Benefits April 22, 2002

Audit Reveals Irregularities in Milwaukee Pensions

April 22, 2002 (PLANSPONSOR.com) - A county audit revealed the final cost of pension and wage payments for Milwaukee County employees to be more than five times higher than suggested by fiscal notes originally put forward by administration officials, a report by Milwaukee County's Department of Audit revealed.
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A perfunctory glance at documents tallying the costs may have lead officials to put the figure at $22.2 million. However, the county’s audit team, an independent arm of the County Board, found that many of the fiscal documents omitted significant pieces of information and were “practically bereft of detail costs.”

In one serious miscalculation, administration officials failed to compound the cost of the compensation deal over the four years, greatly understating its cost, auditors found.

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Final estimates of the cost ended up at around $112 million for the period of 2001 to 2004. The total would cover:

  • increases in wages,
  • changes in pension and sick pay, 
  • modifications to health care, and 
  • additional vacation and holiday benefits.

Pension Scheme

The report, some say, is one more nail in the coffin for County Executive Thomas Ament’s political career, providing further evidence that he sought to enrich himself at the expense of the tax payer  (See also Pumped Pension Payouts Prompt Resignations ). According to press reports, instead of granting pay increases to 5,000 Milwaukee county workers last year, Ament opted to make its pension plan more generous.

Under the new rules:

  • employees, who had worked past their retirement dates, could collect retirement benefits retroactively, and
  • employees could claim a larger share of their unused sick time at retirement.

The new rules ensured Ament, who became eligible to retire in 1996, would receive a lump sum payment of $2.3 million, while several other officials would receive payments of $1 million or more.

In February this year, many of the provisions of the controversial package were trimmed back by the county board at the height of the scandal.

Audit Notes

County auditors describe the pension changes as more generous, especially in its lump sum payment provisions, than similar US public plans, and placed “overall responsibility” for the fiscal information on the plan with the Department of Human Resources, headed up by Gary Dobbert, who, according to reports, failed to share the information with other county finance officials.

Dobbert, who stepped down in January under pressure from the County Board, comes under repeated criticism in the audit (see Petitions Delivered in Milwaukee Controversy and Milwaukee County Exec Steps Down ). Ament and three other officials resigned at the same time.

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