Want to turn school district deficits into surpluses? Do what Wisconsin did.

The 2011-2013 Wisconsin Budget Repair Bill, or Act 10, gives school districts statewide more control over their budgets—including choosing benefits packages through a competitive bidding process, employee benefit and retirement contributions, as well as more flexibility over salaries.

Christian D’Andrea, policy analyst at the John K. MacIver Institute for Public Policy in Madison, explains how Act 10 freed districts to turn deficits into surpluses in Education Next. The editors summarize the act’s effects in this way:

Act 10 limited collective bargaining for certain public-sector employees, among them public school teachers, causing a storm of protest that lasted for months, until the Wisconsin Supreme Court validated the legislation. While the plan called for a cut of 5.5 percent to education, dropping per-pupil funding by $550, funding limits could be offset at the district level by increased employee contributions to health care and pension programs, and by giving local school districts other tools such as wage freezes and adjustments in salary schedules.

The midsized district of Kaukauna turned a $400,000 deficit into a $1.5 million surplus, in part by requiring employees to cover 12.6 percent of the costs of their health-care coverage.  Appleton, a district with more than 15,000 students, saved 3.1 million when the union –backed WEA Trust, which had a monopoly on providing health-care services, matched the lowest bid from a new, outside competitor.  Even Madison, the epi-center of protests, saved $10 million by paring down the number of available insurers and plans.

Many districts that used the cost-cutting tools of Act 10 were able to reduce their debt through a combination of employee pension contributions and teacher retirements, in addition to health-insurance changes.  The Oconomowoc School Board used the collective bargaining changes to reduce its high school staff from 75 to 60 teachers, while offering the remaining teachers $14,000 stipends to take on extra classes.  The move saved more than a half million dollars, which the district then used to bolster its funding in elementary and middle schools, where it had experienced a significant rise in class sizes. …

While no district wants to face cuts, Act 10 allowed districts consolidate power, customize their education offerings, and recoup some or all of the funding that was lost in the 2011-2013 state budget.  In the 2013-2015 state budget, money for districts will be tight again, creating a new round of challenges, which D’Andrea says will probably include merit pay, a teacher effectiveness program, the expansion of school choice, and maybe the creation of a statewide charter authorizer.

One-size-fits-all schooling and budgeting don’t work. If Wisconsin can break free from that mindset, surely other states can as well.