Franklin City Neighbors

A Chapter in the Great Pension Rip Off

Jul 23, 2002

CORRECTION: This article reports that Samuel Leatherwood, a deputy inspector in the Milwaukee County Sheriff's Department, had retired with a $447,497 lump-sum pension after 35 years with the county. The county's pension office, which had said Leatherwood had taken the lump-sum option, now says that Leatherwood is eligible for the $447,497 in a lump sum but has not yet chosen which pension option he will take.

Retirees take $14 million, so fund may need tax aid

By JESSICA McBRIDE and STEVE SCHULTZE
of the Journal Sentinel staff
Last Updated: Feb. 7, 2002

Milwaukee County retirees have signed up for about $14 million in lump-sum pension payments since January, forcing the sell-off of pension fund assets and increasing the probability of taxpayer contributions to the fund, officials said Thursday.

Milwaukee's Pension Dispute


Photo/Tom Lynn
County Executive F. Thomas Ament has come under fire for a new county pension deal that greatly sweetened his benefit when he retires.


Archived Coverage

For past stories, commentary, graphics and other coverage of the Milwaukee County pension and benefits deal, see our SPECIAL SECTION.

The $14 million covers retirements scheduled to officially take place during the first three months of this year and represents a portion of the wave of retirements spurred by news of the possibility that lucrative new pension benefits could be curtailed.

The figures were released Thursday by Jac Amerell, secretary of the county's Employees Retirement System.

It marks the first time that the pension office has put an overall dollar amount on those accelerated retirements. The $14 million comes on top of about $6 million paid out last year under the county's "back-drop" program, in which a portion of a retiree's pension may be taken as a lump sum.

Amerell said the county's $1.5 billion retirement fund could "easily absorb" the costs.

However, the rush on lump-sum payments could make it more likely that a taxpayer-supported contribution to the pension fund will be needed next year, said Cliff Van Beek, a Pension Board member.

"This is probably a little more of a hit than anyone expected," Van Beek said.

Dennis Skelly, an actuarial consultant to the county Pension Board, said the lump-sum payments were one factor leading to the likelihood of the county making a contribution to the pension fund. The lagging stock market slowing the earnings on the pension fund is the major reason that county taxpayers will likely have to contribute to the fund, Skelly said.

A formal determination on the amount of the contribution needed from the county won't be ready for another month or more, he said.

Taxpayer contributions to the fund have been minimal the past two years, but averaged $13 million over the past decade.

Said Amerell: "This is new ground we are walking into here. No retiree or future employee is in any kind of jeopardy."

Amerell said the pension fund had earlier projected, before the scandal, that it would pay out $1.5 million in lump sums for all of 2002.

Amerell said the pension fund would have to liquidate assets to come up with the $14 million.

He explained that the $1.5 billion in the fund is all invested in "equities, fixed income, real estate venture capital. I'm going to have to turn to one of the money managers . . . and say, 'We're going to need $14 million in cash. Please liquidate $14 million of your holdings.' "

What does that mean to the fund?

"Look at it this way," Amerell said. "Fourteen million dollars next to $1.5 billion is not a material number. Nevertheless, it is a small contraction of the investment portfolio. To the workers, there will be no ramification."

Of the latest batch of employees opting to take a lump-sum payment, two will take lump sums of more than $400,000, according to the pension office.

One was Thomas Mollan, the former chief of staff to County Executive F. Thomas Ament, who took a $437,403 lump sum with him into forced retirement. Samuel Leatherwood, a deputy inspector in the Sheriff's Department, left with $447,497 after 35 years with the county.

The lump-sum payments come in addition to monthly pension payments that workers receive, as well as cash payouts for unused sick leave. The chart released by the pension office Thursday listed all those receiving lump-sum payments, but it did not include their monthly benefits or sick pay totals.

The 148 employees who have retired since January also took $4.8 million in unused sick leave with them, according to earlier reports. That number, previously reported, was nearly three times the amount paid in all of 2001, when 121 workers retired all year.

Four other employees took lump-sum payments of between $300,000 and $400,000. They are:

Fredric Matestic, $361,116. He worked for 30 years, and was an assistant district attorney assigned to consumer fraud cases.
Gerald Mikolajczk, $328,086. He has worked for 33 years, assigned to network services.
Kathleen Lamb, $318,959. She has worked for 38 years, assigned to child welfare.
Carl Yauck, $301,600. He has worked for 37 years, assigned to court services.
In addition, 14 other employees took payments of more than $200,000 but less than $300,000.

Forty-seven employees took lump-sum payments of between $100,000 and $200,000.

One of them was Adam Yopp, a county systems analyst who will officially retire Feb. 20 with a $152,443 lump-sum payment. Yopp, 55, said he thought the news media had overplayed the pension issue. He said the idea of recalling Ament over the issue was "ludicrous" and that Ament's potential pension was probably low compared with chief executives in the private sector.

Ament could have received a lump sum of up to $2.3 million, but he has waived his right to the new pension benefits. A calculation done for the county said his lump-sum payout in 2008 would be limited to $641,000, plus $109,212 in annual pension payments.

He could have gotten the bigger lump sum in 2008 if he took no monthly pension payments, according to a separate calculation done for the Journal Sentinel.

Although the sick pay expenditures come from property taxpayers, the lump-sum payments do not; they come from the $1.5 billion pension fund.

Appeared in the Milwaukee Journal Sentinel on Feb. 8, 2002.