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Attention Officers:
As you are aware there is a national conservative movement afoot to cut back on public employee pensions.
The public perception is that public employee pensions are too lucrative compared to the private sector and
that they cost the taxpayer too much money.
The simple answer of the conservative right has been to convert from a "defined benefit" system
like we have here in Wisconsin to a "defined contribution" or 401k system. There has been some interest
in Wisconsin in going into that type of system, being promoted mostly by various conservative think tanks.
The idea has not really caught on here yet. I think that is due to the focus here being on employee
contributions to the current system.
When the Budget Repair Bill was introduced Gov. Walker had included a provision that called for a study of
a conversion to defined contribution. That provision was removed from the Budget Repair Bill but then inserted
in the Budget Bill (Act 32).
The study included the following provisions:
- A study was to be done jointly by 3 state agencies: Department of Administration (DOA), Office of State Employment
Relations (OSER) and Department of Employee Trust Funds (ETF).
- The study was to be completed and delivered to the Governor and Legislature's Joint Committee on Finance by July 1, 2012.
- Topics to be specifically studied were: (a) establishing a defined contributions plan as an option permitting employees,
and(b) permitting employees to not make employee required contributions and limiting retirement benefits for those employees
to a money purchase annuity.
- Act 32 did not appropriate any funding to do the study so it was not going forward. However ETF decided that it might
be prudent to get a study done anyway. So ETF, using some of its own funds, is working on a study that will then be shared
with the other 2 agencies and from that a final report will be completed and then to be delivered by June 1, 2012.
- ETF has always been leery of converting to defied contribution and a study is likely to conclude that a conversion
makes little sense for the state, neither for annuitants, actives, or taxpayers. If ETF did not do a study then the
Governor and Legislature might rush something through. With a due date of July 1, 2012 the legislature will be
out of session and is not likely to come back for this type of divisive issue.
- ETF may be reluctant to support a defined contribution system but the position of the other 2 agencies is not clear.
The Governor controls those two. At this point it is not clear if the public will be able to see the original or
draft study of ETF before it gets modified by the 3 agencies working collectively.
We have been working closely with the other public employee unions on taking a cautious approach to this issue.
We obviously don't want to see legislation rammed through like Act 10 was. We also don't want to get this issue
raised to such a high level that it becomes a major issue in the Recall of Gov. Walker and State Senators.
Debating public employee pensions is not likely to be a winner for us. Thus we and most other unions have been
taking a cautious approach. This week we met with Assembly Democratic Leader Peter Barca (D-Kenosha) and Senate
Democratic Leader Mark Miller (D-Monona) to make them aware of the issue. They were hearing some about the issue
but not a lot at this time. We are also attempting to meet with some moderate Republican legislators to alert
them of the issue. Again we don't want to give them any ideas about trying to move the issue. There are some in
the labor movement, mostly annuitants, that are raising the issue in an effort to get grass roots pressure put on
all legislators asking them to oppose any change. It is the collective position of most public employee unions
and most members of the Coalition of Annuitants that we fight this in a low key fashion. The State Legislature
returns for its winter session on January 17, 2012. It is scheduled to conclude for the year on March 15th.
Rumor has it that they will be in session for only a few days and want to avoid as much controversy as possible.
Thus taking up this pension issue seems very unlikely. Why would you try to quickly pass (another) controversial
issue when you had just directed that a study be done of doing this and the study is not quite yet done?
In addition to the meetings I have described above our labor coalition is working on materials that we will have
ready for the press if it looks like this issue might move quickly. Spokespersons for our position are being lined up.
Labor has received a grant and has hired Sandy Drew, recently retired staff of both ETF and SWIB to help with the research.
We are confident this is the correct approach to take on this issue. We do not think the issue is going anywhere
this session and do not want to do anything to raise it into a recall election issue. However we are working closely
with other public employee groups to make sure we are not caught napping.
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