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The QEO (Qualified Economic Offer) is a means by which a school district can offer its teachers union a salary and benefit package that settles all economic issues and precludes binding arbitration. Arbitration would still be available to resolve non-economic issues or if a district chooses not to offer a QEO.
The intended purpose of the QEO, in general, is to provide school boards assistance in dealing with state imposed revenue limits. It grants them the authority to control the rate of increase for the largest portion of their total staffing costs.
The QEO provision first came into law as a part of the 1993-95 budget bill. Originally set to expire in June of 1996, the 1995-97 biennial budget bill repealed that sunset date and made the law permanent. A key additional change in 1998 required that any savings resulting from a fringe benefits increase of less than 1.7% must be added back in salary.
The law is often thought of as a maximum 3.8% total package increase with a 2.1% salary and a 1.7% benefit component. It is not quite that simple. It has always been the case that benefit increases of over 1.7% could have resulted in the salary increase being reduced until a 3.8% total package increase was attained. However, if the benefit increase was less than 1.7%, there was no requirement to increase the salary or reach a 3.8% total. That changed with Act 237 and, beginning July 1, 1999 and later, savings from fringe benefits have to be added back to the 2.1% salary increase minimum until a 3.8% total package increase is attained.
In brief, to meet QEO requirements, a district must first maintain the teachers' fringe benefits and continue to pay its percentage of those costs. Changes in the cost of fringe benefits determine the amount of money available to apply to salary increases. The law is predicated on an expected minimum annual salary increase of at least 2.1% of the existing salary and fringe benefits package. In fact, however, QEO requirements are met if the combination of increases in both salary and fringe benefits total 3.8%.
In a very simplified way, the QEO is calculated through following these steps:
A completed, legal QEO requires both Form A (the above noted determinations and calculations) and Form B (a summary of the underlying specific calculated totals). There are additionally a Form C (instructions for determining the components of a QEO) and Form D (a WERC filing form once a settlement has been reached).
For a detailed explanation and the actual forms visit <http://werc.wi.gov/werc-qeo.pdf>.