Milwaukee Officials Inch Closer to Pension Litigation

January 21, 2005 ( - Milwaukee County officials are close to filing a lawsuit over allegations that lawyers and actuaries didn't properly warn lawmakers about the massive costs of a sweetened pension plan put in place in 2000.

County supervisors have okayed authorizing their lawyers to investigate the viability of potential litigation against the pension plan’s architects, the Milwaukee Journal Sentinel reported.

Although officials publicly disclosed no specific targets for the lawsuits, the newspaper reported that officials are considering taking action against Mercer Human Resources Consulting and the law firm of Reinhart Boerner Van Deuren. Mercer provided the county with cost estimates for the sweetened 2000 deal, the newspaper said. The head of Mercer’s office in Milwaukee, Paul Patt, told the Journal Sentinel that the firm has heard nothing of being targeted by the county.

Local lawmakers complain that they didn’t know how big of an impact the changes would have. “Mistaken or incomplete information was provided” on potential costs of the pension upgrades, supervisors said a resolution authorizing investigation into possible litigation. The enhancements “resulted in enormous costs to the (pension system), which were not recognized or fully understood at the time they were granted.”

The 2000 deal added a new pension option known as a backdrop – the lump-sum payments that retirees can take in addition to their monthly pension check. Hundreds of retirees have collected six-figure backdrops; the top payout so far is $684,000, according to the newspaper. (See New Milwaukee County Exec Attacks Inflated Pensions ).

The deal has had some notable consequences, the newspaper report said:

  • The retirement system has had to seek tens of millions of taxpayer dollars to make the fund whole since the 2000 deal. The 2000 deal has cost the pension fund $75 million in four years.
  • This month, the county expects to pay out a record $16 million in backdrop checks to exiting employees.
  • T he pension deal led to an exodus of county employees that has at times stretched services to the limit. Last year, more than 750 county workers retired, triple the norm.
  • For two years, the county has focused on defending itself against lawsuits by employees and retirees who were left out of various aspects of the pension deal, or who had some of the sweeteners taken away.

County lawyers said they are still studying whether the county could make a case against figures such as former County Executive F. Thomas Ament, former Personnel Director Gary Dobbert and other top officials who crafted the plan. Dobbert served jail time in 2004 on convictions related to lying about getting an actuarial study of the new plan (See WI Pension Calculation Designer Sentenced to Jail ),