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The Painful Exodus

Posted by Chris Liebenthal on November 29, 2010

From Milwaukee County First:

In the pre-pension scandal days, when the county used to start feeling a budget squeeze, they would open a retirement window.  This would allow some of the more senior employees retire earlier than they might have otherwise.

The reason for the retirement windows were to save money.

Instead of paying a high salaried worker their full pay, the county was able to cut that down by a considerable amount since most pensions pay out less than what the person was making while active.  Furthermore, these older workers were getting six weeks of vacation, which obviously cut productivity and revenue.  Furthermore, services weren’t affected as the county would have younger, less senior, and lower paid workers fill those vacancies.

Then Ament came along with his pension scandal.  In the way the pension was written, it was like a reverse window, designed to keep the older workers around until at least 2004 when the pension enhancers kicked in to their fullest.  Then in 2004, when many of the most senior workers reached the maximum benefit level, there was a mass exodus as hundreds of workers cashed in on these benefits, including pension enhancers, paid out sick leave, and the infamous backdrops.

Despite being warned that there was going to be this exodus, Scott Walker denied any knowledge thereof and the county was strapped in trying to fill crucial spots in areas like the safety services.  It wasn’t until the next year that Walker started to allow these positions to be filled, and only when he was threatened with sanctions and/or takeovers by the state.

The situation is now set up for another, albeit somewhat smaller, exodus to occur.  In the 2011 budget which was just finalized on Wednesday, there is a Section 1950, which deals with employee fringe benefits.  Buried deep inside this section, on page 4, is an easily overlooked but very impactful paragraph (emphasis ours):

In addition to the benefits described above, the County has historically provided for reimbursement of the Medicare Part B premium for retired employees, including their eligible beneficiaries over age 65, who retired with 15 or more years of pension-credited service or are on Disability Medicare. $5,983,300 is budgeted for this expense based on rates established by the Federal Government and published by the Centers for Medicare and Medicaid Services. This represents an increase of $77,167 from 2010. However,the County will cease providing this reimbursement for employees who retire after December 31, 2010. Given that Medicare Part B premiums are income-adjusted and eligible County employees are also provided a pension and free County healthcare to supplement the Medicare program, resources previously allocated to this expense will be redirected to maintaining core services. Savings are projected to be $100,000 in 2011. However the cost of providing this benefit to all of the estimated 2,542 active employees and spouses previously eligible when they retire would be over $3 million annually.

The County Board altered the language only in the sense to move back the deadline of the ending of this benefit to March 31, 2011, but left the rest intact.  Milwaukee County First has learned that the number is currently just under $100 per month per worker for this benefit.  This number goes up every year with the ever-increasing cost of health care.

The unions are of the opinion that this is a negotiable subject and not something that the county can just arbitrarily enforce on represented employees, but they admit that this is not a guaranteed fact.

As one might imagine, because of this tenuous situation, nearly every single worker that is eligible for retirement, but might not have been necessarily considering it before now, it re-evaluating their situation and giving much more consideration to retire before their pensions would get dinged by $1200 each year.  They have to chose between gambling that the union is correct and that this won’t affect their benefits or whether they want to play it safe and take the sure thing and run, even if they don’t feel that they are quite ready to move on.

To further impel these workers to leave is the fact that with Walker leaving office soon, the chances improve greatly for the county and the unions to reach a contract agreement, which is assured to include concessions.  And if the contract isn’t reached in timely fashion, they are facing even more furloughs which would also have a negative impact on their pensions.

Having a second exodus of workers would have both positive and negative connotations for the county.

On one hand, if enough workers decide to bite the bullet and retire, this could help prevent lay offs of the less senior workers.  It would also have the same effects as the previously mentioned early retirement window.

On the other hand, because these are more senior workers, they have the option of taking the back drop and the sick time pay out, which could have a budget busting impact on the general and departmental budgets.  Another big negative is the loss of all the manpower, seeing as the county is not really in a position to hire many workers to replace the ones leaving, and the subsequent drop in services as well as the loss of institutional knowledge.

Many of these workers who find themselves facing the sudden life-altering decision are bemoaning the days of yore when there was mutual respect between the county and the unions and they were together as partners.

In an amazing coincidence, this week’s issue of the Shepherd Express has an interview with Board Chairman Lee Holloway who will be taking over as the county executive’s role as soon as Walker decides to step down.  In the interview, Holloway discusses the tumultuous times ahead, as well the out-going county executive.

Not only does Holloway admit that the way Walker has tried to balance his campaign and budgets in his false bravado, but he shows some insight as to why Walker would follow this Machiavellian approach to the workers instead of taking advantage of their previous amicable relationship:

Shepherd: When you look back on the Walker era, what are his major contributions to the county, both positive and negative?

Holloway: Let me put it this way: He could have been less painful. But he was geared toward becoming the governor from the day that he was elected. A lot of his decisions were based on him being the governor and not on anything else. So from that perspective, he hurt the county. […]

Holloway, and the interim county executive, if Holloway appoints someone besides himself and the new county executive form the spring’s election will really have their work cut out for them in trying to correct all the wrongs Walker has committed.



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