Wisconsin Supreme Court Affirms County’s Pension Cuts

Wisconsin flag

In 2011, Wisconsin’s Milwaukee County reduced pension benefits for nurses by cutting the pension multiplier from 2 to 1.6.

In a 5-2 decision on Friday, the Wisconsin Supreme Court upheld the legality of the County’s decision to reduce the multiplier.

From the Milwaukee Journal-Sentinel:

The Wisconsin Supreme Court on Friday upheld Milwaukee County’s 2011 move to reduce pension benefits for nurses, which had been struck down by lower courts.

The high court’s ruling preserves millions of dollars in planned future savings by the county.

In a 5-2 decision, the court overturned a trial judge and the Court of Appeals, both of which had sided with Suzanne Stoker and her union, who claimed that enhanced pension benefits granted by the County Board in 2000 was a vested property right that even collective bargaining couldn’t undo.

“We conclude that the Legislature preserved Stoker’s rights and benefits already accrued but also gave Milwaukee County home rule authority with the flexibility to enact such prospective only changes,” Justice Annette Ziegler wrote for the majority.

In a dissent joined by Chief Justice Shirley Abrahamson, Justice Ann Bradley wrote, “It is only by repeatedly ignoring the language of the governing session laws that the majority is able to conclude that the county may reduce the pension multiplier, thereby dealing a blow to the rights of the employees.”

At issue was the county’s move to cut the pension multiplier — a key factor in determining pension payments — from 2.0 to 1.6 for pension credit earned starting in 2012. That amounted to a gradual 20% reduction in pensions.

Two lower courts had sided with unions on the issue and claimed the County could not reduce the pension multiplier because doing so amounted to the County taking away the pensioners’ property. The rationale of the lower court rulings:

Milwaukee County Circuit Judge William Pocan ruled in 2012 that the county nurses had an unconditional property right to their pension benefits. He cited the 1945 state law establishing pension rights for Milwaukee County employees, which says each worker “shall have a vested right to such annuities and other benefits and they shall not be diminished or impaired by subsequent legislation or by any other means without consent.”

The county and its Pension Board argued that the multiplier reduction didn’t violate that law because it applied to future pension service credit only and because the nurses’ union had approved the change. Pocan said, however, the benefit reduction could be done only with consent of individual employees.

The Court of Appeals affirmed Pocan in November 2013.

The Supreme Court opinion can be read here.


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Milwaukee Proposes Pay Raises To Offset Employee Pension Contributions

Tom Barrett

Milwaukee’s mayor, Tom Barrett, is planning to give city workers a pay raise to make up for the increased percentage of their paychecks that must be contributed to the pension system.

The increased pension contributions are a part of Wisconsin Gov. Scott Walker’s Act 10, which lowered pension costs for the state but shifted more expenses to employees.

From the Milwaukee Journal Sentinel:

The City of Milwaukee’s proposed 2015 budget would give pay raises of 3.9% to 2,331 workers next year to compensate them for state-mandated pension contributions, Mayor Tom Barrett said Monday.

The pay increases would cost the city $4.8 million, according to figures released Monday. The city also will eliminate the practice of mandatory furlough days as a budget-saving measure for all non-uniformed employees, at an additional cost of $2.7 million.

Those funds come from the $8 million in savings the city gained from not paying the employee pension contribution in 2015 for the 2,331 workers, according to Budget and Management Director Mark Nicolini.

Barrett said the employees deserve the boost in pay as compensation for the pension contributions after going without wage increases in 2011 and 2012 and contributing more toward health care costs in recent years.

Gov. Scott Walker’s signature change in public employee labor law, known as Act 10, bars municipalities from paying the employee share of pension contributions. So all local government employees — except firefighters and most law enforcement officers — are required to contribute half the cost of their pensions, under the law.

In Milwaukee, that amounts to 5.5% of a city worker’s pay for those employees hired before Jan. 1 of this year, Nicolini said.

The city council president agreed with the budgeted raises. From the Journal Sentinel:

Common Council President Michael Murphy said Monday he agreed with the mayor’s proposal. Non-uniformed employees have steadily lost income in the last several years when you consider the lack of raises and higher health care contributions, Murphy said.

“To attract and keep good employees, you can’t, year after year, tell them they are going to be making less money,” he said. “We have to compete with the private marketplace” for new hires.

The Wisconsin Supreme Court upheld the legality of Act 10 in a July ruling.


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