Pension Overpayments Still Happening?

Milwaukee County Courthouse. Photo by Graham Kilmer.

Bryan Lee was fishing last Friday when he received a call from Milwaukee County and someone telling him he owed the government nearly $9,000.

It was explained to him that he had been overpaid: his pension payments were too high.

Lee retired from the Milwaukee County Sheriff‘s Office in 2021, after serving for 26 years. Like all county employees, he met with someone from the county’s retirement services division to have his pension calculated.

“You sit down at the desk, they give you a high number and a low number of what your pension will be… mine was in between the high and the low, so why question it?” Lee said.

As it turns out, Lee should have questioned his pension payment. In fact, he should have questioned it every time it was deposited in his account.

Lee was notified that since he retired in May of 2021, the county has been variously overpaying, and briefly underpaying, him for his pension. He received a letter showing that, with the exception of five weeks that he was underpaid, he has been overpaid every month since he retired in May 2021. “They never called to tell me, they underpaid me,” he said.

But now the county is notifying him he was overpaid $8,963.

When Lee retired, his union, the Milwaukee Deputy Sheriffs’ Association, was in the middle of protracted contract negotiations. When negotiations ended, deputies received a pay raise back-dated to the previous two years, 2019 and 2020, he told Urban Milwaukee. This raised his salary, and thus his pension payments upon retirement.

“So, I mean, it’s gone up, but I just assumed it was, you know, my raise and and the renegotiation, they never sent me any numbers saying how much it was going to increase,” he said.

Lee has been told he has two options. He can waive his right to legally appeal the pension repayment and pay the county back the principle, $8,963. Or, he can maintain his right to legally appeal the repayment, and the county will charge him 5% compound interest on the principle, for a total of $9,704.08.

“It’s not my fault,” Lee said. “I trusted somebody who, that’s their job to do it correctly, and it’s not correct, and now I’m on the hook for it.”

This system, which leaves Lee with no good options, is a legacy of the county’s byzantine, deeply flawed pension system and past attempts to reform it.

The system was created in 1937. Since then there have been so many changes, it has been said there are 180 different calculations to be made. The system has also become a regular source of political scandal.

In 2001, elected officials approved a new pension plan that would pay out massive lump-sum payments to retirees, called backdrops. The payments turned some public employees into millionaires. The public fallout from the scandal led to the ouster of long serving county executive Tom Ament, and the county’s budget has been wrecked by it ever since.

It also further complicated an already complicated pension system. A county report released in 2007, when Scott Walker was the executive, found there were $11 million in underpayments that went back to 2002. The county also discovered there were some $26 million in overpayments. Board members passed a unanimous resolution in 2007 to stop the overpayments and then never checked (nor did the Walker administration) to make sure this actually happened. It was years later, in 2014, that County Executive Chris Abele found out the county was overpaying pensions and sought to recoup the payments. Marian Ninneman, director of retirement plan services, later resigned as more errors were discovered.

In 2017, Abele requested an audit by Baker-Tilly, which found the pension system was “riddled with errors,” as Don Behm reported.

In 2018, the Abele administration proposed a reform of the pension system, and went back and forth with the Milwaukee County Board of Supervisors for nearly seven months over the legislation. The stated goal of the legislation crafted by the Abele administration and shepherded through the board by former Sup. James Schmitt, was to “to improve the accuracy of benefit calculations, and to provide procedures to resolve payment errors.”

The resolution passed in 2019 codified the two options the county gives to beneficiaries of pension overpayments: waive your right to challenge the benefit correction and only pay the principle, or maintain your right to challenge and owe the county the principle plus 5% compound interest.

At the time, policymakers were deliberating over how to resolve outstanding overpayments from 185 retirees totaling approximately $1.55 million. The county had a legal obligation to correct benefit errors, then Corporation Counsel Margaret Daun told supervisors.

The legislation was supposed to fix the pension system. The primary sponsor, Schmitt, implored his colleagues to pass the legislation and “stop the bleeding,” as Mary Spicuzza reported.

Lee’s recent letter suggests the overpayments never ended. However, they have been minimized, according to a spokesperson for Milwaukee County Executive David Crowley, whose office is notified when there is an overpayment or underpayment in the pension system.

“The Milwaukee County Department of Human Resources issues approximately 8,000 payments to retirees each month and 200-300 one-time payouts to exiting employees each year,” the spokesperson said. “Of those, it’s our understanding these situations occur approximately 0-2 times per year.”

Requests for comment on the scope of the county’s pension overpayments sent to Erika Bronikowski, director of retirement plan services, have not been returned.

After the Baker-Tilly audit, county officials acknowledged that the overpayments were not the fault of the retirees. They still acknowledge this. The letter Lee recently received asks him to “please accept our most sincere apologies for the overpayment of your pension.”

Lee’s wife is self-employed. She had surgery this year and was out of work for several months. “It sucks,” Lee said, that he has to pay for an error that wasn’t his own.

“When I was working, I made a lot of drunk driving arrests, like over 700,” Lee said. “If I would have screwed that up… I possibly would have been transferred somewhere else, if I couldn’t do my job properly.”