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Pension costs will play election role

By Matt Pommer

Contribution rates for the Wisconsin Retirement System’s main program will rise sharply in 2011, and the higher rates will play a key role in public employee collective bargaining and this year’s elections.

Costs covering most WRS workers will rise 0.6 percent of payroll next year, while the increase will be 1.4 percent of payroll for elected officials and executives and 1.8 percent of payroll for firefighters. The higher rates were approved by the Employee Trust Fund Board in June. The increases were recommended by independent actuaries who examine the investment results and the money needed to pay the pensions over future decades.

Taxpayers should be interested.

State officials estimate that 98 percent of WRS-covered pension contributions are paid from government revenues. The rest comes from the workers.

Higher health insurance premiums have been a key topic in public employee collective bargaining this year. Many local contracts remain unsettled. Complicating the situation for 2011 will be the increased pension contribution costs.

The 2009-11 state budget, successfully lobbied by police and firefighter unions, bars municipal governments from cutting spending for protective services below those in effect in 2009. That seemed to discourage police and firefighter layoffs in the recession, but pension costs might undercut that protection if municipalities have to shift money from straight wages to pension costs..

Pension contribution rate increases were expected, another reminder of the stock market decline centered in 2008.

The WRS covers more than 264,000 active employees, most of them in a “core” program. Several thousand participants are in a money purchase program in which all money is invested in stocks. The city of Milwaukee and Milwaukee County have their own pension programs.

All four categories of workers are affected by the higher “core” rates. The rate for protective workers without Social Security coverage (firefighters) will be 17 percent of payroll. For other protective workers with Social Security the rate will be 14.7 percent. For elected officials and those in “executive” positions, such as university chancellors and state agency heads, the contribution rate will be 13.3 percent of payroll.

For all other WRS covered active employees the pension contribution will be 11.6 percent next year.

Milwaukee County Executive Scott Walker, who is seeking the Republican gubernatorial nomination, said he wants public employee workers to pay more toward their pension program.  He suggested it could save state government $130 million. Whether he can achieve that through collective bargaining with state employee unions is questionable.

Milwaukee Mayor Tom Barrett, seeking the Democratic nomination for governor, has been focusing his fringe benefit attention on health insurance. Barrett said lower health insurance premiums are possible if most public employees were covered by the same insurance.

Matt Pommer worked as a reporter in Madison for 35 years. He comments on state political and policy issues.

One comment

  1. The stock market would have tanked big time if public employees pension plans had not kept buying into it even during the lowest of the lows. In a way, the public might thank the public wowrker for its pension funds which invest a lot of money every day into the stock market.

    Once the pensions inputs start getting reduced, the market could drop further.

    Just my observations here.

    Scott Walker might think about selling the Governor’s mansion,… that might save some money. He could also take his brown bag bologna sandwich and check into the Salvation Army’s Shelter when (if) he is governing from Madison, OR he could sleep in his office like the legislators do, and claim his $88/day tax free per diem like they do. How about having each legislator including the Governor start paying something for their currently free parking at the capitol? That might generate some money also.

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