Bankruptcy Ruling Opens Door to Discharging Student Loan Debt

The 7th Circuit Court of Appeals ruled this week that a debtor could discharge her student loan debt in bankruptcy. Krieger v. Educational Credit Mgt. Corp., 7th Cir. Case No. 12-3592. Student loan debt is a category of debt that typically cannot be discharged. Allowing the discharge in this case is highly unusual. However, unless overturned on further appeal, the law set forth in this case is the law that Wisconsin bankruptcy judges will follow. The 7th Circuit was careful to limit the discharge to this particular debtor’s facts, but the decision certainly opens the door for future debtors to argue their student loan debt should be discharged. Read the decision here.

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April Municipal Law Alert Available Now

The April 2013 edition of the Municipal Law Alert is now available online. View the latest articles by clicking here or clicking the titles below. This month’s articles include the latest cases and information on Act 10, as well as practice tips on Board of Review scheduling and public comment sessions.

Archives of the Municipal Law Alert, including the ability to key word search, are also available.

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Best Practices: Public Comment

Although not required by law, most municipalities have a space on their meeting agendas for “Public Comment” or “Public Input” on matters and issues in the municipality. It is important to keep in mind a couple of items when dealing with public comments.

First, you should clearly set out the rules. At a minimum, you should state the maximum length of time for comment by each speaker and the total length of the comment period. In addition, during public comment, keep in mind that public comment is just that – the time for the public to comment on any issue. It is not, however, a public discussion, debate, or question-and-answer period. It is out of order for members of the board to engage with the public during this time. Resisting the temptation to respond to a member of the public can also prevent a potential open meetings violation. A discussion could become a violation if the issue being discussed is not on the agenda.

If an issue raised in the public comment session is one the board wants to follow up on or engage the audience on, other options are available. Set up a public hearing or a question- and-answer session on that narrow issue, or place the item on the agenda of a future regularly scheduled meeting. Otherwise, during public comment, board members should sit back, relax and listen to the public’s interest and thank them for their participation in the process.

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Acts 10 and 32 Public Safety Employees and Contributions to Health Care Benefits

Among other things, Wisconsin 2011 Act 32 modified “Act 10” by removing public safety employees’ rights to collectively bargain for health care benefits. Specifically, by statute, municipal employers are prohibited from bargaining with a public safety employee union about:

The design and selection of health care coverage plans by the municipal employer for public safety employees, and the impact of the design and selection of the health care coverage plans on the wages, hours, and conditions of employment of the public safety employee.

Wis. Stat. § 111.70(4)(mc)6.

This may seem like plain and unambiguous language, but three circuit courts have reached apparently conflicting conclusions about exactly what it means, particularly with respect to contributions employees have to make to their health care benefits.

In December 2012, a Brown County judge determined that the scope of this ban extended to bargaining about incidental medical costs, such as deductible amounts. Green Bay Professional Police Ass’n v. City of Green Bay, Brown County Case No. 2011CV2195. The case involved various area law enforcement and fire fighter associations. The associations contended they were not barred from bargaining about “their proportionate cost of, and financial exposure to, the ‘design and selection’ choices made by a municipality.” The city and county, on the other hand, argued those costs fell under the prohibition of bargaining for health care benefits. The Court ruled that since the proportionate share of the costs of health care plans would impact, even if indirectly, “the wages, hours and conditions of employment” and thus was prohibited by Wis. Stat § 111.70(4)(mc)6.

Earlier in 2012, a Milwaukee County judge issued a ruling that contrasts sharply with the Brown County decision. Milwaukee Police Ass’n Local 21 IUPA AFL CIO v. City of Milwaukee, Milwaukee County Case No. 2011CV15086. In that case, the Court held that the term “design,” as contained in Wis. Stat. § 111.70(4)(mc)(6), does not allow a municipality to unilaterally determine all aspects of health care coverage and granted a permanent injunction against the city from “imposing health insurance deductibles, co-pays, prescription costs, etc., other than as was agreed to as part of bargaining the 2010-2012 Labor Agreement between the parties.”

Additionally, in October of 2012, a Dane County judge similarly ruled that Eau Claire County sheriff deputies can negotiate their health care deductibles. Wisconsin Professional Police Ass’n v. Wisconsin Employment Relations Comm’n, Dane County Case No. 2012CV1123.

Municipalities should note that as of the date of this writing, all three of these cases are on appeal, and thus the law on this point remains uncertain.

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Board of Review Scheduling

As Board of Review season approaches, it is a good time to consider the scheduling of Open Book and Board of Review. Some municipalities schedule a single date for both the Open Book and the Board of Review. Our recommended practice is to schedule those on separate days.

Under Wisconsin law, the taxpayer wishing to challenge his or her property assessment must give 48 hours’ notice to the Board of Review. The purpose of the Open Book is to give property owners an opportunity to review and hopefully resolve issues with the assessor prior to a challenge before the Board of Review. Holding the two events on the same day can disadvantage both the property owner and the assessor. Neither may be aware of the basis for the other party’s position and, therefore, are unable to adequately prepare and perhaps resolve issues prior to proceeding to a hearing before the Board of Review.

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Act 10 Status Update and “A Tale of Two Cities”

Recent Court Activity

Act 10, which, among other things, greatly curtailed collective bargaining rights for public employees, was signed into law by Governor Walker on March 11, 2011. Since then there have been several court challenges to the law. Act 10 has been in the news again lately, as a recent Court of Appeals decision denied Attorney General J.B. Van Hollen’s attempt to stay a Dane County Court order which determined that certain parts of Act 10 were invalid. Importantly, this was not a decision on the merits. The State’s appeal of Judge Colas’ decision is still under consideration, and for now the Dane County ruling stands; whether it applies to areas outside of Dane County is uncertain, and whether some or all of it will be overturned is unknown.

So for the moment there is no change in the status of the law – the operative word for local school districts and municipalities is uncertainty.

Background

In Madison Teachers Inc. v. Walker, the Dane County circuit court invalidated the provisions of Act 10 that:

  • Prohibited municipalities from bargaining matters other than base wages.
  • Required a referendum to raise wages beyond the CPI (consumer price index).
  • Required unions to recertify annually and required a majority vote from all employees (need only a majority of those voting).
  • Prohibited “fair share” agreements.
  • Prohibited payroll deductions to collect union dues.

In a section affecting only the City of Milwaukee, Judge Colas also ruled the City has the right to local control of its own pension system.

Tale of Two Cities

As a result of the Dane County decision, some unions have approached school districts and municipal employers demanding that they begin negotiations as if Act 10 never existed, and some local governments and school districts have treated unions like they don’t exist.

In the meantime, local governments can perhaps take some caution and advice from the way two school districts and teachers unions have taken different approaches to this uncertainty.

In Janesville, the school district and the teacher’s union have, apparently, dug in their heels and are ready for more court challenges. The Janesville teachers union has demanded that the Janesville school board begin negotiations, and has threatened legal action if the board refuses. The board told teachers they must sign individual contracts or face termination. How this will play out is anyone’s guess. See Janesville GazetteXtra, “Teachers Union Threatening to Sue Janesville School Board,” March 14, 2013; and Wisconsin Public Radio News, “Janesville Teachers Union Threatens School Board Lawsuit,” March 15, 2013.

The Hudson school district and teachers union have taken a different approach. In 2011, shortly after enactment of Act 10, the Hudson school district created an advisory committee consisting of administrators and teachers. This committee worked on an employee handbook, and on other areas of employee relations, such as teacher evaluations, benefits, and salary structure. In the end, the board implemented much of the advice of the committee, and no one is threatening to sue anyone. See Hudson Star Observer, “HSD Teacher Advisory Committee gets Nod from Teachers,” March 21, 2013.

Perhaps the best policy advice to be gleaned from this is that you catch more flies with honey than with vinegar.

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Register Now – Business and Economic Development in Western Wisconsin

The next installment of “Breakfast with Bakke Norman,” a free quarterly seminar series, is “Business and Economic Development in Western Wisconsin”. The seminar will be held on May 17, 2013, at the WITC New Richmond campus. Registration, hot breakfast and networking begin at 7:30 am. The program will be from 8:00 am to 10:00 am.

Join us for a panel discussion about the economic development tools available in Western Wisconsin and how those tools can be used to promote business growth. Topics covered include Regional Business Fund and Wisconsin Economic Development Corporation tools; training and partnership with local educational institutions and developers agreements. Register now by clicking here or by calling 715-246-3800. An informational flyer is available here. Registration appreciated by May 10. The program is free and open to the public.

Scheduled panelists include:

If you have questions, please contact Janet by email at jking@bakkenorman.com or by phone at 715-246-3800.

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