operations, is to adopt a posted by firms contracted to build highways about 10% of total outlays. This is a sum large teachers are. Smaller classes mean that these bonded system of performance guarantees.10 or high schools in a timely, satisfactory man- enough to constitute substantial compensa- teachers can work with fewer children. This ner. tion to the district and affected students if the 60 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 61

operators fall short, but is not so large as to be ideas so that they extend beyond “school” virtual Educational Spending Account (ESA) expected to cut programs such as art, music, prohibitive. choice. The older model of simply choosing created for each child. Parents would have a and foreign language.16 Crucially, turnaround bonds would help between schools made more sense 20 years choice. They could direct those ESA dollars The Education Savings Account offers a to alleviate the justifiable fears of officials, ago, but is limiting in the new world of virtual to their child’s school and simply enroll their chance to both address parental concerns and district leaders, and other citizens concerned schooling and educational software. In the child in the usual manner, or they could use infuse price consciousness into K-12 school- about spending public monies on nontradition- health care debates, even the most ardent them to procure instruction from other state- ing. Take, for instance, the case of foreign al providers. Bonds would also help incentiv- single-payer enthusiast presumed that patients approved providers. language. One provider that might apply for ize performance and help make Wisconsin an should be free to make a series of choices Do families actually care about the “an- ESA eligibility is Rosetta Stone, which sells attractive venue for proven performers and among physicians and providers. Yet, when it cillary” services that would be best served foreign language instruction in 150 countries inhospitable terrain for comes to schools, the most through ESAs? They and which can be pur- charlatans and unproven expansive vision of choice sure do. New polling chased at a half-dozen operators. By mitigating entails allowing parents to from University of malls across Wiscon- uncertainty, controlling “…simply choosing choose School A or School Wisconsin’s Kenneth sin. Rosetta Stone quality, sharing responsibil- between schools made B. This may appeal to ur- Goldstein found that offers instruction in ity, and providing political more sense 20 years ago, ban parents eager to escape 63.9% of Wisconsin 31 languages, includ- cover, performance guaran- awful schools. It does little, adults identify music as ing Mandarin, Arabic, tees can enable the broader but is limiting in the new however, for the majority very or somewhat im- and Japanese.17 Some adoption of new providers world of virtual schooling of parents—and especially portant when it comes parents might prefer and bolster the demand and educational software.” for the vast majority of sub- to schooling. Indeed, enrollment in one of side of the school reform urban parents—who like 35.5% of adults who those languages to the equation. their schools but who may live outside of Mil- usual French or Span- wish to take advantage of waukee identified music as “very important.” ish, or they might believe the research suggest- Education Spending Accounts a different math or foreign language program. When it came to foreign language instruction, ing that the program—or that of a competitor It’s peculiar that the power of markets to Permitting families to redirect a portion of the 58.7% of Wisconsin adults said that they be- like Auralog or LiveMocah, Inc.—is equal or engender price competition remains so unex- dollars spent on their child through a kind of lieve it is very or somewhat important. Nearly superior to the instruction provided by most plored in K-12 education. Though parents can health savings account analog would address one-third of adults who live outside Milwau- K-12 language teachers.18 Sufficiently wealthy sometimes choose from School A or School unmet needs, allow niche providers to emerge, kee— 31.0%—said it is very important. And parents can just purchase these kinds of ser- B, public school spending today entails a zero foster price competition on particular services, 80.1% of adults statewide said they believe vices on the side, paying the $485 for a Rosetta percent contribution from parents, and parents and make the machinery of educational choice physical education to be very or somewhat Stone program. But, for other families, such an currently gain nothing from choosing a more relevant to many more families.14 important, with 48.3% who live outside of option is currently off the table. It needn’t be. cost-effective district school or charter school. Wisconsin would do well to start exploring Milwaukee deeming it very important.15 How would this work? In the case of A big part of this is due to complacency and a new model at the high school level. It ought For all the rightful import accorded to foreign language instruction, any of these a general sense that this is the way it’s always to continue insisting that schools provide the reading and math performance, parents are providers—and their competitors—could apply been done and the way it always will be done. 11 core credits, amounting to about 55% of the also concerned with the quality of a number of to the state, which would employ an enhanced And this might be at the heart of the prob- high school curriculum, but then rewrite the other school services. Meanwhile, districts are version of the infrastructure designed to handle lem—the inability to change what has always funding formula so that the per pupil alloca- struggling to maintain the quality of those ser- Supplemental Educational Service providers been. tion currently delivered to school districts is vices. A 2009 survey of 315 Wisconsin school under No Child Left Behind. Each approved One tack is to take steps that leverage the broken into two pieces: 55% to fund “core” administrators indicated that, due to the cur- provider would, just as if they were bidding on insights of school choice but broaden these mandated instruction and 45% deposited in a rent budget situation, 58% of superintendents other state contracts, be expected to specify 62 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 63

unit prices. Parents would then be free to use There is obviously much to figure out in manner. Linking school and district spend- Between-Grade Variation in TIMSS, (Institute for the Study [ ] such a system. Nonetheless, pioneering even ing to student outcomes, even if purely for of Labor IZA Discussion Paper, April 2002.) For further ESA funds at their child’s school or at any discussion, see also Mark S. Tucker and Judy Codding, state-approved provider. a modest version of the ESA for low-income informational purposes, can begin to transform Standards for Our Schools (Jossey Bass, 1998); Ronald The ESA model would promote three ex- families has the potential to make Wisconsin discussions about what it means to be an effec- G. Ehrenberg, Dominic Brewer, Adam Gamoran, and J. Douglas Willms, “Class Size and Student Achievement,” traordinarily healthy dynamics. First, it would a national leader in meeting the educational tive school or district. Psychological Science in the Public Interest, Vol. 2, No. 2, begin to make educational choice part of a needs of all its children and beginning to bring For too long, education reform was deemed pp. 1-30. 7 continuum that serves all of the state’s fami- healthy cost-pressures to bear on a sector just a question of “best practices” and fixing Figures based on average self-contained class size, which is 19.7, according to the 2007-2008 SASS Survey. lies. This would help bridge suburban-urban where spending has long been out of control. schools. In the past decade, efforts to promote Available at http://nces.ed.gov/surveys/sass/tables/ divides that have often complicated efforts to accountability and data, expand charter school- sass0708_2009324_t1s_08.asp. 8 In practice, these calculations get much more complex. promote sensible school choice policies. In Conclusion ing, and reform teacher pay and tenure have Class size practices and rules vary: In Milwaukee Public particular, it would give As we said at the start, the taken a central place, and much progress has Schools, for instance, there is a 25-student class size parents across the state critical component here is been made on these counts. Too often absent, restriction in grades K-5, but the formula for grades 6-12 currently allows larger classes and a substantial amount a tool to help meet the the commitment by state however, is a vision of how to use these new of variation. Given that average salary and benefits for a particular needs of their “…Wisconsin is once leaders to aggressively data systems, technologies, choices, and talent full-time Wisconsin teacher is about $74,844, according to calculations based on 2010 Wisconsin Department of children. Second, it begins again well-positioned to root out and remove those in smarter, more cost-conscious ways to better Public Instruction data, this yields a savings of more than $55,000. (Calculations based on Wisconsin Department of to free school districts from resume its leading role barriers that currently meet the needs of all students. On this score, the expectation that every impede problem-solvers. Wisconsin is once again well-positioned to Public Instruction’s Fall 2010 PI-1202 Fall Staff Report, available at http://dpi.wi.gov/lbstat/newasr.html. The figure school will meet every need [in education], should it For instance, the state resume its leading role, should it choose to do was calculated by averaging the totals of average teacher for every child. Instead, it choose to do so.” today limits virtual charter so. salary and average fringe for all reporting districts.) Let’s take this savings estimate a step farther. Imagine makes it possible for spe- schools, such as Appleton’s the program started with teachers in grades 4-8, say, where cialized providers to start Wisconsin Connections Endnotes reading and math value-added can be most readily cal- meeting the varied needs of Academy, to no more than culated. According to calculations of teacher populations 1 based on 2010 DPI data, that’s 26,218 Wisconsin teachers 19 These figures were based on David Dodenhoff’s presenta- Wisconsin’s children. Third, it starts to create 5,250 students. At a time when districts tion, entitled “Wisconsin’s Future” and presented on June today, of which perhaps one-quarter might be eligible. healthy price competition in a sector where are seeking ways to cost-effectively enhance 17, 2010 at the Manhattan Institute. They are based on the (The number of teachers in grades 4-8 was generated from data provided by school districts on Fall 2009 PI-1202 learning opportunities, such rules arbitrarily 1990 and 2009 NAEP data for math and reading, available it has long been absent. Since parents who at http://nces.ed.gov. Fall Staff Report, which can be found at http://dpi.wi.gov/ choose public district or charter schools are restrict the ability of quality providers to serve 2 Figures are in constant 2007 dollars. Available on the Na- lbstat/labels.html. This number represents an estimation, selecting among an array of zero-cost options, students. State leaders ought to ensure they tional Center for Education Statistics website, http://nces. which was arrived at by multiplying the total number of ed.gov/programs/digest/d09/tables/dt09_182.asp. teachers that were labeled as “elementary” teachers by .45 they have no incentive to worry about school have sensible quality control systems in place 3 Data compiled by Wisconsin Information Network for and adding this number to the total number of teachers cost. Consequently, there is no consumer pres- to gauge the performance of various provid- Successful Schools, available at http://data.dpi.state.wi.us/ that were identified as “middle school” teachers.) Such a calculation would yield slightly over 6,500 teachers. If just ers, and then commit to scouring state statutes, data/HSCompletionPage.aspx?GraphFile=BlankPageUrl& sure to reduce cost. Indeed, if anything, there S4orALL=1&SRegion=1&SCounty=47&SAthleticConf=4 half of those teachers opted to participate, initial savings is grudging resistance to the notion of cost- regulations, and rules that may have once made 5&SCESA=05&OrgLevel=st&Qquad=performance.aspx. would be in the vicinity of $180 million per year. 4 cutting in K-12 education. Because they will sense but that now get in the way of effective Milwaukee Public Schools 2008-2009 District Report Because they are more productive, Gold Star Teachers Card (MPS Division of Research and Assessment, 2009), would deserve appropriate compensation—above and be able to spend ESA dollars on any approved providers. 52. Available at http://www2.milwaukee.k12.wi.us/ac- beyond any other merit bonuses. The simplest formula is educational expense, parents will for the first It is also crucial for state leaders to begin ctrep/0809/2009_district.pdf. for the state, school district, and participating Gold Star 5 Teacher to split the savings. Given average teacher pay and taking cost effectiveness seriously. State ac- See Eric A. Hanushek, “Some Findings from an Indepen- time have a reason to comparison shop—as the dent Investigation of the Tennessee STAR Experiment and benefits today, and average statewide class size, teacher dollars they save could be spent on tutoring, countability systems today devote enormous from Other Investigations of Class Size Effects,” Educa- pay works out to more than $3,500 per student. Teachers computers, or even saved for college tuition attention to student learning but none to the tional Evaluation and Policy Analysis, Summer 1999, Vol. who taught 35 students instead of 20 would generate sav- 21, No. 2, pp. 143-163. ings of $50,000 to $55,000. A three-way split would give (depending on what the state chose to deem an question of whether schools or school districts 6 See Ludger Woessmann and Martin R. West, Class-Size participating teachers a productivity bonus of $17,000 or approved expense). are producing those results in a cost-effective Effects in School Systems Around the World: Evidence from $18,000, and would save a like amount for the state and 64 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 65

the district. In practice, of course, the finances would be ing theirs. (Figures based on budget information from much more complex—as would calculations regarding ac- Wisconsin Department of Public Instruction, available tual class size and Gold Star class size—but this example at http://www.dpi.state.wi.us/pb/pdf/act20sum.pdf.) At should be sufficiently clear for illustrative purposes. the high school level, those state funds help provide the 9 In Wisconsin, since 2004-05, 23 schools have been state-mandated 21.5 course credits that students need to closed for low performance and five have been converted graduate. The state requires that 11 of those be in English, to charters. (Please see State of Wisconsin Race to the Top math, science, and social studies—and mandates another Application, June 1, 2010, p. 234. Available at http://www. 0.5 in health and 1.5 in physical education—but is agnos- dpi.wi.gov/sprntdnt/pdf/rttt_rnd2_application.pdf.) Of tic about the rest. (Please see the Wisconsin Department Wisconsin’s 12 lowest-achieving schools in 2010, four are of Public Instruction’s High School Graduation Standards, Great Schools? Not facing closure, one is preparing to restart (meaning a char- Wisconsin Statute 118.33. Available at http://dpi.wi.gov/ ter conversion or reopening under new management), and cal/grad11833.html.) Without Great Teachers six are slated to be engaged in significant transformations, 15 Figures based on Kenneth Goldstein’s “Wisconsin including actions such as principal replacement and cur- Study” distributed in July 2010. By Sarah Archibald riculum reform. (Please see State of Wisconsin Race to the 16 “Wisconsin Students Losing Out Under Revenue Con- Top Application, June 1, 2010, p. 234. Available at http:// trols,” Wisconsin Education Association Council, April 14, www.dpi.wi.gov/sprntdnt/pdf/rttt_rnd2_application.pdf.) 2009. Available at http://www.weac.org/news_and_pub- Sarah Archibald, an education policy consultant, diagnoses the key problem Act 215, passed in 2009, sought to bolster these efforts by lications/09-04-14/Wisconsin_students_losing_out_un- facing education in Wisconsin: how to ensure that our classrooms are led by giving the state superintendent new leeway to intervene in der_revenue_controls.aspx. failing schools, and Wisconsin’s Race to the Top applica- 17 Rosetta Stone pricing and product information available the best possible teachers. Archibald prescribes a tough-love approach that will tion noted that the state has budgeted $1.6 million to hire on official website, www.rosettastone.com. turn the education establishment on its head. The people of Wisconsin asked for “a State Turnaround director and five turnaround special- 18 In one study conducted by faculty at Queens College of ists to work with the lowest-achieving schools.” (Please the City University in New York, for instance, participants bold leadership. Sarah Archibald’s ideas are just what they asked for. see State of Wisconsin Race to the Top Application, June 1, who engaged in 55 hours of Rosetta Stone coursework 2010, p. 236. Available at http://www.dpi.wi.gov/sprntdnt/ achieved similar language proficiency gains to students Here is one of the great disconnects of our Wisconsin employs more than 50,000 pdf/rttt_rnd2_application.pdf.) enrolled in a semester of entry-level college Spanish. For time: 60 percent of Wisconsin citizens rated teachers, at an annual cost of approximately 10 For more information on performance guarantees, see more information, please see Roumen Vesselinov, “Mea- 1 Bryan Hassel and Daniela Doyle, Shifting Risk to Create suring the Effectiveness of Rosetta Stone,” January 2009. the public schools in the state, with the excep- $3.65 billion, and yet it has no common Opportunity: The Role of Performance Guarantees in Available at http://resources.rosettastone.com/CDN/us/ tion of Milwaukee, as excellent or good. Two means of measuring teacher effectiveness. The Education (AEI Working Paper Series, 2010), available at pdfs/Measuring_the_Effectiveness_RS-5.pdf. http://www.aei.org/paper/100130. 19 Amy Hetzner, “Virtual Charter School Enrollment Short years ago, that number was even higher—just majority of these teachers have a continuing 11 Gov. Jim Doyle, April 21, 2004 Press Release. Available of Cap,” Milwaukee Journal Sentinel, November 13, 2009, under 70 percent. People don’t seem to believe contract, which is another word for tenure — at http://www.wisgov.state.wi.us/docs/042104_Veto_ Section B, p. 5. anything is holding education back in Wiscon- meaning, with few exceptions, they have that SB253.pdf. 12 Erin Richards, “Urban SEED School: Budget Dashes sin. But there are times when fact interferes job for life if they want it. This might not be Hopes for Public Boarding School,” Milwaukee Journal with perception and—bad news here—this such a bad thing if teachers had to demonstrate Sentinel, June 7, 2009. Section B, p. 1. 13 If operators fall 10 percentage points short of the is one of those times. When compared to 17 their effectiveness in the classroom to get this standard in question, then a 10 percent penalty will be other large urban districts including Chicago lifelong contract—but they don’t. To put this in collected from the bond. The balance of the bond, if it and New York City, Milwaukee’s students context, is your job guaranteed for life? And if exceeds the financial limits of the provider, could be back- stopped by an outside guarantor—whether a philanthropy, are in the back of the pack—only Detroit’s it is, did you have to prove your ability in your for-profit, or other non-profit group.A virtue of this model students score lower in math and reading in job to get it? Somehow, it has come to pass is that it requires turnaround providers to find guarantors willing to insure their model, sending powerful signals de- fourth and eighth grades. Largely driven by the that most teachers are immune from the reali- pending on whether operators can find willing guarantors. abysmal performance of many of Milwaukee’s ties of the workplace that every other citizen 14 The state could facilitate this kind of educational choice public schools, our state has the most persis- faces. Can you imagine another profession by borrowing a familiar notion from the world of health care reform—namely, the idea of the Health Savings Ac- tent gap in achievement between black and in which it is against the law to fire someone count. Except, because the state already funds schooling white students in the country. from their job because they are not achieving for every student, it can go these family-funded plans one better. The state of Wisconsin spent $6.2 billion in 2009 This isn’t just a Milwaukee problem; it’s the desired outcome? educating all of its students, and local school districts a state problem. And the problems don’t end While Wisconsin does have a licensure spent, on average, another $50 million per year educat- there. system for its teachers, which requires a rigor- 66 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 67

ous content test, this only screens out potential In order to improve the overall quality of executive branch. This is further exacerbated it is just accepted that this is and always will teachers who lack basic knowledge and does teaching, state education leaders are going to by two other factors. The first is that the teach- be the case. But it doesn’t have to be. In fact, very little to differentiate between effective have to question the policies that unions fight ers union is the single most powerful lobby moving the state of Wisconsin forward again and ineffective teachers once they reach the so hard to protect—those that keep low-per- in the Legislature, and the second is the fact relies on not accepting the status quo but, classroom. Initial educators can choose what forming teachers in classrooms and the inabil- that the election for state superintendent is a rather, doing whatever is possible to change area they want to work on to improve their ity to use student performance on standardized special election, which guarantees a low voter it. Even if you are not a parent, as a taxpayer teaching (rather than being required to focus tests as grounds for the dismissal of a teacher. turnout. Essentially, this means and a resident of this state, you on deficient areas), and There’s another serious that the teachers union has an have a stake in having your worse, no one checks to player here that is gener- extraordinary amount of power tax dollars invested wisely in see whether they actually ally not open to innovation: over who gets elected as state schools that uniformly produce do what they say they will “If Wisconsin wants to get local school boards. At superintendent and therefore a level of student learning do. So although teachers serious about education, best, they make decisions over education reform, or lack that enables Wisconsin to be have to pass a second test it must begin by that maintain or improve thereof, in this state. This must financially robust and civically to get their license, it is questioning some of the fiscal stability; at worst, be changed if education is to engaged. the Institutions of Higher they make it difficult, if not improve in Wisconsin. Education, rather than the policies near and dear to impossible, for superin- The Architecture of state, that sets the passing the hearts of the teachers tendents to implement and The fight to get the best Turn-Around grades for this test. The union leadership.” sustain aggressive reform teacher for your child. What can Wisconsin do to result is that this procedure agendas. Some argue that For any parent with a child improve the level of teacher completely lacks teeth. they should be abolished— in public school, the annual quality? The Strategic Man- Wisconsin could have more that they are an anachro- frenzy around which teacher agement of Human Capital high-quality teachers and school leaders, but nism from the little red schoolhouse days that their child will get is all too familiar. What (SMHC) Project, headquartered at UW-Madi- not without getting comfortable with having serve no purpose today other than to maintain causes this annual angst? Teacher quality var- son, studied what is needed to improve teacher teeth. the local control that has us performing at cur- ies widely from classroom to classroom, and and principal quality, examining the research If Wisconsin wants to get serious about edu- rent levels. 2 the quality of a teacher has one of the greatest and investigating promising practices in states cation, it must begin by questioning some of impacts on student achievement.3 While par- and districts where achievement is improving. the policies near and dear to the hearts of the Who decides educational issues in Wiscon- ents know that teacher quality varies consider- Its final report in 2009 offered recommenda- teachers union leadership. Questioning these sin, and why are they so cut off from public ably, the system operates as though teachers tions for state policymakers, many of which policies is not meant as an indictment of teach- opinion? are interchangeable widgets. However, there are more fully articulated in the numbered ers. Polls show that Wisconsin residents have Wisconsin is one of two states, along with are countries where this frenzy doesn’t occur— sections that follow. a high regard for the honesty and integrity of Minnesota, that do not have a state board of such as Singapore, Australia, Japan and the 1. Set the bar (and the starting salary) high teachers, but these same residents have a low education that is at least advisory, and it is the Netherlands, which have taken the bold steps enough to get the right people to go into teach- opinion of teachers unions. Part of the reason only state where the governor does not either to ensure high-quality teachers in every class- ing. for this is the incongruent goals of a teach- appoint the members of the board of educa- room. These countries recruit, select, train, and 2. Monitor the effectiveness of teacher prepa- ers union and the goals of public education tion, the state superintendent of public educa- compensate teachers in a manner that holds ration programs. reform: The former advocates for the rights tion or have an education official as part of the teachers in higher esteem. Wisconsin should be 3. Get rid of the residency requirement in of teachers, while the latter seeks to improve executive cabinet. willing and able to learn from them. Milwaukee to help the district keep its most the quality of education for all of Wisconsin’s This makes it difficult, if not impossible, to Many people don’t even question why effective teachers. children. effectively deal with education issues from the teacher quality varies so dramatically because 4. Make it easier for smart people to teach who 68 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 69

come via alternative routes or from teacher policy is possible, but to make these sorts of it has not yet become standard practice. For students into medicine, for example, without preparation programs in other states. changes here will require a bolder kind of the first three-quarters of the 20th century, the stringent entrance requirements to medical 5. Give state support to national organizations leadership that may upset people across the teaching was bolstered and sustained by smart school would likely mean a drop in the number with proven track records to help put talented, political spectrum. It is going to require leader- women whose career options were severely of smart people going into medicine, and, in energetic teachers into our high-needs class- ship that is willing to put the needs of all the limited. One study of the changing labor turn, the quality of health care. rooms. state’s children before the needs of its adults, market opportunities for So why has there been 6. Provide support to which hasn’t been a women and the quality of such hesitancy to raise the new teachers to ensure politically popular teachers found that the like- bar in education? that their transition to move for liberals to lihood that a female from “It is going to require Besides not yet having heading a classroom is make because of their the top of her high school leadership that is willing come to grips with the fact successful. longstanding relation- class would enter teaching that teaching is no longer 7. Ensure that profes- ship with the teachers fell from 20% in 1964 to to put the needs of all the being subsidized by smart sional-development union. And it is going 4% in 1992—a precipitous state’s children before the women, some argue against funds are spent only on to require leadership drop.4 needs of its adults…” raising the minimum GPA ongoing training direct- that makes difficult Today, because there are required to get into the ly related to changes in decisions about the so many options besides school of education on the classroom practice that allocation of resources, teaching for high-ranking grounds that it would make promote higher levels of student learning. in some cases prescribing the use of resources college graduates, many of which are much it harder to get the desired racial and experi- 8. Tie the tenure and licensure system to stu- for evidence-based strategies rather than more lucrative and carry more status, it is nec- ential diversity that is beneficial, particularly dent performance. leaving all decisions to local school districts, essary to make a concerted effort to redefine in an urban setting. While there is no doubt 9. Implement performance-based teacher and which hasn’t been a politically popular move the profession and recruit smart, talented men that there are positives for students associated principal evaluations in Wisconsin, with stu- for conservatives, because of their stalwart and women from diverse racial and ethnic with having teachers with the same skin color dent growth as a significant component. defense of local control. backgrounds. as role models, along with teachers who truly 10. Use scores from the new evaluation system Bold changes are needed in this state no Research shows that college graduates with understand the difficult conditions that many as one component of a performance-based pay matter who the next governor is, or which above-average ACT scores tend not to go into urban students face, there can be a tradeoff system; provide flexibility to raise the starting party controls the Legislature. teaching, with the effect strongest for elemen- between meeting these goals and raising the salary of top-level teacher candidates. The following points offer more detail on tary teachers and math and science teachers,5 bar. Rather than use these goals as a reason to how to make the changes necessary to improve who have better opportunities in the labor mar- maintain a low bar for entrance into the school Can Wisconsin make these changes? Wisconsin’s education system. ket. And while money may not be the primary of education—the state requires a minimum In a word: yes. Other states are doing it. teacher motivator, research shows that it can grade point average of only 2.5—why not Colorado passed a bill tying tenure to teacher 10 Steps to Boosting Wisconsin’s make a difference. According to one study, in raise the bar, the salary and the status of the effectiveness. In South Dakota, the Incentives Schools order to attract top science, math and technol- teaching profession and make it easier to get Plus program offers fiscal rewards to schools ogy majors, an increase in salary of 45 percent top-level candidates of all races into teaching? based on growth in student achievement. In 1. Set the bar (and starting salary) high would be necessary. 6 This could be accomplished by a state stat- Florida, the legislature voted to repeal tenure enough to get the best people to go into Certainly, there is an argument to be made ute and would probably need to be in order to for teachers—the current governor vetoed the teaching. for raising teacher salaries to get higher-caliber ensure that it happened across all teacher edu- bill—but one of the candidates for governor is To get top-level students to go into teaching teachers, but there’s another piece of this cation programs. (Washington, D.C. recently running on the same platform. in today’s economy requires recruiting. This puzzle not yet addressed: selectivity. Relying passed similar legislation.) Immediately begin As these examples show, bolder education hasn’t always been the case, which is why solely on potential future earnings to recruit offering large bonuses to top math and science 70 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 71

students who are willing to teach, and increase 3. Make it easier for smart people to teach achievement gap in the nation, driven by year, which is close to the national average starting salaries, but only as part of the new who come via alternative routes or from the low performance of minority students in for teacher retention in any program, and 32 performance pay system described below, so teacher preparation programs in other Milwaukee. Other cities have made progress percent remain even longer. Remember, people that salaries would continue to climb only for states. in raising minority test scores, largely through tend not to stay in the same career anymore, teachers who were effective in the classroom. Many promising teachers choose teaching improving the quality of teachers placed in so perhaps it is time to let go of the idea that mid-career, which is why it is important to high-needs classrooms.10 teachers need to make a lifelong commitment. 2. Monitor the effectiveness of teacher make it easy for capable, post-bachelor’s It is time to admit that Wisconsin needs Finally, there is a tradeoff between high energy, preparation programs. students to teach in Wisconsin. These people help from the same organizations that made high expectations for all kids for a short time Getting the right people into education is only bring something to the classroom that teachers these gains possible in other cities, which in- and a more sustained, but perhaps less energet- part of the battle—the next part is ensuring fresh out of college don’t have: practical work clude Teach for America and the New Teacher ic and, yes, less idealistic approach of teachers that the training they receive prepares them experience. Project. While this process has begun—last in it for the long haul. for the classroom. For those who are trained Wisconsin currently has 10 alternative certi- year Teach for America began working in Mil- through traditional routes, this means ensur- fication routes not includingT each for America waukee, and the New 5. Get rid of the resi- ing that they attend a high-quality teacher and the New Teacher Project. However, these Teacher Project has dency requirement in preparation program. Strangely, Wisconsin programs do not meet all of the requirements worked with the district Milwaukee and help doesn’t have a system to monitor the effec- suggested by the National Council on Teacher on a limited basis for the district retain its tiveness of different programs. Louisiana has Quality. For example, Wisconsin should allow the past few years—the most effective teach- such a system. The groundwork for having one alternative certification in non-high-needs district and the state ers. in Wisconsin has been laid out but not fully fields—the 10 current programs are focused on have not fully embraced Milwaukee, a strong developed.7 fields and locations with shortages only. these programs. Three union city, is the only Without such a system, it is difficult to Numerous bills have been introduced primary forms of sup- district in the state that make policy and funding decisions on the basis to loosen the process in this state, but the port are required: mon- still requires teachers to of quality.8 powerful teachers union and higher education etary, leadership and regulatory/statutory. live within the city limits. Thus, it loses many Wisconsin also needs to prepare more math, lobbies have been successful at blocking them. Part of providing leadership could be more experienced teachers, who eventually science and special education teachers—as Both the union and state teacher education achieved by providing financial support. By may want to move out of the city for personal well as students who are well equipped to programs have a vested interest in making sure embracing an organization like Teach for reasons but whose commitment to their class- teach in urban environments. Currently, Wis- that “alternative” routes look as much like America, the state would send a message that it room does not necessarily dissolve with their consin prepares too many elementary teachers traditional routes as possible. is no longer business as usual in Wisconsin— home purchase. Why is this policy in place? It and secondary social studies teachers, and too Similarly, it is difficult for teachers trained that the status quo will not do, particularly in consolidates the power of the teachers union few special education, mathematics, general outside Wisconsin to get certified to teach the largest urban districts.11 and makes it much more likely that school science, technology and foreign language here. This barrier is keeping great teachers out So, why the reluctance? Here are a few board members will be voting in line with the teachers.9 of our classrooms, and its only purpose is to reasons. union.12 Although the Milwaukee teachers The Department of Public Instruction has protect the state’s teacher education programs. One is the desire, again, to protect the status union perpetually has the residency require- been reluctant to take on such roles, but this quo of the teacher education and certification ment on its list of grievances, it has been should be put in place for the 2011-12 school 4. Give state support to national organiza- process, touched on in the last section. Another reluctant to do anything to actually change it, year at the latest, and may require the involve- tions with proven track records to help put is the fact that Teach for America teachers’ as has the school board. ment of a third party, outside DPI. talented, energetic teachers into our high- initial commitment to the classroom is only Make no mistake about it: Making dramatic needs classrooms. two years, which doesn’t sit well with a lot of progress in Milwaukee requires more teacher Wisconsin has the most persistent black-white people. However, 61 percent stay for a third talent than just the fresh blood of Teach for 72 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 73

America—it also requires every possible practice that promote higher levels of stu- percent favor offering tenure to teachers, ac- requires student growth as a component. expert teacher by allowing all teachers the dent learning. cording to the 2010 WPRI poll. Currently, teacher and principal evaluations freedom to live wherever they would like. While pre-service training and new teacher The state could, in a bold stroke of lead- in Wisconsin are left to local districts, and support are critical to improving human capital ership (which would require cooperation as is true of most evaluation systems around 6. Provide support to new teachers to ensure in Wisconsin schools and getting better results, between the Department of Public Instruction, the country, they do not include a measure of that their transition to heading a classroom education leaders must not neglect the is- the governor and the Legislature), announce student growth on standardized tests. As such, is successful. sue of ongoing professional development for that in this state, from now on, teacher tenure they do not differentiate between teachers who The medical model has much to teach the teachers. Much money is spent, and much (or its equivalent, the continuing contract) are performing well in the classroom and those education model. Medical residents are not al- of it is wasted, on professional development would now only be granted when teachers who are not. lowed to perform surgery without a great deal activities that do not change teachers’ class- demonstrate effectiveness Such a system is of hands-on experience with an expert physi- room practice and therefore do not affect how in the classroom using an required to figure out the cian at their side—to much students learn. objective measure of stu- effectiveness of teachers ensure a high level of Currently, principals dent performance. Making “Making this change and principals. The cost quality. Yet districts decide what constitutes this change would better would better align of not having a system of routinely place new a valid use of profes- align policy with public performance-based teacher teachers in classrooms sional development opinion in Wisconsin. policy with public evaluation that is rigorous without consistent ac- time and money rather When asked if they believe opinion in Wisconsin.” enough to be used for poli- cess to expert teachers, than a stringent set of that tenure should be tied cy decisions is exemplified which means students requirements to ensure to teacher performance by the current situation in do not get the same that these precious as measured by student Milwaukee. quality of education resources are spent in progress on standardized tests, 56 percent of Because of budget cuts, the district has they would get from an experienced teacher. ways that ultimately benefit students.T he state Wisconsin residents surveyed said yes. recently laid off 482 teachers. The teachers In Wisconsin, new teachers are required to needs to develop such requirements, and they Other alternatives include abolishing or who were laid off were not the lowest per- have mentors, but how they work with these should include the need to use these resources reducing state aid to school districts that formers, and they weren’t the most expensive, more experienced teachers is far from uniform. to provide teachers with collaborative planning continue to have tenure protection in their or even the most expensive low performers, The state should require at least two years time during the school day and instructional contracts and that do not have a performance- which would make the most sense. The layoffs of support for each teacher, careful selection coaches to provide ongoing, hands-on assis- based compensation system such as the one were decided entirely on the basis of seniority, and training of mentors, and release time for tance so that teachers can improve the quality described below. which means that some award-winning, and mentors so that they can provide in-classroom of classroom instruction. While widely protected by the teachers relatively cheap teachers were let go, while support to teachers. union, support is even present among teach- some less effective and much more expensive When asked if they favored the implemen- 8. Tie tenure and licensure system to a dem- ers for ending tenure. According to a national teachers were retained. tation of a residency program in Wisconsin, onstration of effectiveness in the classroom. poll by Public Agenda (2009), 35 percent of This is not a recipe for moving forward in even after being warned that it would be Why is there tenure for public school teach- teachers said they believed that eliminating Milwaukee or in any other district in the state expensive to operate, 48 percent said yes in the ers? In academia, tenure is granted only after teacher tenure would be either very effective using the same process. But there are alterna- 2010 WPRI poll. performance is demonstrated and rigorously or somewhat effective in improving overall tives. There are numerous places implementing assessed. What’s more, it has a purpose: to pro- teacher effectiveness. evaluation systems that require student growth 7. Ensure that professional development tect the intellectual freedom of professors. The as a significant component—Washington, funds are spent only on ongoing training purpose is harder to articulate for K-12 public 9. Implement a performance-based teacher D.C.’s system counts student performance as directly related to changes in classroom school teachers. Wisconsinites agree: only 34 and principal evaluation in Wisconsin that 50 percent in its new evaluation system; Colo- 74 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 75

rado recently passed a law saying that student degrees—neither of which is demonstrably requirements, dismantled tenure and adopted her up in this endeavor. performance would constitute 50 percent of its correlated with better student performance.13 performance-based pay…and local districts new evaluation system. Wisconsin teachers and principals need still refused to conform, why not hold back References Evaluations of teachers need to be multi- a new pay system that recognizes that more state funds by five or even 10 percent?T his Bacolod, M. (2007). Do Alternative Opportunities Mat- faceted. In order to be fair, they must include effective teachers deserve to be paid more. money could be held in escrow until the local- ter? The Role of Female Labor Markets in the Decline of multiple classroom observations scored by an By applying this simple principle, it becomes ity conforms. If, in order to solve the problem, Teacher Quality. Review of Economics and Statistics, 89, (4), 737-751. objective third party, student test scores and much easier for young or new teachers who bold steps are needed, there is nothing that student work. are highly effective to quickly make a higher catches people’s attention more than holding Boyd, D., Lankford, H., Loeb, S., Rockoff, J. & Wyckoff, Having such a system would also make salary. This will make it much more likely that back funds. J. (2008). The Narrowing Gap in New York City Teacher Qualifications and Its Implications for Student Achieve- it much easier to garner the support needed effective teachers stay in the classroom. ment in High Poverty Schools. National Bureau of Eco- to pass a law that would make it possible to In sum… nomic Research (NBER) working paper No. W10421. What’s needed in this state to move education, dismiss ineffective teachers on the basis of So why haven’t teacher pay reforms taken Chevalier, A., Dolton, P. & McIntosh, S. (2007). Recruit- performance. A poll by Public Agenda (2009) hold in Wisconsin? and the economy, forward is to get the right ing and Retaining Teachers in the UK: An Analysis of found that 76 percent of teachers believe mak- Once again, teachers unions are generally op- people into teaching, train them well, sup- Graduate Occupation Choice from the 1960s to the 1990s. Economica 74, 69-96. ing it easier to dismiss ineffective teachers posed to any changes in teachers’ pay, unless port them in the classroom, ensure that they would increase overall teacher effectiveness. they come in the form of higher salaries or have capable school leadership, measure the Corcoran, S., Evans, W., and Schwab, R. (2004). Changing performance of both teachers and principals Labor Market Opportunities for Women and the Quality of This is encouraging, and suggests that even better benefits for all teachers. As is the case Teachers, 1957-2000, The American Economic Review, 94 among teachers, there is support for policies in any other profession, all teachers are not by the growth in achievement of their students, (2), 230-235. with more teeth. equally deserving of additional pay. This is one reward high performers with competitive pay, Decker, P., Mayer, D., and Glazerman, S. (2004). The A study by one researcher found that the of the many reasons to reform the traditional and remove low performers from our class- Effects of Teach for America on Students: Findings from a effects of implementing a system that could salary schedule. rooms. National Evaluation. Mathematica Policy Research, Inc. This can be done, but not without con- differentiate between high- and low-quality Plus, there is significant public support for Dolton, P.J. & Makepeace, G.H. (1993). Female labour teachers and at the same time be used to weed such a change in Wisconsin. Recent poll re- sciously raising the level of state leadership on force participation and the choice of occupation: The out the low-quality teachers found that getting sults, as well as poll results from 20 years ago, education issues, fully understanding our cur- supply of teachers. European Economic Review 37, 1393- 1411. rid of the bottom 5-10 percent of teachers in show broad public support for performance- rent system, emphasizing the need to put stu- U.S. schools would put us on par with Canada based pay: 77 percent in 2008 and 76 percent dents first, and having a statewide organization Glazerman, S., Isenberg, E., Dolfin, S., Bleeker, M., where citizens can learn about public educa- Johnson, A., Grider, M., Jacobus, M. (2010). Impacts of in terms of teacher quality, a country the U.S. in 1988 of residents favor changing the way Comprehensive Teacher Induction: Final Results from currently trails in this category.13 teachers are paid. In a 2010 survey, residents tion issues and get information about schools, a Randomized Controlled Study. Mathematica Policy were specifically asked if they supported tying such as value-added scores, so that they can Research for the Institute of Education Sciences. 10. Use scores from the evaluation system as teacher salaries, in part, to the performance see how effective different schools are. Han, Y.K. & Rossmiller, R. (2004). How Does Money one component of a performance-based pay of their students, and more than half—53 Wisconsin has a history of leading the na- Affect Teachers’ Career Choices? Evidence from NLS-72. Journal of Education Finance, 30, 79-100. system. percent—favored such a proposal. The new tion in ideas and innovation. The next governor In many other professions, people don’t get evaluation system discussed in the last section of this state has the opportunity to bring that Hanushek, E. (2009). Teacher Deselection. In Dan Gold- paid more because they’ve been employed could form the basis of a new pay system and trademark back when it comes to educating haber and Jane Hannaway eds., Creating a New Teaching Profession. Washington: Urban Institute Press. the longest or because they’ve gone back to become part of a coherent agenda to improve our children. True, it will take bold leadership school, unless those efforts make them better the human capital in the state’s schools. to go up against seemingly immovable forces. Miller, M. (2008). First, Kill All the School Boards. The Atlantic Monthly, January/February 2008. at their jobs. But the current salary schedule Wisconsin could take a page from Presi- The next governor should keep one thing in rewards teachers for time in the classroom and dent Obama’s book and tie reform to money. mind: Those forces are, indeed, movable, and Podgursky, M., Monroe, R., & Watson, D. (2004). The “seat time”—acquiring additional credits and If the new governor eliminated residency the majority of Wisconsinites will back him or academic quality of public school teachers: an analysis of 76 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 77

entry and exit behavior. Economics of Education Review, 4 Corcoran, Evans & Schwab, 2004. 23, 507-518. 5 Podgursky, Monroe and Watson, 2004. 6 Research spanning 30 years in Great Britain shows that Public Agenda. (2009). Teaching for a Living: How Teach- the relative wages for teaching compared to other profes- ers See the Profession Today. Available online: http://www. sions have a significant impact on the likelihood of gradu- publicagenda.org/pages/teaching-for-a-living-full-survey- ates choosing to go into education (Chevalier, Dolton & results#q27b and #q28d. McIntosh, 2007). The authors find that this effect is pres- ent for both sexes but stronger for males, as did a similar Rockoff, J. (2004). The Impact of Individual Teachers on study conducted in the U.S. (Han & Rossmiller, 2004). A Student Achievement: Evidence from Panel Data. Ameri- study of female teachers showed that higher relative wages Maybe Elvis should have can Economic Review, 94 (2), 247-252. effectively attract female college graduates into teach- ing (Shin & Moon, 2005) and a broader study of female stayed in the building. Sanders, W. & Rivers, J.C. (1996). Cumulative and labor market participation had the same finding (Dolton & residual effects of teachers on future student academic Makepeace, 1993). By Alan Borsuk achievement. Knoxville: University of Tennessee Value- 7 Legislation passed in preparation for Wisconsin’s Round Added Research and Assessment Center. 1 bid for Race to the Top established a data-sharing agree- ment between the UW System, the Technical Colleges, the Alan Borsuk compares the public schools of Milwaukee and Boston—two cities Schug, M. & Niederjohn, S. (2006). The Milwaukee Department of Public Instruction and the private schools, with similar problems. But one faced those problems with innovation, while Teacher Residency Requirement: Why It’s Bad for Schools which would allow these sorts of analyses. In addition, and Why it Won’t Go Away. Wisconsin Policy Research UW-Madison signed on to the Teacher Performance As- the other seemed to fight any kind of change. The results are, sadly, not in Institute Report, 19 (5). sessment Consortium, which will involve testing a tool Wisconsin’s favor. that can be used to monitor the effectiveness of teachers Shin, J. & Moon, S. (2006). Fertility, relative wages, and in the classroom, and therefore the effectiveness of the A decade ago, opposition mounted to a Wis- To put it simply, Wisconsin showed little labor market decisions: A case of female teachers. Eco- programs that train them. nomics of Education Review, 25, 591-604. 8 Research shows that teachers’ verbal and mathematical consin law adopted several years earlier calling muscle when it came to motivating students, skills are strongly related to student outcomes (Ehrenberg, for creation of a test that all students would teachers or schools to achieve ambitious aca- Strategic Management of Human Capital. (2009). Taking & Brewer, 1995; Ferguson & Ladd, 1996), and data from have to pass to receive a high school diploma. demic goals. Instead, it set its academic bars Human Capital Seriously: Talented Teachers in Every the UW System shows that ACT scores are significantly Classroom, Talented Principals in Every School. Principles higher for education students at UW-Madison (26.1) com- Testing experts were well along the road of low and attached no particular importance to and Recommendations for the Strategic Management of pared to education students at other UW System schools developing the test when, buffeted by crit- whether students reached those bars, especially Human Capital in Public Education. Madison: University (22.7). of Wisconsin, Wisconsin Center for Education Research, 9 Fischer, T. A., and Swanger, W. H. (2008). Data Trends of ics, particularly suburban Milwaukee moms, not until federal law entered the picture. Its ef- Consortium for Policy Research in Education, Strategic Education Personnel in Wisconsin Public Schools, 2007. the graduation requirement began having a forts to maximize the percent of teachers who Management of Human Capital. http://dpi.wi.gov/tepdl/supdem.html. series of near-death experiences. One person are top-flight professionals barely rate men- 10 Boyd, Lankford, Loeb, Rockoff & Wyckoff, 2008. Wayne, A. & Youngs, P. (2003). Teacher Characteristics 11 Teach for America teachers are getting results. On who was central to the events started privately tion, compared to efforts in a growing number and Student Achievement Gains: A Review. Review of average, TFA teachers in Milwaukee Public Schools’ calling the test “Elvis”—Elvis has left the of other places that were—and are—more Educational Research, 73 (1), pages 89-122. classrooms achieved between a year and a year and a half of reading growth with their students in their first year, building, Elvis is back in the building, Elvis is ambitious and focused on outcomes. WPRI polls—2008 and 2010. compared to national and local averages of .3-.5 years of hanging around the door. Now, contrast Wisconsin to other states, reading growth for low-income students. More rigorous Finally, in the name of budget cuts, Elvis which took the theory of creating higher stan- studies have been conducted in areas where TFA has been Endnotes working longer, such as the national study by Mathematica left for good. The high school graduation test dards and accountability far more seriously. showing that TFA teachers tend to be slightly more ef- was dropped. Their definitions of “proficient” were decidedly 1 Calculated on the basis of an average teacher salary of fective math teachers than other new teachers in similar $48,000 plus $25,000 fringe benefits (Wisconsin Depart- schools and about equal at teaching reading (Decker, P., There were certainly valid arguments for and more demanding. They put an emphasis on how ment of Administration 2009 figures). Mayer, D., and Glazerman, S., 2004). against the graduation test, and there’s no reason to improve teaching and learning. They created 2 Though unsuccessful, the bid to implement mayoral gov- 12 Schug & Niederjohn, 2006. to think anyone is going to revive it now. consequences for not succeeding—consequenc- ernance in the state’s largest school district may have been 13 Hanushek, 2009. the best bet to sustain a long-term improvement agenda 14 With the exception of experience, which tapers off after But the death of the graduation test stands as es such as assigning schools grades for overall that included elements that an elected school board may the first three years (Wayne and Youngs, 2003). a forceful illustration of the difference between achievement that could affect their enrollment not have allowed. 3 Rockoff, 2004; Sanders & Rivers, 1996; Wright, Horn & the paths taken in Wisconsin and those taken in or bring them positive or negative financial Sanders, 1997. several other states over the last 15 to 20 years. sanctions. There were also consequences for 78 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 79

students, such as not allowing them to be There are significant ways that Massachu- Wisconsin had an average score in reading on in 2009 underscored the large gap in perfor- promoted from certain grades or to graduate setts and Wisconsin are comparable. Total NAEP tests of 224 (on a scale of 1 to 500). mance. For example, among 18 urban districts high school until they showed they were able to population is not much different (6.6 million The Massachusetts score was 226, a minor that participated in NAEP testing, Boston (av- perform at least at some level of competency. in Massachusetts vs. 5.7 million in Wisconsin). difference. The nationwide average was 215, erage score, 257) came in above the national The contrast shows up strikingly in the Neither state has an abundance of resources significantly below either state. But by 2009, urban average (252) in eighth-grade reading, achievement trends in at least some cases. Wis- such as natural energy. Both states face the scores of Massachusetts’ fourth-graders while Milwaukee (241) was fourth from the consin’s results have been flat overall since the economic challenges because classic heavy had risen eight points, to 234, a notable sign of bottom. In eighth-grade math, the results were early 1990s, while states such as Florida, Ken- industries have faded. Both states have a single progress. In Wisconsin, the score had dropped more striking: Milwaukee scored far below the tucky, and Massachusetts have seen significant dominant city, one with a history of difficult to 220, and the gap between the two states had other urban districts (251, the second lowest improvement. race relations that became become substantial. Furthermore, the national among the 18 districts). The national average The lessons from these entwined with education. average had risen to 220, the same as Wiscon- was 271, with Boston at 279. contrasts are clear: If With Harvard and MIT, and sin’s score. Add on a few other indicators: Boston was Wisconsin is to get on the “…Wisconsin is going numerous top-tier colleges, In eighth-grade math, Wisconsin (average a finalist in each year from 2002 through 2005 upward path of achieve- to need to take currently Massachusetts outclasses score 278) led Massachusetts (at 273) in 1992. for the high-profile Broad Prize for Urban ment, it is going to need Wisconsin when it comes The national average then was 267. By 2009, Education, which recognizes performance and genuine commitment to fashionable terms very to universities, but both the average Massachusetts score had risen 26 improvement, and it won in 2006, hailed by putting muscle and weight seriously: relentlessness are states with identities points to 299, while the Wisconsin score had the judges for “consistent high performance behind state standards and and fidelity…” strongly linked to higher gone up also but by only 10 points to 288, while reducing achievement gaps across ethnic expectations. It is almost education. putting Massachusetts ahead by a sizeable 11 groups.” Milwaukee has never been a finalist. inevitable that it will need Boston and Milwau- points. The national average had increased Massachusetts decided to sign on to the a level of political and kee schools systems also more than Wisconsin’s as well … by 15 points national “common core” standards movement educational leadership that has been shown by have similarities. Boston Public Schools and now just six points lower than Wisconsin’s after intense debate about whether the new few key players in recent years. And Wisconsin is actually smaller than Milwaukee Pub- score, compared to a 15-point difference in standards would be lower than what was in is going to need to take two currently fashion- lic Schools—56,340 students in 2009-10, 1992. place at the time, while Wisconsin Superin- able terms very seriously: relentlessness, as compared to 82,444. The Boston system is In other words, Massachusetts had moved tendent of Public Instruction Tony Evers said in an urgent and deep commitment to seeing 13% white, Milwaukee 12%, with Hispanics forward substantially. In fact, the state has led he signed on without hesitation because the a much larger number of children reach high making up a larger portion of the student body the nation consistently in fourth- and eighth- standards were such a clear improvement over goals, and fidelity, as in setting a solid course in Boston (39%) than in Milwaukee (23%). In grade reading and math scores since 2005, a what was in place. and sticking with it in high-quality ways over a Boston last year, 37% of students were African huge accomplishment given its middle-of-the- So what explains the successes in Massa- long period. American, compared to 57% in Milwaukee. pack performance in prior times. A New York chusetts and Boston? Massachusetts provides a particularly strik- Just 15 to 20 years ago, Massachusetts and Times story in July 2010 said, “many regard There is nearly universal agreement that the ing comparison to Wisconsin. Tangible steps, Wisconsin were fairly even when it came to [Massachusetts] as having the nation’s best key is “the grand bargain” struck in the Bay intangible elements, and positive outcomes— student achievement, gauged by performance education system.” State’s legislature in 1993. the Bay State has done better than the Badger of students on the National Assessment of In the meantime, Wisconsin’s standing The ambitious agreement was the product State on each. There are plenty of issues to Education Progress (NAEP) tests, which are slipped compared to the nation. Although it of a confluence of favorable circumstances work on in Massachusetts and plenty of prob- the closest thing the nation has to an apples- still prided itself as a high-achievement state, and visionary, bipartisan leadership, along lems. But if you’re looking for progress and and-apples basis for comparing performance the record suggested a label of “somewhere in with strong involvement from business and a place that offers good lessons to Wisconsin, across time and from state to state. the middle, and trending downward.” civic leaders. At heart, it was a simple deal: heading to Boston is a good idea. In 1994, a sample of fourth-graders in As for Boston and Milwaukee, test results Give schools more money and demand better 80 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 81

results. the way teacher training programs in Massa- In the first round of graduation testing that Gov. Patrick Deval, for what they view as Thomas Birmingham, a key architect, chusetts did their work. counted, only about 60% of juniors quali- efforts to dismantle aspects of the bargain by said the two pieces were inextricably linked. The bargain also provided for steps that fied to pass. But tutoring was made available softening standards and accountability and Birmingham, at that time Democratic presi- received less attention but which insiders say for free to students who needed it, and they politicizing the educational bureaucracy. Gass dent of the state Senate and now a lawyer in were crucial to improvement. Local school were allowed as many tries at the test as they said Massachusetts has carried out education private practice, said in an interview, “If we committees, the equivalent of Wisconsin’s wanted. In the end, more than 90% passed. In reform well, “but it’s been a knife fight.” He took the money out, the standards piece was school boards, lost much of their power to recent years, 90% to 95% of students have met said that if the 1990s were the golden era for just going to be an exhortation.” But, he added, meddle in school affairs, including hiring. the graduation require- change in the state, the if it was just a matter of adding money without Superintendents statewide got stronger, clearer ment. current period is “the demanding high standards, there would have roles in leading the educational initiatives. Driscoll said that aluminum era.” been no real change. In Boston, principals lost the right to tenure when the reality of the But the basic struc- A multibillion-dollar infusion of state in their jobs and to collective bargaining as test hit, “there were ture remains in place, aid to schools righted inequities between a unit. Thomas Payzant, superintendent of no excuses any more.” and the progress in have- and have-not school districts that had Boston from 1995 to 2006, said in an interview Schools, teachers, and Massachusetts is docu- reached severe levels—and which everyone that those provisions were more important to students themselves mentable in numerous expected (correctly) would be found illegal in him than just about anything else in the bar- found they could ways. court about the time the legislature acted. The gain. He said he used his power to significantly achieve more than ex- Meantime, what has new system resulted in high-poverty districts improve the corps of principals, and that was a pected. “When we want happened in Wiscon- around the state (not just in Boston) spending key to overall improvement. (Wisconsin’s Leg- to, we can move mountains,” said Driscoll, sin? There’s been a lot of action, but not much more money per student than high-income dis- islature followed suit 17 years later by includ- who is now chair of the National Assessment that can be shown to have improved student tricts. Per-student spending in Massachusetts is ing an end to principal tenure in Milwaukee in Governing Board, which runs the NAEP test- achievement. Reforms in Wisconsin often have now among the highest in the nation. a reform bill passed in April 2010.) ing program. “We don’t expect a lot of our been focused on structural or program chang- But perhaps more importantly, along with When the MCAS was first administered in kids, and that’s wrong.” es, but rarely on meaningful action aimed at the money came one of the nation’s most rigor- 1998, the results were “decisively disappoint- Paul Reville, who played a major role in improving learning. ous sets of standards for what children were ing and even a little frightening,” as a report on shaping the 1993 bargain, is now state secre- Consider the remarkable research paper expected to learn, and a demanding state test- Massachusetts’ success by Achieve, an educa- tary of education. In an interview, he said the by Christopher P. Brown, now a professor at ing system, the Massachusetts Comprehensive tion non-profit, put it. But education leaders bargain is “in very good shape.” He added, the University of Texas at Austin. Even just Assessment System (MCAS). The key was the did not waver. They held firm, and after that “We have put our money where our ideals are its title—“Keep It Cheap, Keep It Local, and requirement that students pass the high school scores began to rise—and opposition declined. in terms of education.” But he said continu- Keep It Coming: Standards-based Account- MCAS by performing at least at a level associ- But with the implementation of the 2002 ing issues such as major achievement gaps ability Reform in Wisconsin”—says a lot about ated with a 10th-grader (which is itself a lower graduation test, opposition grew. Unlike between white and black students call for new Wisconsin’s weaknesses in tackling education bar than in previous generations). Wisconsin, Massachusetts state leaders such steps such as extending the amount of time issues since the mid-1990s. The bargain also called for teachers to as David Driscoll, the state education com- children spend in school, offering better early Brown wrote that the emphasis on local demonstrate competency in their subject areas missioner, strongly defended the plan. He childhood services to high-needs children, and control, the absence of a state school board before being allowed to take over a classroom. said it took awhile for many people to realize more efforts to improve teaching. (Wisconsin is one of only two states without When just under 60% of the applicants for that “we obviously weren’t kidding around in Critics such as Jamie Gass, director of the one), and the active and highly political role teaching licenses failed the test the first time it Massachusetts.” He and other test supporters Center for School Reform for the Pioneer of the Legislature in setting education policy was given in 1998, the result caused a national prevailed. Wisconsin’s leaders showed no such Institute, a conservative-oriented think tank create a climate where accountability reforms sensation—but also led to major changes in fortitude. in Boston, are critical of Reville and his boss, are hard to launch or sustain. 82 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 83

Brown wrote, “Wisconsin’s resistance helped keep down property taxes statewide, local-control state, but came up with a state- tions, and they’ve stuck to them consistently, to systemic changes forces policymakers to but, in the view of many educators, has, if engineered system that reduced local power even when there was strong opposition. reduce their agendas from dramatic changes anything, hampered educational quality. and drove improvement. Wisconsin should Can Wisconsin and its leaders summon those to gentle nudges.” He compared the prolifera- Along with the failure of the graduation do likewise, Finn said. What would he say to attributes? Does the arrival of new state stan- tion of education initiatives in Wisconsin to an test to get off the ground, Wisconsin had a set those who argue for local control? “Tough ba- dards signal a willingness to effectively pursue overgrown weed patch. of other non-accomplishments in the 1990s nanas,” Finn said. “Does the state care whether what the standards call for and to push every- The three biggest initiatives in Wisconsin and 2000s. It was repeatedly criticized by its kids are learning or not?” If so, it will not one involved in education, including teachers, education in the 1990s and experts from a range of only adopt the nationwide core standards, but students, and parents, to achieve more? 2000s all proved popular— educational perspectives move firmly to see that teachers are actually Driscoll said, “The question to be asked and didn’t produce any real for having one of the weak- shaping their work to follow them and that a is, if we were so successful, and I think that’s improvements in overall “To try to change course est sets of state standards state testing system is created that measures indisputable...why weren’t states knocking my student performance. None you need leaders…willing for what students were success meaningfully. door down asking how to do it?” were directly aimed at expected to learn. A study Driscoll said the new standards offer “a In today’s economic realities, throwing a lot to take the risks and pay improving instruction or by researchers from the great opportunity” for Wisconsin to get on of money into the education pot is almost sure- motivating students the way the price, deal with the Northwest Regional Edu- a path similar to the one Massachusetts has ly not feasible. But what could be done if there Massachusetts’ standards and fallout of making changes.” cational Laboratory, based followed—but he echoed Finn in saying that was really a sense of urgency about the state MCAS testing system were. in Portland, Oregon, found was true only if what follows from adopting of education in Wisconsin, or if legislators, The three are the SAGE Wisconsin was near the the standards is done well. union leaders, and others were willing to look program to keep down class bottom of the nation when What can educators learn from what has realistically at fiscal changes that could open size for thousands of lower-income kinder- it came to how challenging the required level been accomplished in Massachusetts? Educa- the doors to change? What if it was agreed that garten-through-third-grade students; school of competence was on state tests in order for tion Secretary Reville suggested three answers: it was unacceptable for Wisconsin’s academic choice initiatives, including charter schools students to be rated proficient. (1) The power of leadership, both private and trends to stay flat while other states improved across the state and the Milwaukee Parental In an interview, Chester E. Finn Jr., presi- public, to make education a component of a and passed us up? And finally, ifW isconsin’s Choice Program, which allows students in dent of the Thomas B. Fordham Institute, an state’s economic strategy. (2) “The need to poor record does not elicit a sense of urgency, Milwaukee to attend private schools, includ- educational think tank in Washington, listed concentrate more deliberately on improving when should that come? ing religious schools, using publicly funded the elements of Massachusetts’ success—the the quality of instruction.” (3) The need to It appears that if you set the bar low, vouchers; and the reform in the mid-1990s of standards, tests, overall accountability—and focus on factors that impede students from tak- students will jump over a low bar. And if school finance, which increased the percentage said, “To the best of my knowledge, Wisconsin ing advantage of even a maximal situation. you set the bar much higher—if you demand of basic school costs covered by the state while has lacked all of those things so far.” Driscoll cautioned against going too far in more from them—they just might meet and putting brakes on increases in school spending He also said it appeared leadership on edu- lionizing what has been accomplished in Mas- even surpass expectations. Add to that new and compensation for teachers. cational issues has been lacking in Wisconsin, sachusetts. “While we lead the country, we’re political leaders who would be willing to take Research has shown only modest gains, at at least since Tommy Thompson departed as the best of a poor lot,” he said. “We’ve still got strong stands that might not be popular with best, associated with SAGE, and that student governor in 2000. a long ways to go.” entrenched establishments in the state’s educa- performance in voucher schools does not differ “You don’t need leadership if you want to What Massachusetts has done right in large tion system and stand by them. If money is significantly from MPS. On class size alone, steer a steady course,” Finn said. “To try to part involves intangibles, namely, leadership, not available to throw at the problem, there are it should be remembered that countries with change course, you need leaders . . . willing to an urgent commitment to do better, and solid always alternatives. much larger class sizes (40 students) have take the risks and pay the price, deal with the policy thinking. People from different parts of Who says it’s not too late to knock down some of the highest math scores in the world. fallout of making changes.” the political spectrum were able to come to- Driscoll’s door? Maybe some handsome ver- The school finance reform appears to have Massachusetts considered itself a strong gether around plans in line with those realiza- sion of Elvis is on the other side. 84 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 85

of Lake Wobegon—think all the children are So here is a blueprint for real reform. Our above average. new governor—whether Democrat or Repu- This dangerous and damaging illusion has plican, state legislators, and parents should persisted for too long. seriously consider these steps if they want The fact is that while state tests purport to Wisconsin’s children to have any chance in the show high levels of proficiency in reading and increasingly complex global economy that is Public Education in math, the National Assessment of Educational their future. This will have a direct bearing on Progress (NAEP) tests, commonly referred the future of this state. Wisconsin: Facing Reality to as the nation’s report card, show that far fewer First, the problems By Rose Fernandez than half of Wisconsin’s Milwaukee is the canary in Rose Fernandez describes what is possible when we loosen the restraints and fourth- and eighth-graders “…Wisconsin can be the coal mine for the rest are proficient in math and of the state. Student scores create a real and vibrant educational marketplace. Most importantly, polling a leader in the innovative done for Refocus Wisconsin tells us that the people of Wisconsin want more of a reading. in reading and math as use of technology by market orientation in Wisconsin’s education landscape. Wisconsin can reverse measured by the National this decline. The first step removing barriers and Assessment of Educa- Wisconsin, we have yet another problem. A coalition of business leaders and parents is to shake off the compla- providing incentives.” tion Program (NAEP), the For decades, Wisconsinites have basked in responded by backing reforms to give parents cency that all is well. Our national yardstick of aca- the certainty that our public schools are the more freedom to choose. As a result, Mil- citizens deserve an honest demic attainment, are lower envy of other states and do an outstanding job waukee parents now have more educational and long overdue explana- than in any other urban area of preparing students for productive lives. choices than other Wisconsin parents. And tion of where our children except Detroit. In truth, we have been on a long slide into they’ve exercised that option by voting with really stand. We need to face the reality that we Milwaukee students who do graduate are mediocrity, even though Wisconsin taxpayers their feet. Tens of thousands of them have need radical change. too often unprepared for college. Between have doubled their financial support for educa- left MPS for private and charter schools and The second is to embrace reforms that 2004 and 2009, 69 percent of MPS graduates tion since 1983, the year that a major report nearby suburban school districts. work. Parents need more educational choices. that enrolled at the University of Wisconsin- sounded the alarm about American education. School choice has produced improved When dollars follow children, and parents can Milwaukee (UWM) required remedial courses “If an unfriendly foreign power had at- graduation rates and highly satisfied parents. choose the schools best for their children, we before they could begin their post-secondary tempted to impose on America the mediocre But MPS continues to fail too many chil- will provide incentives for all schools to im- education. More troubling, fewer than 20 educational performance that exists today, we dren. To make matters worse, it is very nearly prove. When educators are free to innovate, we percent of MPS graduates who entered UWM might well have viewed it as an act of war,” bankrupt. Unchecked, MPS obligations will will move beyond the bureaucratic structures between 1998 and 2003 earned diplomas 1 said the introduction to A Nation at Risk. put Milwaukee and state taxpayers on the hook that impede progress. within six years. Two years later, a report on public schools for billions of dollars at a time when state and The third is to make more effective use of This is not the fault of taxpayers, who have in metropolitan Milwaukee showed poor local governments are struggling with deficits scarce resources. More money is not an option, been generous to MPS. Last year, per-pupil performance in the Milwaukee Public Schools and unfunded liabilities of their own. nor is it a solution. But Wisconsin can be a spending was $15,374, up 87 percent in real (MPS) and significant achievement gaps Taxpayers in Milwaukee and the rest of the leader in the innovative use of technology by dollars since 1977. This compares to taxpayer among area students. This stunned many com- state know that MPS is in trouble. removing barriers and providing incentives. support of $6,442 for students in the Milwau- munity leaders, who had been assured by MPS But the WPRI poll conducted for this This will help urban and rural districts and kee Parental Choice Program (MPCP) and officials and a passive news media that stu- project shows that when it comes to the rest of charter, virtual and private schools make better $7,775 for students in independent charter dents were performing “at or above average.” the state, Wisconsinites—like the good people use of scarce resources. schools. 86 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 87

Despite this substantial increase in taxpayer Fixing the broken wheel More educational choices will produce oversaw them, have been backed by a huge support, the fiscal condition of the district is Providing more educational choices for parents greater benefits if they are buttressed by moves investment of state taxpayer dollars. MPS real not sustainable. This is because MPS school is a critical part of the answer in Milwaukee to make Wisconsin a leader in innovation. spending since the 1976 Reynolds decision has boards have approved major increases in ben- and elsewhere in the state. Technology can help transform education for increased by 36 percent despite a reduction in efits for teachers and retirees but have failed Despite its limits, the Milwaukee Parental public, private and charter schools, giving enrollment of over 20,000 students.5 to fully fund them, despite warnings from actu- Choice Program (MPCP) in Milwaukee has educators the ability to do One word sums up the aries and auditors. The growing cost of these already shown success in the form of higher more with less and giving result: Failure. unfunded liabilities graduation rates, students access to more MPS as now structured forces annual educa- increases in academic options. “…students in MPS score is impervious to the kind of tion program cuts. It is achievement, and high Innovation is criti- lower on the National accountability that might a cycle that cannot be levels of parental satis- cal. Education has been Assessment of Educational lead to any real change. sustained and will only faction. In addition, en- notably impervious to the Academic achievement get worse. rollment in the limited revolutionary changes in Progress reading and math remains far too low. As As the WPRI poll charter school options other aspects of our lives, tests than every similar mentioned earlier, students shows, citizens know in Milwaukee and the including social network- urban district across the in MPS score lower on the that Milwaukee has rest of Wisconsin has ing, computing, commu- country except Detroit.” NAEP reading and math problems, but they be- grown consistently. nications, travel, banking, tests than every similar lieve all is well elsewhere. The Wisconsin state This report recommends creation of a more and many other industries. urban district across the tests do much to encourage that myth. In 2009, vigorous educational marketplace in Wiscon- If we want such progress country except Detroit.6 the Wisconsin Knowledge and Concepts Exam sin by: in education—and we surely need substantial This fact is more troubling because the United showed that about 80 percent of Wisconsin • Dramatically increasing the number of public progress to compete globally—we need to States trails other developed nations on in- fourth- and eighth-graders are proficient or and private chartering authorities. open doors to more educational choices and ternational assessments, particularly in math, above in math and reading. • Lifting caps on enrollment in virtual and more innovation. despite high levels of per-pupil spending.7 These results are a disservice to Wisconsin. other charter schools. Finally, we need to address the major Less well recognized is the fact that the They reflect low expectations and standards • Lifting enrollment and income caps on the fiscal issues in Milwaukee. Left unattended, district’s fiscal condition seriously threatens that have been assailed by numerous indepen- MPCP. these problems will consume more and more its sustainability. Unfunded liabilities for dent studies.2 Indeed, the NAEP tests show that • Allowing education dollars in Milwaukee resources that will be unavailable to educate health insurance for retirees for 2009-2010 are far fewer than half of Wisconsin’s fourth- and and elsewhere to follow students on a more children. estimated at $2.6 billion—more than twice the eighth-graders are proficient in math and read- equitable basis. MPS annual budget! And that’s the good news. ing. Making matters worse, national NAEP • Providing a tax credit for families that wish Repairing education in Milwaukee That number is projected to grow to $4.9 bil- comparisons since 1990 show that Wisconsin to enroll their children in private schools. For more than three decades, beginning with lion by 2016.8 children are losing ground compared to other • Simplifying the open enrollment process that the 1976 federal court decision involving While MPS has made some academic states.3 parents use to enroll their children in schools integration, the Milwaukee Public Schools has gains in an era of parent choice, particularly Other common indicators such as the ACT outside their resident district. been the target for reform. in the area of graduation rates, those gains are college entrance exam also give Wisconsin Notably, WPRI polling shows that Wiscon- There have been strategic plans, blue rib- insufficient and do not represent the progress families a false sense of comfort. While Wis- sin residents favor more educational options, bon commissions, new superintendents, and needed to educate children in Milwaukee.9 But consin consistently does well on the ACT, only including charter schools, tax credits, taxpayer elected school board members from across the the district still cannot accomplish a basic task 57 percent of Wisconsin students actually take support for online courses taken for credit, and political spectrum. like teaching children to read in all too many the test. The rates of participation and scores private school choice. The reform efforts, and the officials who cases, despite the loss of thousands of students are starkly lower for minority students.4 88 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 89

to private and charter schools. In this environment, numerous charter au- code, which permits a bankruptcy judge to re- to increase attainment for choosers, and test MPS is not alone. Education at the K-12 thorizers are able to compete and open schools order obligations. Twenty-six states, including scores for non-choosers. level has been notably impervious to the kind that offer a wide range of options for Milwau- Wisconsin, do not have a provision allowing In addition, the SCDP found that school of change that has revolutionized almost every kee’s diverse body of students. Increasing the municipalities to file for bankruptcy. If MPS choice in Milwaukee saves Wisconsin taxpay- other industry in America. This is because, as number of charter authorizers promises to spur were able to develop an acceptable plan, then ers over $30 million annually.14 Findings are several influential authors argue, innovation the creation of college preparatory schools as such legislation would not be needed. Further, confirmed byW isconsin Legislative Fiscal tends not to occur in massive and entrenched well as programs that lead to added vocational district bankruptcy will force MPS to deal with Bureau reports chronicling the negative impact bureaucracies or in highly training, help for students its unused capacity problem by making shut- of ending the MPCP on school districts outside standardized and regulated with special needs, and spe- tered schools available to charter and private of Milwaukee.15 environments. Innova- cialized programs in math schools. The positive academic, fiscal, and satisfac- tion happens in small and “That kind of progress and science. tion effects of school choice in Milwaukee nimble start-ups.10 in education requires a MPS should become an Milwaukee Parental come despite the fact That kind of progress climate where innovation active and successful au- Choice Program that it is a limited in education requires a thorizer of charter schools The Milwaukee Pa- experiment in free- climate where innovation is encouraged, barriers are opening opportunities for rental Choice Program market education is encouraged, barriers are removed and customers academic achievement (MPCP) is the nation’s reform. There are removed and customers can can choose the services rather than an operator of oldest and largest several changes to choose the services they they want.” a centralized bureaucratic market-based urban the MPCP that would want. school system unresponsive education reform. increase freedom for to the needs of its custom- While groundbreaking parents and educators, A New View of Edu- ers. The district must either it its scope, the MPCP and ultimately inten- cation choose to resolve—or be forced to resolve—its is nonetheless short of a test of a true educa- sify benefits to students, parents, educators, in Milwaukee academic and fiscal problems. tion marketplace. and taxpayers. The goal of this proposal is the creation of Despite its limitations, the MPCP has a a vibrant educational marketplace where all Putting Milwaukee on track positive impact on attainment in Milwaukee. Proposed Changes to the MPCP parents throughout the state and especially It is likely that the state will need to compel Most notably, graduation rates for students in 1. Remove enrollment limit in Milwaukee have a wide range of choices: MPS to address its fiscal issues. For more the program were 18 percent higher than stu- Currently, the MPCP is capped at 22,500 charter and private schools; virtual schools; than 20 years, MPS school boards have made dents in the Milwaukee Public Schools (MPS) full-time-equivalent students. In 2009-2010, supplementary online learning opportunities; decisions that allowed the district’s unfunded between 2003 and 2008.12 To put it another 20,328 children attended 111 schools. Since and other schools that meet highly specialized health insurance liabilities to balloon from way, if MPS graduation rates had matched the program expanded to include religious needs. $202 million to $2.6 billion.11 These decisions those of the MPCP, 3,352 additional Milwau- schools in 1998, enrollment has grown annu- In this environment, dollars follow students cost all Wisconsin taxpayers dearly. The state, kee students would have received diplomas ally by an average of 1,326 students. Given to the schools chosen by their parents, who are however, has its own fiscal problems, and it is between 2003 and 2008. Ongoing research these trends, the cap will be reached within able to make comparisons using easily acces- clear that taxpayers lack the capacity to meet by the School Choice Demonstration Proj- two years, which will limit parents’ choices, sible information. Educators also have choices, all obligations. ect (SCDP) has also confirmed the findings and also prevent high-quality schools that are including persons who may not meet current To ensure resolution, the state should enact of earlier studies that students in MPS most growing to continue their expansion and/or licensing requirements for public school teach- a provision that permits municipalities, includ- exposed to school choice competition experi- open new locations. Removing the enrollment ers and administrators but have much to offer ing school districts, to file for bankruptcy ence test-score gains.13 In other words, even an cap removes these artificial barriers to success. students. under Chapter 9 of the federal bankruptcy imperfect school marketplace has been shown 90 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 91

2. Remove income limits average Milwaukee family neither qualifies the option to attend suburban public schools Minnesota passed the nation’s first charter Currently, a student must come from a house- for the MPCP nor can afford private school via Open Enrollment or Chapter 220. Even legislation. Since then, Wisconsin steadily hold with an income at or below 175 percent tuition. though the Legislature has passed legislation has lost ground, as other states have enacted of the federal poverty level ($37,439 for a to expand the MPCP to Milwaukee County and expanded laws that offer more funding, Income Percent of Poverty household of four) to qualify for the Milwau- Limit in recent past sessions, the governor has not autonomy, authorizers, parental and educator kee Parental Choice Program. In 2006, the Median Milwaukee $37,022 229 percent supported it. A new governor should sign this freedom, and, ultimately, innovation. law changed to permit a household income Household Income bill into law and expand the opportunities for Charter schools are public schools. While Median Milwaukee $42,950 223 percent 16 up to 220 percent of the federal poverty limit Family Income Milwaukee parents. the number of charter schools in Wisconsin ($47,065 for a household of four) once a stu- Continuing MPCP $35,565 220 percent is not capped, the only authorizer in the state dent is in the MPCP. These limits leave many Eligibility 4. Equitable funding except for Milwaukee and Racine is the local Sources: U.S. Census American Community Survey and the Wisconsin Depart- low-income working families trapped because ment of Public Instruction. Per-pupil MPCP payments dramatically trail school board. A charter school can be estab- they don’t qualify for the MPCP but can’t af- those of MPS and independent charter schools. lished by the school board at its discretion or Because charter schools and MPS schools ford private school. In fact, MPCP students receive less public in response to a petition from teachers. The are already able to accept students regardless Dropping income eligibility would put funding than any other students in the state. school then enters into a contract (generally of income eligibility, it is logical to assume schools in the MPCP on equal footing with Recent budget cuts and increased program five years) that governs its operations rather that a universal voucher program would have charter schools, which have no income re- regulations have intensified cost pressure on than traditional public school laws in chap- demographics similar to MPS and charter quirements, and ease greatly the bureaucratic schools and put them in a position where it is ters 115 through 121 of the Wisconsin State schools. That would mean a similar racial burden on participating schools. More impor- impossible to succeed. Statutes.17 make-up and a slightly higher percentage of tantly, giving all Milwaukee parents more op- In Milwaukee, the University of Wisconsin- non-low-income students. Per-Pupil Cost/Payment 2009-2010 tions would strengthen the City of Milwaukee Milwaukee, the City of Milwaukee, and the Removing income limits from the MPCP MPS Cost $15,374 and our state as a whole. Milwaukee Area Technical College (MATC) would simplify the enrollment process for Independent Charter $7,775 Throughout his tenure, former Mayor John also are authorized to charter schools. In ad- schools and parents by removing the bureau- MPCP $6,442 Norquist supported school choice as a way to dition, the University of Wisconsin-Parkside cratic process of having to prove a parent is strengthen the middle class, a group he called Milwaukee needs to establish that all of may authorize a single charter school in poor, prevent middle-class parents from being the backbone to a “large and vibrant city.” its children have equal value. It needs to fund Racine. Unlike district charters, independent priced out of choice, treat private schools Indeed, giving parents the ability to attend any MPCP students, whose schools must meet charter schools employ non-union teachers and in the MPCP the same as other Milwaukee school in the City of Milwaukee at no cost to additional regulations, such as accreditation, are funded outside the state equalization aid schools, and, more importantly, extend the ben- them would serve as a powerful advantage to that no public schools in the state face at an formula. The schools receive substantially less efits of school choice to more parents without Milwaukee in competing to attract businesses, equitable level. funding than traditional public schools, just changing the character of the schools. residents, and, ultimately, jobs. These changes to the MPCP would give $7,775 per pupil in 2009-2010. While indepen- But would opening up the MPCP to all more Milwaukee parents more purchasing dent charters in Milwaukee have more poten- 3. Remove geographic limits families fundamentally change the character power to more schools, giving them the chance tial for innovation than most district charter Under current law, schools must be located of the schools in the MPCP? Would it prevent to acquire the best education for each indi- schools, their growth has been limited by an in the City of Milwaukee to participate in the low-income families from having options? vidual child. inability to draw outside school operators to MPCP. Allowing private schools outside of As the table below shows, Milwaukee is on Milwaukee, resistance to widespread charter- the City of Milwaukee to enroll Milwaukee average not a wealthy city. The median average Charter Schools ing by the University of Wisconsin System students through the MPCP would further Milwaukee family has an income that is just Wisconsin became a pioneer in the charter Board of Regents and the Milwaukee Common the options of Milwaukee parents. It is worth above the continuing eligibility threshold for school movement when it passed its first Council, and the unwillingness of MATC to noting that Milwaukee students already have the MPCP. These numbers suggest that the charter school law in 1993, just two years after use its chartering authority. 92 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 93

The untapped potential of charter schools ers, and give parents more leverage in choosing have vast potential to create a pipeline into mance by directing the respected Wisconsin in Milwaukee and Wisconsin could be real- a school. Other groups in addition to public their vocational programs through the estab- Legislative Audit Bureau to review authorizer ized through legislative changes to Wisconsin’s universities should be allowed to authorize an lishment of charter schools. The result would operations and execution of contracts every charter law based on successful charter laws unlimited number of charter schools, including: be more diverse schooling options for parents, five years. Institutions that are not holding elsewhere. According to the Center for Educa- students, and teachers. schools to the terms of their charter contracts tion Reform, Washington, D.C. and Minnesota All private non-profit four-year degree-grant- would lose their authority to grant charters. have the two best charter laws in the country.18 ing institutions 3. Develop more equitable Attributes of those laws, as well as model Wisconsin has a vibrant private higher- funding for students in Open Enrollment legislation from the education sector that charter schools. Interdistrict open enroll- National Alliance for could be an asset to Currently, unionized charter “…charter schools in ment is a state program that Public Charter Schools, producing high-quality schools receive fund- Milwaukee and Wisconsin allows parents to request provide a framework charter schools. For ing similar to traditional could be realized through a K-12 public school for for Wisconsin to example, institutions public schools. However their child other than the legislative changes to increase options for like the Milwaukee non-union and independent resident school assigned families and educators School of Engineering charters in Milwaukee Wisconsin’s charter law to them by their home while improving aca- could authorize charter receive less. In 2008-2009, based on successful address.22 The program demic outcomes and schools that prepare the average revenue per charter laws elsewhere.” began in the 1998-1999 embracing innovation. students for undergrad- member in Wisconsin was school year, and last year uate programs. $12,463, while each student 28,025 Wisconsin students Proposed Changes to Wiscon- attending an independent attended public schools sin’s Charter School Law The mayors of cities of the first, second, third charter school received $7,775.20 using open enrollment.23 The large majority of 1. Eliminate all enrollment caps. and fourth class applicants are to brick-and-mortar schools in Wisconsin currently caps enrollment in virtual The mayor of Indianapolis has had since 2001 4. Provide funding for the acquisition and neighboring districts. However, parents may charter schools and the UW-Parkside charter the authority to authorize charter schools in renovation of buildings for charter schools. also apply to charter schools, either traditional school in Racine via state statutes, and Mil- the City of Indianapolis.19 Wisconsin mayors One of the challenges facing new charter or online. waukee Public Schools (MPS) charter schools should have the same authority. school operators is limited access to facilities. Wisconsin restricts open-enrollment trans- via a memo of understanding between the School districts like MPS, which has excess fers more aggressively than other states with Milwaukee Teacher Education Association and An independent statewide charter authorizer building capacity for 22,000 students, are similar programs and makes it much harder the MPS board. Wisconsin needs to eliminate board nonetheless refusing to sell or lease their to apply. The application period is limited to all caps on the number of children who may Both Arizona and the District of Columbia facilities to other schools.21 Wisconsin should a few weeks in February, too early for many attend charter schools of all types and put into have independent charter-authorizing boards provide funding for charter school facilities, families to make decisions. Parents may not law language that allows schools to open mul- that have been successful at granting charters and allow it to increase annually with inflation. learn of rulings for months, leaving their chil- tiple locations under a single charter. to high-quality schools. So should Wisconsin. dren in limbo. 5. Provide for transparent evaluation of autho- Children with special needs are uniquely 2. Increase the number of chartering authorities. All state technical colleges rizer performance. vulnerable to denial. Often parents make Allowing more entities to authorize charter The Milwaukee Area Technical College is the Wisconsin charter schools currently are regu- the choice of an online charter because their schools will stimulate Wisconsin’s education only technical college in Wisconsin with the lated via their individually negotiated contract child will do best learning at home, only to marketplace by providing more high-quality authority to authorize charter schools, but has with their charter authorizer. Wisconsin can have their application denied by their district authorizers, put pressure on inactive authoriz- never used it. Nonetheless, technical schools similarly monitor charter authorizer perfor- because it wishes to maintain its funding. Bu- 94 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 95

reaucrats, not parents, make the final decision. of the statewide online charter schools could Statewide Refundable Tax Conclusion Public school open enrollment can be a cen- be completed. The Legislative Audit Bureau Credit If Wisconsin wants to improve a situation tral feature of a vibrant education system that conducted the audit and released the results A statewide private school education tax credit headed in the wrong direction, we must expand holds achievement as the primary goal. Open in February 2010. The audit validated the will help ensure that parents across the state freedom for parents and educators by provid- enrollment is a tool parents use to procure the accountability each school has to its district have the freedom to make school choices that ing more educational choices while letting best possible education elected school board, best serve their children’s learning and devel- dollars follow students and embracing inno- for each of their children. showing online schools to opment. vation. Nowhere is this more A mechanism must be in be not only successful and Currently, there are 126,812 important than in Milwaukee place to define and validate “Educational freedom popular, but well managed. students attending private with its poor academic results space-unavailability claims, produces results, The results of this audit schools in Wisconsin whose and virtually bankrupt school since those denials are innovation is critical, would be coveted by any parents are paying tuition in ad- district. common and districts are public school. Strikingly, dition to their public school tax The reasons for doing this not compelled to any stan- and scarce resources over 90 percent of parents, burden.27 Provision of a refund- are clear: Educational freedom dard of accommodation. mean we need to do teachers, and high school able tax credit for those parents produces results, innovation is more with less.” students reported that they would open the opportunity for critical, and scarce resources Online were satisfied with their a private school education to mean we need to do more with Learning Cap school.26 children of all family income less. Wisconsin school districts The enrollment cap has levels. Wisconsin can regain its in 2009-2010 authorized 15 charter schools no basis in research or data. The number 5,250, Three states bordering Wis- place as a national leader in that deliver instruction to 3,635 students us- which is a mere fraction of one percent of total consin offer some sort of tax educational excellence and ing online curriculum.24 These are full-time public school K-12 enrollments in Wisconsin, incentive for parents choosing reform by opening more oppor- schools that are quite similar to the district’s is arbitrary. The cap has created a cumbersome private schools.28 Importantly, the value of the tunities to both families and educators while neighborhood schools except that learning and costly waiting list process that burdens tax credit must be greater in Wisconsin than raising the bar on academic achievement and takes place largely at home. Students access schools, teachers, DPI staff, and, most signifi- any of these states if it is to have the desired equity. More equitable funding and access to a online schools through the state’s public school cantly, Wisconsin families. policy effect of encouraging opportunity for varied menu of choices give all children grow- open-enrollment program. School faculty is The enrollment cap on Wisconsin’s state- all families, as opposed to simply offering a ing up in our state the freedom to learn as they state certified and meets the statutory require- wide online charter schools is onerous to modest tax benefit to private school users.A learn best. The reforms described will create ments of any Wisconsin charter school. Online taxpaying parents and shameful treatment of tax credit worth $2,500, roughly 30 percent an educational marketplace hospitable to in- schools are public and face the same trans- young boys and girls who are simply asking to of the average United States private school novation and freedom that will ultimately raise parency and accountability requirements of attend their preferred Wisconsin public school. tuition, indexed to increase annually by an achievement without ignoring fiscal reality. traditional neighborhood schools. Yet, these in- This regressive practice should end with the amount equal to the percentage increase in the Finally, the entire state should realize that novative schools continue to face threats from closure of the waiting list for the 2010-11 Consumer Price Index, would enhance greatly when it comes to education, as Milwaukee opponents, including the Wisconsin Education school year. The summer of 2010 must be the the ability of children of all socioeconomic goes, so goes Wisconsin. Association Council (WEAC).25 last summer in limbo for families who want backgrounds to attend private school through- their children to attend what are some of the out the state. Endnotes Opponents capped online school enroll- state’s most successful public schools. In a June 2010 poll for this project, 64 per- 1 University of Wisconsin-Milwaukee Department of As- ment at 5,250 children, with the justification cent of the respondents favored a tax credit for sessment and Institutional Research, May 18, 2010. that the restriction was needed until an audit low- and moderate-income parents who send 2 See: Kevin Carey, “How States InflateT heir Educational Progress Under NCLB,” The Education Sector. May 2006. their children to public and private schools. 96 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 97

3 1990, 1992, and 2009 National Assessment of Education- 2009. al Progress, the National Center for Education Statistics. 24 Wisconsin Department of Public Instruction. 4 The Wisconsin ACT participation rates in 2009 for Afri- 25 In 2004, WEAC sued a first-year statewide online char- can American and Hispanic students were 36.5 percent and ter school run by the Northern Ozaukee School District on 33.0 percent, respectively. Average composite scores were several grounds, including that parents of students in the 16.8 and 19.7. school were too involved in their children’s education. The 5 Milwaukee Public Schools Board of Directors, “Facts and school, Wisconsin Virtual Academy, grew each successive Figures,” 1977. Milwaukee Public Schools, “Superinten- year despite the threat of the lawsuit. More families found dent’s Proposed Budget,” Fiscal Year 2011. the school, grade levels were added, the faculty grew, and 6 National Assessment of Educational Progress Trial Urban state test scores were just as good as, and often better Saving Money and Teachers’ District Assessment, The National Center for Education than, the student’s resident district scores. In perhaps the Statistics, 2009. most telling measure of value, retention rates for enrolled Jobs in One Simple Stroke 7 Comparative Indicators of Education in the United States students were higher than district projections. and Other G-8 Countries: 2009, National Center for Edu- Nonetheless, Wisconsin Virtual Academy was closed By Scott Niederjohn cation Statistics, March 2009. by court ruling in December 2007. The court denied the 8 Don Bezruki, “A Critical Element of Reform of Milwau- district funding for the 2007-2008 school year, which was kee Public Schools: The Escalating Cost of Retiree Health already nearly half over. Thousands of parents and students Scott Niederjohn, the director of the Center for Economic Education at Lakeland Insurance,” The Wisconsin Policy Research Institute, joined their teachers and administrators and went to Madi- College, explains how our antiquated and basically rigged system is robbing school December 2009. son to ask legislators to save their schools. Through a bi- 9 Improving Educational Outcomes in an Era of Choice, partisan compromise, state statute was brought up-to-date kids of millions of dollars. Niederjohn not only unearths this little-known problem, School Choice Wisconsin, April 2008. to recognize online instruction as a legal form of public but tells us how to solve it. 10 See Liberating Learning by Terry Moe and John Chubb, schooling in Wisconsin, and Wisconsin Virtual Academy Disrupting Class by Clayton Christensen, and Saving was allowed to reopen. Introduction process that didn’t allow bids from other health Schools by Paul Peterson. 26 Wisconsin Legislative Audit Bureau, “An Evaluation: 11 Don Bezruki, “A Critical Element of Reform of Milwau- Virtual Charter Schools,” February 2010. Anyone who has listened to the news for the care providers. Taxpayers wind up paying more kee Public Schools: The Escalating Cost of Retiree Health 27 Wisconsin Department of Public Instruction. There are past two years knows that there are serious for this closed system, and other teachers will Insurance,” The Wisconsin Policy Research Institute, an additional 21,062 students attending private schools in December 2009. Milwaukee via the MPCP. shortfalls in the budgets of Wisconsin’s public lose their jobs because of this unwillingness to 12 Rob Warren, “Graduation Rates in the Milwaukee Pa- 28 Program information obtained from the Foundation for schools. We know this has led to teacher change. rental Choice Program and the Milwaukee Public Schools: Educational Choice. layoffs and reductions in programs. And yes, Take the Milwaukee Public Schools district 2003-2008,” February, 2010. Minnesota offers both a tax deduction for 100 percent 13 Greene and Marsh, SCDP of education expenses including tuition for private schools, it’s a given that if you can’t educate the next (MPS) as an example. Faced with a large 14 Robert Costrell, “The Fiscal Impact of the Milwaukee and a refundable tax credit for education expenses beyond generation to compete successfully in a more budget shortfall, the administration proposed Parental Choice Program. 1993- 2008,” The School Choice tuition equal to 75 percent of those expenses up to a Demonstration Project, February 2008 maximum of $1,000 per child. The fact that the credit is competitive world, you might as well give up a plan that called for a significant reduction in 15 January 13, 2010 memo from LFB to Rep. Jeff Fitzger- refundable ensures that low-income families with limited now and save the time and energy. If Wiscon- the number of teachers and other staff mem- ald (available at www.SchoolChoiceWI.org). or no tax liability can also increase their education pur- sin kids today can’t find solid jobs tomorrow, bers. It just couldn’t pay their salaries. Ac- 16 See 2003 AB 260. chasing power. 17 Merrifield, Layla, Informational Paper 31: Charter Iowa offers a non-refundable tax credit equal to 25 there is no future for this state, period. cording to the district, however, if the teachers Schools, Wisconsin Legislative Fiscal Bureau, January percent of a parent’s total education expenses up to a This report offers a clear, sensible and moved to a less-expensive health care plan 2009. maximum of $250. Education expenses include fees for 18 The Center for Education Reform, Charter School Law activities as well as books and tuition for private schools. almost effortless way to solve part of this prob- —with no out-of-pocket cost to the teachers— Ranking and Scorecard 2010. Illinois offers a non-refundable tax credit worth 25 lem. But it is running into stiff resistance from more than one-third of those positions could 19 http://www.indy.gov/eGov/Mayor/Education/Charter/ percent of total education expenses after the first $250 up entrenched powers who, while they may desire be restored.1 Pages/home.aspx. to a maximum of $500. Like Iowa, education expenses can 20 Department of Public Instruction. include fees for activities in addition to books and tuition the same kind of success that we all do, simply This seemingly easy choice—one that 21 A Spending Education: Milwaukee Gets Money for for private schools. don’t want to have to change what they already would save the jobs of many fellow teach- Unneeded Schools, The Wall Street Journal, February 7, 2009. have in place. ers through the move to the new health care 22 See: http://dpi.wi.gov/sms/psctoc.html. Here’s the problem: In many districts, plan – was never formally considered by the 23 Russ Kava, “Informational Paper 30: Inderdistrict Public teacher health insurance benefits are more Milwaukee Teacher Education Association School Open Enrollment,” The Legislative Fiscal Bureau, expensive than they need to be. That’s because (MTEA). As a result, 480 Milwaukee Public the teachers union has chosen a provider in a School teachers received layoff notices as the 98 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 99

2009-2010 school year closed. Similar options process. Private firms have understood this for In contrast to the overall health insurance percent of salaries. This number is, once again, have been rejected by other Wisconsin teachers years; even the vast majority of governmental in the state, the market for Wisconsin’s public well above the national average of 23 percent, unions throughout the state. Why is that? units have moved in such a direction. This school district health carriers is dominated by and it puts Wisconsin in the top 10 of U.S. When union leaders are pressed to explain article focuses on the Wisconsin state govern- one near-monopoly provider: the Wisconsin states in this area. these choices they generally cite some combi- ment health insurance pool as one example Education Association Insurance Corporation It gets worse when teacher benefit costs nation of the following:2 of a competitive system. Many Wisconsin (WEAIC). And as we previously stated, this is are measured as a percentage of state per- • Funding for schools and rising health insur- school districts could realize substantial sav- an affiliate of the state’s largest teachers union. sonal income. For every $1,000 of personal ance costs aren’t their fault. It’s a national ings if they moved to this plan or one similar WEAIC writes health insurance coverage on income earned within the state of Wisconsin, crisis that needs to be solved. to it. Establishing a system that allows school teachers in approximately 64 percent of dis- $8.28 was spent on instructional public school • Teachers work hard for those benefits and districts to seek bids from competitive teacher tricts in the state.5 This makes it the dominant employee benefits in the 2008 school year. are entitled to them. Offer anything less and health insurance carriers would significantly player in the market. The next-most-popular This number is 44 percent above the national you won’t get or keep the quality educators the lower insurance premiums and allow teachers insurance carriers are Security and Dean, at 7 average, demonstrating that Wisconsin spends district needs to be successful. to actually benefit from increased job secu- and 6.8 percent, respectively. WPS and WCA a disproportionately high percentage of its • Members have fought for the right to have rity and potentially higher salaries. And most come next, with the remaining 16 percent of income on public school teacher benefits.T his the quality health care they now enjoy. important, their health coverage would not districts using other carriers. This is not wide high level of spending places Wisconsin fourth In fact many Wisconsin school districts are significantly change. open at all; just take a look at Table 1. in the nation, just behind Alaska, New York, simply locked into an outdated and inflexible It sounds like a no-brainer, but this is a per- and West Virginia. model of procuring health insurance benefits. fect example of how everyone wants change, Table 1: Wisconsin Public School Health Increases in health insurance costs consume but not in their backyard. (And bear in mind, a Insurance Carriers in 2009-2010 Table 2: Public School Spending on Teacher a growing portion of Wisconsin public school topic like health insurance for public employ- Benefits per $1,000 ofS tate Personal Income teachers’ total compensation. That’s because ees may seem to be a pretty dry subject, but if Carrier # of Districts % of Districts the health insurance market for public school you want to fix things, this is where you have WEA Ins Corp 245 64.0% Rank State Public School Teacher Benefit Costs per $1,000 State Personal teachers is dominated by one monolithic to start. So stay with us, and remember, all Security 27 7.0% Income organization – the Wisconsin Education As- politics is local.) Dean Health Plan Inc 26 6.8% 1 Alaska $14.69 sociation Insurance Corporation (WEAIC), WPS 13 3.4% 2 New York $9.57 Wisconsin Counties which is, not coincidentally, an affiliate of the The Health Insurance Market 11 2.9% 3 West Virginia $9.18 Association (WCA) state’s largest teachers union. WEAIC writes for Wisconsin’s Public School 4 Wisconsin $8.28 Other 61 15.9% health insurance coverage on teachers in ap- Districts 5 Michigan $8.05 TOTAL 383 100.0% U.S. Average $5.78 proximately 64 percent of districts in the state. We’ll start with the obvious: The market for Source: Wisconsin Association of School Boards; based on a sample of 383 In most districts, the carrier has been chosen health insurance in Wisconsin is fragmented. of Wisconsin’s 426 school districts. Source: U.S. Census Bureau through a no-bid process.3 More important, the In 2008, the leading provider claimed about 13 Benefit Costs for Wisconsin The average monthly cost of single-person coverage is more expensive than the alternative percent of the Wisconsin group accident and Teachers coverage paid by Wisconsin school districts carriers that other districts choose. health insurance market.4 This share quickly Wisconsin spends a lot on teacher benefits. It is about $728, while the family premium In other words, the teachers union benefits falls to five percent for the fourth- and fifth- ranked 10th in the nation in per-pupil spending costs, on average, about $1,684. But as Table from this sweetheart deal at the expense of the largest carriers, while more than 30 different on teacher benefits, at $1,976.6 This number is 3 reveals, those districts that choose to use taxpayers. insurers shared the final 60 percent of the almost 40 percent higher than the U.S. average WEAIC as their insurance carrier pay a signifi- Wisconsin school districts could save huge market. In other words, the market for the vast of $1,420 per pupil. The same source reports cantly higher premium than the other districts. amounts of money if they would provide majority of the people in Wisconsin is wide that in 2008 Wisconsin public school teach- The average single-coverage costs for districts health insurance through a more competitive open. ers’ benefit costs represented, on average, 40 using WEAIC is $770.75, while their family- 100 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 101

coverage costs are $1,749.69. Compare this Table 3: Wisconsin Public School Teacher health insurance provider. These factors have • WEAIC is the only health insurance carrier with the average costs of the two premiums Health Insurance Characteristics, 2009-2010 rendered it difficult, if not impossible, for included at the bargaining table when school paid by Wisconsin’s school districts that don’t school boards to move away from WEAIC as district contracts are negotiated with teachers. use WEAIC. The premium paid by districts the insurance carrier. In a bizarre twist, collec- • School districts cannot change from WEAIC

that use WEAIC coverage is more than 16 amily tive bargaining provisions have been used to without agreement from the teachers, most of percent higher (for single coverage) and more amily solidify WEAIC’s near monopoly position in which are represented by WEAC. aid by E mployer aid by E mployer than 10.5 percent higher (for family coverage) D eductible amily the teachers’ health care market. • WEAIC is reluctant to readily make avail- than premiums paid in the other districts. Yet the benefits that can come able important data needed vera g e % of S in le vera g e % of F vera g e S in le D eductible vera g e F S in g le vera g e M onthly F vera g e M onthly P remium A g e P C overa A g e P C overa A A W isconsin S chool D istrict I nsurance C arrier N umber of S chool D istricts A P remium A Table 3 also shows that, on average, Wis- from competitively bidding for school districts to solicit All 383 $728.17 $1,683.54 96% 95% $167.28 $347.64 consin taxpayers foot the difference. School health insurance for public competitive bids. WEA Ins 245 $770.75 $1,749.69 96% 95% $119.39 $244.71 districts pay 96 percent of the single-coverage Corp school districts are self-evident. health insurance premium on behalf of teach- Non Basic economic theory reveals REFORM WEA Ins 138 $663.29 $1,582.76 96% 94% $237.42 $498.39 ers, and 95 percent of the family-coverage Corp that a competitive market for How might the process be premium. This is well above what the typical Source: Wisconsin Association of School Boards any good or service is more reformed to create a more employer provides for workers in the U.S. as a likely to result in the most effi- competitive environment? As whole or in Wisconsin. In other words, teach- Barriers School Districts cient and cost-effective alloca- a start, reforms would have to ers pay less for their coverage than taxpayers in Face When Changing Health tion of resources. Private-sector focus on a system that encour- the private sector. Insurance Carriers Under employers, as well as govern- ages school districts to com- According to the Kaiser Family Founda- Current State Law ments, have long understood petitively bid for their health tion,7 employers (both in Wisconsin and So, given the higher costs that school districts the potential for cost savings of insurance carriers. A proxy throughout the country) tend to pay between pay to use WEAIC coverage, why do they such a bidding strategy. for a health insurance market 72% and 76% of the health insurance pre- choose it, especially when school districts are for public school teachers that miums for their employees, while Wisconsin technically free to solicit other bids for health Insuring Public School provides service through a competitive bidding school districts pay almost all of the costs for insurance coverage? In fact, state law requires Teachers Through the State strategy is the state health insurance pool for their teachers – 95 percent on average. Further, that if a school district wants to change its Employee Pool Wisconsin public employers. Employee Trust Table 3 (at end) reveals that single deductibles health insurance carrier, it is required to solicit It is obvious that WEAIC holds a significant Funds (ETF), a subdivision of the Wisconsin average about $167 for Wisconsin teachers, sealed bids. advantage over other insurance carriers since, Retirement System (WRS), operates this pool, and teachers’ average family deductible is However, in practice, school boards are as we have just shown, the cost of obtain- and employees statewide receive their coverage about $348. severely limited in their ability to solicit ing health insurance through that carrier is from this pool system. competitive bids. This is because every aspect demonstrably higher than the cost of cover- This innovative method creates a more tra- of health insurance coverage is subject to age from other carriers.9 Yet, although it costs ditional supply-and-demand market. The sup- collective bargaining. The Wisconsin Employ- more, WEAIC is the carrier of choice for 64 ply side of the market is established each year ment Relations Commission (WERC) has percent of Wisconsin school districts in our as the ETF collects bids and premiums from ruled that even minute administrative matters sample. Unlike other public and private entities health insurers whose policies meet certain must be bargained.8 This includes not only the in Wisconsin, school district choices of health standards identified by the state.T he policies overall coverage and employee cost-sharing insurance carriers is affected by the relation- can range from full indemnity coverage to provisions, but also the manner in which the ship between WEAIC, the health insurer, and HMO coverage. Qualifying plans must meet coverage is administered. Further, in many WEAC, the teachers union. state standards established to provide extensive contracts, WEAIC is actually named as the Consider the following: coverage. 102 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 103

Subsequently, to establish the demand side Choices for Teachers Association of School Boards (WASB).12 The No-Brainer: Saving Jobs or of the market, employees select a plan from the Joining the state plan would provide teach- Two hundred and fifty-nine of the 382 Increasing Teacher Salaries available choices in their respective county of ers with significantly more choices than they school districts in our sample, or about 68 per- The money that school districts would save by residence. This individualized choice creates currently have. They would gain the ability cent, would reduce their health insurance costs providing health insurance coverage through an environment in which insurers have an to choose the plan available in their county if they switched to the state insurance plan. the state pool could be used to balance their incentive to offer the highest-quality plans at that works best for them. If they would rather Based on the stated assumptions, the Milwau- budgets, avoid layoffs, provide property tax the lowest possible prices continue with an expensive kee Public Schools district would save more relief, increase teacher salaries, or provide for in order to be competitive. preferred provider plan, than $18 million per year by transferring to the other district needs. This system stands in stark like the Milwaukee Public state plan. The Fond du Lac district would save We see this in Table 5, which shows data for contrast to the options cur- “…the WEA Insurance Schools currently has, it more than $1.8 million. the 10 districts that would be able to increase rently available to school Corporation charges would be their option, but Table 4 reports data for the 10 districts that teacher salaries by the greatest amount if the districts, which generally they would pay for it. Or would achieve the greatest savings if they were savings from participating in the state pool more for health offer a single plan. they could choose one of to participate in the state pool. The savings were passed on to the teachers. The largest Allowing public school insurance coverage than the generous HMO options would clearly be significant.T he table also re- potential increase, $5,609 per teacher, is in the teachers to select their own alternative carriers.” available and enjoy a lower ports the insurer currently providing coverage Jefferson school district. Interestingly, accord- individual health insur- premium. in each of these districts. In this sample, six of ing to WASB contract settlement data, Jeffer- ance policies would be a Such a reform would the top 10 currently use WEAIC. In fact, of the son has already made the decision to move to significant departure from provide a substantial 50 districts that would save the most by chang- the Wisconsin state pool beginning on October the current collective bargaining system. Even incentive for attracting bright young teach- ing to the state plan in our sample, WEAIC is 1, 2010. The table also reports the current with these changes, school districts and unions ers into the profession. It is likely that most the current insurer in 36 cases (72 percent). insurer in each of these districts—WEAIC would still need to negotiate the dollar amount young teachers, often in good health, would be provides insurance in seven of 10. each employee would be required to contrib- interested in a reform that would allow them to Table 4: Districts That Would Save the ute toward each respective tier plan, similar make their own health care choices. Instead of Most Money by Moving to Health Coverage Table 5: Districts That Would Save the to the manner in which state employee unions these young teachers being forced into expen- through the State Pool, 2009-2010 Most Money by Moving to Health Coverage bargain under Wisconsin statutes. sive health care options chosen by their unions, through the State Pool on a Per FTE Basis, Rank School District Savings Current Many local governments throughout the they would be able to select less expensive Carrier 2009-2010 state participate in the health care plans offered options and, perhaps, enjoy new benefits in the 1 Milwaukee $18,361,105 Aetna Rank School District Savings Current by ETF. However, in our sample, only the Fen- form of higher salaries. 2 Fond du Lac $1,870,830 WEAIC per FTE Carrier nimore Community, North Cape and Yorkville 3 Mukwonago $936,443 WEAIC 1 Jefferson $5,609 WPS J2 school districts participate in the Wiscon- Advantages for School Districts 4 Appleton Area $924,858 WEAIC 2 Clinton Community $5,256 WEAIC sin public employers’ group health insurance School districts would save significant money 5 Jefferson $810,611 WPS 3 Niagara $5,250 WPS plan.10 if they were able to join the state plan. We 6 Marinette $614,014 WEAIC 4 Herman #22 $5,071 WEAIC If school district employees chose to join know this by simply calculating the difference 7 Watertown $589,437 WPS 5 Potosi $5,021 WEAIC the state health insurance pool, the advantage between the employer’s contribution of total 8 Richland $530,207 WPS 6 Paris J1 $4,850 WEAIC that the WEAIC offers would no longer exist. state pool premiums and the employer’s con- 9 Reedsburg $528,821 WEAIC 7 Cassville $4,802 WEAIC Of course, WEAIC would still be able to com- tribution of the premiums paid by the school 10 Holmen $524,245 WEAIC 8 Richland $4,791 WPS Source: Wisconsin Association of School Boards pete in the health care market by developing a districts. State premiums are available in the 9 Beecher-Dunbar-Pembine $4,695 WEAIC competitive insurance policy for state employ- “It’s Your Choice” guide provided each year 10 Tigerton $4,436 WEAIC Source: Wisconsin Association of School Boards ees and offering it as another option within the to Wisconsin state employees, and the district current state plan.11 premiums are available from the Wisconsin Chapter 4 104 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 105

Conclusion 4 According to the Wisconsin Office of the Commis- Wisconsin’s public school districts are trapped sioner of Insurance. 5 According to a survey sample of 383 of Wiscon- in a dated system of providing health insurance sin’s 426 school districts (survey provided by the benefits for their teachers.T he health insurance Wisconsin Association of School Boards). 6 According to the latest data available from the market for Wisconsin school districts is domi- U.S. Census Bureau’s Public Elementary-Secondary nated by the Wisconsin Education Association Education Finance Report for 2008. 7 Insurance Corporation. WEAIC writes the Data available from: http://www.statehealthfacts. org/. insurance plans for over 64 percent of Wis- 8 Section 111.70 Wis. Stat. consin school districts. This paper shows that 9 As seen above in Table 3. 10 According to the Wisconsin Association of School it charges more for health insurance coverage Boards (WASB), Monona Grove also participates in than alternative carriers. Reform that would the Wisconsin state health insurance program. 11 foster competition in the market for teachers’ Currently, WEAIC only offers insurance products to Wisconsin public school districts that have a health insurance would serve the interests of Wisconsin Education Association Council (WEAC) Wisconsin’s taxpayers and teachers. bargaining unit. WEAIC is not prevented from expanding its business to compete in the state em- In particular, reforms at the state level that ployee pool by its charter/articles of incorporation. would allow school districts more power in 12 A precise calculation of the total savings would choosing the health insurance carrier—rather require information on the number of employees choosing individual or family coverage. We can than negotiating with their teachers union— obtain an informative estimate, however, by assum- would be a useful first step towards solving ing that one-third of the employees would choose single coverage and the remaining two-thirds would this dilemma. A model for reform is the health choose family coverage. insurance pool for state employees. This plan The state employee premiums that are used in Economic Development is administered by the Department of Em- this analysis are those for the benefit year 2010. Similarly, the school districts’ premiums are those ployee Trust Funds (ETF). If health insurance from the 2009-10 benefit year. for teachers could be provided through ETF, savings could accrue to the majority of school districts in the state. These savings could be used to balance district budgets, avoid layoffs, provide for teacher salary increases, or provide property tax relief to residents and finally, edu- cate more of Wisconsin’s children… a situation in which everyone benefits.

Endnotes

1 This was reported on May 14, 2010, by Erin Rich- ards, in the Milwaukee Journal Sentinel. 2 From conversations with journalists that cover education issues in Wisconsin. 3 According to conversations with Wisconsin Asso- ciation of School Boards (WASB) representatives.

106 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 107

missions, studies, economics summits, reports, success. During the 1970s under Democratic commentaries, and legislative hearings. There Gov. Pat Lucey, a businessman, Wisconsin was the Strategic Development Commission grew jobs faster than in the nation. Per capita of 1985, the Blue Ribbon Commission on 21st income grew. Lucey was a reform governor, Century Jobs in 1997, and the Grow Wisconsin merging the higher education system and lead- Plan in 2003. Despite the best of intentions ing efforts for a business tax cut—the M&E WISCONSIN: and some constructive ideas, little progress property tax exemption for manufacturers’ has materialized. Execution has been modest. machinery and equipment. In 1977 the Wall WE’VE GOT A PROBLEM The results have been poor. Barriers persist Street Journal called Wisconsin the “star of the that undermine bold efforts to stimulate the snowbelt.” By Tom Hefty, John Torinus and Sammis White Wisconsin economy. Following another dismal decade in the UW-Milwaukee Professor Sammis White and successful businessmen Tom Hefty But before launching 1980s, Republican Gov. and John Torinus know that the people who want to start businesses (and create into recommendations on Tommy Thompson came what we think Wisconsin in and turned the state’s jobs) are out there. All they need is half a chance from our political leaders. If “Bold reforms inspire Wisconsin wants to stop losing decent-paying jobs and actually add more of should do, we need to fortunes around again. He them, this is the blueprint to get us back on track. revisit the past—and it’s confidence in business reformed welfare, encour- not all negative. Wisconsin and workers alike.” aged new education choices Wisconsin’s economy has been eroded over the bachelor degrees. There are few Wisconsin has experienced some suc- and was a cheerleader past 30 years by the waves of economic change industries, beyond health care, education and cess, and there are positive for business. Wisconsin that have battered the rest of the country as government, with any significant growth.A nd lessons in our history. But employment grew faster, well. With each storm, the business foundation perhaps most important and least understood, those successes must be understood and put incomes improved and people actually moved of the state has weakened. Then a brief calm the state is below average or near the bottom in into perspective. to Wisconsin, while the state’s economy gives false hope that everything is okay. But no rankings for new firms launched. flourished.T he prosperity lesson from Lucey one rebuilds the foundation. And no one looks The need for job creation is more vital The State’s Income Report Card and Thompson is simple—leadership mat- to harness the waves of change. today than it has been in decades. Over the last 30 years, Wisconsin per capita ters, especially when it comes to economic Keep that in mind as you read this report on Wisconsin needs a fundamental change in income has never surpassed the national development. It’s not about party politics. Bold Wisconsin’s economic decline. Because there economic development leadership, strategy average. It is a statistical truth that roughly reforms inspire confidence in business and has always been something of a rebound—no and structure. That process will require that the half of the states are above average. Wiscon- workers alike. matter how small—a lot of people here don’t timeworn Wisconsin cultural and political as- sin was never among them, not once in three Despite the strategic failures over the last see an economic problem. Unfortunately, the sumptions be openly challenged. Change will decades—and that includes some real boom decade, one recent Wisconsin success story facts don’t support their lack of concern. not be easy nor without controversy. But big years for the United States economy. Many resonated—investing in biotech, notably at Over the last two years, this state has lost changes are required. Better, bolder ideas must Wisconsin residents seem to have grown com- the UW-Madison and in Dane County. UW- over 151,000 jobs. But with some important emerge. (Although politicians are reluctant placent in accepting below-average economic Madison Professor James Thompson surfaced exceptions, Wisconsin’s economic perfor- to admit the need for change, Wisconsinites opportunities—akin to fans accepting a coach as a world leader in stem-cell research, and mance has been sliding since 1978. The state see the evidence firsthand.T hey watch their who never is better than .500. There were the expectations for a potential payoff grabbed ranks 48th out of 50 in 30-year personal children and grandchildren leave to find decent exceptions—periods of improvement. Unfortu- headlines. income growth. Average wages have been jobs elsewhere.) nately, those improvements proved temporary. UW-Madison established credibility with declining relative to the U.S. average. The state Calls for job generation have been made Under two governors—one a Republican the attraction of major federal research dollars, ranks poorly in the percentage of adults with before. Wisconsin has launched multiple com- and one a Democrat—the state flirted with well publicized world leadership in research, a 108 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 109

chancellor and university regents who promot- biotech investment. in the union to create a state agency to assist other states that were once its equal. ed the story, and support from the governor’s The question we seek to answer is why so and coordinate economic development. That office. Governors from both parties,T hompson many proposed efforts over many years failed was in 1971! and Democrat Jim Doyle, supported the bio- to gain support. What forces have been so That open animosity has continued into Dysfunctional Politics—The Downfall of tech research. The research success coincided strong as to inhibit support anywhere near the the 21st century. In 2008 the UW-Madison Pro-Growth Politicians with a period when state dollars were made level of state investment in biotech in Madi- chancellor openly attacked the state chamber Just as corrosive to any public-sector action on available and invested. Many of the biotech son? The answers are varied, and some are not of commerce for taking posi- economic development have dollars were bonded, not General Purpose Tax very pretty. tions that are common postures been ongoing and bitter party Revenues (GPR), which among business organizations rivalries. The Legislature is made the spending less Wisconsin’s across the United States —ad- dysfunctional; it cannot reach controversial. The dollars Failures— vocating a more competitive tax agreement on any issue of invested in this effort at “…growth in dollars The Reasons climate. What makes Wiscon- note. There is little bipartisan UW-Madison have been and jobs in the biotech Wisconsin Culture sin unique is not businesses support for economic devel- estimated at more than One of the most critical favoring low taxes. What makes opment initiatives or much $750 million, and the sector has helped reasons for Wisconsin’s Wisconsin unique is its con- else. Neither party crosses the payoff has been substantial. Dane County weather tepid approach to economic tinuing culture of ambiguity aisle. Business managers and That growth in dollars and the Great Recession as development is that— or hostility towards businesses politicians have not been on the jobs in the biotech sector only a modest blip.” other than in Madison— —the organizations that create same page. They cannot agree has helped Dane County Wisconsin has not been jobs and economic opportunity. on what must be done, nor weather the Great Reces- willing to place large bets In the flat world of economic even that something different sion as only a modest blip. to strengthen the economy. competition in the 21st century, should be done. Their rhetoric The rest of Wisconsin has Most people don’t realize that culture is guaranteed to is stale and unconvincing. In not been so fortunate. that the state has struggled fiscally for decades. lose business opportunities. the words of Shakespeare: “A plague on both With these examples of bold initiatives, One reason: Wisconsin’s taxes remained high your houses.” one might think that a strong argument has and spending remained generous in other The Ostrich Syndrome The GOP positions are generally pro- been made for the state to be more active in areas, just not in economic development. A re- Compounding this cultural factor, Wisconsin business, but are canned reproductions from stimulating economic growth. Unfortunately, cent Deloitte study of Wisconsin competitive- citizens and politicians have often denied that decades past: lower taxes, less regulation, and that has not been the case. Other recommenda- ness found that economic development staffing the world is changing around them and that smaller government. Valid or not, they haven’t tions—clusters, broadband, more investment was one-half the level of competing states. the state must dramatically adjust. Too many figured out how to be pro-growth. Since the in entrepreneurial ventures, more effective Economic development dollars were as little as citizens and politicians think that the way days of Gov. Lucey in the 1970s —and that’s technology transfer, clean tech—have failed one-quarter the level of competing states. things were will remain or be restored and almost 40 years ago —Wisconsin has lacked to gain major state investment. Northwest The economic development failures go that concerted efforts to respond to a vastly pro-business or pro-growth Democrats. The Wisconsin had computers, southeast Wiscon- beyond dollars to the state’s culture. Histori- changed world are unnecessary. Wisconsin Clinton-inspired moderate Democratic Leader- sin had medical devices; neither received state cally, Wisconsin has been reluctant to support has survived several economic downturns and ship Council (DLC) in Washington created a attention. The nascent “freshwater cluster” in business, particularly big business. Wisconsin then seemingly come back, having not done middle-of-the-road, pro-growth wing of the Milwaukee has only recently resonated enough culture is ambiguous at best about business; anything unusual. That history strongly deters Democratic Party. The DLC supported ideas to win substantial public dollars. UW-Milwau- Progressive politics in Madison and Socialist new efforts to bring more dramatic change to from Gov. Thompson to reform welfare and kee has received a $54 million commitment politics in Milwaukee often displayed outright the state’s economy. The result has been that open school choices for parents. But there for a freshwater campus, a tiny fraction of the hostility. Wisconsin was one of the last states Wisconsin continues to fall further behind was little support from Wisconsin Democrats 110 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 111

today. The seeds of the DLC did not take root state’s liability, viewed as a sinkhole. “Stick Bureau noted that Wisconsin spending on eco- goals of economic development initiatives in Wisconsin. The legacy of the early 20th it to Milwaukee” is a common phrase heard nomic development in Milwaukee was below have never been precisely defined.T hat means century remains—business must be regulated, throughout the state. the statewide average. Since 2006 the state has it has been very difficult to make a case for not promoted. Any request to state government in Madi- canceled two promising technology initiatives any particular intervention because proponents The disconnect between the business world son to invest in the Milwaukee region is met in the Milwaukee region—TechStar and the have not said where that intervention is to take and the political leadership has been com- with skepticism or outright disdain. For BioMedical Technology us. Do we want 150,000 pounded in recent years because of the heavy example, the venture capital segment of the Alliance. In 2010, a UWM new jobs or 50,000 new influence of union leadership on Democratic state pension fund hasn’t put any real dollars study shows that City of jobs? Do we want all types “Higher business and politics. Both houses into the entrepreneurial Milwaukee job growth of jobs or only jobs that of the Legislature are economy of Southeast- ranked 49th out of 50 U.S. personal taxes, pro-union require a baccalaureate or now led by former ern Wisconsin, even cities. measures, increased higher? Without a clear de- union leaders, and their though many of the It is true that the City of regulation and greater lineation of what is sought, legislation has sent pension contributions Milwaukee receives higher it is much harder to build a discouraging messages come from the region. per capita state aid in other liabilities do not weave a road map for getting there. to the CEOs who make That pervasive neglect areas of government. Many welcome mat for anyone Some of the imprecision location decisions. penalizes the state’s of those aid levels are gen- thinking of starting a new embedded in an non-strate- Higher business and largest economic erated by the high poverty gic “no winners, no losers” business in Wisconsin.” personal taxes, pro-union measures, increased engine in terms of needed stimulation and rates in the city. And the approach is due to Wis- regulation and greater liabilities do not weave large-scale investments. poverty rates are caused by consin politics. Economic a welcome mat for anyone thinking of starting In 2005, the seven counties in the Milwau- the weak economy, which is development spending is a new business in Wisconsin. kee area created a new organization, called the caused by the lack of state economic develop- viewed in the Legislature as a constituent-re- The state’s profile has long been character- M-7, to market southeast Wisconsin as a strong ment attention, which goes on and on, ’round lations fund; every legislator receives some. It ized by more union activism than many other region for business investment. That group is and ’round. is the economic equivalent of “walking-around states. One can argue the benefits of that real- working hard to change the regional dynamics, money,” made famous in Chicago politics. The ity, but there can be no argument that business- but this is a Herculean task. Before its incep- No Losers … But, Sadly, strategy also fitsW isconsin culture, perhaps es put plants in more supportive locations. tion six years ago, Milwaukee’s problems had No Winners Either a throwback to the state’s socialism in the The 2010 CNBC ranking of the Top States become a self-fulfilling prophecy. Milwaukee Every economic development study since the mid-20th century. David Ward, the head of for Business ranked Wisconsin 46th for “work- did poorly—in performance and in economic mid-1980s has recommended that the state Northstar Economics, refers to Wisconsin’s force.” That miserable position was derived in development attention. A 2003 study by the focus its economic development efforts on economic development this way: “No one can spite of the huge investments in training and Wisconsin Revenue Department noted that targeted exporting industries. Yet at the state move ahead unless no one is left behind.” The education and the vaunted work ethic of the growth and per capita incomes in non-metro level nothing has happened. To the contrary, result is that no one moves very far. state’s citizens. areas of Wisconsin were above peer non-metro the Legislative Audit Bureau report notes that Almost every state enjoying robust growth regions in other states. The Wisconsin slide in every county in Wisconsin received some eco- in jobs and incomes employs a focused cluster Milwaukee income and job losses was concentrated in the nomic development funding, regardless of its strategy of economic development. Colorado Further compounding the inaction on eco- state’s metro areas, led by Milwaukee, accord- needs or its economic development plan. Other and Iowa are good examples of success. Such nomic development is Wisconsin’s longtime ing to the study. Out-state legislators see little than biotech, there are no industry targets as a strategy was recommended by the 2002 UW aversion to investing in Milwaukee. Wiscon- prospect for change, and little reason to invest growth opportunities of the future. This dem- Economic Summit. A cluster strategy centers sin’s great city was once the economic engine in the region. The 2006 audit of economic de- onstrates a shocking lack of imagination. on exporting industries with above-average that drove the state. Today, it has become the velopment spending by the Legislative Fiscal A further inhibitor in Wisconsin is that the growth potential; an existing state job base; a 112 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 113

state competitive advantage, whether through Note that all of Wisconsin’s great employers Summary of History Lessons 1. Totally restructure economic development research, presence of an industry-leading com- started here. We have traditionally grown our The state’s three decades of economic slide in an independent “charter government” pany; a pool of skilled workers; or transporta- own economy. That is proof positive that, with present a paradox. Wisconsin spends gener- model. tion linkages. Despite repeated recommen- smart leadership, we have the latent entrepre- ously and ranks well on the leading inputs The Wisconsin political model for eco- dations and examples of success elsewhere, neurial talent to reinvent ourselves again. We for success—quality schools (ranking 15th), nomic development has failed. The Legislative Wisconsin still fails to have a targeted industry believe—and this is important—that given just an extensive higher education system (12th), Audit Bureau found 154 different programs strategy. Not surprisingly, a small amount of support, (university) technology in 23 agencies and the state does not employ entrepreneurs would come research (13th, with commissions support- industry specialists for its out of the woodwork. Madison in the top ing activities in every economic development “…all of the net job growth Startup businesses, like 10), and patent rates county of the state— staff. Wisconsin has a reac- all businesses, need a good (15th). Yet the state whether they wanted tive economic development in the United States in the business climate, com- ranks 48th in 30-year or needed economic strategy—politicians react- past decade has come from petitive personal taxes and, income growth. So the development assistance ing to threats of lost jobs— startup businesses.” importantly, support teams failure must be due or not. There were no company by company, of mentors and expert to one or more of the measures of success industry by industry, and coaches. They also need intangibles—a lack of or failure. With no community by community. early-stage capital. Instead consistent leadership, measurement system, of addressing the climate no formal plan or targets, political indifference there was no accountability. It has been a Big Oaks from Little Acorns for new businesses, Wisconsin established four to economic development spending, strategy political apparatus, not an economic develop- According to the Kauffman Foundation, all tiny entrepreneurship centers. Instead of creat- and organization—or something that cannot ment model. of the net job growth in the United States in ing a venture capital fund, Wisconsin added be precisely measured or put into an economic The charter model is an independent, the past decade has come from startup busi- investor tax credits, a constructive but minor formula. Whatever the factor or combination private-sector-driven organization held to nesses. Repeat: all net new jobs. Indeed, its program. The majority of those credits have of factors, Wisconsin has evolved into a state accountability standards for achieving public latest analysis shows that from 1977 to 2005 gone to ventures in Dane County, where the with a poor business climate, one that is not goals. Charter schools are growing alternatives young companies created an average of three unemployment rate is well below the rest of conducive to growing the firms that a suc- in areas of failing public schools. Charter uni- million jobs per year, while existing companies the state. Specific recommendations were also cessful economy demands. And we are all the versities free public higher education from the reduced jobs by one million annually. Wiscon- made for Wisconsin investments by Wisconsin poorer as a result. same type of political interference that affects sin largely fails to address this reality—both public pension funds. Little progress has been economic development. in its economic development strategies and, made outside Madison. In the most recent Three Ideas This could be called a public/private equally important, in its economic develop- reporting period through the first quarter of Strategic turnaround is possible. It’s been done partnership, as Forward Wisconsin was in the ment studies. Neither the 1985 nor the 1997 2010, Wisconsin received only $26 million of before—Govs. Lucey and Thompson achieved 1980s. That underfunded partnership model Wisconsin studies addressed new business venture capital, the lowest amount in the Mid- success. And there are nearby models, Iowa in Wisconsin ended in 2005, when the state issues in any meaningful way. National studies west. Minnesota attracted $235 million. Even and Minnesota, of Midwestern states that have Department of Commerce took it over. In the differ on Wisconsin entrepreneurship rankings. smaller Iowa attracted $84 million—more than raised incomes and created jobs at a faster charter structure, the governor would be the In some studies, Wisconsin entrepreneurship three times what Wisconsin received. pace. With that in mind, here are three big chief salesperson—but not the engineer build- ranks in the bottom five states. In other stud- ideas to reverse those long-term trends ing the model. ies, Wisconsin ranks far below average. In no Wisconsin employs independent boards to study does Wisconsin rank above average. run its public university system and to man- 114 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 115

age its natural resources. We contend that job and professionally managed. There are cluster- In this hostile personal political environ- bles of the business climate must be discussed creation rises to the same level of importance. industry targets for investment. It supports ment, business leaders choose to quietly leave and addressed—leadership, organization, and Indeed, without a robust jobs base, nothing regional entrepreneurship and venture capital Wisconsin rather than challenge the status quo. attitudes towards business and labor. else works very well in today’s world. growth as well as funding promising technolo- With the state’s ranking of 48th in long-term The basics are in place. Wisconsin has Under a new Job Creation Board, we would gies within major companies. It is accountable personal income growth, the phrase “will the a hard-working population. The workforce establish a set of cluster councils to engage for performance and regularly measured for last one out of Wisconsin, please turn off the participation rate is well above average. Yet the leaders of the exporting engines of the success by independent academic studies. lights?” has an added word. Please turn off the incomes are well below average. Wisconsin economy in a col- Most important, lights “quietly,” so as not to disturb the politi- needs an ambitious plan. It needs big ideas laborative governance a $1 billion Wiscon- cians. and new attitudes for the 21st century. It needs model. A member of sin Idea Fund would The recent Republican efforts have been a fundamental change in economic strategy the Job Creation Board signal to the world that little better. Republicans are generally pro- and—note to new governor and state legisla- and a member of the Wisconsin is serious business, but sometimes not pro-growth or tors—Wisconsin needs bold leadership. governor’s cabinet about economic devel- pro-competition. The ideas for the 1980s would be represented opment. Republican resurgence came from conserva- on each council. tive Washington, D.C. think tanks. Regulatory Further, a similar council would be created 3. Create a Pro-Growth, Pro-Reform reform came from the American Enterprise In- to address on a continuous basis the needs of Political Dialogue stitute. Welfare reform came from the Heritage the state’s entrepreneurs. Bill Clinton created the Democratic Leader- Foundation. Today, there are few new ideas for ship Council and the Progressive Policy Insti- a renewed 21st-century economy. 2. Create a Five-Year, $1 billion Wisconsin tute a quarter century ago. The moderate DLC Idea Fund supported by bonding authority. was at the forefront of the reform movement, Summary A 2010 Deloitte study of Wisconsin com- from welfare reform to fiscal reform to school The evidence that the world is changing is petitiveness found that Wisconsin economic reform. It produced the New Technology Index uncontested, so the Wisconsin economy must development efforts are unstructured, some- for the United States, which identified state change as well. The alternative is to end up times conflicting, lacking measurement and policies that promoted economic growth and with Alabama and Mississippi as its equal in accountability and lacking resources. A opportunity. The last DLC event in Wisconsin terms of incomes and educations. Wisconsin $1 billion Wisconsin Idea Fund would is listed as 1999—just before the most recent needs to step up in 2011 to create its future, address each of those weaknesses. slide in Wisconsin economic performance. rather than just let it evolve as it has been The Wisconsin Idea Fund can be patterned The anti-business wing of the Democratic largely doing for at least the last 30 years. after the successful Ohio Third Frontier Fund. Party chokes off public debate about business Wisconsin has been on a 30-year economic That fund has enjoyed bipartisan support, and issues. One of the political surrogate groups slide. There are lessons from the short periods voters have twice approved bonding authority, regularly attacks any pro-business ideas as of past success and from the success of neigh- most recently in May 2010, for a $700 million “giveaways.” They attack business leaders boring states. Numbers are stubborn things. expansion of the program. The Third Frontier individually for speaking on public issues. They tell us not only that Wisconsin’s relative fund is financed by bonding, not by current Even pro-innovation UW-Madison Chancellor position has declined, but that the traditional taxes. It is independently governed, with John Wiley joined the anti-business wolf pack investments alone (attraction subsidies, educa- regional representation from across the state, with a published attack on the state chamber of tion and training, research, real estate develop- advised by a committee of academic experts commerce and its members. ment) have not been successful. The intangi- 116 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 117

state could reduce them more dramatically taxes are not the sole factor in determining and quickly by rebalancing the tax system to how good a state’s business climate is (clearly reduce the state’s overreliance on the personal other factors such as workforce quality, income tax and property tax and shift more schools, transportation and energy infrastruc- emphasis to the sales tax, a consumption tax ture, and overall quality of life are also very where Wisconsin’s tax burden is currently important), they play a major role.1 While Wis- Desperately Seeking much lower than that of consin excels in some most other states. The of the areas that affect a New Tax System sales tax, by the way, the business climate, was deemed most fair the tax system receives By Richard G. Chandler by over half (55%) of poor reviews. Former state Revenue Secretary Rick Chandler shows us how Wisconsin’s mix those responding in the Wisconsin-specific of taxes is constraining our capacity to create jobs and economic growth. This survey. studies have found that should be required reading for the next governor and Legislature. But here is the kick- taxes significantly af- er: Economic modeling fect the state’s business An Introduction to promote economic growth and enhance job shows that rebalanc- climate. A recently re- Imagine that there’s an old guy driving down the opportunities. An important way to help this ing the Wisconsin tax leased study titled “Be hill in his Model T Ford. He’s out of gas, the effort is to change our present tax system. system in a revenue- Bold Wisconsin: The muffler has fallen off, and the tires are pretty That’s because Wisconsin now has a state neutral way to reduce personal income and Wisconsin Competitiveness Study,” by Deloitte well shot. But he’s still driving because of and local tax system that relies more heavily property taxes could generate about 10,000 Consulting, concluded that high business gravity and inertia. So, as far as he’s concerned, on the personal income tax and property tax more jobs, increase per capita income up to costs, including business and personal taxes, all is well with the world. Of course, he may run than most other states. Wisconsin ranks about $400 per person, and increase investment. were the third-largest obstacle to advancing into a problem if he needs to climb up another 25% above the national average on those two These are very substantial positive effects. economic development in Wisconsin.2 Surveys hill, but that’s not his problem right now. taxes. This is bad policy because Wiscon- And from our poll, Wisconsin citizens of manufacturing and service company execu- Imagine this old guy as Wisconsin’s past sin relies more heavily on taxes on earnings would clearly support rebalancing Wisconsin’s tives by Professor Jon Udell, of the University and present tax system. It’s soaking income and savings. It’s also bad from a marketing tax system in order to promote growth. At any of Wisconsin–Madison School of Business, earners and property owners. There’s a big hill perspective, because the personal income tax given level of tax collections, a tax mix with found that business and personal taxes were coming up—the state faces a projected deficit and property tax are the most visible and most lower personal income and property taxes ranked fourth and eighth among the 20 most of more than $2 billion in the next budget. disliked of the major taxes, and also the easiest would be better for Wisconsin’s economy and important factors in making location decisions, And if nothing changes, more businesses and to compare with other states. In the poll done more acceptable to the state’s citizens. The and that Wisconsin ranked most poorly on workers, which fund the state, will head to for this project, only one-quarter (26%) of people understand this. It seems our political these two tax factors out of all 20 factors that other states, leaving fewer people to pay the those responding believed the state’s income leaders are the ones riding down the hill in that were identified.3 bills. But, like our friend going down the hill, tax was the fairest tax, and even fewer (18%) Model T. A common misconception is that businesses we still seem to be doing all right for the time found property taxes in the state to be fair. only look at the corporate income tax in evalu- being. The plain and simple truth is that Wis- Taxes and Jobs ating a state’s tax climate, which clearly is not When we take a good hard look at where consin’s economy would benefit from lower Taxes play an important role in determining true. They also take a close look at personal we are, it’s clear that everything isn’t all right. personal income and property taxes. State a state’s economic competitiveness. Virtually income and property taxes. Another miscon- We can’t afford to be complacent. Right now, policymakers could work to reduce those every major national study of state business ception is that the overall tax burden tells the Wisconsin should be doing everything possible taxes gradually over time. Alternatively, the climates refers to the impact of taxes. While whole story about the impact of taxes. A more 118 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 119

complete way to judge the impact of a state’s Wisconsin’s tax system was progressive, with the national average. The state ranks a little the number of services taxed.10 Rather, it’s be- tax climate is to examine how the overall mix the highly progressive personal income tax farther above average when we look just at cause Wisconsin’s state sales tax rate of 5% is of all taxes affects the business climate. That offsetting the effects of a somewhat regressive tax collections without including fees—5.0% comparatively low (lowest in the Midwest and should include a look at the effect of the per- property tax and sales tax.4 above average, which is 13th highest among 31st among all states) and Wisconsin has far sonal income tax and property tax burden on Rather than focusing on progressivity, the states.7 fewer local-option sales taxes and lower local- workers and businesses. It’s more realistic … wouldn’t it make more sense to ask whether the What’s noteworthy is where Wisconsin option sales tax rates than most other states and more honest. tax system is structured to stands on the two (the top combined do as much as possible to largest tax sources. state and local sales Growth and help the economy grow, Wisconsin is far above tax rate is the lowest in Progressivity “State and local and as little as possible to average on personal the Midwest and 40th When evaluating Wiscon- governments in Wisconsin impede it? Isn’t it more im- income taxes and prop- among all states).11 sin’s tax system, we should portant to provide people, erty taxes. For property In terms of the sales collect more money from be asking two fundamental especially those at the lower taxes, the state is 23.6% tax base, Wisconsin, questions: First, does the the state’s citizens than and middle levels of the above average, which like most states, pro- state’s tax system promote those in other states.” economic spectrum, with as is eighth highest. For vides sales tax exemp- economic growth while it many job opportunities as personal income taxes, tions for necessities performs its basic func- possible? Wisconsin is 25.0% such as groceries and tion of raising the revenues above average, which is 12th highest. medical services and for goods and services needed to fund important government ser- Characteristics of Wisconsin’s The fact of the matter is, Wisconsin sticks sold to governments and charities. Like most vices? And second, if we started with a clean Tax System—Heavy Reliance out like a sore thumb when it comes to person- states, Wisconsin also provides exemptions for sheet of paper, could we design a tax system on Personal Income Taxes and al income taxes and property taxes. Wisconsin some (but not all) goods and services sold pri- that would do a better job of producing more Property Taxes ranks ninth in the percentage of total state and marily to businesses and farms; the rationale jobs and income for our citizens? In analyzing Wisconsin’s state and local tax local tax collections from personal income and is that when business inputs are taxed, there is When tax policy analysts evaluate state tax system, it’s important to understand a few key property taxes combined.8 a pyramiding effect, with the cost of any sales structures, they often ignore economic impact. pieces of background information. In 2009, Middle-income and upper-income taxpayers taxes imposed on sales to businesses added The emphasis tends to be on factors such as total state and local tax collections in Wiscon- pay personal income taxes at a rate that’s well to the costs of products that are themselves whether the tax system is progressive (mean- sin were $23.7 billion. The major sources of above the national average (in the top quarter subject to the sales tax when sold to the final ing that it results in higher-income taxpay- tax revenue were property taxes ($8.7 billion), of all states). For them, the impact is accentu- consumer, creating double taxation.12 ers paying a greater share of their income in personal income taxes ($6.2 billion) and sales ated because Wisconsin’s personal income tax In terms of the major tax imposed exclu- taxes than lower-income individuals), fair and taxes ($4.4 billion). Playing a smaller role, as is highly progressive. But for lower-income sively on businesses, the corporate income equitable (meaning that it treats similarly situ- in most other states, were corporate income taxpayers, Wisconsin ranks among the lowest- tax, Wisconsin tends to rank average to below ated taxpayers alike), balanced (in the sense of taxes ($630 million).5 tax states (in the bottom one-third of all average. To put this in context, corporate in- raising revenue from a variety of sources), and State and local governments in Wisconsin states).9 come taxes are very volatile, bouncing up and administratively efficient. collect more money from the state’s citizens Wisconsin is actually well below average on down depending on the state of the economy. We’ve tended to fixate on progressivity than those in other states.6 According to the sales tax collections (14.0% below average, or In Wisconsin they went from $503 million in more than other factors. A lot of analytical most recent U.S. Census Bureau figures, for 33rd highest). Contrary to a common mis- state fiscal year 2002 to $890 million in fiscal effort has been devoted to this issue. For ex- 2008 Wisconsin ranks above average on total conception, this is not because the state taxes year 2007 before dropping to $630 million ample, a lengthy 2004 Wisconsin Department revenue collections from both taxes and fees as fewer goods and services than the average in fiscal year 2009 after the current recession of Revenue tax incidence study concluded that a percentage of personal income—4.4% above state; in fact, Wisconsin ranks 11th in terms of took hold.13 120 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 121

In addition, smaller businesses are often Where Wisconsin Ranks—Good When I served as secretary of the Depart- able to see how much more they pay compared organized as partnerships, limited liability cor- News and Bad News ment of Revenue, homeowners constantly with residents of other states; and because they porations, or Subchapter S corporations, which Looking at the big picture, the results are complained to me about how much more they think the property and income taxes aren’t very means that their earnings are taxed directly to mixed. On the plus side, Wisconsin’s tax bur- paid in property taxes compared with relatives fair or understandable, they’re upset by the their owners on their personal income tax re- den has come down in the past two decades. or friends with similar homes in other states. fact that these taxes are so high in Wisconsin. turns, rather than through the corporate income In 1994, Wisconsin ranked 18% above the Business managers told me that when they This helps explain why Wisconsin’s “tax hell” tax. So, focusing just on the corporate income national average on overall tax burden (it’s now were hiring workers, espe- image persists even though tax and other direct and exclusive business 5% above), 39% above average on property cially mobile middle-in- the state’s overall tax bur- taxes presents an incomplete picture. taxes (now 24%), and 52% above average on come workers in areas such den has dropped. Census personal income taxes (now 25%).14 as information technology, “Wisconsin is still Bureau figures may say the Wisconsin’s Personal Income and Property Wisconsin’s tax burden has dropped in large engineering, and research strikingly out of line on state’s tax temperature is Tax Burdens Are Far Above the National part because of two notable policy initiatives. positions, they’d be told personal income and gradually cooling, but it Average The property tax burden was reduced due to that a good salary offer still feels like a “tax hell” the adoption of revenue and spending limits for a Wisconsin job would property taxes.” when it comes to the taxes Wisconsin’s tax burden compared for schools and local governments in the 1993 turn out to be noncompeti- people notice and dislike with national average for 2008 legislative session, coupled with the move tive when a comparison of the most. 25% 20% to two-thirds state funding of schools in the after-tax take-home pay 15% 1995 legislative session, which led to an 8% with another state was made. Bad Policy and Bad Marketing 10% 5% reduction in property taxes from 1995-96 to Wisconsin’s overreliance on the income and 0% -5% 1996-97. The personal income tax burden was What Does the Public Prefer? property taxes is bad from both a policy and -10% reduced primarily due to an across-the-board As mentioned, public opinion surveys have marketing point of view. In terms of policy, -15% rate cut, other tax cuts and the adoption of in- consistently shown that the property tax and Wisconsin taxes earnings and savings (in the Total Pers inc Property Sales taxes taxes taxes taxes dexing of personal income tax brackets in the the personal income tax are the most disliked form of investment in property) more heavily 1999 legislative session, which led to an 11% taxes. Here are the detailed results from a June than most other states, while taxing consump- Putting all of this information together, the reduction in income taxes from 1999-2000 to 2010 statewide survey conducted by the Wis- tion less heavily. If you tax something, you get overall picture shows that by comparison with 2001-02.15 consin Policy Research Institute: less of it. If we want to encourage earnings and other states: Unfortunately, there’s some bad news as • When asked which tax they think is most fair, savings in Wisconsin, we should tax them less. • Wisconsin gets a greater percentage of its well. For those who pay attention to the overall 55% of respondents listed the sales tax, while Moreover, since Wisconsin’s personal in- revenues from taxes rather than fees. tax burden, Wisconsin is still above average, 26% listed the personal income tax, and 18% come tax falls more heavily on middle-income • Wisconsin gets a much greater percentage although the percentage difference from the listed property taxes. and upper-income taxpayers than in other of its tax revenues from personal income and national average has decreased and Wiscon- • When asked which tax is most understand- states, our already high burden is dispropor- property taxes. sin’s rank among the states has improved (from able, 49% said the sales tax, 24% the personal tionately concentrated on income producers • Wisconsin gets a smaller percentage of its tax third to 13th).16 But the worst news is that Wis- income tax and 27% property taxes. and job deciders (people in a position to decide revenues from the sales tax (because the state consin is still strikingly out of line on personal • When asked which tax they’d most like to re- where jobs will be created and located). Again, has a relatively low state sales tax rate and income and property taxes. duce, 54% of respondents said property taxes, this is a self-destructive policy choice. fewer local option sales taxes, not because of a Why should we worry that Wisconsin 33% said the personal income tax, and 14% Perhaps even worse is the impact of this smaller sales tax base). stands out on personal income and property said the sales tax.17 overreliance from a marketing perspective. taxes? Because they’re the most visible, most People clearly know how much they pay Wisconsin’s tax system has evolved so that the disliked and most readily comparable taxes. in property and income taxes; they’re easily state is far out of line on the most visible, most 122 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 123

easily comparable and most disliked taxes, property tax. growth in the future, so taxes levied on con- be necessary to balance the budget, Beacon while being below average on the sales tax. This could be done in several ways. One sumption tend to be less economically harmful Hill looked at a revenue-neutral combina- When it comes to sales tax payments, most way would be to reduce the personal income than taxes levied on income or capital. tion package, which involved reductions over people have very little idea how the rates they and property taxes gradually over time. An- The Beacon Hill analysis started by looking a one-year period in all three of these taxes, pay compare with other states and don’t know other would be to immediately shift some of at the effects of several tax reduction alterna- offset by a sales tax rate change. how much they pay in total sales taxes each the existing burden away from the personal tives: First, reducing personal income taxes The package included a personal income year. When people do think about the sales income and property tax. by about $800 million (about 13%); second, tax cut of 13%, a property tax reduction of tax, they don’t mind it as much as other taxes. reducing property taxes by about $800 million 9% and a corporate income tax cut of roughly They understand how it’s calculated. They feel An Economic Analysis of (about 9%); and third, eliminating the corpo- 50%, for a total cut of about $2.0 billion, offset they have a lot of control over how much they Tax Mix Changes rate income tax (equivalent to a roughly $800 by a 2.5-cent sales tax rate increase. This com- pay, since they have discretion about what they Economic models can be used to evaluate million reduction when the economy is strong). bination was found to increase employment buy. They also realize that visitors from other alternative approaches to tax system changes. The income tax reductions and property tax re- by 9,960 jobs, disposable income by $410 states—whether tourists or here on business— We asked the Beacon Hill Institute, an inde- ductions were assumed to be across-the-board per person, and investment by $1.4 billion, as add to the coffers as pendent, nonpartisan reductions. shown in Table 2. well, just as Wisconsin- economic research All three alternatives would result in gains It should be emphasized that this is a ites do when they visit organization affiliated in employment, disposable income, and invest- revenue-neutral package, meaning that while other states. with the Department of ment over a one-year period, as shown in Table some taxes go down and others go up, it does While some tax ana- Economics at Suffolk 1. The personal income tax reduction was the not result in a net overall increase or decrease lysts criticize the sales University in Boston, best at boosting jobs and income, while the in total state tax collections. Overall tax collec- tax as regressive, most Massachusetts, to use corporate income tax cut provided the biggest tions would stay the same, but the tax structure people don’t share this its state tax system boost to investment. Of course, while the eco- would become significantly more growth- concern. They seem to economic analysis nomic benefits of these changes are obvious, friendly.19 understand that it’s not model to review sev- they would require the state to cut spending imposed on necessities, eral options.18 by $800 million, which would be difficult at Table 2—What Do You Gain When You and they think that when it comes to purchases The Beacon Hill approach quantifies the ef- this point due to the state’s ongoing difficulties Change the Tax Mix? of other items, individuals with higher incomes fects that can be expected from tax increases or with balancing the state budget. tend to buy more and pay correspondingly decreases. Beacon Hill explains that personal Tax Cutting personal income tax by 13%, cutting Change property tax by 9%, cutting corporate income tax more in sales tax. income taxes reduce wage and salary earnings, Table 1—What Do You Gain When You Cut by 50%, but adding 2.5 cents to the sales tax rate lowering income and reducing employment Taxes by $800 Million? Employment + 9,960 jobs How To Improve Wisconsin’s levels. They also reduce investment income, Personal income + $2.471 billion [+ $410 per capita] Cutting personal Cutting Eliminating Tax System hurting investment levels and new business Tax New investment + $1.430 billion Change income tax property tax corporate income All of this is an argument for considering formations. Property taxes on land, structures by 13% by 9% tax completely changes to Wisconsin’s tax system to help im- and personal property owned by businesses Employment + 15,956 jobs + 3,834 jobs + 6,270 jobs Tax Mix Changes Produce prove the state’s economic climate. The review hurt business investment levels, and property Personal income + 1.120 billion + 141 million + $637 million Dramatic Benefits of where Wisconsin’s tax system diverges most taxes also have the effect of discouraging New investment + $23 million + $380 million + $1.058 billion To highlight the benefits, a well-structured, from other states, policy considerations and home purchases. Corporate income taxes affect In an effort to find an optimal combination growth-friendly, revenue-neutral tax mix the results from public opinion surveys all sug- business investment levels. Sales taxes reduce of personal income, property, and corporate in- change is projected to result in a gain of gest that Wisconsin should move away from current consumption, but reduced consumption come tax changes that would not require state almost 10,000 jobs, income gains of more excessive reliance on the personal income and levels today do not hurt potential economic budget cuts beyond those that may otherwise than $400 per person, and substantial 124 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 125

investment increases. asked if they would support or oppose raising erty taxes are. The Beacon Hill model took Conclusion These are dramatic gains. To put them in the state sales tax by 2 cents to 7 cents on the this into account and still showed significant Wisconsin policymakers should be consider- perspective, if a Wisconsin employer an- dollar to reduce everybody’s property taxes by increases in net income. The impact of the de- ing every possible option to improve the state’s nounced that it was creating 10,000 new jobs 20%, 60% of respondents said they’d approve, ductibility issue is less substantial than it might business climate, create jobs, and accelerate in the state, it would make front-page head- and 40% were opposed. When asked if they’d appear at first glance because manyW isconsin economic growth. One component of this lines. If the state government announced tax support a 2-cent sales tax increase in return taxpayers do not itemize deductions on their should be a review of our tax mix, with reduc- cuts for individuals that would put an extra for a 25% personal income tax cut, 56% said federal income tax returns, because businesses tions in the overall tax burden when possible, $400 in every person’s they’d approve, and 44% can deduct their sales tax payments as business and adjustments to our tax mix to optimize pocket, it would be hailed were opposed.20 expenses, and because a significant portion of growth. as a major accomplishment. There will be arguments sales taxes is paid by out-of-state residents— At whatever level of tax collections Wiscon- Finding ways to increase “Economic analysis tells against this approach. certainly more so than with personal income or sin chooses, a tax mix that would collect less investment in Wisconsin’s us that a tax mix change One argument is that if we property taxes. from personal income and property taxes and businesses has been a long- raised the sales tax, the ad- more from sales taxes would simply be better. standing goal of state poli- would boost employment, ditional revenue would just What Are Other States Doing? It makes sound policy sense because it reduces cymakers, and this proposal incomes and investment.” be spent rather than being Wisconsin can’t afford to stand still. Other taxes on earnings and savings. It would help in would result in a significant used for tax reduction. But states are reviewing their tax systems with the marketing the state to workers and businesses, increase in investment. this won’t happen if a plan express goal of developing changes to promote who strongly dislike high personal income Wisconsin’s emphasis is structured properly, with economic growth, and several of them have and property taxes, and would help combat on progressivity above other factors in design- appropriate spending restrictions. When ad- discussed changes that would reduce taxes on Wisconsin’s “tax hell” reputation. ing the state’s tax structure has cost the state ditional revenues were devoted to school aids earnings and savings. Economic analysis tells us that a tax mix jobs and wealth. Changing the tax structure when the state moved to two-thirds funding As one example, in Minnesota, the Gover- change would boost employment, incomes with an increased emphasis on boosting jobs of schools in the 1990s, property taxes ended nor’s 21st Century Tax Reform Commission and investment. Survey information tells us and incomes would produce dramatic benefits. up 10% lower than they would otherwise have appointed by Gov. Tim Pawlenty issued a that the public would support a change. A tax been because school revenue limits were in report in 2009 that recommended that the state mix change would help Wisconsin’s economy Pros and Cons of Tax Mix Changes place. eliminate the corporate income tax and make and make the tax system more acceptable to There are strong arguments based on economic Another argument against this restructur- other changes, including targeted personal Wisconsin citizens. And in an era where there theory in favor of changing Wisconsin’s tax ing is fairness—that is, a highly progressive income tax reductions for “pass-through” busi- is great public distrust of government along system to bolster economic growth by reduc- tax system is needed for reasons of equity. But ness income, and in exchange expand the sales with strong negative feelings towards incum- ing personal income and property taxes. The even after Wisconsin’s tax mix is adjusted to tax. The commission noted that “income taxes bents both here and in Washington, this is a premise is that all tax sources are not created put less reliance on the personal income and tend to penalize success, which discourages change that would have broad public support. equal; some have more damaging effects than property tax, the tax system would still be incremental savings and business investment, That’s something worth noting for our future others, while there are changes in the tax mix progressive. We’d be reducing a regressive tax which in turn stifles job creation and economic lawmakers. that can actually help the economy. The Bea- (the property tax) and we’d still be getting a growth,” and said that “consumption taxes, con Hill economic analysis model shows that substantial share of revenues from the highly such as the sales tax, are generally prefer- Endnotes taking the positive cues would result in tan- progressive personal income tax. able because they are less volatile, cheaper to 1 See the following studies, among others: CNBC Special gible economic benefits toW isconsin citizens. One more argument is that sales tax pay- administer, and encourage saving and invest- Report, “America’s Top States for Business,” featured in Perhaps just as important, this move would ments are not deductible on federal personal ing.”21 USA Today, “Texas beats Virginia for best-business title,” July 14, 2010, p. 2B (Wisconsin ranked 29th, and factors have strong public support. Wisconsinites income tax returns for people who itemize de- evaluated included tax burden, including taxes on individ- would approve a shift in the tax mix. When ductions, whereas personal income and prop- uals, property and businesses); Chief Executive Magazine, 126 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 127

“Best and Worst States for Business 2010,” May/June 2010 porate Income/Franchise Tax,” January 2009. (Wisconsin ranked 42nd, and factors evaluated included 14 Legislative Fiscal Bureau Informational Paper 69, “State taxation and regulation, on which Wisconsin received a and Local Government Revenue and Expenditure Rank- grade of D); Forbes Magazine, “Best States for Business,” ings,” January 2009. September 23, 2009 (Wisconsin ranked 48th, and factors 15 Legislative Fiscal Bureau Informational Paper 69, Janu- evaluated included taxes). ary 2009. 2 Deloitte Consulting, LLP and Newark Knight Frank, 16 Legislative Fiscal Bureau Informational Paper 69, Janu- “Be Bold Wisconsin: The Wisconsin Competitiveness ary 2009. Study,” prepared for the Wisconsin Economic Develop- 17 Wisconsin Policy Research Institute statewide survey of ment Association, the Wisconsin Counties Association and Wisconsin citizens, June 2010. Growing Anger Over Competitive Wisconsin, Inc., July 2010. 18 The Beacon Hill Institute uses a computerized general 3 Professor Jon Udell, University of Wisconsin—Madison equilibrium model that provides a framework for quantify- Free Government Pensions School of Business, “Wisconsin’s Quality of Life as Seen ing the effects of proposed tax changes on an array of state by Manufacturers and Service Providers: A Study of the economic indicators, including employment, income and By WPRI Staff Quality of Business and Personal Life in Wisconsin,” investment. November 2000. 19 Other combinations of tax mix changes were reviewed 4 Wisconsin Department of Revenue, “Wisconsin Tax by the Beacon Hill Institute. The employment, income and How could one dry paper written by an actuary create an uproar? The people Incidence Study,” December 16, 2004. investment benefits of those packages will be posted on at WPRI explain that it’s really not that difficult when the paper points out a 5 Wisconsin Taxpayers Alliance, “The Wisconsin Taxpay- the Wisconsin Policy Research Institute website at er,” “2009 in Review: Total Wisconsin Taxes,” November www.wpri.org. fundamental unfairness between your pension and your neighbor’s—if he or she 2009. 20 Wisconsin Policy Research Institute statewide survey of happens to be a state worker. 6 The rankings in this paper are based on taxes and fees Wisconsin citizens, June 2010. 21 paid as a percentage of personal income, the approach Governor’s 21st Century Tax Reform Commission, sector employees. It is generous in the ben- that’s generally recognized as providing the best measure “Minnesota’s Millennium: Launching a New Generation of Early in the winter of 2010, the Wisconsin Pol- of the impact of taxes and fees on people’s pocketbooks. Competitive Leadership and Economic Growth,” February icy Research Institute published a somewhat efits it provides to retired employees, and it is The rankings would be generally similar but with some 13, 2009. dry, technical actuarial study that proved to be especially generous in that it asks employees to small differences if the tax burden was measured on a per 1 capita basis. surprisingly incendiary. That report featured contribute nearly nothing to fund their retire- 7 The rankings for 2008 for various tax and fee sources a relatively innocuous comparison between ment. More than 99% of the cost is picked up are all from the Wisconsin Taxpayers Alliance “Focus” public and private pensions and concluded by by state and local taxpayers. newsletter, “New Census figures change state tax rank- ings,” July 28, 2010, using U.S. Census Bureau data. The suggesting that now might be a prudent time Taxpayers who work in the private sector rankings for the major tax sources are listed in the paper. to reform the Wisconsin Retirement System. and support these public employees are often For fees and charges, Wisconsin ranks 2.5% above aver- age, which is 29th highest. From public employee unions came the pre- matched in their payment—in other words, for 8 Wisconsin Taxpayers Alliance, “The Wisconsin Tax- dictable strident response: no pension reform, every dollar they put into their retirement fund, payer,” “Challenges Facing State Voters in 2010,” June/ no way, no how, not now, not ever. But the their employer will match it with anywhere July 2010. 9 Office of the Chief Financial Officer of the District of response from the public was quite different. from 50 cents to a dollar, which is considered Columbia, “Tax Rates and Tax Burdens in the District of Letters, phone calls and blogs told us that our generous. Columbia—A Nationwide Comparison,” September 2009, and Center on Budget and Policy Priorities, “The Impact report verified what they always believed: that Public employees and their union lead- of State Income Taxes on Low-Income Families in 2009,” public pensions in Wisconsin are out of line ers had a ready answer for the public. They April 26, 2010. with fiscal realities. said that public employees had forgone pay 10 Federation of Tax Administrators, “Survey of Services Taxation,” July 2008. That report, authored by Joan Gucciardi, increases year after year, which justified their 11 Federation of Tax Administrators, “State Sales Tax a Milwaukee-based actuary, detailed that generous pensions. A generous pension, it Rates,” February 2010, and Office of the Chief Financial Officer of the District of Columbia, “Tax Rates and Tax Wisconsin’s pension system—which includes seems, was a key part of their social contract Burdens in the District of Columbia—A Nationwide Com- all state and local workers from mainte- with Wisconsin citizens. However, when we parison,” September 2009. nance workers to university faculty and local put the question to the public, we received a 12 Wisconsin Department of Revenue, “Summary of Tax Exemption Devices,” February 2009. teachers—is overly generous, especially when clear and very different message. The question 13 Legislative Fiscal Bureau Informational Paper 5, “Cor- compared to pensions provided by private- in our statewide poll for this project conducted 128 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 129

in June 2010 asked: ery real or perceived inefficiency at the DMV wish to contribute to the plan. contributes 5.3% of payroll toward employee “Some people say that it’s understandable or the City Clerk’s Office?D o we criticize pub- There is no disguising the fact that defined pensions. Contrast this with the estimated that public employees don’t contribute to their lic employees for the same behavior we see at benefit plans are more popular with employees 11.1% of payroll Wisconsin public employers pensions because public-sector salaries are our own place of work every day? And is this since, when employers adopt defined contri- (taxpayers) are contributing toward employee lower than salaries paid in the private sector. general animosity toward public employees bution plans, employee contributions almost pensions. Through collective bargaining, Other people say that public employees should what we are picking up in WPRI’s polling of always go up and much more of the invest- public employers have agreed to pick up all but contribute to their own pensions like everyone public pensions? ment risk is shifted to the employees. With the .06% of the cost of employee pensions. else. Which better describes While there likely is a recent decline and subsequent sluggishness of Pensions have become an issue of fairness. how you feel?” historical animus toward the equity markets, private-sector employees have While private workers have seen their retire- • 17% said that it is under- public-sector workers on the felt the sting of that added ment plans wither away, standable that public employees part of some people—both risk. Retirement dates have Wisconsin public employ- don’t contribute to their own fair and unfair—our polling been pushed back, and cold ees are retiring earlier, pensions suggests a deeper and a wider water has been thrown on “The public no longer sees have far better retirement • 76% said that public employ- divide than that. So what might retirement lifestyle expec- public employee pensions benefits and pay almost ees should contribute to their explain the current raw nerve tations. nothing for all of it. In own pensions related to public employee While private-sector as inviolable and it places this context, we can begin Most surprising was that pensions? There are probably employees are seeing their pension reform high on the to understand the univer- the 76% came from across the two factors at work. retirement date pushed list of budget solutions.” sally strong feelings that board. It seems all of Wis- First, the pensions pro- further into the future, Wis- our polling is picking up consin supports a change that vided to public employees are consin public employees regarding public employee would have public employees substantially more generous regularly retire well before pensions, to say nothing of contribute to their pensions. than those provided to private- their 65th birthday. The WPRI study showed the fact that taxpayers are paying for it all. Conservatives and liberals think they should sector employees. It has not always been that that, for the Wisconsin Retirement System, the There is another aspect of the public pen- contribute. Blacks, whites and Hispanics think way. Private-sector employers, buffeted by a rate of retirement was significantly higher for sion system that bears discussion. In respond- they should contribute. Even people in union barrage of national and international economic those younger than 65. For example, 24% of ing to the WPRI study, public employee unions households told us that public employees forces, have been forced to cut back on all of 58-year-old men in the Wisconsin Retirement as well as individual employees consistently should contribute to their own pensions. In this their costs, including employee pensions. Since System who were eligible for retirement did raised one point. They argued that, while their recap, we will revisit some useful information the 1970s, private employers have moved away retire. pensions are indeed comparatively generous, from that original WPRI pension study and lay from the costly defined benefit plans—those In addition to retiring younger, Wiscon- they deserve better pensions because for many out a path that will lead to pension reform in that are similar to Wisconsin’s public pen- sin public employees have richer retirement years they have sacrificed higher pay increases Wisconsin. sion plan—to less costly defined-contribution benefits.T he WPRI study compared benefits for better pension benefits, sort of an implied plans. In a 2009/2010 survey of Wisconsin and side-by-side and found that the private-sector deferred-compensation plan. Any change to The Growing Imbalance Between Illinois, only 8% of employers offered defined worker would need a salary of $70,000 to have either the employee contribution or any other Private and Public Pensions benefit plans. By contrast, 88% offered defined retirement benefits comparable to a public elements of their pension would be tantamount OK, so the public is unhappy with public pen- contribution plans. The most common form employee earning $48,000. to reneging on the deal. Implicit in this line of sions. Isn’t there always going to be tension of defined benefit plans is the 401(K). Most Finally, the study compared how the cost reasoning is that, unlike their private-sector between the taxpayers and public employees? such plans are employee sponsored, with the of pensions is shared between employers and counterparts, public employee pensions can Doesn’t the public blow out of proportion ev- employees deciding on their own whether they employees. The average private employer only be enhanced, never diminished. This is, 130 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 131

however, incorrect. the next two-year budget. Some of those other tem as having an unfunded liability of less than employers. Wisconsin is no different. State To public employees, their pensions have states are in even worse shape—at least for the 1%. What was unsaid in that study was that law requires that employees pay approximately been a rock-steady element in an uncertain time being. Wisconsin’s top-notch ranking is due in part to one-half of the cost of their pension. However, world. Through boom and bust economies, In the context of the looming budget deficits the infusion of $750 million of bond proceeds Wisconsin law includes a longstanding provi- through changing political leadership, not and pension changes sweeping governments that the governor and Legislature authorized in sion that allows public employers to pay some to mention enormous changes in the very throughout the land, the implied commitments 2003. This transaction had the effect of trans- or all of the employee share. Over time, both nature of public service, pensions have been made to earlier generations of public work- ferring the unfunded liability from the pension state and local employers have agreed to pay a comfort in their predictability. The WPRI ers ring hollow. That was then and this is now. system to mainstream state and all but a tiny (less than ½ of study showed how public pensions have been The public no longer sees public employee local budgets. 1%) share of the cost. If the subjected to relatively few pensions as inviolable and Turning our attention to statutes were changed to pro- changes in recent decades, it places pension reform specific fixes, there are three hibit the employer from paying especially compared to high on the list of budget categories of changes to the the employee share, state and their private-sector coun- “Wisconsin’s public solutions. Wisconsin Retirement System local employers (taxpayers) terparts. However, that pension system seems that should be considered. would realize significant sav- is changing. Across the Three Recipes for Pension First are a series of technical ings. The WPRI study said nation, state and local extravagant and more Change adjustments to the current the savings could be as high governments are challeng- than a little unfair. The Before we move to the system, which were detailed as $619 million per year. This ing the precept that pension public is ready for change.” consideration of changes to in the WPRI study. These would not change when people benefits cannot be reduced. Wisconsin’s pension sys- included changing the way are eligible to retire nor would Notably, Colorado, Min- tem, two clarifications are in which employee earnings it reduce the generosity of nesota and South Dakota in order. First, any changes are calculated (earnings are retirement benefits. are attempting to roll back benefits. California, would not affect the benefits employees have a key determinant of retire- The third category of Illinois and New Jersey are also actively con- already earned. They would affect the pension ment benefits), increasing the retirement age change would require major surgery: moving sidering benefit reductions.T he era of public for those employees in the future and for any closer to the rest of the population, integrating from a defined benefit to a defined contri- pension stasis is over. new hires. Second, the Wisconsin Retirement benefits with Social Security and reducing the bution system. Such a change would bring More than anything, what will drive change System is well funded, especially when com- multiplier, which would reduce the definition Wisconsin’s pension system more in line with in public pensions is the depressed condition pared to other public pension systems. While of adequacy. These and other changes were the retirement plans offered to most private- of state and local government balance sheets. many public pension systems not only face the presented in that report, each of which could sector workers. The way it would work is that With normally reliable revenue streams drying burden of paying for their current pensions, be done by changing state law. Collectively the the current defined benefit plan would be fro- up in the wake of the recession, government is they also have to make up for past underfund- changes would tighten the factors that deter- zen on a particular date. Where this change has grappling with how to balance an overextended ing of pensions. The Pew Center on the States mine retirement benefits, which would yield been made, after the specified date, any new budget. Local schools are sending lay-off no- pegged the nationwide unfunded pension savings to public employers (taxpayers). The employees are placed into a defined contribu- tices to teachers by the thousands. Wisconsin liability at $1 trillion earlier this year.2 Many exact savings would depend on how aggressive tion plan, and no new people would be allowed state government struggles to meet its commit- states face the double whammy of having both the changes are. into the old defined benefit plan.W hile some ments, relying on furloughs and other tempo- generous public pensions and an underfunded The second category of change would have private pension plans have moved all employ- rary measures to make it through the current pension plan. This dual obligation poses a employees paying their share of the cost ees into the new defined contribution plan, year. And it will get worse, since we know that crushing burden for many pension systems. of their pension. Most public pension plans no public plans have made the conversion for state government faces a $2.5 billion deficit in The Pew study found Wisconsin’s pension sys- require contributions from both employees and existing employees. Chapter 5 132 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 133

While there could be savings to taxpayers ourselves to a new, more austere reality, Wis- if Wisconsin were to convert to a defined con- consin’s public pension system seems extrava- tribution plan, the savings are not guaranteed. gant and more than a little unfair. The public is Regardless of which system is in place, the ready for change. savings would depend on how much employers At a minimum, employees should begin contribute to the plan. If the employer contrib- to pay for part of the cost of their own pen- utes 5% of payroll to pension benefits, there sions like everyone else. This would yield real is no cost difference if the contribution is to a savings—as much as $619 million per year— defined benefit or a defined contribution plan. for state and local governments. Beyond that, The big difference would be the allocation of our next governor has to take a serious look risk. Under a defined contribution plan, the under the hood of Wisconsin’s pension system investment risk rests with the employee. If the and address some fundamental questions about retirement fund investments prosper, employ- benefit levels and retirement age. Finally, we ees would accumulate more value in their also need to have a serious discussion about account, allowing them to retire earlier or to moving to a defined contribution system.T his retire with benefits that are more generous. If is a deeper discussion than dollars. It is a dis- investments do not prosper, employees would cussion that will ultimately turn on what is the likely work longer and their retirement benefits right relationship between public workers and would be lower. Also of note is that converting their employers, the taxpayers. to a defined contribution plan would require state and local governments to operate two re- Endnotes Polling Details tirement systems, since the existing retirement 1 This essay is based on information presented in a WPRI system would need to be maintained, even if Report, The Imbalance Between Public and Private Pen- there can be no new enrollees in that plan. In sions in Wisconsin, authored by Joan Gucciardi, February, 2010. short, any move to convert to a defined contri- 2 Pew Center on the States, The Trillion Dollar Gap, bution plan has advantages and disadvantages. Underfunded State Retirement Systems and the Road to In any event, a thorough analysis of defined Reform, February, 2010. benefit plans is in order. There is something about the topic of pensions that makes people wince and turn away. The topic is fraught with mind-numbing technical detail, impenetrable jargon and very large dollar amounts. Given the current state of the economy and the condition of state and lo- cal government budgets, the public, while still wincing, is no longer willing to turn away. At a time when Wisconsin families are enduring financial uncertainty and we are reconciling 134 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 135

and reveal a greater willingness to offer their for various education policy reforms. opinions on education and potential reforms. In other words, when it comes to education, Assessments of School Quality the people of Wisconsin have strong views, —Wisconsin’s Tough Graders and that makes them different from the rest of A variety of studies have shown that when the country. asked about the quality of public schools, Public Voices: Wisconsin’s Wisconsin residents reported higher levels respondents typically offer higher evaluations of support for a va- of the schools in their Mind on Education riety of reforms—in communities than they particular vouchers, do with the schools By Kenneth M. Goldstein and William G. Howell charter schools, online in their state or in the A major part of the poll done for Refocus Wisconsin concentrates on education. education, and merit nation as whole. For The reason is simple: If a state can’t prepare its young for a future in a more pay—than does the example, respondents complex world, then that state has no future. As UW Professor Ken Goldstein, nation as a whole. That nationwide are more who led the polling, and University of Chicago Professor William Howell said, opposition to than twice as likely explain, the people of Wisconsin understand this, even if their leaders don’t. these reforms was also to give the schools in as high as or higher their own communi- Americans are notoriously ill informed about comes to evaluating schools and potential re- than in the nation as a ties an “A” or “B” 2 politics and public policy in general, and edu- forms. Add to that the fact that we are able to whole. Though they give their local schools than they are the schools elsewhere. Wisconsin cation policy in particular. But the most strik- compare public attitudes and perceptions with slightly lower grades than does the American residents offer similar assessments, though ing finding on education from the survey done objective facts about the state of education in public, Wisconsin residents also claimed (cor- the differences attenuate somewhat. Whereas for the Refocus Wisconsin project was that citi- Wisconsin, and what you have here is a valu- rectly) that their students perform as well as or about half (48 percent) of Wisconsin residents zens of Wisconsin are paying attention—close able and comprehensive look at Wisconsin’s better than students in other states on standard- give the schools in the state as a whole an A or attention—and have strong opinions when it thinking when it comes to educating its young. ized tests. And Wisconsin residents are just a B, fully 60 percent give the schools in their comes to education. Wisconsin residents are Over half of Wisconsinites (51 percent) told as enthusiastic about student accountability own communities such high marks. much more likely to stake out a clear posi- us that they were paying either “a great deal” requirements as is the American public. Wis- At the same time, Wisconsin residents of- tion on various education policies than is the or “quite a bit” of attention to issues involv- consinites have another thing in common with fered slightly lower evaluations of their local American public as a whole. ing education. In national surveys, 38 percent their fellow Americans: They vastly underesti- public schools than do respondents nation- The survey done for the Refocus Wisconsin of the American public as a whole pay either mate the actual amount of money that is spent wide. Though the two groups are equally likely project was a comprehensive examination of “a great deal” or “quite a bit” of attention each year on students in public schools. to give the schools in their communities an A state attitudes. It permitted us to examine state- to issues involving education. When asked There is another important element that can or a B (60 percent for Wisconsin residents, 59 wide opinion with a much larger and statisti- about specific education reforms, moreover, be taken from this poll. The divide between percent nationwide), Wisconsin residents are cally precise sample than is normally available Wisconsinites are as much as five times more residents of Milwaukee and the rest of the state significantly more likely to offer marks at the and also allowed us to compare attitudes across likely to stake out a clear position either in is deep. When asked about the quality of edu- very bottom of the grading spectrum. Almost different areas of the state and among different support or opposition than is the American cation in the state, Milwaukee residents offered twice as many residents of Wisconsin rate the 1 demographic groups. public. Assuming such differences aren’t significantly lower assessments than residents schools in their communities a D or an F (13 Perhaps most importantly, the poll also was strictly an artifact of survey methodology, a statewide. In addition, city of Milwaukee percent), compared to 7 percent nationwide. designed to permit comparisons of the views possibility we will discuss, Wisconsinites seem residents distinguish themselves from other But Wisconsin residents are roughly 9 percent- of Wisconsin to the rest of the nation when it to pay more attention to educational issues Wisconsinites for their higher levels of support age points less likely to give their community 136 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 137

schools a C. What is emerging here is that Wisconsin ranked 15th in math, with a state- did better on standardized tests than students When asked in the Education Next-PEPG Wisconsin residents are less likely to fall in the wide average scale score that was statistically in other parts of the country, only 14 percent of surveys about a proposal “that would give middle of the road on these issues…they are significantly different from the national aver- Milwaukee residents thought so. low-income families with children in public both more positive and more negative than the age of 239. In reading, fourth-graders ranked The tendency of respondents to grade lo- schools a wider choice, by allowing them to rest of the country. 30th, generating scores that were no different cal life or conditions differently than state or enroll their children in private schools instead, When explicitly asked about the relative from the national average. Wisconsin students national conditions, moreover, carries over with government helping to pay the tuition,” quality of education systems around the coun- in eighth grade scored higher than the national into other domains of life. For example, while 40 percent of the American public professes try, however, Wisconsin residents registered average in both subjects, placing 14th in math only one in three Wisconsinites (34 percent) support, 34 percent expresses opposition, and higher levels of support for their local schools. and 21st in reading. think the state is on the right track, 40 per- 27 percent claims to neither support nor op- Almost four in 10 As noted above, most cent believe the country is headed in the right pose. Using the exact same question wording, (37 percent) of Wisconsin studies show that people direction. Additionally, Milwaukeeans are less among Wisconsin residents, support jumps residents said that “the tend to be more enthusias- likely to believe the quality of life in Wiscon- to 48 percent and opposition to 42 percent, “More than the rest of quality of the K-12 educa- tic about their local schools sin is higher than in other states (19 percent). and the middling category drops to just 10 tion system in Wisconsin” the state, Milwaukeeans than those found in their More than the rest of the state, Milwaukeeans percent.5 Among residents of the city of Mil- was higher than that in also tend to see the best state or the country as a also tend to see the best and brightest as leav- waukee, support for vouchers is even higher. other states, and a similar and brightest as leaving whole. Milwaukee resi- ing Wisconsin for employment reasons and are There, nearly six in 10 (59 percent) residents proportion (42 percent) dents, however, buck this more likely to anticipate their own departures. support vouchers, whereas just 28 percent op- believed that it was about Wisconsin for employment trend, giving schools in the pose them. Again, there are fewer people with the same. Only 11 percent reasons and are more state higher grades than Choice in Education: no opinions. thought it was worse than likely to anticipate their schools in their own com- Vouchers, Charter Schools, Though they often function much like in other states. Similarly, munity. Over one in five and Online Education tuition-assisted voucher programs,6 tax credit own departures.” most Wisconsin residents (21 percent) of Milwaukee Wisconsin has had as much experience with programs tend to attract higher public sup- thought that students in residents gave their local school choice as most other states in the union, port than do voucher programs. Whereas their states score at least schools a failing grade. In if not more. Milwaukee continues to operate 40 percent of the American public supports as well on standardized tests as do students in the rest of the state, only one percent of resi- the nation’s oldest voucher program. Wiscon- vouchers for low-income families, 60 percent the rest of the country. About one in three (34 dents gave their local schools a failing grade. sin was among the early adopters of charter supports programs that “offer a tax credit for percent) of Wisconsin residents thought that Residents of the city of Milwaukee also were schools and has enacted reasonably strong educational expenses (fees, supplies, comput- Wisconsin students scored better, and a little much more likely to see their schools as a ma- charter legislation.4 And a vibrant community ers, and tuition to low- and moderate-income less than half (47 percent) believed Wisconsin jor problem. Nearly half of city of Milwaukee of virtual schools operates in Wisconsin. It parents who send their children to public and students score about the same. Only 13 percent residents (47 percent) gave Milwaukee Public is no surprise, then, that Wisconsin residents private schools.” Moreover, 46 percent of the of Wisconsin residents believed that state stu- Schools a poor rating, and only three percent were much more likely to stake out clear posi- American public supports tax credits “for dents score worse than students nationwide. rated MPS as doing an excellent job. Finally, tions on vouchers, charter schools, and online individual and corporate donations that pay These assessments are roughly consistent while 37 percent of Wisconsin residents said education, no matter how these proposals are for scholarships to help low-income parents with the facts. In the 2009 National Assess- that “the quality of the K-12 education system formulated. And for the most part, Wisconsin send their children to private schools.” In ment of Educational Progress (NAEP) tests,3 in Wisconsin” was higher than that in other residents expressed higher levels of support for Wisconsin, support for both of these kinds of Wisconsin students consistently performed states, only 17 percent of the city of Milwau- these choice initiatives than does the broader tax credits is even higher. Sixty-four percent of above the national average but below the most kee residents rated Wisconsin’s system higher American public. Within Milwaukee, more- Wisconsin residents supported the former kind elite states (e.g. Massachusetts, which ranks than other states. And, whereas 34 percent of over, support for school choice reaches its of tax credit, and 62 percent supported the lat- at the very top). Fourth-grade students in state residents thought that Wisconsin students apex. ter. In the city of Milwaukee, support for these 138 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 139

proposals is stronger still, with 64 percent of to only a limited number of course offerings is, the practice of “basing a teacher’s salary, in of Wisconsin residents and 51 percent of the residents supporting the tax credit program for in the schools” who take courses over the part, on his or her students’ academic prog- American public express support, as compared low- and moderate-income parents, and more Internet. Two years later in Wisconsin, a virtu- ress.” Among the American public as a whole, to 29 percent of Wisconsin residents and 20 than three in four (76 percent) supporting a ally identical 63 percent of residents expressed there exists a mere plurality of support (43 percent of the American public who oppose program in which individuals and corporations their support. In Milwaukee, more than two percent to 27 percent). Again, we find further the policy—again, showing less middle ground would receive a tax break for contributing to out of three city residents (67 percent) did so. evidence that Wisconsinites are more engaged in the state. When asked about a proposal to scholarships for low-income parents to send As in previous measures, though, opposition to in education policy, as Americans as a whole “offer teachers a higher salary in exchange their children to public school. particular education reforms also appears high- were three times more likely than Wisconsin for giving up tenure,” 36 percent of Wisconsin Support for charter schools both around er in Wisconsin than in the nation as a whole. residents to select this middling category. residents responded affirmatively, as compared the nation and in Wisconsin follows a similar Whereas 13 percent of the American public On the issue of teacher tenure, this pattern to 30 percent of the American public; on this pattern. Told that “many states permit the for- opposed online education for rural schools in of findings is even same item, though, 40 mation of charter schools, which are publicly 2007, 23 percent of Wisconsin residents do starker. While just over percent of Wisconsin funded but are not managed by the local school so in 2010. And once again, a greater portion one in three (35 per- residents also voiced board,” and that “these schools are expected of the American public than the Wisconsin cent) Wisconsin resi- opposition, as com- to meet promised objectives, but are exempt sample selected the middling category of “nei- dents supports offering pared to 23 percent of from many state regulations,” 40 percent of the ther support nor oppose.” tenure to teachers, only the American public. American public professes support, 14 percent one in four Americans On both questions, the opposition, and 37 percent neither support nor Merit Pay and Teacher Tenure nationwide does so. American public as a opposition. In Wisconsin, by contrast, there Debates over merit pay and teacher tenure also But Wisconsin resi- whole is roughly three is significantly more support and opposition. appear more engaged and polarized in Wis- dents are also twice as times more likely to By a factor of nearly two, however, support- consin than they do in the rest of the country. likely to oppose tenure “neither support nor ers of charter schools outnumber opponents in Much of the American public has not yet made as members of the American public. Fully half oppose” the proposed amendment to current Wisconsin (54 percent to 28 percent). Notably, up its mind about the value of either merit pay of Wisconsin residents oppose tenure, com- tenure practices than are Wisconsin residents. Wisconsinites are much more likely to have or teacher tenure. That’s not the case in Wis- pared to 23 percent of the American public. an opinion on the issue, with only 12 percent consin, where residents, once again, are per- The reason for this apparent contradiction, School Spending of residents saying they neither support nor fectly willing to stake out a clear position on again, is the striking difference in the percent- Americans tend to underestimate vastly the oppose voucher program. Support for charter these controversial issues. As a result, on both age of Wisconsin residents who are willing to amount of money spent on public schools. In schools is also high in the city of Milwaukee, of these issues the Wisconsin public is much stake out a clear position on this issue. While 2007, an Education Next-PEPG survey asked where 57 percent of residents support charter more divided than the American public as a almost half (47 percent) of the American pub- respondents to estimate how much is spent schools and 29 percent oppose them. Interest- whole. Depending upon the question asked, the lic claimed to “neither favor nor oppose” ten- each year on public school students. The aver- ingly, there are no significant differences in American public is somewhere between three ure, only 11 percent of Wisconsin residents did age per-pupil spending estimate from respon- attitudes on these measures across other areas and nearly five times more likely to “neither so. There is more support for teacher tenure in dents was $4,231 dollars, and the median re- of the state. support nor oppose” policies involving merit the city of Milwaukee, with a narrow plural- sponse was just $2,000. At the time this survey Online education, at least when it is used pay and teacher tenure. And in every instance, ity (43 percent to 41 percent) of city residents was fielded, actual average spending per pupil to expand the array of course offerings to stu- Wisconsin residents registered higher levels of supporting tenure. exceeded $10,000.7 dents in rural communities, enjoys widespread both support and opposition than the American When asked about a proposal that “would Wisconsin residents similarly underestimate support. In 2008, 64 percent of the American public. require teachers to demonstrate that their actual expenditures on public school students.8 public expressed support for giving credit to A majority of Wisconsin residents (53 per- students are making adequate progress on state Though actual annual per-pupil expenditures students from “communities [that] have access cent to 33 percent) supported merit pay—that tests in order to receive tenure,” 56 percent in Wisconsin surpass $12,000,9 those Wiscon- 140 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 141

sin residents who were willing to hazard an “students in certain grades must pass an exam of charter schools (61 percent for Republicans including vouchers, charter schools, virtual estimate claimed they thought expenditures before they are eligible to move on to the next and 51 percent support from Democrats), but education, merit pay initiatives, accountabil- amounted to just $6,400, on average.10 The grade level.” Three years later in Wisconsin, there was majority support from both camps. ity provisions, teacher tenure, and increased median estimate was $5,000. Moreover, exact- 80 percent of residents continued to do so. In There was very slight additional support from school spending—levels of support and ly one in four Wisconsin residents thought that 2007, 85 percent of the American public sup- Republicans for requirements that students opposition in Wisconsin are routinely higher less than $1,500 was spent on public school ported another requirement that “students must pass exams to go to the next grade or to get a than in the nation as a whole. For example, on students each year. pass an exam before they are eligible to receive high school diploma, but again, it was mini- choice and merit pay policies, in particular, the Interestingly, Wiscon- a high school diploma.” In mal. American public is three to five times more sin residents are just as 2010, 85 percent of Wis- Republicans were more likely than Demo- likely to select this middling category than sanguine as the nation as “…38 percent of the consin residents supported crats (62 percent to 51 percent) to support are Wisconsin residents. Consequently, public a whole about the effi- the same requirement. basing teacher salaries on student progress. opinion about education reform in Wisconsin cacy of increased school American public claimed to And Democrats were more likely to support would appear more polarized than in the rest of spending. A majority of pay either ‘a great deal’ or Partisanship and teacher tenure—43 percent of Democrats in the country. 57 percent of Wisconsin ‘quite a bit’ of attention to Attitudes support and 30 percent Republicans in support. What is the source of these differences? residents, and 53 percent Decades of research in Republicans were slightly more likely to say Survey methodology may be the culprit. The of the nation as a whole, issues involving education, American politics and that students needed to show adequate progress WPRI study was conducted over the telephone, are either very confident while 51 percent of public opinion have dem- for teachers to get tenure and thought three whereas the Education Next-PEPG surveys or somewhat confident that Wisconsin residents do so.” onstrated that partisanship years was too little time to get tenure. Again, were conducted online. It is possible that when “if more money were spent or party identification is though, there was strong majority opinion by speaking to an actual person on the telephone, on public schools in your the single most important all on these issues. respondents feel a greater compunction to district … students would driver of policy attitudes. The two largest differences came on ques- express a clear position of support or opposi- learn more.” But once again, staunch critics of We examined differences in assessments of tions about additional spending and a tax credit tion to a given policy reform. And some past increased spending appear in higher propor- the education system in the state and various for educational expenses. Specifically, Demo- research has shown this to be true.11 Our own tions in Wisconsin than they do in the rest potential reforms by self-reported party identi- crats by a margin of 22 percentage points (70 surveys provide further suggestive evidence of the nation. Whereas just 13 percent of the fication.W hile there were differences on some percent to 48 percent) were more confident of this phenomenon. Though the subsample of American public is “not confident at all” that questions, there was relatively little variance in that additional spending would improve Wisconsin residents in the Education Next- increased spending will augment student learn- attitudes among Democrats and Republicans schools. More surprisingly, Democrats (72 PEPG 2009 Survey is quite small (n=57), it ing, 19 percent of Wisconsin residents reported on most issues. percent) were more likely than Republicans reveals a much higher proportion of Wisconsin such views. Republicans were slightly more likely to (57 percent) to support offering a tax credit for residents claiming to “neither support nor op- pay attention to education issues, but there educational expenses to low- and moderate-in- pose” various policy reforms than is observed Student Accountability— was no difference by party attachment in how come parents who send their children to public in the WPRI telephone survey. Where Wisconsin and the Nation Wisconsinites compared the education system and private schools. Still, the differences between the online Are In Line in the state to other states overall or by test and telephone samples that we observed are Wisconsin residents exhibit just as much scores. Furthermore, while Democrats rated Conclusion markedly greater than those observed in past support as the rest of the nation for student schools in the state higher than did Republi- Looking at the entire survey, we findW iscon- research on “mode effects.” Our own surveys, accountability measures. In 2007, the last time cans, there was no difference in how Demo- sin residents have stronger opinions than the moreover, suggest that the observed differ- these questions were administered in an Edu- crats and Republicans graded schools in their nation as a whole. While the margin between ences are due, at least in part, to differences cation Next-PEPG survey, 81 percent of the own communities. supporters and opponents in Wisconsin and in the two populations. As previously noted, American public supported a requirement that Republicans were slightly more supportive across the country is similar on many issues— 38 percent of the American public claimed 142 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 143

to pay either “a great deal” or “quite a bit” of offers members of its panel free Internet access and a attention to issues involving education, while WebTV device that connects to a telephone and television, the sample is not limited to current computer owners or 51 percent of Wisconsin residents do so. Note users with Internet access. also that the differences between Wisconsin 3 Data on the NAEP, commonly recognized as the “nation’s report card,” are available at: http://nces.ed.gov/nationsre- residents and the American public on this portcard/ (site accessed July 27, 2010). dimension are not observed on every policy 4 Wisconsin first enacted charter legislation in 1993. For item. On some items, in fact, few if any dif- the strength of its charter law, the Center for Education Reforms ranks Wisconsin 16th among the 40 states with Wisconsin’s Great Disconnect ferences are observed. Moreover, the observed charter laws. More information is available at: http://www. differences are most acute on items where charterschoolresearch.com/laws/wisconsin.htm. — Worried but still Happy 5 Interestingly, when Wisconsin residents are told that Wisconsin residents have the most experience, “currently the state of Wisconsin allows low-income fami- By Kenneth M. Goldstein e.g. school choice. lies in Milwaukee to send their school-age children to any What, then, is the bottom line? Though public or private school they choose,” and that “for those parents choosing a private school, the government helps UW-Madison Political Science Professor Kenneth Goldstein is one of the perhaps not as great as the raw comparisons pay the tuition,” support for expanding this program to the foremost experts in the country when it comes to asking questions. He explains between the WPRI and Education Next-PEPG rest of the state jumps to 60 percent. 6 For more on this topic, see William Howell and Mindy in a few short pages and, perhaps more importantly, in terms we can all surveys would suggest, Wisconsin residents Spencer, 2007. “School Choice without Vouchers.” Pioneer understand, what the people of Wisconsin are thinking on practically every appear more informed and engaged about Institute White Paper #41. Available online at: http://pio- important social issue. Here’s the headline: The folks here have strong views, education reform than people in the rest of the neerinstitute.org/pdf/wp41.pdf. 7 Howell and West show that support for more spending and they are not afraid of expressing them. country. Moreover, Wisconsin residents appear decreases by 10 percentage points when respondents are just as supportive of, and in some cases more informed about average per-pupil expenditures in their Refocusing Wisconsin did not just want to hear ites are unified more than they are divided. district. Howell, W. and M. West. 2009. “Educating the supportive than, Americans nationwide. And Public.” Education Next. 9(3): 40-47. See also Howell, W. from the experts for this report. It wanted to Democrats, Republicans, union members, where Wisconsin public schools confront the and M. West. 2008. “Is the Price Right? Probing Ameri- hear from ordinary citizens as well. So the government employees, young, old, Madison greatest challenges, notably in Milwaukee, cans’ Understanding of Education Spending.” Education project executed one of the most thorough and and Green Bay—all have relatively similar Next. 8(3): 36-41. support for a wide range of accountability and 8 Direct comparisons with the national sample, in this exhaustive polls of state residents in recent positions on a wide variety of issues. choice reforms reaches its apex. instance, are complicated by the fact that the WPRI survey memory to understand where average citizens Where we do see differences is between res- allowed respondents to claim they did not know, an option that was unavailable in the Education Next-PEPG survey. fall on the important issues facing the state. idents of the city of Milwaukee and the rest of Endnotes Forty-eight percent of Wisconsin respondents selected this In short, Wisconsinites are concerned about the state. These differences are most dramatic option. Additionally, the results for the national sample the direction of the state, its economy, and their when it comes to assessments of how things 1 See www.RefocusWisconsin.org for a full description listed above come from a 2007 survey, whereas the WPRI of the survey methodology, a full copy of the survey survey was fielded in 2010. family’s own economic wellbeing. Further- are going and quality-of-life issues. Milwau- instrument, cross-tabs, and the raw survey data in an 9 In 2008-2009, the most recent year for which data are more, Wisconsinites do not think that their kee residents have a more negative outlook. In available, per-pupil expenditures in the state of Wisconsin SPSS data file. state government is doing a particularly good addition, there are also significant differences 2 Except where noted, Wisconsin public opinion data are were $12,346, on average. For previous years and district- compared to results from the 2009 Education Next-PEPG specific figures, see: http://dpi.wi.gov/sfs/cmpcst.html (site job and are frustrated with a state government between city of Milwaukee residents and citi- Survey (Howell, W., M. West, and P. Peterson. 2009. “The accessed July 27, 2010). that they do not believe is particularly inno- zens in the rest of the state in their assessments Persuadable Public, Results from the Second Annual 10 As in the national survey, we dropped from the analysis Education Next-PEPG Survey.” Available online at: http:// estimates that exceeded $50,000. vative. Still, Wisconsinites also report being of the current situation and attitudes toward educationnext.org/files/pepg2009.pdf). Findings from the 11 See, for example, J. Michael Dennis, Cindy Chatt, Rick relatively happy and rate life and schools in the various public policy reforms. Li, Alicia Motta-Stanko, and Paul Pulliam, 2005. “Data 2010 Education Next-PEPG Survey should be available Badger State better than in other states. Perhaps the most striking finding in the in the fall of 2010. All Education Next-PEPG surveys Collection Mode Effects Controlling for Sample Origins were conducted by the polling firm Knowledge Net- in a Panel Survey: Telephone versus Internet.” Knowledge Although attitudes on many issues break survey and one that sums up the challenges for works, which maintains a nationally representative panel Network Research Paper available online at: http://www. down along some of the familiar divisions Wisconsin and its leaders in the 21st century is of adults, obtained via list-assisted random digit-dialing knowledgenetworks.com/ganp/docs/Research-0105.pdf. sampling techniques, who agree to participate in a limited and can be explained by political partisanship, the strong belief that we are losing some of our number of online surveys. Because Knowledge Networks across a wide variety of issues, Wisconsin- best citizens. By a margin of well over two to 144 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 145

one (62 percent to 27 percent), a clear majority • 488 respondents in the rest of the state In the July survey, we see a small downtick had slightly more positive views, these nega- of Wisconsinites believe the best and brightest With proportional weighting, the study in the mood of Wisconsinites. Fewer than one tive assessments varied little by partisanship. leave Wisconsin to work. yields seven representative and comparable in three (28 percent) Wisconsinites thought that Democrats, Republicans, and Independents samples: the state was on the right track. Furthermore, may disagree on some issues, but they share a Methodology 1. Statewide sample citizens were less content with state govern- similar outlook on the performance of Wiscon- The June 2010 WPRI study comprised a rep- 2. City of Milwaukee ment, more frustrated, and less happy than they sin’s state government. resentative sample of 2,508 Wisconsin adults 3. Milwaukee Media Market (excluding city of were in the June survey. Again, the results and Most Wisconsinites (62 percent) think their ages 18 and over conducted from May 27 to Milwaukee) the downward trends track national trends seen taxes are too high, and a similar number (64 June 10, 2010. The focus of the study was on 4. Milwaukee Media Market in scores of polls around the country over the percent) believe they are paying more com- policy issues as well as attitudes on quality of 5. Madison Media Market summer. pared to other states. Again, while Republicans life in Wisconsin, economic evaluations, and 6. Green Bay Media Market Statewide, views on the economy showed had stronger views, identical majorities of self- satisfaction with state government. The survey 7. Rest of the state some small signs of optimism in the June sur- identified Democrats also thought their taxes instrument also included a wide range of The July study used the identical vey, but citizens remained wary. Exactly four were too high (54 percent) and that they paid standard demographic measures. This survey methodology, talking to 822 Wisconsinites in ten said that they though the economy would more than people in other states (54 percent). conforms in full with the disclosure require- (621 by landline and 201 by cell phone). It was stay the same over the next year while 38 per- Despite these less-than-positive assess- ments of the American Association of Public conducted from July 11 to July 13 and included cent of Wisconsinites believed that the state’s ments, Wisconsinites rated the quality of life Opinion Research (AAPOR) Code of Profes- an oversample of 200 city of Milwaukee economy would get better over the next year. in their state higher than (39 percent) or about sional Ethics and Practice and the AAPOR residents. An AAPOR standard disclosure When it comes to one’s family economic situ- the same (48 percent) as that of the residents Transparency Initiative. An AAPOR standard form and a full copy of the survey instrument ation, just three in ten Wisconsinites thought of other states. Wisconsinites also reported disclosure form and a full copy of the survey and crosstabs are also available at www. they would be better off over the coming year. high levels of happiness across the state, with instrument and crosstabs are available at www. RefocusWisconsin.org Respondents believe the economy should be 71 percent saying they are either very or rather RefocusWisconsin.org. the top priority of state government (39 percent happy. Also, although they may be dissatisfied The fieldwork for this survey was carried Mood in the June survey). There is partisan consensus with the job state government is doing, a ma- out by LHK Partners of Newtown Square, In the June 2010 survey, Wisconsinites were that jobs and the economy are the most impor- jority of Wisconsinites—52 percent—believed Pa., using a dual-frame sample design cover- slightly more optimistic about the direction tant problem, but Republicans (30 percent) are that state government is basically sound. On ing both landline telephone and cell phone of the state than the direction of the country. more likely than Democrats to be concerned this question, there were partisan divisions with numbers, with samples produced by Genesys Exactly three in ten Wisconsinites said that the with government spending. almost two in three Democrats (65 percent) Sampling. In total, 1,867 respondents were country was on the right track, while a clear saying that state government was basically reached by landline and 641 were reached by majority—62 percent—believed it was headed Life, Schools, and State sound while a plurality of Republicans thought cell phone. The study was designed to provide in the wrong direction. These findings echo Government state government needed major reform. information about both the state as a whole and results from national surveys on the direction Views on state government are generally nega- Wisconsinites gave moderate marks to their its various geographic regions, with the follow- of the country with Wisconsinites’ views on tive. State government is more likely to be schools. Statewide, the most popular grade ing number of interviews completed in each of the direction of the country virtually identical rated as doing a poor job (25 percent) or only for schools in both the state and community five geographic areas: to nationwide polling. Wisconsinites’ opinions fair job (43 percent) than of doing a good job was a “B” (44 and 42 percent, respectively). • 492 respondents in the city of Milwaukee of the direction of the state were only slightly (28 percent) or excellent job (2 percent). A ma- Comparatively, a majority—57 percent—of • 526 respondents in the Milwaukee Media more positive, with only slightly more than jority of Wisconsinites—61 percent— reported those polled gave public schools in the nation Market (excluding city of Milwaukee) one in three (34 percent) saying it was on the that they thought state government was tied to as a whole a “C.” Most in Wisconsin rated the • 499 respondents in the Madison Media Market right track. Republicans and independents were old ideas and practices and only 28 percent of quality of their school systems and the state’s • 503 respondents in the Green Bay Media much more likely to be negative about both the Wisconsinites thought state government was student performance on standardized tests as Market state of the country and the state of the state. innovative. Although self-identifiedD emocrats higher than or about the same as the rest of the 146 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 147

country. A majority of the state (60 percent) Republicans, and 79 percent of Independents to 60 percent); they were also more supportive The Political Environment favored a voucher system for schools. As you all saying that pubic employees should contrib- of a teacher “residency” program. The survey did not ask a standard battery of will read in the essays on education for Refocus ute to their own pensions. In general, Milwaukee residents are more campaign or election questions. It did, however, Wisconsin, the citizens of this state have stron- aware of and more supportive of reforms—an ask party identification, registration status, and ger opinions on education than the rest of the The Great Divide: even more striking fact when it’s taken into ac- whether a respondent was likely to vote in the country, they follow these issues, and they are Milwaukee and Everywhere Else count that residents of the city are more likely November elections. Along with other demo- not afraid of weighing in with their opinions. Whereas the rest of the state tends to be more to be Democrats, and Democrats in the rest graphics, the crosstabs report includes answers optimistic about their local situation than the of the state are less likely to support reforms. for all questions by these characteristics. Reforms nation, Milwaukee residents buck this trend on Forty-seven percent of those polled in Milwau- Looking at both the June and July surveys In the July survey, the $2.7 billion structural question after question and topic after topic. kee thought that the Wisconsin state govern- and across all regions of the state, there is a budget deficit and the fact that the state has the Although only 34 percent think the state is ment needs very major reform. significant enthusiasm gap in the likely elector- third-worst migration pattern in the country on the right track, 40 percent of Milwauke- ate. Republican and likely Republican voters were the two arguments that were rated as the eans believe the country is headed in the right African Americans: are much more likely to say that they will vote most believable and the most convincing rea- direction. Additionally, Milwaukeeans are less More African American poll respondents than Democratic and likely Democratic voters. sons to support policy reforms. The largest part likely to believe the quality of life in Wisconsin (51 percent) than white respondents think Furthermore, independents are more likely to of the population leaving the state earns over is higher than other states (19 percent). More the country is headed in the right direction. identify as Republicans by a margin of over $120,000 a year and the largest influx of new than the rest of the state, Milwaukeeans tend to However, they are much less optimistic about two to one. In the June survey, Democrats have residents—by far—earns around $20,000. The see the best and brightest as leaving Wisconsin the state (38 percent). Nearly a third of African a seven-percentage-point advantage in party argument that resonated best with those who for employment, and are more likely to see Americans say the quality of life in Wisconsin identification among all adults.T his changes to changed their minds or who thought that major themselves leaving. is below that of other states; this number is less a five point Republican advantage when inde- policy reform was not needed when first asked In what may seem to be a disconnect from than 10 percent for white respondents. While pendents are given the opportunity to identify was the migration message. This is consistent the results described in the above paragraph, African Americans are less likely to think there with one of the parties (leaned party id) and with what we saw in the University of Wiscon- despite this negative perspective on state is- needs to be major reform in the state govern- the population is certain voters. The gap is sin Business School student survey and in the sues, residents of Milwaukee are much more ment, they tend to be more aware and support- even more dramatic in the July survey, with a June statewide survey: Wisconsinites believe likely (47 percent to 30 percent) to expect their ive of other reforms, including school reforms. three-percentage-point advantage for Demo- the best and the brightest are leaving this state, family’s economic situation to get better in the African Americans report more optimism on crats among all adults with unleaned party id and that is a strong reason to fix things. coming year. the future of their family economic situation, turning to a ten-percentage-point deficit when Wisconsinites are most negative about the Those polled in Milwaukee were much with 53 percent expecting it to get better (com- the population includes leaned independents taxes that the state relies upon (income and more likely to see the schools as a major prob- pared to 27 in the rest of the state). Along with and only certain voters. In short, in terms of the property) and are most positive about the tax lem. Not surprisingly, nearly half (47 percent) younger voters, African Americans are less partisan composition of the electorate, the dif- (sales) that we rely on less. There is support for give Milwaukee Public Schools a poor rat- likely to think the sales tax is the most fair, and ference in voter enthusiasm by party identifica- raising the sales tax and reducing the property ing, compared to 34 percent in the rest of the find the income tax the most understandable. tion and the movement of independents toward and/or income tax. These beliefs are consistent state. Despite this pessimism, Milwaukeeans Like Milwaukee respondents, African Amer- the GOP is striking. What we are seeing this across a wide range of demographics, partisan- are confident (30 percent very and 38 percent icans see major issues with the state’s school summer in Wisconsin is consistent with other ship, and geographic regions. somewhat) that extra money spent on schools systems. Unprompted, 21 percent say education national and state data across the country and There is clear and overwhelming support would help students learn more—a belief not is the most important problem for government is a mirror image of 2008—when Democrats (76 percent to 17 percent) for having public shared by the rest of the state. to tackle, and African Americans rate state and were more energetic and independents strongly employees help contribute to their own pen- Milwaukeeans were both more aware of and community schools lower than the rest of the supported Barack Obama and other Demo- sions. There are no partisan divisions here more supportive of school vouchers than the state. They are more likely to support teachers cratic candidates. with 71 percent of Democrats, 79 percent of rest of the state (71 percent in favor compared than other groups. 148 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 149

of economics and European studies at George- city. As mayor, he reduced government spend- town University, and was a senior lecturer of ing, cut the city’s bureaucracy, held the line on economics at the University of Pennsylvania. taxes, eliminated counterproductive regula- She received her Ph.D. in economics from Uni- tions, and identified more than $400 million in versity of California, Berkeley in 1993. savings. He reinvested the savings by leading a Contributors transformation of downtown Indianapolis that Rose Fernandez has been held up as a national model. Rose Fernandez spent a career as a pediatric nurse Kenneth Goldstein Sarah Archibald Richard G. Chandler and hospital administra- Kenneth Goldstein is a pro- Sarah Archibald has Richard G. Chandler tor and is an entrepreneur fessor of political science at worked in education served as Secretary of the operating a small business the University of Wiscon- research for more than Wisconsin Department with her husband manu- sin-Madison and the author 10 years, primarily at the of Revenue from 2001 to facturing fire service safety of over 30 books, refereed Consortium for Policy 2003 and as Wisconsin’s equipment. In 2004, she was a founder of the journal articles and book Research in Education at State Budget Director Wisconsin Coalition of Virtual School Families chapters. His diverse set UW-Madison but more from 1987 to 2001. He is and led that organization’s successful effort to of publications on political communication, recently at the Value-Added Research Center. President of Chandler Consulting, LLC, which change state law allowing online instruction in voter turnout, survey methodology, presidential Last year, she was on loan to Gov. Doyle to provides public policy and government relations 2008. Fernandez is the Executive Director of the elections, and Israeli politics have appeared in assist with Wisconsin’s Round One Race to the consulting services. His clients have included National Parent Network for Online Learning. top-line political science journals and major Top application. Archibald has consulted na- statewide organizations and businesses in the Her five children have all attendedW isconsin university presses as well as in refereed law tionally with states and school districts on such real estate, manufacturing, education, energy Virtual Academy, a statewide charter school that and medical journals. Goldstein recently won issues as school finance adequacy, instructional and transportation sectors. He has written is- uses an online curriculum. She holds a Master the University of Wisconsin’s Kellet Award for improvement and effective resource allocation. sue papers on state budget, tax and economic of Science in Nursing degree from the Univer- his career research accomplishments and the She holds a bachelor’s degree in political sci- development and has made many presentations sity of Wisconsin-Madison. Chancellor’s Award for excellence in teaching. ence, a master’s in policy analysis and a Ph.D. in on public policy. Chandler has a B.A. degree in He also has extensive professional experience educational leadership and policy analysis from government from Lawrence University and a Stephen Goldsmith and is currently a consultant for the ABC News the University of Wisconsin-Madison. law degree from the University of Chicago Law Stephen Goldsmith is the elections unit and a member of their election School. He lives in Madison with his wife and Daniel Paul Professor Alan J. Borsuk night decision team. He has appeared numer- twin daughters. of Government and the ous times on “NewsHour with Jim Lehrer,” Alan J. Borsuk is senior director of the Innovations fellow in law and pub- Gwen Eudey “Nightline,” “ABC World News Tonight,” in American Government “NBC Nightly News,” “CBS Evening News,” lic policy at Marquette Gwen Eudey is Assistant to Program (on leave) at University Law School. He the Dean in the Wisconsin FOX News Channel, MSNBC, CNBC and Harvard’s Kennedy School CNN, and is a frequent contributor on National previously was a reporter School of Business and has of Government. He was recently named Deputy and editor for the Milwau- joint appointments as a se- Public Radio. He is also quoted extensively in Mayor for Operations by New York City Mayor the country’s top newspapers such as The New kee Journal and Milwaukee nior lecturer in both finance Michael R. Bloomberg. Goldsmith is former Journal Sentinel for 37 years. He has covered and economics at the Uni- York Times, The Washington Post, and The Wall Chair of the Corporation for National and Com- Street Journal. education since 1998. He continues to write versity of Wisconsin-Mad- munity Service and previously served two terms a weekly column for the Journal Sentinel on ison. She previously worked as an economist at as Mayor of Indianapolis, America’s 12th largest education. the Federal Reserve Board, assistant professor 150 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 151

John Gurda Fredeorick M. Hess and editor of Besieged: School Boards and the in July 2004. In 2009, he wrote LeMay: The Life John Gurda is a Mil- Frederick M. Hess, an Future of Education Politics. His research also and Wars of General Curtis LeMay, a biogra- waukee-born writer and educator, political scientist, has appeared in numerous professional journals phy of the controversial U.S. Air Force general historian who has been and author, studies a range and edited volumes. published by Regnery in 2009. His op-eds studying his hometown and of K-12 and higher-educa- have appeared in The Wall Street Journal, The home state since 1972. He tion issues as AEI’s director Michael M. Knetter Washington Post, and The New York Sun, as well is the author of 19 books, of education policy studies. Michael M. Knetter joined as other newspapers and magazines. Kozak was including histories of He serves as executive edi- the Wisconsin School of born and raised in Milwaukee. He was educated Milwaukee-area neighborhoods, industries, and tor of Education Next, on the Review Board for Business as its dean in in the public school system there and attended places of worship. The Making of Milwaukee is the Broad Prize in Urban Education, and on the July 2002. He has pub- the University of Wisconsin – Madison, gradu- Gurda’s most ambitious effort. At 450 pages and bards of directors for the National Association lished widely in the areas ating with a B.A. in political science. with more than 500 illustrations, it is the first of Charter School Authorizers and the Ameri- of international econom- full-length history of the community published can Board for the Certification ofT eaching ics and macroeconomics. George Lightbourn since 1948. Milwaukee Public Television cre- Excellence. A former high school social studies Knetter served as senior staff economist for the George Lightbourn is the ated an Emmy Award-winning documentary teacher who has taught at the University of Vir- President’s Council of Economic Advisors for President of the Wisconsin series based on the book in 2006. In addition ginia, the University of Pennsylvania, George- former presidents George H.W. Bush and Bill Policy Research Institute. to his work as an author, Gurda is a lecturer, town University, Rice University, and Harvard Clinton, and is currently research associate for He served two governors as tour guide, and local history columnist for the University, he holds his M.Ed. in teaching and the National Bureau of Economic Research Secretary of the Wisconsin Milwaukee Journal Sentinel. He holds a B.A. curriculum and his M.A. and Ph.D. in govern- and faculty affiliate of the La Follette School of Department of Administra- in English from Boston College and an M.A. ment from Harvard University. Public Affairs. Knetter completed his under- tion. He has also served in cultural geography from the University of graduate studies in economics and mathematics on numerous boards, including the Wisconsin Wisconsin-Milwaukee. William Howell at the University of Wisconsin-Eau Claire and Investment Board, the UW Hospital and Clinics William Howell is the his Ph.D. in economics at Stanford University. Authority Board and the Board of Directors of Thomas R. Hefty Sydney Stein Professor in CMC Heartland Partners, based in Chicago. Thomas R. Hefty is the American Politics at the Warren Kozak Lightbourn received a B.A. and M.A. from the retired chief executive of University of Chicago, Journalist and author, War- University of Wisconsin-Madison. He is mar- Cobalt Corporation (Blue where he holds appoint- ren Kozak has written for ried and has three grown children. Cross Blue Shield United ments in the Harris School some of the most influential of Wisconsin). He served of Public Policy, the De- network anchors on televi- Olivia Meeks as co-chair of Gov. Doyle’s partment of Political Science, and the College. sion, including Ted Koppel, Olivia Meeks is a research Economic Growth Council He has written widely on separation-of-powers Diane Sawyer, Charles assistant in education from 2003 to 2005, and he served on a similar issues, American political institutions, and Gibson and Aaron Brown. policy studies at the Ameri- panel under Gov. Thompson. Hefty holds a mas- education issues. He is the co-author of While During the 1980s, he was an on-air reporter for can Enterprise Institute. ter’s degree in economics from Johns Hopkins Dangers Gather: Congressional Checks on National Public Radio. In 1988, he co-wrote, University and a law degree from the University Presidential War Powers; author of Power with- along with Eric Sevareid, the award-winning of Wisconsin. He has received honorary doctor- out Persuasion: The Politics of Direct Presiden- PBS documentary Kristallnacht, The Journey ates from both Ripon College and the Medical tial Action; co-author of The Education Gap: From 1938 to 1988, marking the 50th anniver- College of Wisconsin. Vouchers and Urban Schools; co-editor of The sary of Crystal Night. His first book, The Rabbi Oxford Handbook on the American Presidency of 84th Street, was published by HarperCollins 152 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 153

Lawrence J. Mone Christian Schneider Atlantic, The Public Interest, Commentary, Jayson White Lawrence J. Mone has been Christian Schneider is The Wall Street Journal, The New York Times, Jayson White works at the President of the Manhattan a senior fellow at the Dissent, The Weekly Standard, The Washington Ash Center for Democratic Institute, one of the nation’s Wisconsin Policy Research Post’s Outlook section and The Times Literary Governance and Innova- most influential public Institute. He was the Supplement. tion at Harvard Kennedy policy think tanks, since recipient of the 2005 School, managing the Ur- 1995. Under his leadership Wisopinion.com “Blog of Ryan Streeter ban Policy Advisory Group, the Manhattan Institute has the Year” award, and is a Ryan Streeter is U.S. editor which supports policy sponsored and disseminated research on such frequent guest on “Sunday Insight with Charlie of ConservativeHome.com, dialogue among chiefs of staff and senior policy topics as tax and economic policy, education, Sykes” in Milwaukee. Schneider spent eight a national political daily to advisers to mayors in the 35 largest cities across welfare reform and crime. A summa cum laude years working for the Wisconsin State Legisla- be launched in November the country. The Urban Policy Advisory Group graduate of the College of the Holy Cross ture and holds a master’s degree from Marquette 2010. He is also a Non- is also core to the development of the Project on in Worcester, Massachusetts, he taught high University and a bachelor’s degree from the Resident Senior Fellow at Municipal Innovation, a new urban policy and school history in Cambridge, Massachusetts, for University of Utah, both in political science. the Sagamore Institute for technical assistance partnership between the several years before earning a master’s degree in Policy Research in Indianapolis and was until Kennedy School, Living Cities and the Rock- public policy from the University of California, Fred Siegel recently Senior Fellow at the London-based efeller Foundation. Before joining the Ash Fred Siegel is currently Berkeley in 1982. Legatum Institute. Previously, Streeter was a Center, Jayson served as domestic policy analyst both scholar in residence Special Assistant for Domestic Policy to George for the Rudy Giuliani presidential campaign and at St. Francis College in M. Scott Niederjohn W. Bush in Washington, D.C. He holds a Ph.D. as communications director for The World Food M. Scott Niederjohn has Brooklyn and a senior in political philosophy from Emory University. Prize Foundation, an Iowa-based foundation fo- published more than 50 fellow at The Manhattan cused on cutting-edge solutions to world hunger. articles, monographs, Institute. A professor at The John Torinus White holds a master’s degree in public policy reports and curriculum Cooper Union for Science John Torinus is the Chair- from Columbia University and a bachelor’s de- materials and concentrates and Art from 1983 to 2009, he has been a fellow man of Serigraph, Inc. in gree in philosophy from Iowa State University. his research in the areas at the Institute for Advanced Study in Princeton, West Bend, Wisconsin, and of economic education, has taught at the Sorbonne, and was a Senior the founder of BizStarts Sammis White public policy analysis and applied microeco- Fellow at the Progressive Policy Institute in Milwaukee. He previously Sammis White is a profes- nomics. He is a Charlotte and Walter Kohler Washington. Siegel is the author most recently served as president for sor of urban planning, Professor of Economics at Lakeland College of The Prince of the City: Giuliani, New York Competitive Wisconsin, an Associate Dean of the Uni- in Sheboygan, Wisconsin, and the Director of and the Genius of American Life (2005), which organization that measures the economic health versity of Wisconsin-Mil- Lakeland’s Center for Economic Education, received the cover review in the New York and competitive position of the state, where he waukee School of Continu- which recently received a national award for the Times Book Review. His previous book, The continues as director. Torinus holds a bachelor’s ing Education, and Director best new center in the United States. Niederjohn Future Once Happened Here: New York, D.C., degree from Yale University and a master’s of the UWM Center for holds undergraduate and master’s degrees from L.A. and the Fate of America’s Big Cities, was degree in social science from the University of Workforce Development. He has a bacherlor’s Marquette University and a Ph.D. in economics named by Peter Jennings as one of the 100 most Stockholm, Sweden, in international relations. degree from graduate of Williams College and a from the University of Wisconsin – Milwaukee. important books about the United States in the Ph.D. from the University of Pennsylvania. He He lives in Wauwatosa with his wife and four 20th century. He was a senior adviser to Rudy has co-authored two books, co-edited three oth- children . Giuliani’s 1993 mayoral campaign and wrote ers, and written or co-authored over 145 journal the candidate’s path-breaking quality-of-life articles, reports, and research monographs, the speech, has written for The New Republic, The majority related to economic development. DOnOrs 154 | refocus wisconsin | a project of the wisconsin policy research institute refocus wisconsin | a project of the wisconsin policy research institute | 155

The Lynde and Harry Bradley Foundation

Bart Adams A. W. Bryant Cleary Gull Holdings Inc. Reed Coleman The rotunda consists Stewart & Kathleen Friend John Oster Family Foundation, Inc. of four mosaic panels, Johnson Controls Mike Jones representing Wisconsin’s Judd S. Alexander Foundation Fred Kasten James R. Klauser three branches of Jason Kohout Stephen & Elaine Kraut government (the Kwik Trip, Inc. Lubar Family Foundation M&I Corporation legislative, the executive Manpower Inc. Daniel McKeithan, Jr. and the judicial) and Albert O. Nicholas Northwestern Mutual Foundation Richard R. Pieper, Sr. liberty—the foundation Robert W. Baird & Co., Inc Paul & Carol Schierl of all power in a John & Mary Sensenbrenner The Rauser Agency, Inc. free country. Bill & Mary Walker Wausau Paper WPRI Board of Directors:

James Klauser, Chairman David Baumgarten Ave Bie Catherine C. Dellin Jon Hammes Thomas J. Howatt David J. Lubar Maureen Oster Timothy Sheehy Gerald Whitburn Edward Zore George Lightbourn, President

Don’t forget to visit our website at www.RefocusWisconsin.org, where you will find all of the writing, the polling data and the documentaries that tell the story of Refocus Wisconsin. You can even tell us what you think.