Five months after being warned that their pension payouts were in legal limbo and needed to be paid back to the county, Milwaukee County retirees are no closer to getting an answer from County Executive Chris Abele or the county’s pension board.
The 208 retirees have pension payouts that previous administrations had approved as legal and fair, and the retirees made decisions based on this information from the county. But now Abele wants the county to change its position and to recoup the money because he says the county’s advice had been erroneous.
The pensioners received letters back in April stating that the problem, which originally surfaced in 2007 during the Scott Walker administration, would be resolved in September.
In August, they received letters saying the situation was still unresolved.
And when a handful of affected retirees tried to attend last week’s pension board meeting at the courthouse, the discussion about their pensions was conducted behind closed doors.
Even the pension board member who’d received one of those letters was unable to participate in that private discussion.
Employee Retirement System manager Marian Ninneman told the retirees that the actuarial study hasn’t been finished, and therefore nothing could be done to resolve their dispute.
“Once there are more clear answers that will be communicated to impacted retirees and employees,” Abele spokesman Brendan Conway emailed the Shepherd.
But Boyd McCamish, executive director of AFSCME DC 48, told the Shepherd that the retirees need answers from Abele as soon as possible.
“It would be nice if he for once would provide some dignity for the people who worked their entire lives so that they could have a pension, so that they could sleep easy,” McCamish said. “Our members have been terrorized for the last few months about this and not knowing what the future holds. It’s extraordinarily unfair and unprofessional.”
County Failed to Fix the Problem
The retirees with questionable payments participated in the county’s pension system based on advice provided by the county itself. That advice didn’t always adhere to the county ordinances or Internal Revenue Service (IRS) rules, but the county was aware of those deficiencies and did little to nothing to resolve them.
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When news broke in 2007 that the county was providing faulty advice, Walker convened a panel to review the situation and the county board voted to attempt to recoup the money from the retirees.
That’s the 7-year-old advice that Abele wants to follow.
That said, the county did little in the past seven years to recoup the money or fix the problem.
Although the county hired a high-powered law firm to investigate the situation to see if there had been any criminal activity, it soon halted the probe, fearing that it would turn up incriminating evidence that could be used against the county in its lawsuit against the county’s former actuary, Mercer Inc.
Aides and advisors to the Walker and Abele administrations knew that the pension problem still existed.
In fact, in May, Deputy Corporation Counsel Mark Grady told a county board committee that the he and outside counsel were aware that the county’s pension advice was questionable but that he was waiting for a response from the IRS. He said he hadn’t heard from the agency since 2009, but didn’t call or contact anyone to push for a resolution.
Advocates for the retirees say there’s a simple fix at hand: Change county ordinances to bring all of the retirees into compliance and get IRS approval for the changes. The payouts to the affected retirees have been “baked in” to the county’s pension assumptions, so there’s no new financial hit for the county if those changes are adopted.
But Abele doesn’t seem to be interested in that solution. He wants to take what Conway says is “tens of millions of dollars” from the pensioners whose only mistake was taking the county’s retirement advice.
The county has been notified that a lawsuit is in the works if Abele decides to go ahead with his plan.
Opening the Door to Pension Changes?
Until Abele provides more answers, the retirees say they’re uncertain about what their future holds and if they can manage on a reduced income or if they have to pay back large sums of money they thought was legitimately theirs.
Former disability services employee John Kaminsky says he followed county advice and invested almost $10,000 of his own money into the pension plan to buy more time for retirement purposes.
“I have every letter they sent me, everything in writing,” Kaminsky said. “I went by the book and did everything they told me.”
But he said that now he’s worried the county wouldn’t honor its agreement with him. That’s making him very upset and confused.
“I’ve got the same feeling of insecurity as everyone else about what’s going on,” Kaminsky said. “My stomach’s churning. It’s hard to make plans for the future. I’m going to be 68 this year. I don’t think that I can physically [get another job].”
Former County Clerk Tom Zablocki, who retired in 2004, charged that Abele is using the case against the 208 employees to see if he can go after all of the retirees in the pension system. He said that the statute of limitations precludes Abele from trying to claw back the money from these retirees, most of whom left county service more than a decade ago. But if Abele is successful with this group, Zablocki said he believes that Abele will try to alter the pensions of other retirees.
“He’s trying to open the door,” Zablocki said. “It’s the thousands of people [in the retirement system] who are worried, for good reason.”
