Comments on: Pension Grab II redux/reax/questions for all

By: Concerned reader

Concerned reader — Wed, 01 Aug 2007 15:02:19 +0000

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.

By: capper

capper — Wed, 01 Aug 2007 01:54:59 +0000

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.

By: Concerned reader

Concerned reader — Tue, 31 Jul 2007 00:34:07 +0000

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.