- I'm Zac Schultz filling in for Frederica Freyberg.
Tonight on "Here and Now," we'll get some Capitol Insight on
Governor Walker's state budget proposal.
Then we'll look ahead to what self-insurance means for state
employees and what the Madison school district needs to do to
get additional state funding.
It's "Here and Now" for February 10.
- Funding for "Here and Now" is provided, in part, by Friends of
Wisconsin Public Television.
- The state of our state is strong
and the state of our budget, well, it's outstanding.
We are working and winning for Wisconsin.
- That was Governor Walker at Wednesday's budget address.
We should mention that Wisconsin Public Television is partially
funded by state dollars.
So is Public Radio.
And that brings us to tonight's "Capitol Insight." We welcome
back Wisconsin Public Radio's Capitol Bureau chief Shawn
Johnson to talk about the governor's budget.
Thanks for being here. - Thanks for having me.
- I want to start with another clip from the governor's speech
in which he sums up his impression of this budget.
- Overall our common sense reforms brought us here to the
point where we have a significantly better budget
outlook.
We call this the reform dividend.
And wow, as the Fiscal Bureau pointed out.
That's a lot of money.
- Governor Walker says, "That's a lot of money."
Where is it being spent?
- Yeah. It is a lot of money.
I'm not sure the Fiscal Bureau said, "Wow, that is a lot of
money," but that is, compared to his previous budgets,
this is the most you've seen the governor come out of the gates
proposing to spend on public schools.
The increase in per-pupil funding
is taking up the bulk of it.
Roughly $200 increase in each of the tiers of the budget.
So to put that in perspective, it's more than the Department of
Public Instruction was asking for.
So in that context, it's a lot of money.
- And that's not the only place he's spending money, either.
I mean, the University of Wisconsin system's getting an
increase in their budget and other places.
I mean, as Todd Berry told us after the budget, President of
the Taxpayers Alliance, the governor is spending all of the
money that's in the budget, too, spending down the reserves.
- Yeah.
He starts out with a surplus and ends with very little money at
the end of the budget to kind of address all these constituencies
that you haven't really seen the governor address in this way in
previous budgets.
It's not that he would not talk about schools.
Certainly that wasn't the case.
He always has said that his Act 10 was about helping schools,
gave them the ability to, you know, more freely decide how to
spend their budget.
But in previous budgets, his first budget, for example, he
cut roughly $800 million from schools.
In his previous three budgets, he's cut the University of
Wisconsin system.
He would increase them by either by $100 million or roughly $140
million depending on how you score it in this budget.
So a change of tune in a variety of areas for Governor Walker,
and, you know, we are under different circumstances now.
The economy is in a different place than it was back in 2011,
the national economy, the Wisconsin economy.
We also have a gubernatorial election right on the horizon,
2018 election, in which many people believe that Scott Walker
is going to run for a third term.
- Yeah.
And Governor Walker's had Republicans in control of the
legislature his entire time in office and this session
Republicans increased the majorities, but that doesn't
mean complete harmony at the capitol.
Assembly Speaker Robin Vos has been very blunt in his request
for more transportation funding and Governor Walker said he'll
veto any increase in the gas tax that the Assembly may try and
put in when they get the budget in their hands.
Let's watch Speaker Vos's reaction at the end of this clip
while Governor Walker was talking about transportation
funding in the budget address.
- Our budget includes more funding for local governments to
fix roads and bridges and potholes than they've seen in
more than a decade and a half.
It also includes the largest amount ever, ever for the
rehabilitation of state highways.
- Now, that was not a very subtle eye-roll when you're
sitting right behind the governor on public television.
- No.
It's kind of unheard of for a speaker from the same party to
react to something the governor is saying in that way on that
stage.
You might be tempted to kind of write it off as, whoops, he
didn't mean to do that, but then you look at everything else that
Robin Vos said on the day the budget came out.
He was at the Wisconsin Counties Association meeting that
morning, very clearly wanted to send a message there.
We had a quote from the speaker.
He said, quote, sometimes I think that folks forget that we
are co-equal of the governor.
He gets to put the budget out, but it's not like we just
salute.
He used that word again later when talking about the governor.
We're not going to just salute.
He said that the governor was trying to buy off local
governments with this increase in local road aids at the
expense of a cut to state funding for road projects like
the one in Speaker Vos's district.
So he's not being subtle here.
He's coming out saying pretty firmly that he wants changes to
this budget specifically as it pertains to transportation.
- And he's not the only one.
Usually the budget address is filled with applause lines and
standing ovations.
And this one should have been too with--he has a lot of tax
cuts were in here.
This is red meat for the conservative base.
But we actually saw a relatively lukewarm reception from both
parties.
Clearly Democrats aren't happy with just about anything that
Governor Walker proposes, but even the Republicans were slow
to rise on a lot of soundbites that sounded like they were
waiting for an applause line.
- Yeah, take for example, the tuition cut is probably the
biggest example of something where the governor probably
feels like he's got this populous message that he wants
to roll out there.
The tuition freeze has been popular with Republicans lately.
The tuition cut would seem is not at least with Republican
legislative leaders.
They feel like that the money that the state would spend
backfilling that tuition cut or the revenue that the university
would lose could be better off spent somewhere else.
And so they've said they're not onboard with that.
But even the income tax cut.
I mean, Senate Majority Leader Scott Fitzgerald, though not as
outspoken by any means as Vos this week on the governor's
budget, said that he didn't care for that income tax cut, thought
there was a better way to get bang for your buck if you're
going to cut taxes.
- So what does this mean in terms of how long this budget
will take a pass?
Obviously, it goes to the Joint Finance Committee next.
Then each chamber has to pass a version.
They could even have dueling version there which is extremely
rare for one-party control.
- Yeah.
When Republican control began in Wisconsin, they got budgets done
by July 1, which is when the next fiscal year begins.
You don't have to do that in Wisconsin because, you know, the
current budget will carry over to the next budget if you don't
have a new one in place.
So that pressure is not exactly there.
But they've done it.
You saw that start to erode last session over transportation.
Republican lawmakers didn't like what the governor put out there.
It took them a while to come to terms.
You heard Speaker Vos this week say it's not my goal, but I'll
take it to October if we have to, basically throwing it out
there that he's willing to stand his ground in some type of a
dispute over transportation funding.
Seems unlikely that Republican-controlled
legislature and governor's office would take this fight to
October, but, you know, again, this is a message that the
speaker wants to send early in negotiations.
- And you've mentioned it before, but a lot of people are
calling this a re-election budget.
And Governor Walker has been relatively clear without coming
out and saying it that he's going to run for a third term in
2018 and this would appeal to a lot of the base that he has in
southeast Wisconsin, but also maybe a new base that Donald
Trump opened up when he ran for president and won Wisconsin.
- Rural Wisconsin.
You see hints of that all over this budget, from the way that
he would include money specifically for rural schools,
schools with declining enrollment, schools with high
transportation costs.
The way that he includes some money, not much by the speaker's
standards, but some money for local governments to repair
local roads, which are in bad shape compared to other states
and getting in worse shape here in Wisconsin.
Those seem like nods to part of the state that has become more
important politically just in this last election.
If you look at how Donald Trump won Wisconsin, it wasn't by just
dominating southeast Wisconsin, which has been the path to
victory for Republicans in previous years.
It was by winning this swath of smaller counties, rural
counties.
And so that's a constituency that I think the governor wants
to make sure he addresses.
- We've only got about a minute left, but we've heard him use
some of those phrases we heard from Donald Trump.
I haven't checked the record, but I don't remember
Scott Walker talking about winning nearly as much as he has
since Donald Trump won.
- Yeah.
"Working and winning for Wisconsin" made ten appearances
in the governor's budget speech.
He mentioned it--and that's a 24-minute speech.
Clearly he wants to hit that home.
He said the same thing in his state of the state speech.
You're seeing it in his campaign material now, too.
So it does seem like he's kind of borrowing from what's worked
for Donald Trump in that regard.
- What role do Democrats have to play in this budget if any?
The last time around, on Joint Finance the Democrats were in
play to help release some additional bonding for some road
projects.
Do they have a small unsung role to play in this process?
- I would think practically speaking it's all about message
for them.
You know, probably they're going to try to position themselves as
the Scott Walker alternative going into 2018 and they got to
find a way to do that.
There is a chance they could become relevant if -- and it's a
big "if" -- if Republicans decided they wanted to try to
override a governor's veto on transportation for example.
They'd need democratic votes but that's something Republicans
have not been willing to do so far during their control of
state government.
It seems unlikely that they'd want to do that now.
- Shawn Johnson, thanks for your time.
- You're welcome.
- In our "Look Ahead," we're focusing on the governor's
proposal to move to self-insurance for state
employees.
For that we welcome Lisa Ellinger, who is with the
Department of Employee Trust Funds, which administers
the health insurance plans.
Thanks for being here. - Sure.
- What does self-insurance mean for state employees
and their family members?
What changes are they likely to see?
- Sure. So what self-insurance refers to is a structure
where the employer pays directly for medical claims costs.
I think that might be easier to understand by explaining how
that it is different from what we do today.
Currently in our fully-insured environment, each year we
establish premium rates with the insurers that participate in our
program and every month we pay that premium and insurers pay
the medical claims as they come in.
As part of that relationship, those insurers also build in a
risk charge in the premium to compensate themselves for the
fact that they are absorbing the risk.
In a self-insured environment, what would change is we would
still be working with third-party administrators to
process claims, handle customer service, oversee the provider
networks that deliver services but the big difference is that
in that environment those TPAs would be billing the state
directly as those medical claims come in.
So the state would be assuming the risk.
And if I could just add to that, I think this is the most
important part of the discussion and the concern that is maybe
out there, because I think when people hear the term
self-insurance, a lot of times they start to think about
questions such as, "Will I still be able to see my doctor?
Will my benefits change?
Will my costs go up?"
And those are very important issues, but they are not
impacted by whether or not the state self-insures.
And I also think that people either forget or maybe aren't
aware that we already self-insurance significant
aspects of the state employee program.
Our pharmacy benefit, which is about 20% of our overall cost,
has been very successfully self-insured since 2004.
And last year we moved to self-insure our dental program
and our nationwide access medical plan has been
self-insured for decades.
So these aren't new concepts for the state employee program.
- But what we have seen from the insurance companies that are
electing to bid to offer some of that coverage is that not
everyone that's currently in the program is electing to bid and
there will be a lower number in some areas.
So there will be changes.
- There will be changes.
- And what that looks like is yet unknown, right?
- So there are some knowns and some unknowns.
I will say, to go to the point about the fact that some of our
current insurers did not compete, I think that's
important because we should point out the fact that for many
of them, our membership represents a very small part of
their book of business.
It might be 1,000, 2,000, 4,000 members.
So for those insurers, not participating in our program
will not have a dramatic impact to them.
To go to your point about the changes, yes, some of our
members will have to change health plans, but the important
point about that is we've found that our members are really
interested in whether they can maintain access to their primary
care provider.
And the analysis that was done as part of this decision shows
that 98% of the providers available today will still be
available in the restructured system.
In addition to that, more providers than are available
today will be available in the system.
And those are real numbers.
So while our members may have to change health plans, the vast
majority will not have to change their providers.
- Governor Walker says he expects to save about $60
million in just the first year and a half on this.
But past studies have shown that this could actually cost the
state tens or hundreds of millions depending on the number
of claims come in because the state takes on the risk if
there's a lot of claims.
- Right.
- So how realistic is the governor's number?
Is it just the most optimistic case?
- So let's start with those dueling actuaries studies.
You're absolutely right.
We've studied this issue a number of times over the past
several years and they did come up with wide-ranging estimates,
but what those actuaries agreed on was the fact that the only
way you could get at what the real potential cost savings were
would be to do a request for proposals or a competitive bid
process with binding contractual and cost information.
So that's part of the reason we did this.
With regards to the biennial budget estimate and what our
board has also suggested, $60 million over the biennium, I
think it's a very realistic target.
And where that comes from is our actuary provided a range of
estimates on the high end, low end and the midrange end based
on those bids that came in, but also their projections about
future health care costs and also assumptions about where our
members will move with these new vendors that are available.
And the $60 million number comes from that middle of the range
estimate.
So I think it's conservative and very realistic.
- With the state picking up the risk, we know in terms of
Medicaid if there's more claims, the state just has to pay more
money and that affects the rest of the budget.
In this case down the road if there's a bad year or a bad
couple years, will that just affect GPR spending and where
money comes from from the budget?
Because the state will have to pay it, right?
- I think focusing on the claims is the exact right area
to focus because that's the vast majority of health care costs.
Administrative fees are just a fraction.
So, first of all, we have several provisions in the
contracts that are focused on performance guarantees to focus
on future claims costs growth, and as we go into negotiating
the contracts in the weeks and months ahead, this is also going
to be an area of focus where we want to put protections in place
to make sure the state is protected from that future cost
growth.
- One of the other concerns that a lot of Republicans in the
legislature have and outside groups specifically insurance
companies, is disruption to the private health care marketplace.
By taking this many employees away from what had been a
private marketplace and putting them under this plan, there may
not be as many customers left for some of their companies,
which could cause them to raise their prices for everyone else
or go out of business.
- Right.
And we've talked about this a little bit already but I pointed
out earlier that several of the insurers that chose not to
compete, we're very small to them in terms of the membership
that we steer their way.
But I also want to go back to that 98% of provider access
number because what that means is all those providers we work
with today will still be participating in our program, as
well as the hospitals they work with, the health systems they
work for.
And so the vast majority of participants that participate
today in our program will still be part of that.
We'll just be doing it with fewer insurers than we do today.
- And if there are big claim years in the future, will that
affect premiums?
Will the state look to raise premiums on their employees?
- So the hope is no.
We are establishing a reserve policy, and currently the fund
already has a very stable, healthy reserve that we have
built over the past couple of years in anticipation of moving
toward a self-insured program.
So that reserve is there to help in the event that we do
experience blips in claims costs.
- And we've only got a few seconds left, but -- this is
kind of a broad question, but there's a lot of uncertainty in
health care today with the possible repeal of the
Affordable Care Act in Washington and obviously
Wisconsin moving to self-insurance.
What are people thinking?
How concerned should they be about what it means for them and
their access for their families to get the care they need?
- That's an excellent point because I think there's a lot of
focus on our program today and the changes that maybe we're
causing in the health insurance market.
But the truth of the matter is the different mergers,
acquisitions, partnerships we're seeing have been happening for
years and will continue into the foreseeable future and are
caused by things that are above and beyond the state employee
health insurance program.
- All right, Lisa Ellinger, thank you for your time.
- Thank you.
- On paper some of the big winners in the governor's budget
are public schools.
The governor wants to invest an additional $650 million over the
biennium.
But for some schools there's a catch.
Joining us now to talk about that is James Howard, President
of Madison Metropolitan School District.
Thanks for your time today.
- Thanks for having me.
- Governor Walker is calling for an increase in funding of
$200 per student in the first year and $204 in the second
year.
After six years of proposed cuts from the governor, that's got to
be good news, right?
- Well, it's good news, but you have to really think about the
fact that we have been working really with quite a bit of a
deficit.
I just want to make sure everyone understands that
although it's good news that it's really hard to make up for
the deficit we've been under the last six years.
- And of course there's a catch with that as we mentioned
because the governor's budget says school districts must be in
compliance with Act 10 before receiving that aid and Madison
School District is not.
- Well it depends on how you define it.
Under the original definition of compliance, we have been
compliant.
And under the new definition which we're just studying, seems
as though, yes, there is a little bit of a catch.
But we feel that we will be able to come into compliance with the
new definition.
It's something we have not studied and talked about yet
with administration and board.
This is all new.
But we feel that, yes, we should be able to come in compliance
with the new definition.
But we need to study it a little more.
- And that word "compliance" is interesting because ever since
Act 10 came onboard the governor and his allies have talked about
it as the "tools" of Act 10, to allow school districts to handle
the cuts in state funding that were coming their way and
allowing each district to make their own choices in how they
use that.
You felt you've been in compliance with what the law
required.
- We've been in compliance.
What we really want to acknowledge and really make a
point of is that we have over the last six years worked with
our staff and we've had this collaborative process in place
and we feel that through that process that we've really come
into agreement and come to a point where we're getting the
best agreement between staff, administration that's possible.
And we have to understand that if you were to place an entire
say 12%, which is called upon in the request in terms of Act 10
compliance, that's a big hit for our staff.
And we have worked hard to work with our carriers, our insurance
carriers, keep costs down and we think that we're in a good
place.
The only thing we're asking is allow us to continue to be able
to manage it on the local level and not really mandate how we
should take care of our staff.
- And just to clarify for our audience that may not be
familiar with the deal, the area that's in concern here with
Madison is the amount that teachers and staff pay towards
their health insurance premiums.
Act 10 required it to be around 88% and Madison staff does not
pay that much.
The school district pays more, but obviously making them pay
more would mean a pay cut for them.
- Well, let's understand that the requirement was really on
municipalities, on city government.
It really was not on school districts from the beginning.
And so this is what's new.
That he's now--the governor is now placing the requirement on
school districts.
Six years ago when Act 10 came into existence,
it was for city government.
It was not for schools.
We had the option of requiring up to 12%.
For a few years we didn't require anything.
But as of today we do require between 1.5 and 10% from our
staff.
- It seems like Act 10 had been in the past.
Most municipalities and school districts had moved on with
whatever agreement they had.
Does it feel like the governor is ripping open old wounds here?
- We like to refer to it as the re-election budget.
And we think that some of this is political.
Let's face it.
School districts, if you look at, for example, referendum as
an indicator, many districts across the state
have been going to referendums.
And the reason that is is that districts, especially rural
districts, have not had the funding that's needed to provide
for programming.
We're wondering if this is not a little bit of politics and this
is a pretty much a re-election budget.
Yes, we're more than happy to receive funding, but we've been
really on a tight purse over the last six years.
- And obviously there's a long way to go in this budget before
it becomes law, but if it does as written, if the Madison
School District didn't come into this new definition of
compliance, they wouldn't receive some of this per pupil
increase which affects students and local taxpayers.
That would be pitting a lot of groups against each other at the
local level if you didn't ask teachers to pay up to the full
12%.
- I think the way we're going to proceed is to come to the
table with staff, come to the table with our teachers and
really talk about -- and this is the process we've had in place,
really talk about -- use a collaborative process and say
how do we move forward.
How do we move forward with the requirement now that we require
you all to pay up to 12%?
How do we really do that?
We do know there are also some legislators that are saying that
they're not really pleased with these numbers.
And so it may not really come to pass.
So we'll sit down with staff, and we'll talk about this and
see through our collaborative process where is the best --
where should we end up?
What's the best path forward?
- And less than a minute left, but is it a possibility that you
ask the staff and teachers to take the cut and pay more for
their insurance but then make it up in a pay raise somewhere else
so they are made whole in the end of the process?
- Well, we do believe in making the entire situation, making our
staff whole.
That's a possibility.
Again, it's something we'll have to talk about.
This has only been on the table for a day or two and we haven't
had a chance to vet it properly.
Again though, you're right.
It could come to that.
We could figure out a way to make it up
in some kind of a pay increase. That's correct.
- Have you heard a lot from your staff?
- Not as of yet.
We haven't gotten any feedback from staff at this point.
Maybe a few emails.
But we know from the past that we already have staff
that's hurting.
Our lower-paid staff are only making the 20s, 20 some thousand
a year.
As you know, that's barely subsistence.
When you talk about increasing the amount they pay in to any
fund, that's going to be a big hit for them.
- James Howard, thanks for your time today.
- Thanks for having me.
- Now we have a quick update
to the ongoing problems at Lincoln Hills.
That's the youth prison in northern Wisconsin that's under
investigation by the FBI.
Governor Walker wants to add more staff to comply with
federal standards instead of shutting it down as many critics
have suggested.
Walker has proposed adding eight new counselors.
Lincoln Hills is currently the subject of two federal lawsuits,
one of which alleges extensive use of solitary confinement as
punishment for misbehavior.
Former and current inmates claim as much as 20% of the juvenile
prisoners are in solitary confinement at any given time.
Finally tonight, a "Look Ahead" to next week.
We had promised you a check-in with a refugee program manager
in Milwaukee tonight, but due to state budget coverage we are
rescheduling that for next week.
That's also when Frederica Freyberg will return.
I'm Zac Schultz.
Have a great weekend.
- Funding for "Here and Now" is provided, in part, by Friends of
Wisconsin Public Television.