Retirement Sustainability Taskforce
County Executive Abele has launched the Retirement Sustainability Taskforce comprised of stakeholders representing employees, organized labor, retirees, the business community, elected leaders, taxpayers and county officials. The taskforce includes the existing members of the internal county workgroup that has started reviewing the option of joining the state pension. The County Executive has also asked that the County Board select a County Board member to directly participate in the taskforce.
In the last decade, Milwaukee County has implemented several major modifications to make the county’s pension system more sustainable. These modifications include reducing the pension multiplier from its high of 2.5% to its current 1.6%, implementing employee contributions from 0% to 6.5%, and refinancing the outstanding debt. Because of the decades of underfunding, however, the unfunded liability is still over $500 million and continues to grow. Milwaukee County’s annual contribution to the pension system has grown from $27.9 million in 2006, to $96 million in 2016 and is expected to have another $7 million increase in 2018. Currently pension and retiree healthcare expenses are equal to 76% of the county’s property tax levy used for operations. In the next decade that number could rise to 81% - 97% of the operating property tax levy. Furthermore, a recent audit of operations indicates that the current system is riddled with errors, largely because of the over 2,000 variations within the current county system, compared to the state system which has only four.
The objective of the taskforce is to study larger pension system modifications that ensure retirement security for future retirees and long-term fiscal sustainability for the County. The taskforce will develop recommendations to Milwaukee County on pension system modifications that should be considered.
The taskforce meetings are facilitated by Public Policy Forum (PPF). The Public Policy Forum is a private, non-profit, independent research organization dedicated to enhancing the quality of public policy decision-making in southeast Wisconsin. PPF’s research and facilitation activities encourage elected officials and community leaders to find effective, data-driven solutions to pressing policy challenges, and promote productive, nonpartisan discussion among the public and private sectors. More information about PPF can be found here.
Third-Party Technical Assistance
The taskforce will also include technical expertise from subject matter experts including The Pew Charitable Trusts’ public sector retirement systems project. The Pew Charitable Trusts uses evidence-based, non-partisan analysis to solve today’s challenges. To inform policymaking, Pew performs research on all aspects of state and local public pension systems, including their fiscal health, investment practices, benefit design and governance. Drawing on that research, Pew also offers technical assistance to policymakers considering ways to ensure that their retirement systems are affordable and sustainable and put workers on a path to a secure retirement. More information about Pew’s work on Public Sector Retirement Systems can be found here.
Membership will include representation from the public sector, private sector, employees, organized labor, retirees, the community and other stakeholders and experts. Invitations have been sent to several potential taskforce members and a complete list will be provided prior to the first meeting of the taskforce.
How the State Option Fits In
Joining the state’s pension system is an attractive option that needs to be further explored (“state option”). The state option offers a simpler and competitive benefit. Understanding the state option will be a key component of the taskforce’s work. However, because the state option is “irrevocable” and “exclusive,” the taskforce will also need to understand and evaluate other options in order to provide a final recommendation. The smaller internal workgroup that has been reviewing the state option will continue their technical review of the state option.