Cutting compensation: Effects of budget cuts on public servants
What will be the cost to the government in terms of the quality and effectiveness of its workforce?
By Mason Pooler, Master’s Student, Public Administration at American Public University
In an attempt to reduce Wisconsin’s budget deficit, in 2011 Governor Scott Walker passed Act 10, also referred to as the Budget Repair Bill. The bill affected many areas of government employment, but most notably reduced funding for pension contributions and health insurance, and limited collective bargaining for labor unions representing public employees, including public safety workers.
As Wisconsin now enters its true first year of Act 10 enforcement, the effects of this legislation will start to become evident. While the state can point to measurable savings because of these budget cuts, what will be the cost to the government in terms of the quality and effectiveness of its workforce? The state must have proper metrics in place to ensure it is measuring the full effects of budget cuts from this controversial and wide-reaching legislation.
Impact of Act 10 on Government Employees
All state and local government employees in Wisconsin share a common pension system. A certain portion of an employee’s earnings, usually around 12 percent, goes into the pension system each pay period. Depending on the total number of years worked in the pension system and the performance of the stock market, the potential payout in retirement is very substantial. Setting aside a portion of an employee’s wages into the pension system buys their entry into a guaranteed retirement windfall. Pre-Act 10 collective bargaining agreements had put the burden of paying that full contribution onto the government agencies employing the workers.