Issue Paper Snapshot Qualified Economic Offer

The Qualified Economic Offer (QEO) law provides a method school boards can use to limit teacher compensation costs. It was enacted in 1993, along with legislation that restricts the amount of revenue local school districts can raise. The law applies only to K-12 teachers.

Under the QEO law, school boards have two options for setting teacher pay and benefits:

1. Impose the QEO law by offering a 3.8 percent settlement (combined salary and benefit increase). Under QEO, teachers cannot petition to take the contract to arbitration and they cannot by law strike.
2. Negotiate with teachers using collective bargaining, which allows binding arbitration and strikes as dispute-resolving mechanisms.

School boards almost always choose the QEO option, which is recommended by the Wisconsin Association of School Boards. If teachers reject the QEO proposal, the school board can impose it, leaving teachers with no legal means to achieve resolution. Moreover, once wages and benefits have been set and a minimum QEO is offered, teachers lack the bargaining leverage to effectively negotiate other compensation issues or education issues such as class size, professional development, or student behavior.

Actual practice shows that when districts impose a QEO, the stated increases do not show up in teacher paychecks. This is because (1) teacher salaries are a function of salary schedules, not only the QEO, and (2) many districts use “cast forward costing,” a process prescribed in the QEO law. This is how it works: Every year, as experienced teachers retire or move on, they are replaced by less experienced teachers with lower salaries and benefits. The district, however, advances these more expensive “ghost” teachers on the salary schedule in projecting costs for the next two-year contract.

By overstating its expenses for teacher salaries, the district gives the impression that it is spending more money on teacher salaries and benefits than it actually does. This means that under the QEO law the district can claim to have met the QEO standard of 3.8 percent combined salary and benefit increases while actually providing less to individual teachers.

WEAC affiliates report that school districts’ use of “cast forward costing” or “ghost people” has resulted in large cost overestimates. This phenomenon is one reason that, since the QEO went into effect, Wisconsin teachers have averaged a 1.9 percent annual salary increase, well below the 3 percent inflation rate during this period.

Talking Issues

The QEO harms the quality of public education:

• Often eliminates collaboration between labor and management, resulting in increased tension in the workplace that interferes with educational quality.
• Discourages those with a superior teaching ability from entering and staying in the education profession by limiting pay.

The QEO negates collective bargaining:

• Allows employers to unilaterally impose a QEO, forcing employees to “take-it or leave-it.” Employees’ only recourse for dispute resolution is to engage in job actions.
• Allows employers to avoid discussion of creative solutions to the challenges facing public schools (such as proposals dealing with class size and teacher preparation).
• Discourages consensus bargaining.

The QEO is unfair:

• Singles out and penalizes one group of public employees.
• Contains a flawed costing formula that uses projected, rather than actual costs. Consequently, district budgets are often overestimated because they project forward the previous year’s staff positions. Turnover savings are ignored and teachers receive less than the QEO promises them.
• Penalizes employees who are planning to retire by giving them a lifetime of reduced pensions.

WEAC Position

The Wisconsin Education Association Council supports repeal of the Qualified Economic Offer law and encourages a new statute that adheres to the following principles:

• nurtures local problem solving;
• mandates open, honest, and direct communication between the parties;
• establishes clear and administratively feasible procedures and reciprocal obligations;
• promotes good will and productivity through voluntary settlements between employers and unions of employees;
• encourages the uninterrupted delivery of high quality public services;
• institutionalizes fairness for all those with a stake in the bargaining process;
• and encourages creativity in the labor/management relationship.

For More Information

The complete issue paper

OnWEAC's Resource Page on the QEO

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