Pension system crumbling: Milwaukee system receives "D" grade for $2.1B net liability
By ethanh // 2024-12-10
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A newly released Legislative Audit Bureau report on Milwaukee's finances and pension system contains disturbing findings that suggest a crumbling towards bankruptcy type of situation for the Midwestern city. At the end of 2023, the Milwaukee pension system had a net liability of $2.1 billion and a fiduciary net position of $5.8 billion. We also know that between 2022 and 2023, the Administration and Operations Committee of the Board went into a closed session three times, which is improper. In 2011, Milwaukee repealed the closed meeting clause that the Board used as justification for these illegal closed-door meetings. Another 11 closed-door meetings also occurred between February 2013 and December 2021, all using the same bogus clause which is no longer valid. Two additional problems the report identified include the Board improperly classifying all investments and wrongly calculating the net pension liability in employer schedules. "The ending net pension liability was understated by $85.1 million and the total deferred outflows of resources and the total deferred inflows of resources were each overstated by $395.2 million," the audit reads. (Related: Remember earlier this year when a Google Cloud "error" instantly erased a $135 billion pension fund?)

Starting January 1, Milwaukee pension system to be absorbed by state

Truth in Accounting, which conducted the audit, gave Milwaukee a "D" grade based on its current financial position. As of this writing, Milwaukee owes each and every taxpayer in the city $15,300. "Any city with an average taxpayer burden of between $5,000 and $20,000 was graded with a 'D,'" writes Jon Styf for The Center Square, a Wisconsin media outlet. In 2023, Milwaukee's pension system reported $545.9 million in net investment income and $203.7 million in total contributions. That same year, it paid out $466.6 million for benefits and $8 million for administrative expenses. Things are about to change, though. Starting on January 1 in the new year, the Milwaukee County pension system will be absorbed by the State of Wisconsin. All new hires will become part of the state's pension system rather than the city and county's system, which is historic. Milwaukee County Executive David Crowley is credited with making this change, which will help to dig "one of the nation's most troubled government pension systems," to quote Urban Milwaukee's Bruce Murphy, out of the hole it is currently stuck in. One of Crowley's first jobs in politics back when he was in his 20s was being an aide to then-County Supervisor Nikiya Harris Dodd. That is where he first learned about the city's very serious pension problem. "That was an issue that was constantly talked about at the county," Crowley recalled to the media. "We all knew it was a huge problem." In 2000 and 2001, county officials in Milwaukee were running wild with trying to grab as much of the cash for themselves as possible before the whole thing eventually goes belly up. Some employees were given $1 million lump sums in a scandal that made national headlines. "The pension scandal won national coverage for the size of its giveaways and the massive long-term costs for taxpayers," Murphy writes, that amount estimated to be $1.35 billion. After those benefits were awarded as part of the scheme, they became "property rights" for employees that the county could not take away, leaving the city unable to build or maintain parks, buses, government buildings, and other basic services. "We knew there was no way we could make any investments in county services if we didn't solve the pension problem," Crowley says. "We had an upside-down system where more people were collecting pensions than paying into it. A lot of that was because they had to keep cutting employees because of the cost of the pension." As excited as some people are about Trump's reelection, there is only so much he or anyone can do to keep the crumbling financial system afloat. Learn more at Collapse.news. Sources for this article include: TheCenterSquare.com NaturalNews.com UrbanMilwaukee.com
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