Bruce Murphy
Murphy’s Law

Schmidt Pension At Issue In Sheriff Race?

Acting Sheriff could collect a lot from taxpayers. Will he waive lucrative backdrop benefit?

By - Aug 2nd, 2018 12:27 pm
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Richard Schmidt. Photo from Milwaukee County.

Richard Schmidt. Photo from Milwaukee County.

There is a shadow hanging over the race for Milwaukee County Sheriff, the shadow of the potential pension Acting Sheriff Richard Schmidt could collect. 

I have heard rumblings that he could collect a huge lump sum pension benefit through the infamous “backdrop” provision that has paid county employees as much as $1.3 million apiece. I have done my own calculations that suggest Schmidt could get anywhere from $596,000 to $834,000, depending on the details of his employment. Schmidt declined to respond to my phone calls and emails requesting more details on his employment with Milwaukee County.  

Indeed, I don’t even know Schmidt’s date of birth, since he declined to provide that information (we do know he’s 62 years old). And county officials in the Human Resources Department have, based on legal advice from the County Corporate Counsel, declined to answer questions about how an employee in Schmidt’s class might be treated for pension purposes.  

Tim Coyne, Director of Retirement Plan Services for the county wrote me as follows: “As advised by Corporation Counsel, we do not provide advisory interpretations of the County’s complex pension laws with respect to individual employees since individual circumstances change over time and because pension calculations can be impacted by a very large set of factors, which also can change over time, and result in potentially significant differences in final pension calculations.”

It’s quite possible that Schmidt himself doesn’t know precisely how large a backdrop he could collect. But here’s the thing: By August 14, it will be too late for voters to ask any questions about this benefit. There is no Republican running in the general election and whoever wins the Democratic primary will be sheriff for the next four years. 

My contention, speaking as a Milwaukee County voter and taxpayer, is that Schmidt should sign a legal document with the County Corporation Counsel permanently waiving his backdrop benefit, whatever the amount is. If Schmidt is not willing to waive the benefit, I think he doesn’t deserve to win an office of public trust like County Sheriff. 

Even without the backdrop, Schmidt will collect a very lucrative pension. By 2022, after one term as Sheriff, Schmidt would be 66 and would have worked about 36 years with the county. He would collect a minimum of a $92,600 annual pension, and perhaps as high as $97,900, depending on his date of birth, starting date of employment in 1986 and how his annual service credit is computed for his four years served as sheriff. Of course if he serves a second term that would increase his annual pension by at least $10,500. 

And even if he loses the election after waiving the backdrop benefit, he could choose to work until age 65 or later and would have a very good conventional pension, that would be far more generous than the vast majority of county residents earn. 

The infamous county pension plan of 2000 and 2001 caused the biggest political scandal in Milwaukee’s history, resulting in the resignation of then County Executive F. Thomas Ament, the firing of several cabinet officers and the recall from office of seven county supervisors. The plan’s passage was a gross abuse of the public trust that has already cost the county $300 million and is likely to eventually cost $400 million or more. That is because there are still more than a thousand county employees, veterans like Richard Schmidt, who are still eligible to collect the backdrop upon retirement. 

By June of last year, nine employees had 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. It’s the most lucrative public pension in state history, and has left the county unable to pay for basic maintenance of services like the county parks and transit, which have seen years of cutbacks. 

For the public, there is no recourse, no way to stop this, because the courts  have consistently ruled that a pension, once given, cannot be taken away. But voters can certainly demand that any county employee running for office — such as Richard Schmidt — should not personally contribute to the ongoing fiscal bleeding of county government. 

As for the other two candidates in the race, Earnell Lucas served 25 years in the Milwaukee Police Department and has earned a conventional city pension, probably earning somewhere in the neighborhood of 62 percent of his final average salary as an officer. And Robert Ostrowski, a dark-horse candidate who has raise little money for the race, is 50, has worked for the county for just 16 years, and would not be able to retire until well after a first term as sheriff, should he win office. 

By contrast, Schmidt’s election will give him four more years to see the compounded interest grow on his backdrop payment. His career at the county was always in the sheriff’s department, but he has had at least six job titles, with some as a member of a union, and some not, which complicates his situation. (The county’s insanely complicated system is estimated to include 180 different ways to compute a pension, depending upon an employee’s situation.)

Still, I was able to learn through a Journal Sentinel data base of county employee salaries that in 2010, the year after Schmidt first became eligible for retirement, he was earning an annual salary of $105,875. 

But what was Schmidt earning from 2006-2009, which is probably the period from which his final average salary would be computed for backdrop purposes? What was the date of his first work day at the county? These and other details I requested from Schmidt were not provided by him. 

Assuming Schmidt’s average final salary was about $90,000 for the years in question, which might be low, his backdrop for mid-2009 to mid-2022 would range from $625,000 to $834,000, depending on whether his service credit multiplier is 1.5 percent per year worked (the lowest an employee can get) or 2 percent (applied for union members, etc.). That’s using the county’s current estimated figure for growth in its pension fund of 7.75 percent annually. 

Another way to go is to take Schmidt’s actual and higher final average salary of $110,666 for 2010 to 2012, which I was able to get from the JS data, and project the backdrop earned from the shorter 10-year period of December 2012 through May 2022, the end of his first term as sheriff. This would give him anywhere from $596,000 to $794,000. 

I should note that under the backdrop provision, this lump sum would be in addition to the lifetime monthly pension Schmidt would also collect, which would range from about $31,000 to $55,000 per year, depending on the details of his situation. 

I must stress these are crude estimates. Had Schmidt responded to questions, I could have offered a far more precise figure. 

But whatever the backdrop Schmidt is eligible for, he owes the public an explanation of how he will handle this. My guess is than many voters would insist Schmidt sign a waiver of any such benefit if he wants our vote for the office of Milwaukee County Sheriff.

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More about the Milwaukee County Pension Scandal

Categories: Murphy's Law, Politics

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