In Wisconsin, pension repayment demand is overturned

Victory ‘speaks to the power a strong union’

LAST YEAR, HELEN SCHMIDT received a shocking letter from Milwaukee (Wis.) County, her former employer. The letter stated that the pension board of the Milwaukee County Employees’ Retirement System made a mistake regarding employee pensions, and it wanted its money back.

“I was totally surprised and shocked by the letter,” says Schmidt, a retired registered nurse. “I’ve been receiving my pension for 19 years with no problem—and then I get this letter.”

Schmidt worked at Milwaukee County’s Doyne Hospital for 24 years; she was a member of the Wisconsin Federation of Nurses and Health Professionals, Local 5001, until the hospital closed in 1995. Schmidt earned a pension that she received every month after her retirement, until the letter arrived in April 2014.

Schmidt wasn’t the only one to get a letter. More than 200 Milwaukee County employees and retirees—including 25 other WFNHP members—some of them now in their 80s, also were notified.

The group faced delayed retirement or pension repayment demands totaling nearly $11 million—a result of errors the county said were made in the way the workers were allowed to purchase credit for previous county service.

Buyback problems

According to the county, the pension payments violated county ordinances governing pension buybacks. County officials had been aware of this problem since 2007. Then-County Executive Scott Walker reported the problem to the Internal Revenue Service yet never sought to recover pension payments. Chris Abele, the current county executive, has aggressively pursued payment recovery, ordering a review last year of the pension payments made to these workers.

In Schmidt’s case, the county sought a repayment of $222,941 because before her retirement, she paid nearly $2,000 to purchase service credit for a short period of time when she worked under an emergency appointment prior to becoming a permanent employee. In August 2014, the county reduced Schmidt’s monthly pension from $2,416 to $1,590. It also threatened to take half of that to apply to what the county thought of as its “overpayment” to her, which would leave her with only $795 per month. The move forced Schmidt, who is now 72, to dip into her savings to make ends meet.

The WFNHP contacted its labor attorney, Jeff Sweetland, to help the retirees file an appeal to the county executive’s decision as well as a lawsuit against the pension board. He also crafted an amendment to the county ordinance that would retroactively validate the purchases the retired health professionals had made.

“The problems with the pension buyback program were driven by a number of county big shots who gamed the system,” says Sweetland. “The retirees reasonably understood that their purchases were valid. They relied in good faith on what the pension board told them was legitimate when they considered retirement back in the 1990s.”

In response to a grass-roots effort by union members—retired and active—the pension board asked the county board of supervisors to amend the pension ordinance to retroactively validate about 200 county employees’ and retirees’ service-credit purchases.

Unfortunately, the pension board’s proposed fix did not extend to a group of 13 other retirees whom the pension board deemed “ineligible.” The group included Schmidt and four other retired WFNHP members—nurses Carol Schmeling and Beatrice Trapp, and medical technologists Cheryl Miller and Peny Schaefer. Sweetland crafted an amendment to the pension board’s proposal that would retroactively validate their purchases as well. That amendment was approved by the county board on Feb. 5, along with the pension board’s proposal, but the county executive vetoed the entire measure. On Feb. 17, the board met again and voted to override the county executive’s veto.

“It’s such a relief,” says Schmidt. “I’m thankful that we had a lawyer. I don’t think we would have gotten the ear of the county without him.”

One last hurdle

“Everyone involved agrees that the retirees did nothing wrong,” says WFNHP president Candice Owley who also is an AFT vice president. “They followed the direction of the county staff who told them that they were eligible to purchase credits, told them what it would cost and accepted their payment. How could they have known that the advice they were given violated county rules?

“This is a truly great victory because conservative radio, bloggers and print media have been working hard to say that these retirees participated in an illegal pension program,” says Owley, adding that the conservatives had been urging citizens to pressure the county supervisors to vote down this pension fix.

There is one last hurdle, however, says Sweetland.

“We have to get the IRS to bless the board’s decision. If we do that, then we will have saved these women’s pensions going forward and relieved them of the threat of having to pay back thousands of dollars.”

“The victory also speaks to the power of a strong union,” says Jeff Weber, president of WFNHP Local 5001. “Many of the first calls that people made when they got these letters were to the union. It is just one more reminder that there is value in being a union member.”

Healthwire, Summer 2015 Download PDF (976.21 KB)
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