Mitchel Writt

The $400 Million Pension Problem

Infamous county pension plan's cost may hit $400 million, make many wealthy.

By - Jun 6th, 2017 02:31 pm
Tom Ament

Tom Ament

Some 16 years ago, the Milwaukee County Board quietly approved a huge hike in pension benefits benefiting non-union employees (in November 2000) and union employees (later in 2001), whose still increasing price tag for taxpayers may hit $400 million. The plan passed with no media scrutiny until editor Bruce Murphy wrote about it for that publication and later did a feature story on the pension plan for Milwaukee Magazine. (Murphy currently serves as Urban Milwaukee’s editor.)

Two key parts of the pension plan were a 25 percent bonus which allowed veteran employees to collect as much as 100 percent of their final average salary in a pension and a complicated lump sum “backdrop” provision that gives the longest servicing employees the biggest payout. In response to Murphy’s stories the Milwaukee Journal Sentinel did a series of front-page stories that went for months, with the rest of media, TV and radio,  piling on.

The resulting public outrage forced then-County Executive F. Thomas Ament, who would have gotten a $2 million backdrop payment, to forego his backdrop, fire a number of his cabinet members and eventually resign from office. Seven county supervisors were also recalled from office. Measured by the number of officials thrown out of office, it was the biggest political scandal in Milwaukee history.

By the end of 2016, 2,204 employees had collected $294.6 million in backdrops, county statistics show, and the county estimates that there are 1,179 employees still eligible for the backdrop (the benefit has long since been eliminated for newer employees) with about $100 million in payouts expected. The total bill may yet total $400 million.

The average backdrop collected to date is more than $133,000 per employee, but that payment comes in addition to the monthly pension collected. Thus, Deputy District Attorney Patrick Kenney, whose $1,342,992 backdrop is the largest anyone has received, also gets a monthly pension of $6,642, or nearly $80,000 per year in addition to the huge backdrop payment. Veteran Milwaukee Zoo employee Karl Hackbarth got a backdrop of $1,267,057 plus a monthly pension payment of $4,381, or more than $52,500 per year.

To date nine employees have gotten backdrop payments of more than $1 million, seven of more than $900,000, seven got $700,000 to $850,000, 20 got payments of $600,000-$699,999 and 69 employees got $400,000 to $599,999. In addition they all got a generous monthly pension.

The updated list below begins with the highest paid county employees and moves down to the lowest paid. Also listed are employee job titles, monthly pension amounts and retirement dates.

Influential proponents of the plan were county board research staff head Tom Kuzma and Corporation Councel Robert Ott. Kuzma’s backdrop amount is listed at $290,407 while Ott’s is listed at $125,454. Also involved in the bill’s passage was Sheriff Lev Baldwin, who has a backdrop amount listed at $333,450. Baldwin was once accused of making political threats to board members to make sure some political officials were eligible for pension benefits.

Backdrop Spreadsheet

Categories: Politics

23 thoughts on “The $400 Million Pension Problem”

  1. Rich says:

    The price tag for this pension deal is chump change compared to the monetary, civil, environmental, and social costs resulting from the elevation of a certain politician that was a result of the pension scandal.

    Where’s WI at now…dead last in job growth and first in giveaways & rewards to corporate cronies?

    @WashCoRepub, spare us your drivel, including any comments about how your taxes went down, WDGAFF.

  2. WashCoRepub says:

    It’s rare that a political event takes place that is so remarkably confluent in unexpected ways… exposing the naked greed of (some) ‘public servants,’ the gross ineptitude of the County Board at the time, putting Milwaukee in tough fiscal straits for perhaps decades, and elevating the political career of one of the greatest (now) Governors this state has ever known.

  3. Jason says:

    Rich which one? Gwen Moore.

  4. Ken says:

    That is interesting. To think that Scott Walker probably never would have been County Executive and then Governor if this scandal hadn’t occurred.

  5. Joe says:

    Tony Zielinski, an attorney, voted for this shit deal as a member of the County Board at the time, and later claimed not to have understood its import. He then ran off to the common council and still gets re-elected to this day.

  6. Jason says:

    We would have more money for parks and public transportation if we did n’t have to feed this public servant gravy train. How many millionaire zoo keepers are there in the world. Nice County job if you can get it.

  7. Ben says:

    Good Article. Thank you for reminding us of the elite-ism of the democratic party.

    A good column to add to the Pension Backdrop List would be political affiliation. I’m sure if this was led by Republican’s, this would be the primary focus.

    So to summarize, the title of this column could be:

    The $400 Million Democratic Party Pension Problem
    The $400 Million Pension Problem Left By Democrat Misconduct
    The $400 Million Pension Problem Stolen From Milwaukee Taxpayers By The Democratic Party

  8. Vincent Hanna says:

    Clearly Ben should write all headlines from now on Bruce Murphy. Please hire him. He is fair and objective and doesn’t view anything through a partisan lens. He isn’t prone to “us vs. them” comments and doesn’t make obtuse statements about one party being bad or good. We need people like him now more than ever.

  9. Orville Seymer says:

    It is stunning to scan through the list and see all of the large payouts that the taxpayers of Milw. County continue to provide for former county employees.

  10. Big Al says:

    Shocking that “one of the greatest (now) Governors this state has ever known” did absolutely nothing to fix the problem, even though he had 8 years to do so.

    Can’t wait to see what kind of stuff comes out of the woodwork once he gets out of Madison. Maybe Clarke can take him to Washington; incompetence loves company.

  11. JPKMKE says:

    Mitch, I’m not familiar with the pension changes back then. Do you know whether the backdrop lump sums were written in to reduce the long term capital risk in the plan or was it just an add-on benefit? Were pension benefits for new participants reduced at that time and the lump sum used to keep previous participants whole in making the change?

  12. Susan Lemke says:

    It is Chicago style corruption right here in Milwaukee.
    Thank you for keeping this in the news. We should not forget what happened in our fair city.

  13. JPKMKE says:

    No one knows whether the backdrops were introduced to reduce long term pension contributions? I would not write this story without verifying the purpose of the pension change in the first place.

  14. Bruce Murphy says:

    To JPKMKE: no, the pension changes weren’t done to reduce the long-term capital risk, but were simply an add-on. As the stories listed above reported, the alleged rationale was to keep long-term employees from retiring but at the time the size of county government was actually shrinking and there was no evidence of any problem attracting skilled employees.

  15. JPKMKE says:

    Well, since:
    1) We know the original intent of the pension change was to avoid a deluge of retirements among county workers, and
    2) It’s possible the backdrop lump sums would have reduced long term pension obligations or
    3) No one knows the actual accounting they are complaining about in this story…

    Perhaps it is not appropriate to post all of these names in a public shaming???

  16. Bruce Murphy says:

    I might note that JPKMKW is an anonymous person who declines to reveal his occupation or possible conflicts on such issues. As to these claims, there were hundreds of follow-up stories by the Journal Sentinel and every other media source in town after my first stories. No proof was ever provided by county to back up your speculations above, County Exec Tom Ament demanded the resignations of several department heads for their role in the controversial plan and Gary Dobbert, the plan’s chief architect, was convicted of misconduct in office and seven supervisors recalled from office. None could provide any valid justification for the plan.

  17. Orville Seymer says:

    Not to mention that the county actuary paid out around $45 million dollars and never brought any additional information about this issue.

  18. JPKMKE says:

    Now now Bruce. No bullying. I’m an anonymous reader who is questioning the story and why the names are listed. Set aside the politics at the time, the story says that much has been paid out and is yet to be paid out. It would be good to know how amounts paid by to date would have compared to the pension obligations which would have been paid out by now. If it is much more, then I agree it’s a great story. If not, we have missed something.

  19. Joe says:

    “Perhaps it is not appropriate to post all of these names in a public shaming???”

    I think the majority of readers don’t begrudge employees for taking the money – i’d take it too – but get angry with the county board members who came up with and passed the pension deal.

    Government employeepay will always be public record. If you are embarassed of the hindreds of thousands in pension dollars you receive, then don’t work in government.

  20. Vincent Hanna says:

    Yes people don’t like things done in secret and want more transparency, not less. GOP, please take note.

  21. Bruce Murphy says:

    JPKMKE: my point regarding your anonymity is that you may have a conflict. As you know I have emailed you separately about this and you noted you work in “compensation.” I don’t know more than that, but I would note that whenever our articles discuss compensation of CEOs and government employee and the like, you take issue with them. I think readers evaluating these comments deserve full transparency.

  22. JPKMKE says:

    Right, lets all put our 401(k) balances out here right now. I guess we’re not going to get to a discussion of the facts of the pension accounting.

  23. Joe says:

    JPK, you’re the one essentially suggesting that the old pension system might have actually cost more than the one with dropback payments. If you’re so curious why don’t you look that up yourself?

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