State Supreme Court upholds law supported by federation

State employees are among the 15,000 members of the Wisconsin Federation of Teachers who will benefit from a June 12 Wisconsin Supreme Court decision upholding the constitutionality of Act 11, which was signed into law by then-governor Tommy Thompson in December 1999.

The WFT lobbied for the pension changes during the 1999 Legislature and filed an amicus brief with the State Supreme Court disputing the legal challenge.

Specifically, Act 11 mandates numerous changes to the Wisconsin Retirement System (WRS), the pension system for 90 percent of the public employees in the state, including state and school district workers represented by the WFT.

One of the most significant changes mandated by Act 11 pertains to the death benefit. "Prior to Act 11, if an active employee died, the only eligible recipients of the full death benefit were a spouse or dependent child. It was a widows and orphans benefit," says Ken Opin, a lobbyist for the WFT, who estimates the financial benefit of Act 11 could total $7 billion. "Now, beneficiaries can be anybody, and the benefit is 100 percent of the employer/employee benefit" if the deceased WRS participant is age 55 or older. Given changes in society, this is very significant," Opin notes.

Other provisions of the law supported by the WFT include:

• an increase in the pension formula multiplier for all service through Dec. 31, 1999, for the vast majority of the WRS participants, from 1.6 percent to 1.765 percent;
• removal of the 5 percent earnings cap for participants in the money purchase plan who were hired after Jan. 1, 1982; and
• the Jan. 1, 2000, re-opening of the variable trust, which was frozen to new participants in 1982.

Additionally, approximately 103,000 current retirees are receiving a 10.3 percent increase under Act 11.

Controversy over Act 11 stems from a portion of the law that provides $200 million to the system's 1,200 employers to pay for their share of unfunded liabilities. "Essentially, we paid a $200 million access fee to gain benefit improvements," says WFT president Bob Beglinger, noting that "there are a number of members who are more than a little upset by that."

"By the same token," he says, "[Act 11] represents about a 10 percent increase in pension benefits" for employees.

"Pension changes have been a major issue for state and local government employees this year," says FPE/AFT department director Steve Porter. "In virtually every arena, the courts, state legislatures and the Congress, benefit changes have been enacted that dramatically change retirement benefits. Activism and involvement by FPE/AFT local unions on behalf of public employees has made a tremendous difference."

The WFT is hoping to turn the downside of Act 11 into a positive by "capturing that $200 million in base-building raises," Beglinger says.