Who’s To Blame For Yet Another Pension Giveaway?
Abele wants some 200 retirees to stop getting illegal pension benefits, but board members are outraged.
Life has been very good for Sue and Lev Baldwin, and we the taxpayers are paying for it. Lev Baldwin served as county sheriff but retired at the ripe old age of 53 in 2002. His retirement benefits included a lump-sum “backdrop” payment of $333,450 plus an annual pension for life of $70,440.
Lev assured himself of this huge payout by lobbying county board members to make sure elected officials were covered by the lucrative pension deal passed in 2000 and 2001. Then-county board chairwoman Karen Ordinans opposed the inclusion of elected officials, but Baldwin reportedly threatened to have the sheriff’s union oppose her brother, county supervisor John Weishan, in his next election. Ultimately both Ordinans and Weishan voted for the plan which included elected officials.
As for Sue Baldwin, she agreed to give up these big pension benefits while working in the administration of then-County Executive Scott Walker, but it turns out she had quietly gotten another pension sweetener that assured her, much to Walker’s outrage, of a pretty nice payout. in 2003, Baldwin, then 55, retired after just 19 years of service with a $50,377 annual pension under an early retirement pension option available to employees 55 or older with at least 15 years of service.
Actuarial tables project the Baldwins will both live into their mid-80s, by which time they would have together collected $4.1 million in total retirement payments from county taxpayers.
But as it turns out, Sue Baldwin’s pension may have been illegally inflated when she was allowed to “buy back” pension credits from employment as a young summer worker. Many county employees were allowed to do this, but as it turns out, some may have done so illegally.
The administration of current County Executive Chris Abele recently discovered this problem and has sent letters to some 200 retired county employees informing them their monthly pension benefits will be reviewed and lowered by a yet-to-determined amount as a result of illegal buy backs.
Included in that group are former Milwaukee County Clerk Tom Zablocki, who collected a backdrop payment of $375,322 and also gets an annual pension of $29,309 and former parks employee William Tietjen, who collected a $225,490 backdrop, plus an annual pension of $56,429. All told, the Abele administration estimates that $14 million in overpayments have so far been awarded to some 200 employees.
Many employees used the buy-back program to convert seasonal or part-time county stints in college and even high school into additional pension credits. But some may have done so illegally because they wrongly bought back pension time using money transferred from an employee’s deferred compensation savings account; because the buyback payment exceeded 25 percent of the employee’s annual salary; or because the buyback was made too late, the Abele administration has concluded. “The ordinances [regulating pensions] must be followed regardless of what the retirees were told,” county Corporation Counsel Paul Bargren told the Milwaukee Journal Sentinel.
But many county board members are outraged at Abele’s actions. Weishan, whose vote in favor of the 2000-2001 pension plan made Lev Baldwin a wealthy man, declared that Abele is being unfair to these retirees, and needs to come up with some better plan.
Superviser Michael Mayo, who also voted for the 2000 and 2001 pension plan, also took after Abele, saying “We cannot blame” the retirees, and “It is the county administration’s fault, not the County Board.” Mayo has extra reason to by sympathetic to these retirees: as the JS has reported, he paid $6,813 to purchase two years of pension credit for three summers he worked in county parks in the 1970s. This gained him a 33 percent increase in his pension.
But apparently the pension board never did anything to comply with this resolution, nor did the administration of then-County Executive Scott Walker. So did the county board ever follow up to make sure its resolution was being followed? “I know I didn’t,” supervisor Mark Borkowski sheepishly admits. “I don’t believe any of my colleagues did.”
It’s hardly surprising that Abele knew nothing about this 2007 issue when he took office four years later. Did Dimitrijevic or any other supervisor let him know about this issue? Not according to Borkowski. “No supervisor ever mentioned it to Chris,” says Abele’s spokesperson Brendan Conway.
It was Marian Ninneman, the county retirement system manager, who triggered the review of the pension buybacks after discovering a prospective retiree’s pension didn’t conform with county ordinances. And Ninneman wasn’t around in 2007.
Borkowski says Abele made a huge error by sending a letter out to the 200-some retirees before having computed the exact adjustment in their pensions. “You don’t send a letter like that scaring the bejesus out of people,” he says.
But if Abele had delayed sharing this distressing news with retirees, wouldn’t he then be blamed for letting them discover this through gradual leaks of the information?
Borkowski also believes the county may not have legal grounds to adjust the pensions. “Let’s face it, these people were advised by our HR people that they could do what they did. I think the county needs to look in the mirror on this. This thing is ripe for court action.”
It’s certainly possible the courts might stop Abele from demanding any repayment of past pension money wrongly awarded. But would the courts also bar the county from adjusting future payments? True, many of these 200 people are lower-level employees living on modest pensions; they are not in the category of Baldwin or Zablocki. But the entire buyback program reeks of the cronyism, nepotism and conflicts of interest that infected county government for decades, and have yet to be entirely stamped out.
I don’t doubt that taxpayers will be glad the Abele administration has finally put a stop to approving retiree pay packages that included illegal buybacks. This should have been done by Walker and the board back in 2007.
Update May 28: Supervisor John Weishan called to say he was never threatened by Sheriff Baldwin and denied that this had anything to do with his vote for a pension package that included elected officials.
Journal Sentinel Coverage of the Issue
The county’s buy-back plan was uncovered through the dogged research of reporter David Umhoefer, whose 2007 story triggered the county board’s resolution and won him a 2008 Pulitzer Prize. But as important as Umhoefer’s story was, the reality is the buy-back plan would have had a far smaller fiscal impact if not for passage of the 2000-2001 pension plan. Its 25 percent bonus drove up the value of these pensions. Even more important, its backdrop provision had a huge benefit for anyone who could buy back time and become eligible for an earlier retirement. For each year they worked past their retirement date, the magic of compound interest (at 8 percent annually) drove up the value of their nest egg.
The Journal Sentinel, of course, has never computed how much of the buyback’s impact was due to the 2000-2001 pension plan, and never mentions my role in breaking that story in reporting for Milwaukeeworld.com and Milwaukee Magazine. I play the role of Voldemort here: “He who must not be named.”
The good news is that Umhoefer has every reason to aggressively follow up on this issue and how the county handles it. His colleague Steve Schultze, by contrast, who until recently served as county reporter, did a story that offered sympathy for the employees worried about losing some of the their benefits due to the illegal buybacks.
One of those employees was Bob Miller who retired in 2009 with a $129,243 backdrop and an annual pension of $35,208, county records show. Schultze, however, didn’t include this information in his story.
I’m told Schultze has now retired. It will be interesting to see who is chosen as the next county reporter.
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