For the first time in 16 years, school district leaders and teachers across the state are negotiating contracts without the "qualified economic offer." That law, repealed in June as part of the state budget, in effect capped annual teacher compensation increases at 3.8 percent for pay and benefits combined.

The change has school officials, teachers, parents and property owners on the edge of their seats.

Conventional wisdom suggests that both teacher pay and property taxes will shoot up dramatically as they did year after year prior to the QEO. However, some observers think the recession and existing state-mandated revenue caps could preempt any quick jolts to the pocketbooks of teachers or taxpayers.

People on both sides of the bargaining table agree on this: What comes next remains unclear.

"The landscape has changed significantly and we're not entirely sure how it's going to play out," said Don Hietpas, chief financial officer for the Appleton Area School District, the largest district in the Fox Cities with 15,000 students. "I don't know that anybody can predict exactly what's going to happen."

Corey Otis was a high school student the last time there wasn't a QEO on the books.

Now, he's a teacher with 10 years of experience at Appleton East High School and serves on the bargaining committee.

"This is new territory for a lot of us," Otis said.

Before and after

The QEO, which took effect with the 1993-94 school year, allowed districts to avoid arbitration with teachers unions by offering an annual increase in compensation of at least 3.8 percent.

For the nine years prior to 1993, pay and benefits rose by an average of about 7.5 percent annually, according to the Wisconsin Taxpayers Alliance. With the QEO in place, the average dropped to about 4 percent.

The same was true for school property taxes. Before the QEO, total tax collections increased by an average of 9 percent; afterward, the increases dropped to 4 percent.

Prior to the QEO, the average salary for a public school teacher in Wisconsin was about 4 percent above the national average, the Taxpayers Alliance reports. In 2007-08, the average was 6 percent below the national norm.

However, when benefits are figured in, Wisconsin teacher compensation still was above the national average, the Taxpayers Alliance says.

Last school year, the state average was about $51,000, according to the most recent data collected from districts by the state Department of Public Instruction.

"You can't predict with certainty where we're headed, but the only thing we can draw on is what the pre-QEO past looked like. It's fairly clear: Compensation dropped by 3 to 4 percent and property tax increases dropped by 4 to 5 percent," said Todd Berry, president of the nonprofit research group based in Madison.

Berry said an important factor remains in place — revenue caps established at the same time as the QEO. They limit each district's property tax and state aid collections based on student enrollment, inflation and prior-year spending.

So, if a district offers teachers a higher-paying contract, it may have to spend less on other things like maintenance, books or desks. Ironically, the district could end up laying off teachers to cover the increased contract costs.

"The potential losers in this," Berry said, "are school superintendents, school boards, young teachers and anything in the budget that's not compensation."

Otis said some people might be surprised by what happens in the post-QEO world.

"Right now, budgets are so tight and there are all these problems with school funding in Madison, I don't think the QEO (elimination) will have the impact some people think it will."

Coming to terms

As of last week, 89 of the state's 426 school districts had settled new teacher contracts in 2009, according to the Wisconsin Education Association Council, the state's largest teachers union.

Spokeswoman Cristina Brey said WEAC has salary data for 55 of the settled districts, and increases averaged 1 percent. She could not provide a number for contracts settled since the QEO was eliminated in June.

Stockbridge, a small school district in Calumet County, is among the 337 without new contracts.

Dave Moscinski, school district administrator there, said talks are proceeding "reasonably" without the QEO.

"The economic realities that are hitting are being taken into account," he said.

Moscinski said settlements likely will depend on each district's financial conditions. "And that varies significantly," he said.

In Appleton, Hietpas said negotiations have yet to start. In the short run, his guess is that talks won't change much.

"Beyond that, what will happen is very, very difficult to predict."

Dan Rossmiller, director of government relations for the Wisconsin Association of School Boards, envisions lower contract settlements in the short term.

"Due not to the changes in the law but due to the economy," Rossmiller said. "But in the long term, we will see higher teacher settlements."

Some teacher bargaining units are calling for 5 percent and 6 percent increases in places where unemployment is the highest. Others are proposing wage freezes, he said.

Mary Alice Browne, who has four children in Neenah schools, admits she is no expert on school finances and the QEO. She does know she is happy with the education her kids are getting.

"I personally feel you can't pay these people enough for all the work that they do," Browne said. "The topic of benefits is very tricky and I understand that a lot of community members feel it's something that needs to be renegotiated."

Rossmiller said negotiations are taking longer than usual.

"I think part of it is the new law (and) part of it is the state of the economy, which is making it difficult for districts and teachers to figure out just what they should propose."

Otis, the Appleton teacher, said he and his colleagues are pleased to be able to work with the same leverage as their employers.