The MATC Audit: Unelected, Incestuous Boards at the Root of the Problem
Part 3 of a 3 Part Series

A comprehensive, self-funded review of the fiscal status of MATC has been conducted through a joint effort by the CRG Network and its affiliate the Greendale Taxpayers Group (GTG). The group consists of CPA’s, pension managers, managed care specialists, legal professionals, educators, and other concerned citizens. Financial records, employment contracts, collective bargaining agreements, business plans, budgets, health care plans, pension agreements, payroll records, and expense reports were obtained from MATC using the Wisconsin Open Record Laws. After extensive analysis of this information over a 60 day period, the findings are being relayed in multiple releases to the public to educate them of the fiscal decisions made by the unelected MATC Board of Directors and the elected government officials in the State of Wisconsin.

Greater Milwaukee Taxpayers Have No Say But Have to Pay

The Governor’s 1993-1994 budget called for the State of Wisconsin to provide local property tax relief by funding two-thirds of the cost of local schools. It had the appearance of providing increased funding for K-12 schools while reducing property taxes. In reality this difference was made up by borrowing funds through the sale of bonds. As part of this reform, revenue caps were imposed on K-12 schools and a new concept called the Qualified Economic Offer (QEO) became law, allowing school boards to impose a 3.8% limit for annual increases in total compensation for union personnel. The teachers unions are in favor of removing such state mandated revenue caps. An example of how spending increases when revenue caps are removed can be noted with community service levies (Fund 80) administrated by school districts. These levies, which are earmarked for recreational and community activities, have soared to $49 million (almost 300%) since 2000/01 when the state legislature removed the caps.  

Source: Milwaukee Journal Sentinel July 23, 2006, “Community Service Levies Soar Since Cap Lifted”.

There is also evidence to suggest that the increase is due to some school boards using Fund 80 as a "slush fund" and diverting it to illegal uses.

Mandated revenue caps control spending. When mandated caps are not in place, governments use taxpayer dollars irresponsibly.  State legislators must recognize this and work to restore fiscal responsibility

Wisconsin Educational Spending: Reckless and deceitful

An increased level of State funding for K-12 schools without corresponding increases in state tax revenues is advocated by current Governor Doyle. This policy is predicated upon the false notion that the state’s annual budget is balanced.  The difference is made up through additional borrowing which has increased debt, jeopardized our bond rating, and simply shifted Wisconsin's serious financial problems to future taxpayers.

The State uses a cash-based accounting system to meet its annual statutory obligation to prepare a balanced budget. This accounting practice recognizes revenues and expenses only if actually received or paid in a given year. It fails to recognize certain liabilities that require cash payments in the future. Bond rating agencies measure the state’s ability to repay its debts and require Wisconsin’s finances to be restated using Generally Accepted Accounting Principles (GAAP). This same GAAP accounting is used by US public corporations and most states across the nation. Under this generally accepted and more appropriate accounting system, Wisconsin has NOT had a balanced budget since 1980, contrary to the claims of Governor Doyle and past Governors.

Wisconsin once had the strongest credit rating in the country. The State’s practice of approving unbalanced budgets, which are falsely represented as balanced, has contributed to Wisconsin’s credit rating now being ranked as the 2nd worst in the nation. This ranking causes interest payments to be more expensive on state debt, and jeopardizes the ability to provide financial support for schools like MATC without increases in taxes.

Source: Wisconsin Policy Institute. March, 2005, “Financial Delusion” p. 1, 2, 5, 11.

No Revenue Caps +  Irresponsible Boards  =  High Property Taxes

Unlike K-12 schools, Wisconsin’s 16-school technical college system, which includes MATC, has been exempt from revenue caps such as the QEO. The responsibility to control costs is assigned to the technical colleges’ appointed Board of Directors and state government officials. The result is extremely disturbing, as property tax levies for all technical schools across the state (including MATC ) have, on average, surged 90.5% from 1991 to 2002, or 3 times the increase in the CPI.

Source: Wisconsin Taxpayers Alliance August 6, 2003.

The combination of no revenue caps and an irresponsible Board hurts the students, the taxpayers, and the Greater Milwaukee community by excessively raising tuition and property taxes.

MATC Students and Taxpayers Ultimately Pay for the Board’s Mistakes

Soaring spending for lavish salaries and benefits at MATC over the past 17 years has resulted in soaring property tax levies, soaring student tuition and fees, and soaring revenue required to educate students. In 1999, the average full-time equivalent student paid $1775 to attend MATC. For the 2006/07 school year, each full time equivalent student will pay approximately $2,630, an increase of 48% over this seven year period.

The MATC system is structured so that students pay only 11% of the total cost or 20% of the total instructional cost to attend MATC. In comparison, residents who attend the UW system pay almost twice as much, or 38.1 % of the total instructional cost to attend the universities. The remainder of the cost of education for both of these schools is subsidized by the taxpayer. (UW tuition is subsidized by State income taxes. MATC tuition is primarily subsidized by Greater Milwaukee area property taxes.)

If MATC students paid the same percentage as UW students their tuition would nearly double but greater Milwaukee area property taxpayers would save $30 million this year.  The answer is to reduce outrageous waste, keep tuitions stable, and save the $30 million.

Technical College Services at Private University Prices

The total cost to educate each full-time equivalent student (FTE) at MATC was $17,240 in 1999, increasing to $23,760 in 2006.  If the current rate of increase continues the cost of educating a MATC student will rise to $46,000 per year in 10 years.  By contrast, the similar tuition for a full-time student at Marquette University, a private 4-year college, is $24,670 per year, almost identical.  While tuition does not cover the entire  per student cost of a private school education, in essence, taxpayers could afford to send every MATC student to Marquette University for what they pay to educate a student at MATC (note also, private school tuition is subsidized by private voluntary donors not compulsory tax payments).

The Wisconsin Taxpayers Alliance report shows that within the UW system, tuition covers approximately 40% of the cost of education.  We can then calculate the cost per student at UWM by dividing $5,868 (yearly UWM tuition cost) by 40% to yield $14,670.  This puts the cost of educating MATC's 13,000 students within the UW system at $191 million dollars, $118 million less than MATC.  Existing state and federal  taxes, other revenue sources, and student fees currently supply $176 million in MATC funding.  This would reduce the required Milwaukee area property tax contribution to $15 million in order to cover the difference.  This represents an 88% decrease in the Greater Milwaukee Area property tax levy (currently $133 million) by simply converting operation of MATC programs and facilities to the UW system.

Source: MATC 2000/01 and 2006/07 Activity Plan and Budget, Wisconsin Taxpayers Alliance July, 2003: “Why are Wisconsin’s Taxes so High?” Pg 27, 37.  Marquette University Bursar's Office, UWM Tuition Schedule, University of Wisconsin System Response to the 2004 Legislative Fiscal Bureau Recommendations on UW System Staffing, February 1, 2005.

The Greater Milwaukee property taxpayer subsidizes the high operational cost of MATC, including student tuition as well as lavish wages and benefits for employees.

MATC is failing to fulfill their mission as a technical college

The clearest measure to determine success at the technical college level or higher, is shown by the ability of students to put their education to use in the job market. In 1999, 85% of MATC graduates found employment related to their course of study.  Source: MATC 2006/07 plan, p. 63.

At the present time, only 67% of MATC students are employed within the field from which they graduated."   Source: MATC 2006/07 plan pg. 24.

This could be due to several factors.  Milwaukee ranks only 274 out of 367 in job growth among cities in the country.  Source: Milwaukee Journal Sentinel, August 3, 2006.

Milwaukee County’s population has declined.  Source: Milwaukee Journal Sentinel, June 21, 2006..

Wisconsin had the third largest decline in median income in the entire nation.  Source: Milwaukee Journal  Sentinel August 30, 2006.

Is MATC properly advising their students? Statistics show that the demand for skilled technical workers, such as welders, is predicted to outstrip supply by over 200,000 jobs by 2010.  Source: Wall Street Journal, August 15, 2006.

MATC graduated only 14 welders in 2005. Source: Milwaukee Journal Sentinel, Jerry Schultz former Director of Information Technology, MATC.

Finally, over 70% of all MATC students are enrolled in a General Education or Business curriculum.  Is this sort of education the core mission of a technical college, particularly when the Greater Milwaukee Area already has a taxpayer funded education institution that provides similar educational services for one-quarter of the cost?
Source: whttp://www.wtcsystem.edu/reports/fact/cost_alloc/pdf/category_total.pdf

How is it that only 8% of MATC’s full- time equivalent students are enrolled in technical programs where the current job outlook is strong? One in three will not be employed in their field of study.  Even with an outrageous price tag of $23,760 per student, MATC is failing in its core mission.  Also, why should taxpayers support an institution that provides services already available to them from other sources at a fraction of the cost?

Sampling of Communities That Pay for MATC

The counties of Milwaukee, Ozaukee, Washington, and New Berlin fund the entire property tax levy for MATC, based on property values. These communities have no choice but to pay for the spending decisions of the Board, as MATC is not subject to revenue controls. The 10 highest taxed communities in 2000 and their respective MATC tax bills are shown in the table below, demonstrating a total increase of 53% from 1999/00 to 2005/06. Also included is a pro-forma 2005/06 tax levy, which illustrates $37.4 million in savings that would be realized this year alone had MATC spending increased in line with the CPI since 1991

MATC Tax Levy
Ten Highest Paying Communities
$Million’s)

Source: 2000/01 and 2006/07 activity plan and budget page 60.

In 2005, $37.4 million could have been saved by ten communities in the Greater Milwaukee area if MATC curbed its historical spending to match the CPI. Considering the multitude of economic issues facing our cities, MATC’s irresponsible spending habits further adds to the perception of corrupt and/or wasteful local government.

Taxation Without Representation . . . or worse!

The composition of the 9 MATC Board of Directors consists of representatives of employers, employees, elected officials and a school district administrator per Wisconsin law. As of May 15, 2006 the Board consisted of the following persons along with their current place of employment.

Lauren Baker: Program coordinator with Milwaukee Public Schools
Jeannette Bell: Mayor of West Allis and board chair until July of 2006
Pedro Colon: State Representative for the 8th Assembly district
Peter Earle: Attorney in private practice
Dr. William Hughes: Superintendent of the Greendale School District
Mark Maierle: Business Manager, International Union of Operating Engineers #317
Linda Sowell: Public affairs consultant with Martin Schreiber & Assoc. (Lobbyists)
Bobbie Webber: Board chair, Milwaukee Fire Department Captain, and union secretary
Lenard Wells: Chairman of the State of Wisconsin Parole commission.

Current and past Board members of MATC have been irresponsible stewards of Greater Milwaukee Area property tax dollars. Decisions are based upon maintaining and improving the level of wages and fringe benefits from year to year, which take a larger share of residents’ personal incomes. How did it get to this point? In examining the backgrounds of the MATC board members, there are 2 elected public officials (Ms. Bell, Mr. Colon), 3 who work in the public sector heavily represented by unions (Dr. Hughes, Mr. Webber, and Ms. Baker), another public sector employee (Mr. Wells), a business manager for a local electrical union (Mr. Maierle), a lawyer (Mr. Earle), and a public relations consultant for a firm that represents special interests (Ms. Sowell).
The vast majority of the board (7 members) come from the public sector and/ or an environment tied to organized labor. Many have personal wage and benefit packages that are similar to those at MATC. Given their perspective, it is clear why special interests are better represented than the average taxpayer.

In the words of the Board Members themselves

Following are highlights of Board Member e-mails, obtained through open record requests.

In discussing financial decision-making, Board member Dr. William Hughes writes to fellow Board member Mark Maierle, dated March 30, 2005 at 7:54 am:

“In the end, a budget with over 90% perhaps as high as 94% of funds going to payroll, benefits and pensions MATC will need all the revenue it can generate.”

And a continuation of the e-mail at 9:31 am where Dr. Hughes states:

“the general public does not pay attention to the goings on at MATC."

Their focus is generating more revenue, not managing costs. Revenue comes from the student and taxpayer. They suggest, increase taxes and tuition to fund lavish compensation. The taxpayer won’t know.

On March 25, 2005 at 11:07 am, former Board member Chuck Gobel writes to fellow Board member Mark Maierle regarding MATC Board dysfunction.

“When Board members take positions and make comments based on who offered an opinion or suggestion and not what the issue is or the merit of the statement, there is more than polarization, there is dysfunction. I deeply resent the reaction that my question and comments get from some Board members.”

Upon receiving this e-mail Mark Maierle forwards this e-mail on April 12, 2005 @ 7:18 pm to Dr. William Hughes and states:

“As Michael Corleone would say. He is dead to me”.

The MATC Mafia at work?

On April 1, 2005 @ 9:37 am, Board member Mark Maierle further communicates his beliefs in an e-mail to fellow Board member Peter Earle.

“Check the record and you will see that I have supported the unions on every issue except Cole’s contract”. “ I would never treat fellow unionists the way I was treated, so I continue to work for them.”

The Board’s allegiance is to special interests, not to the taxpayer.

On May 23, 2005 at 10:13 a.m., Lauren Baker writes to Mark Maierle regarding MATC child care center expenditures.

"Jeskiewitz (State Representative Sue Jeskiewitz) thought it was OK when we explained that the centers were used as learning labs. The administration has not pursued that line of reasoning. Craig P. thought we should charge the child care expense to teaching and learning, thus making the centers run as a learning lab . . . Remember, Jeskiewitz is a Republican and needs to be vocal on these issues. I’ve never felt compelled to set policy based on what Alberta (State Senator Alberta Darling) and Jeskiewitz tell us. …We need to have a sophisticated view of the politics in Madison or we will be jerked around”

Lie to politicians, the elected representatives of the taxpayers, tell them what they want to hear so they go away.  That is the Board's idea of political "sophistication."  The Board promotes funneling “Child Care” into another budget, Teaching and Learning. This way, it represents something other than babysitting at taxpayers expense."

On February 22, 2005 at 9:48 a.m., William Hughes writes Mark Maierle about potential new Board members.

“I know Ann (Sczygiel) and Karl Hertz. Karl is my old friend and former Superintendent of Mequon. Ann is a budget analyst for Walker and Ament and took a retirement deal.”

Interestingly, in the Fall, 2005 Ann Sczygiel was also unanimously appointed to the Greendale School Board (where William Hughes is Superintendent) over 3 other highly qualified candidates. Inbreeding of Board members is one of many reasons why MATC is not under control. Only their cronies are allowed in so that they have a homogeneous think tank.  Oh yes, and let us not forget the "double dipping" that is a less publicized  part of the pension scandal.  Retire from one agency, collect a sweetheart pension deal, then have your cronies appoint you to another government position so you can continue to feed at the trough.

On March 31, 2005 at 8:45 am., Mark Maierle writes to Peter Earle about a persons’ observation that Darnell Cole is tight with the union, and the union holds an axe over the Board’s head.

“I believe his criticism of Cole came from his perception that Cole was in the union’s pocket.  It sounds like the union is again threatening a no-confidence vote. The Board has had this ax held over our heads long enough.”

Special interests get their way. Taxpayers have to pay.

CONCLUSIONS AND RECOMMENDATIONS

The strategy of the MATC Administration and Board

Successful organizations in the private sector continually search for more efficient methods to deliver a product or service to their customers. Failing to engage in improvement processes opens doors to competitors who are better able to serve customers more effectively and efficiently.  At MATC, there are no competitive or adversarial forces.  The responsibility to pay competitive wages and benefits and to control educational costs belongs to the MATC Board of Directors. This Board has favored special interests ahead of those of the taxpayers who pay the bills. The result has been the granting of irresponsible wage and benefit packages which has led to soaring property tax levies.

If current practices are allowed to continue, the total cost to educate a full time student at MATC will double within 10 years from $23,760 to $46,000. The corresponding property tax levy will double from $132.6 million to $260 million, far beyond the residents ability to pay.

Recommendation 1: Replace the entire MATC Board

The Greater Milwaukee Area must seriously consider converting from an appointed to an elected board.  Because of the multi-jurisdictional nature of MATC, this may require extensive study and negotiation to reach an equitable method of converting.  In the short-term, the current Board needs to be replaced with a balanced and responsible Board that can rationally address all of the issues facing MATC. A new 7 person Board should be appointed to both provide needed skills and insight as well as to prevent special interest groups from having undue influence. A potential composition might include:

• 2 Non-partisan local elected officials

• 1 member from a local business organization such as  the Greater Milwaukee Committee or Metro-Milwaukee Association of Commerce

• 1 union representative

• 1 member from a policy research organization such as the Public Policy Forum or the Wisconsin Policy Research Institute

• 1 member from a taxpayer advocate organization such as the Wisconsin Taxpayers Alliance or Citizens for Responsible Government

• 1 high ranking official from the University of Wisconsin-Milwaukee (UWM) and/or Milwaukee Public Schools (MPS) on an alternating 1 year term basis.

This new Board would have balanced representation with advocates in local politics, public policy, unions, education, and taxpayers.  A representative from UWM could focus on eliminating duplicate MATC educational programs already offered at neighboring UW schools. A representative from MPS working with MATC would place additional emphasis on improving high school graduation rates. By improving the educational process at MPS, the taxpayer would not be responsible for the cost of re-educating students at MATC.  Finally, a taxpayer advocate would serve as a financial watchdog and spending counter-balance.

Recommendation 2: State mandated revenue caps needed at MATC

The vast majority of employee compensation at MATC is covered under union contracts. MATC is in a situation that is similar to that of Milwaukee County. Taxpayer dollars are irresponsibly given away in the form of excessive compensation that does not improve the quality of services provided. The difference between Milwaukee County and MATC is that Milwaukee has a State-imposed revenue cap whereas MATC has none. In order to keep future property taxes in line with residents ability to pay at MATC, labor contracts need to be renegotiated, and/ or jobs need to be eliminated or outsourced at lower cost. Soaring costs at MATC can only be controlled if annual revenue caps are implemented which will ultimately limit tax increases. Without revenue caps tied to the CPI (or growth in per capita incomes) the taxpayer will be constantly forced to fund a standard of living for public employees that they themselves will never enjoy.

Recommendation 3: MATC tuition Should be in line with that at UW system and duplicate programs eliminated

Full-time students at MATC pay about 20% of the operating cost of education compared to UW students who pay about 40% of the cost. The 20% difference at MATC is paid for by Greater Milwaukee Area property taxes at a cost of approximately $30 million. MATC offers general educational curricula as well as technical educational programs. 70% of MATC students are enrolled in general education or business classes, not in technical educational programs.

Subsidizing tuition for unique technical programs that are not available at other colleges should be considered an investment for future business growth in the area. However, since most of these non-technical programs are offered at schools such as UWM, many students are attending MATC for one simple reason; low cost tuition for the student, all at Marquette University prices for the taxpayer!

Student tuition needs to be increased from 20% of operational costs at MATC to 40% for non-technical programs to fall in line with the UW system. Students in these general educational programs will then choose to attend the school that offers the best educational value. Competition will drive quality. This change will force MATC to control its costs, reduce duplication, and provide incentives to students considering technical programs at MATC. The result will be a greater supply of technically skilled workers which will help businesses in the area to expand and flourish in the Greater Milwaukee Area.

Recommendation 3 - Alternate: Allow the UW System to take over operation of MATC programs and facilities.

The overwhelming majority of MATC educational programming is currently available within the UW System or could easily be made available with existing resources.  The UW System clearly provides a lower cost alterative to the duplicate programs offered by MATC.  The potential for dramatic property tax reduction exists by simply substituting the lower cost UW System infrastructure in place of the more expensive MATC infrastructure.  One time transitional costs can be kept low by continuing to use MATC personnel and facilities but within the lower cost structure of the UW System.

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