Nov. 15, 2013 – Milwaukee County and its Pension Board cannot alter the “percentage multiplier” that is used to calculate pension benefits without obtaining the prior consent of employees affected by the change, a state appeals court has ruled in a class action.
Under the Milwaukee County Employees’ Retirement System (MCERS), pensions are determined through a formula that multiplies “final average salary” by years of service. That number is then multiplied by a percentage value set by Milwaukee ordinance.
Suzanne Stoker began her employment with Milwaukee on April 13, 1982, the day the Milwaukee Brewers beat Cleveland 9-8 before making the World Series later that year.
When Stoker and other similarly situated employees began their employment, and became members of MCERS, the “percentage multiplier” was set at 1.5 percent under Milwaukee ordinance. In 2001, the multiplier changed under an incentive program.
Employees hired after 1981, which included Stoker, could get a multiplier of two percent for each year of service after 2000. In addition, the multiplier would apply to prior years, up to eight years prior to 2001, for each year served after 2000.
In 2011, Stoker’s collective bargaining representative – the Wisconsin Federation of Nurses and Health Professionals (Local 5001) – entered an agreement that set the percentage multiplier at 1.6 percent for all service after 2011.
This reduced the multiplier from the two percent that Stoker and others were receiving, and Milwaukee Ordinance section 201.24 was amended to reflect the change.
Stoker and Local 5001 brought a class action to invalidate the ordinance and to prohibit the reduction in plaintiffs’ percentage multiplier under MCERS. A circuit court ruled that Stoker and other class members had vested rights that could not be altered.
In Stoker v. Milwaukee County, 2012AP2466 (Nov. 14, 2013), a three-judge panel for the District I Appeals Court affirmed, noting the issue was “whether Milwaukee County may alter the formula multiplier in a manner that is entirely prospective. …”
Under the home rule authority, the panel explained, Milwaukee County could alter the terms of the pension system, but the law clearly states that no change can alter the vested rights of workers who were MCERS members before the change took effect.
“Stoker and those similarly situated have a vested contractual interest in the percent multiplier at the highest level obtained during the course of their employment,” Sherman wrote, noting the multiplier could not be decreased without the employees’ consent.
The panel also explained that employee’s cannot consent through collective bargaining agreements that are entered into on their behalf. It noted a prior case in which the court held that unions cannot bargain away vested rights of members without their consent.