Milwaukee County Board discloses $17M pension administration error; Abele fires back
MILWAUKEE -- Milwaukee County Board Chairman Theo Lipscomb said in a statement Thursday, December 1st the county paid $11 million in lump sum payments in November to retirees and their beneficiaries to correct for underpayments made to employees who retired between 2001 and 2008. Future payouts are expected to cost an additional $6 million, according to Lipscomb.
According to Lipscomb, although a correction was made in 2009 to ensure accurate pension payments, the 2001-2008 underpayments were not addressed until November 2016, which resulted in dramatically larger lump sum payments due to interest costs that accumulated at a rate of 8% annually.
Lipscomb has requested an analysis from the County Comptroller of the additional costs that were incurred as a result of what he says was Milwaukee County Executive Chris Abele's failure to act sooner to implement an administrative fix of the problem.
Chairman Lipscomb made the following statement:
"Has the County Executive known about these errors since he took office in 2011? The amount the County owes grew every year by 8%, saddling us with dramatically larger costs than what we would have paid if the problem had been corrected sooner.
I was disappointed to learn that County Executive Abele waited almost a month after receiving an actuarial report before informing the Board that in just four days, $11 million in lump sum payments would be paid out to retirees or their beneficiaries.
By waiting nearly a month to inform the Board of underpayments to retirees, the County Executive denied the Board the opportunity to discuss the $17 million error during the budget process, and kept the public in the dark.
The lack of previous disclosure and transparency from the County Executive and staff under his authority in the Employee Retirement System is disappointing. I have urged the Director of Retirement Plan Services to hold their meetings at a location where proceedings can be livestreamed for the public and recorded."
The Milwaukee County Board will meet to discuss the issue in committee meetings scheduled for December 2nd and December 8th.
Supervisors on the Personnel Committee and Finance and Audit Committee expect to receive additional explanation about the extent of the errors and delayed response in addressing them, according to Lipscomb's statement.
Below is a statement from Milwaukee County Executive Chris Abele's Office:
"Chairman Lipscomb has a predictable habit of distorting facts for his political benefit. In this case, it’s even more disappointing than usual because the Chairman’s inaccurate statements about the County’s efforts to pay retirees the benefits they earned have the potential to undermine the public’s faith in our entire pension system.
This error was reported to the IRS in 2007 and the County Board has on multiple occasions over the years been made aware of the process by which we have been working with the IRS. The County Comptroller and Auditor, at the county executive's request, have already completed an analysis of the actuarial report we received a month ago. We have kept the Board informed since that time as well.
Because County Executive Abele was not elected in 2007, we will let Chairman Lipscomb answer the question of why he has not taken any action on this since his election to the County Board. It is unclear why he is covering up his knowledge of this most recent issue since it has been shared with Supervisors on multiple occasions, most recently this July.
This administration has moved as quickly as possible to remedy this unfortunate situation that was caused by previous administrations. An earlier response would not have been possible, as the Chairman implies, because the IRS only approved the County’s correction plan this summer. Our hardworking employees have spent hours and hours of their evening and weekend time correcting this error, which they did not cause, since the IRS sent its approval. As soon as we received and were able to verify the cost, we shared that with the County Board and retirees.
Government isn't a game. The Chairman should check his facts, retract his statement, and apologize."