As he seeks re-election and, if the rumors are true, a bid for governor in 2018, Milwaukee County Executive Chris Abele is trying to portray himself as a careful steward of taxpayers’ money. For example, in an early glossy mailer, Abele boasted that he “said no to decades of cronyism and corruption, cleaning up the county’s pension mess, saving taxpayers millions and ending big payouts to insiders.”
Once again, Abele is not exactly telling the truth—and following the Scott Walker campaign playbook by using the county’s pension “mess” in an attempt to win votes. He’s also ignoring a pension “mess” that occurred on his watch: The 2016 county budget uses reserve funds to pay for a $20 million hole in the pension fund as a result of the county’s outside actuaries’ mistake in calculating pension contributions.
Let’s look at the facts. Abele had a chance to clean up the county’s pension system but instead of listening to experts and doing the prudent thing for both county retirees and taxpayers, he charged ahead with a misguided “solution” that would have taken money away from retirees and put county taxpayers on the hook for a costly legal fight—and perhaps $20 million in unnecessary pension spending.
The pension scandal Abele refers to isn’t the one that swept Scott Walker into office as county executive, but it’s one that Walker left behind when he became governor. In 2008, the Milwaukee Journal Sentinel won a Pulitzer Prize for discovering in 2007 that some of the county’s pension plans didn’t adhere to county ordinances or Internal Revenue Service (IRS) rules. It seems that the county staffers were giving employees erroneous information about their pension plans, which the workers relied upon when making decisions about saving for retirement. The workers following the county’s advice had no idea it was faulty.
Walker made a lot of noise about fixing the mess and he and the county board decided unanimously to try to recoup the disputed money from retirees. In reality, however, not much was done to fix the problem or get the money back. It seems that even Scott Walker couldn’t stomach taking money away from retired senior citizens who’d made important life decisions based on county advice they trusted.
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Flash-forward seven years to 2014, when an Abele administration official discovered that nothing had been done to fix the problem or get the money back. When Abele found out, he quickly shot out a letter to the 200-plus affected retirees saying that he was going to take back the “overpayments.”
Abele continued with that threat even though a growing body of evidence throughout 2014 showed that his rash decision was not in the county’s best interests.
Why was Abele’s impulsive “fix” so misguided? First off, some retirees threatened to file a class action lawsuit arguing that they had followed county advice about their pensions and therefore weren’t liable for the county’s own mistakes. It would have cost the county plenty to fight that case in court and they likely would have lost. Secondly, the majority of the pension payouts—about $20 million of the disputed $26 million—were so old that they were beyond the statute of limitations and the county couldn’t recoup them. And under IRS rules, if the county admitted it made a mistake in its pension payments, it would be responsible for covering the amount that it couldn’t recoup from the pensioners to make the fund whole. That would put the county on the hook for $20 million of the disputed $26 million. Taken together, it looked like it would have cost the county more money to try to recoup the disputed pension payments than to leave them alone.
Fortunately, there was a simpler and less punitive solution: simply change county ordinances so that the disputed pensions were legal. The costs were already factored into pension calculations, so no new money would need to be added to the pension system. Plus, this strategy would not harm seniors who were relying on their county pensions to pay their bills. The county’s attorneys recommended this fix and the board voted 14-2 to change the ordinances.
But Abele resisted listening to reason and wanted to cut the retirees’ pension payouts going forward. He vetoed the board’s resolution, which the board overrode. Finally, the problem was solved.
The takeaway from this episode? That Abele was more interested in scoring political points in the style of Scott Walker than in doing the right thing for the county. Abele positioned himself as Walker Lite and exploited right-wing loathing of county workers and made deliberate decisions to take money away from retirees whose only mistake was in following the advice of the county’s pension personnel.
But perhaps we shouldn’t be too hard on the county executive. After all, Chris Abele is the son of a Boston billionaire who, unlike the rest of us, has never had to think about saving for retirement, a major worry for every person who doesn’t benefit from family money. Perhaps Chris Abele just can’t relate to the 99% of us who have to earn paychecks and make tough decisions about savings, investments and retirement. These normal challenges simply aren’t his reality.
