Sup. Wasserman Proposes Pension Reform

Milwaukee County Courthouse. Photo by Graham Kilmer.

For more than 20 years, Milwaukee County has been haunted by a disastrous pension plan that has robbed public services to pay out massive pension sweeteners to longtime county employees.

On Jan. 1, 2025, the county finally charted a course toward the eventual closure of the pension plan. From that date forward, all new employees would be enrolled in the state-run pension plan. State legislation negotiated by County Executive David Crowley authorized a new 0.4% sales tax to help the county pay back the pension costs accrued after 20 years of paying out lucrative pension sweeteners that turned some county employees into millionaires overnight.

A decade before the county pension scandal erupted, another pension problem for the county was born, albeit much smaller.

“The pension office is so overwhelmed with the disasters that have happened there, with the backdrop and millions there” that this has been overlooked,” Sup. Sheldon Wasserman told Urban Milwaukee.

It’s called the OBRA Plan, short for Omnibus Budget Reconciliation Act of 1990 (OBRA) Pension Plan. It’s a pension plan for seasonal county workers, such as lifeguards and summer groundskeeping workers. It exempts workers from the Social Security payroll tax. As seasonal workers, few employees accrue enough benefit for anything other than a small cash payout. The average OBRA payout for the past five years was approximately $501, according to a report by Erika Bronikowski, director of Retirement Plan Services.

The problem is that hundreds of OBRA-eligible workers never receive their payout each year. In 2019, 422 former employees were eligible for a payout, but only 52% received one. The rest were transferred to the Office of the State Treasurer after several attempts to contact the recipient. The pension office has trouble finding eligible recipients, many of whom were teenagers when they were last employed by the county, Wasserman said.

“It’s basically a promise that’s not being kept,” he said. 

The cost to the county to administer the plan and attempt contact with all the hundreds of annual eligible recipients has ranged between approximately $180,000 and $200,000 in recent years. It’s a lot of money to spend on an employee benefits plan that isn’t really working, Wasserman said. He’s proposing a solution and has sponsored a resolution that will go before his colleagues on the county board in September.

“My resolution says let’s end it,” he said.

The resolution calls for a “soft-close,” which is the term for a multistep process that will take several years, and coordination with the state, to transition the benefit to the federal Social Security system. It will require a referendum of existing plan members, which the county already spends significant time getting in touch with. Wasserman believes, if properly explained to members, such a switch is preferable for both the members and the county taxpayer.

“Social Security is portable. Social Security is everywhere, and these kids aren’t going to lose their earnings they put into it,” Wasserman said.

The switch would be a multi-year process, and the county will likely need to hire consultants to help with the process. But Wasserman believes policymakers need to just “bite the bullet” and clean up this problem for the pension office.

“It’s time that we do something, and we can,” he said.