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Last April, Milwaukee County Executive Chris Abele sent a letter to more than 200 Milwaukee County retirees warning them that their pension payments weren’t valid and that he would take back any money they’ve been overpaid.
Nine months later, Abele is walking back from those comments.
But his new strategy, outlined in a Jan. 9 memo to county supervisors, would still take money away from 221 retirees whose only mistake was accepting the county’s own advice when setting up their pension plans.
“The county executive’s plan does not try to recoup any money from retirees,” emailed Abele’s spokesman, Brendan Conway. “It only adjusts future payments to the amount that complies with the law.”
And by “adjusting” them, Abele means “lowering” them.
Abele’s plan, which wasn’t recommended by the county’s Pension Review Board in a December 2014 hearing, will likely be heard in the Finance, Audit and Personnel Committee at the end of the month, Supervisor Theo Lipscomb, its co-chair, told the Shepherd.
Lipscomb said he opposed Abele’s fix, which would void legal agreements—some of which were made as far back as 30 years ago, long past the statute of limitations’ six years for these types of collections. He said that would expose the county to lawsuits from the affected retirees.
“It does not seem clear to me that he can do that legally,” Lipscomb said. “Another question is whether you morally should do that. These people relied on advice that the county provided.”
Even Scott Walker Didn’t Try to Take the Money
Although less financially devastating than the pension scandal that forced County Executive Tom Ament from office, the current pension problem was years in the making. It came to light in 2007, when the Journal Sentinel’s Dave Umhoefer won a Pulitzer Prize for his coverage of pension overpayments for a few hundred retirees. These former county workers followed county pension administrators’ advice on “buy ins” and “buy backs,” invested in the system, and made decisions about their finances and retirement plans based on the county’s advice. Turns out that the county was allowing these employees to receive pension benefits that weren’t always aligned with county ordinances and Internal Revenue Service (IRS) rules.
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In response to the 2007 revelations, Scott Walker, then the Milwaukee County executive, and the county board unanimously decided on a course of action that included attempting to recoup the alleged overpayments from the retirees.
Although Walker has made a career out of attacking public employees’ benefits, the county under his leadership never actually tried to take the money back from retirees and penalize them for following county advice.
Seven years later, the Abele administration discovered that some of the county’s pension experts were aware of the problem but weren’t actively trying to resolve the issue.
So Abele stepped in, making headlines with his April 2014 letter to the affected retirees, stating that he would take back the disputed money from them. He cited the 2007 unanimous county board vote to recoup the payments to justify his actions but provided no other legal or financial advice to support his strategy. Nor did he consider that the statute of limitations would prevent him from collecting the bulk of the money or that the county’s legal costs would pile up as attorneys would be forced to contact retirees—or their widows or widowers—to take back the money.
In response to Abele’s letter, the county was put on notice that a class action lawsuit was in the works on behalf of employees and retirees who argued that the county had no legal right to nullify their longstanding pension agreements and take back the money.
In September Abele sent another letter, making the same threat but providing no additional details on his plan, leaving the pensioners in limbo.
In December, Deputy Corporation Counsel Mark Grady brought two options to the county’s finance committee: change the ordinances to retroactively bring the pensions into compliance or try to recoup the disputed money from the retirees. It was estimated that about $20 million of the estimated $25.8 million overpaid could not be recouped, since it was paid out so long ago that the statute of limitations protected those payments.
The Pension Review Board recommended changing the ordinances, since it would cost the county nothing, was less burdensome and headed off a costly legal battle with retirees. However, Marian Ninneman, manager of the county’s retirement system, testified that Abele was still committed to taking back the money already paid out to the pensioners, their widows and widowers.
Weeks later, Abele proposed his new hybrid fix in a memo to the board.
“As we’ve come to learn about Abele, he’s making the situation worse,” said Boyd McCamish, head of AFSCME District Council 48, the county’s largest union. “Why does he insist on terrorizing retirees who have done nothing wrong?”
No Security for Pensioners
Abele’s spokesman, Conway, said he couldn’t comment on the potential legal risks his boss’s strategy would raise, but pointed to the county’s successful litigation in defense of reducing nurses’ pension multiplier going forward in 2012. The state Supreme Court ruled 5-2 in December to overturn decisions made at the circuit court and appellate court level that had opposed the county’s actions.
Lipscomb said the nurses’ pension payments and the alleged overpayments made to the 221 retirees were totally unrelated.
The nurses’ case was about what an employee was going to earn going forward, Lipscomb said, “not adjusting what they’re going to receive tomorrow based on service that they’ve long since provided.”
But McCamish said there is a connection between the two cases. He said that Abele, the Walker administration, the Greater Milwaukee Committee (GMC) and their fellow conservatives want to return to a pre-Great Depression America, with an anxious, underpaid and unprotected workforce and a well-compensated elite 1%.
“It’s about the principle,” McCamish said. “If you are a retiree, a pensioner, you should feel no security at all even though you’ve been paying into these things all your life. One of the main things Abele’s trying to do, along with his buddies the Koch brothers, is to create and perpetuate what is known as the precarious workforce. So even retired people should feel levels of instability. Because when people are desperate and scared they will do anything and they will accept anything.”
