It was small beer, but the instant the $45 million settlement with Mercer Inc. was finalized, Milwaukee County officials proclaimed it as proof they were blameless in passing the outrageous pension deal of 2000. Experts have estimated it may ultimately cost taxpayers as much as $900 million, so recouping one-twentieth of this will hardly make a dent in the bill. Yet some board members were giddy with thoughts of redemption.
“It vindicates us,” said County Board Chairman Lee Holloway.
“The untold story,” declared Supervisor John Weishan Jr., “is that of the elected officials [ including his sister, former Board Chair Karen Ordinans] who were ridiculed in the local media . It is unfortunate that they and their families suffered through the recall process that ensued.” Board members, he added, made decisions based on incorrect information from their consultant, Mercer. “Supervisors are everyday citizens … [who] don’t necessarily have actuarial experience.”
Well, John, I don’t either. But as the reporter who broke this story, first for Milwaukeeworld.com and then in an expanded feature for Milwaukee Magazine , I had no problem figuring out how smelly the deal was. Indeed, in reviewing all those stories, it’s still amazing to see how negligent – and greedy – board members were.
For decades, courthouse insiders saw county government as “a cookie jar for employees,” as former Supervisor Roger Quindel once put it. “This attitude permeates the place. Every time you turn around, they’re trying to get more.”
After the stock market gains of the 1990s inflated the county pension fund, officials wanted to cash in. “We all felt very rich because the pension plan had done so well,” Supervisor Mark Borkowski told me.
The county already had the state’s most generous pension. At the time, city retirees could collect up to 70 percent of their final average salary; state retirees maxed out at 65 percent. County retirees, though, could collect 80 percent.
Yet the 2000 pension deal allowed all veteran employees to effectively increase that to an unprecedented 105 percent of their salary. Everyone in the courthouse tracked their own percentages, so board members knew it was an incredibly lucrative benefit.
The administration of County Executive F. Thomas Ament claimed the sweetener was needed to recruit and retain talented employees. But the county didn’t need more employees. It needed fewer. It had been shutting down or losing departments to the state of Wisconsin for years, dropping from about 10,000 to 7,500 employees in the 1990s. Not one official I interviewed offered one example of a talented worker who had left the county.
This was more than enough to make the plan suspicious. But on top of that came the “backdrop” – huge lump sum payouts to employees. It was a complicated computation. But any board member could have asked a simple question: How much will the officials pushing for this plan personally benefit?
And, oh, were they pushing. Board members said they were under pressure from Ament and others – his head of human resources, Gary Dobbert; his chief of staff, Tom Mollan; and county corporation counsel Robert Ott. Had all served until 2008, their backdrop payments would have grown to $2.3 million for Ament, $1.7 million for Mollan, $1.3 million for Ott and $760,000 for Dobbert.
Both Ordinans and finance chair Lynne De Bruin told me the board was provided examples of backdrops (contrary to the claims of other supervisors). But Dobbert would only provide examples for lower-paid employees, De Bruin said. And no one smelled a rat?
Before the plan was passed, De Bruin learned of a county nurse who would get a $275,000 backdrop. According to two board members, De Bruin shared this with Ordinans, who advised De Bruin “leadership is supporting this. You swallow hard and vote no.” De Bruin did in fact vote no. But Ordinans and 19 others voted yes.
While it’s certainly true Mercer was lax in its role as county consultant, there’s no evidence any board member ever asked Mercer to estimate the cost of the pension deal. Nor did any board member ask the county audit department to analyze the bill. For that matter, why not ask the finance chair why she was voting no? “It wasn’t even debated on the county floor,” former Supervisor Penny Podell recalled.
No one asked any questions because all benefitted. Everyone got a 25 percent boost in their pension; it’s just that this was far more valuable for higher-paid veterans with more years of service.
Afterward, of course, the pension fund declined drastically from the stock market meltdown. The underfunded county transit system has cut back routes, making life harder for those without cars. The help line for poor people needing food stamps is understaffed and unresponsive. The parks are declining drastically. The courthouse stinks at times from lack of maintenance.
There’s no money because countless county employees have walked home with lump sum retirement funds of $250,000 to $975,000. But not to worry, none of this is the fault of our now-vindicated county supervisors.