First things first; though the Journal Sentinel was late to the reporting party, they’ve done a bang-up job in outlining just how egregious the scam was. From news that some, like former supervisor Tom Bailey, received multiple invites into the “buy back” scheme (in Bailey’s case, he knew he could buy back when he got elected; he chose to blow the 2-year window and later got in under the scam by lying about his prior knowledge and refusal to buy back in), to more-than-incidential knowledge among seasonal employees that they could have entered the county pension system as seasonal employees (that same story notes that; the change to allow those that had never been in the pension system to buy in as though they had was one of the key killers in this scam), to a listing of some teat-suckers who were to a person unrepentant for participating in the scam, Dave Umhoefer has done yeoman’s work.
I see that I got picked up by WisOpinion. Thanks, guys. Beyond those I mentioned in yesterday’s post, I noticed that Capper (filling in at Jay Bullock’s place), James Rowen, and Dan Cody have noticed. I have to thank Capper for linking to me (and Technorati for finding the link), and WisOpinion for finding James’ and Dan’s words.
Speaking of reactions, this morning’s paper has a few from various county pols. Supervisor Mark Borowski asked, “What bothers me is how does the county in essence shaft the IRS? Doesn’t somebody, somewhere say something?” He ought to know the answer to the second, especially since he voted for the Big Grab of 2000; hell no. As for the first, I’m not a lawyer, but based on what the paper reported, the county enabled its employees to shaft the IRS. If there’s more than that, I’m presuming that Umhoefer’s holding that to prevent any tainting of the potential jury pool. Paging the shark. Paging Mr. Rick Esenberg. What beyond enabling employees to bust the 25%-of-salary limit on “buy backs” is a violation of federal law?
County Executive Scott Walker asked (once again) for an independent review of the pension situation. I could’ve swore we had one after the Scam of 2000; how did that miss this? As for the pension board’s suggestion that most of the grabbers be “grandfathered” by the Board and Walker, he said, “There’s no way we’re doing down that path. That certainly won’t be our approach,….” Even money says that it will be county board chair Lee Holloway’s.
Supervisor Jim “Luigi” Schmitt gasped out, “How do two wrongs make a right? I’m not going to be party to that.” Oh, really? You were a party to one hell of a wrong with your vote for the Big Grab of 2000.
Guess I’ve already started with the questions, so let them roll:
– How did this miss EVERYBODY’S attention, especially in the wake of the Big Grab of 2000? That particular grab came to light in January, 2002. The pension board quietly put in a sunset provision for this grab in question in 2005, and it finally sunsetted in January 2007.
– How did the Journtinel twig onto this? If one winds the calendar back the 6 months they’ve been digging into this, that would be the month that this abomination was shut down. I rather suspect that it was a teat-sucker who was a bit late to the grab party and was hoping that the paper would be sympathetic to him/her.
– Prior to yesterday, where was the paper’s reporting? The pension board may have been spurred to self-report to the IRS by questioning by a reporter, but unless I missed the story, they sure weren’t spurred to do so by anything that actually appeared in the paper.
– This one’s a special to the lefties (though righties are welcome to chime in as well); just how are we going to pull this back for those that already “bought back”, especially considering that your kind of politicians made it all-but-impossible to pull back anything related to pensions, even those that were improperly and/or illegally granted?
– Related to that, other than a risky pull-back attempt and the end of the program by the pension board once the teat-suckers were booted (which already happened), what more can be done? Other than Michael Mayo, there is nobody in an elected office that had a hand in implementing this.
– For those that would say criminal charges, what’s the statute of limitations on that? It’s been 9 years since federal laws were likely violated.
– Is there an exemption to the end of the “buy back” scheme for existing unionized employees, like there is for the end of the pension “enhancements” that was the Big Grab of 2000?
Revisions/extensions (6:47 pm 7/30/2007) – Add Mike Nichols to the list of reax, and he points out that Sue Baldwin resumed her suit to get even more money than she and her husband, former sheriff Lev, ran out the door with.
Revisions/extensions part 2 (7:44 pm 7/30/2007) – Cleaned up who appeared to know what when a bit. After a re-reading and a comment from “Concerned reader”, the original made it appear that this might have came to light outside the pension board before it did.
The Journal certainly deserves some credit for bringing to light the Retirement Office practices that Dave Umhoefer catalogued, and for identifying some of those who took advantage (and how). Kudos to them for it.
Saying that the Journal was “late to the party”–which is, we all realize, just another aftershock in the scandal that Bruce Murphy alone fathered–rather understates it. The Walker Pension Board voted to end the buy-in practice, which is the focus of the Sunday article, in July 2005. That was TWO YEARS AGO! Further, as the article itself reports, the Board’s counsel (not the Journal Sentinel) recommended an IRS filing TWELVE YEARS AGO–a suggestion that found a receptive ear only after Walker’s appointees gained control.
By the way, a review of the IRS filing (it’s a public record) will show that the Pension Board has NOT “recommended” grandfathering. The filing identifies grandfathering as a potential cure. It also identifies the County Board’s retroactive approval of the violative practices as a potential cure, and further identifies rescinding the pensions as a potential cure. Doesn’t IRS procedure require that ALL potential cures be indicated? Consider this carefully: Would the current Board take the unprecedented step of terminating a benefit practice (and risking the litigation that, history clearly shows, attends such a step) if it intended unilaterally to permit grandfathering? Would individual members have called for additional investigation if they intended to see this all go quietly?
Dave Umhoefer did a nice job of itemizing the practices that led the Walker Pension Board to act more than two years ago, but it’s worth a chuckle to see the Journal taking credit for leadership on this.
I’m not sure that the audit did miss the buy back. It was either so common and convulated that it didn’t stand out, or it was found and swept under the rug, so to speak.
I would more stongly suspect Walker cuing MJS more than a tiffed employee. Walker has a tendency for this kind of thing. Look at how long he held the tapes of the sleeping employee before releasing it at a politically opportune time.
I am not sure of the legality, but if the buy backs were done against county and federal law, that would give the county the grounds to rescind the deals, for some at least.
As one can imagine, there are still county workers that may be eligible for the buy back, but, from my understanding, they’re getting brick-walled right now. I do know that any county employee hired after 1994, gets no pension enhancer, sick leave pay out to the extent that older workers got, and no lifelong health insurance. That was written into the union contracts before Walker took office.
The buy-back issues are largely pedestrian. For the most part–Umhoefer identifies perhaps 80 exceptions, and doesn’t place a price tag on them–these are folks who sought to repurchase prior service credit. There’s no issue that the purchased credit was earned. From an actuarial standpoint, their repurchases are a wash, or close to it. The central issue here is that the County’s retirement office permitted the repurchase payments to be made in violation of the Internal Revenue Code. Let’s watch and see if IRS allows the failure to be cured, and the fund exempt status protected.
The real radish here from a cost and indignation standpoint should be the roughly 100 employees who capitalized on the BUY-IN program. (Umhoefer calls both of the key programs “buy back,” but there’s an important difference that suggests a different label here.) Under buy-in, seasonal employees were permitted by the retirement office to PURCHASE credit from seasonal jobs and other positions for which membership in the retirement system was optional. And the particular abuse that’s costly is the now-terminated practice of allowing pre-’94 hires to purchase (not repurchase) credit that allows them to get back behind the magic 1982 date, which–under the Ament & Co. enhancements–increases the pension multiplier. (Note, as an aside, the extent to which this whole situation keys back to the enhancement package.) The real story is that several of the folks who permitted this practice appear also to be among the 100 who most benefitted. Umhoefer identified several, including retirement office folks and one county supervisor who also served on Ament’s pension board.
As for tip-offs, it seems a stretch. The whole thing was hiding in plain sight. Anybody who paid attention to the proceedings of the Pension Board after Walker’s appointee (Walter Lanier) took over would have seen repeated discussions of buy-in and buy-back on the agenda through 2004 and 2005, together with the public resolution of July 2005 that ended the buy-in practice. Maybe the real head-scratcher is why it took the JS so long to bring the story to press.