Furloughed Workers May Get Pension Credit

Milwaukee County is considering a change to its pension rules allowing employees furloughed because of the COVID-19 pandemic to still get that time credited towards their pension.

Each year, a Milwaukee County employee that works full time for a year gets a single “pension service credit.” Employees can take up to 30 days a year of unpaid leave without losing that year’s pension credit.

A new resolution that will go before the county board will get rid of that cap for very specific circumstances, one of them being any unpaid time off directly caused by the COVID-19 pandemic.

As of August, when the comptroller and the county’s actuary looked at the impact this change would have, there were 160 employees that had exceeded the one month of unpaid time off, out of 1,571 employees that were furloughed at some point during the year.

The county already budgeted for a full pension service credit for these employees in 2020, so the ordinance change would not affect the county’s bottom line or its actuarial projections for employee pension costs, according to reports from the Office of the Comptroller and Segal, the county’s actuarial service.

If the county board does not adopt the resolution, the county would see an “actuarial gain” of $50,000 to $100,000. As the comptroller’s report explained, “If the county chooses not to provide service credit for unpaid hours in excess of one month or 160 hours, there would be a savings to the County, albeit the savings would be negligible.”

An actuarial gain is a projected decrease in the county’s overall pension obligation.

The ordinance the board will vote on also includes language that would allow county employees that are out of work on workers compensation or because of military service to also exceed the one month cap on unpaid time-off that can count towards their pension.

The ordinance is narrowly tailored to lifting the limit for COVID-19, workplace injury and military service time off. It does not affect any other considerations that go into calculating a county employee’s pension.

“Thanks for looking out for employees who, through no fault of their own, are not working right now,” Supervisor Eddie Cullen said to the chair of the Employee Retirement System at a meeting of the Personnel Committee earlier this month. “We appreciate it. I’m sure you’re looking into it, making sure we don’t have any pension snafu’s because of it.”

The pension system in Milwaukee County has been a source of financial pain and scandal for decades, after the notorious backdrop scandal that occurred under former County Executive F. Thomas Ament.

The changes under Ament gave a bonus to veteran employees that allowed them to gain a pension paying 100% of their final average salary, and/or eligibility for the notorious “backdrop,” a lump-sum payment that paid as much at $1 million to long-time county employees.