MADISON, Wis. (CN) - Home-rule rights justify Milwaukee County's reduction of pension multipliers mid-employment, the Wisconsin Supreme Court ruled Friday.
The 5-2 decision reverses findings by the lower courts that established pension multipliers as a vested right as soon as they are enacted, instead of when they are earned.
"In other words, Milwaukee County could so amend the formula and apply it prospectively because that prospective application does not 'diminish or impair' benefits accrued from service credits already earned," Justice Annette Kingsland Ziegler wrote for the majority opinion.
Suzanne Stoker, the lead plaintiff in the class action, had been hired by Milwaukee in 1982 when the multiplier was 1.5 percent. When the county raised the multiplier to 2 percent for certain employees in 2001, it included an opportunity for employees to receive the higher rate retroactively if they continued their employment.
Stoker did, but the county entered an agreement with Stoker's union in 2011 that the multiplier would change to 1.6 percent for all work performed beginning in 2012.
She and her nurses union filed suit to have the pension-multiplier reduction declared invalid.
The action pointed to a 1957 law that says members of the Milwaukee County Employee Retirement System have a "vested right ... to all increases in benefits covered by amendments subsequent to the date his membership [in MCERS] is effective," the opinion states.
"In short, she argues that she is entitled to the most favorable pension formula available during her employment," Ziegler wrote.
The state Supreme Court agreed with Wisconsin, however, that the 1957 and similar statutes are overruled by the county's right to home rule guaranteed under a 1965 law.
County ordinances stating benefits are not vested until earned are thus valid, and benefits can be reduced before they are vested, the opinion states.
"The amendment did not breach Stoker's contractual right to retirement system benefits earned and vested because it had prospective-only application to future service credits not yet earned," Ziegler wrote
In a scathing dissent joined by Chief Justice Shirley Abrahamson, Justice Ann Walsh Bradley blasted the majority's "narrow focus."
"Rather than addressing the session laws which provide a clear answer to our inquiry and dictate protection of the employees' benefits, the majority shifts the focus of its analysis to language in the Milwaukee County General Ordinance," Bradley wrote. "It is only by repeatedly ignoring the language of the governing session laws that the majority is able to conclude that the county may reduce the pension multiplier, thereby dealing a blow to the rights of the employees.
"I conclude instead, as did a unanimous court of appeals, that the session laws mean what they say: employees have a vested right to their benefits when they accept employment with the county and the county is not permitted to diminish or impair those benefits," Bradley added.
The Legislature in 1945 stated that rights are vested the moment employees are hired and thus become a member of the retirement system, Bradley said.
"It is hard to imagine how much clearer the legislature could have been," she wrote.
"In sum, the majority's attempt to avoid the language of the governing session laws and shift the focus to the language in the ordinance is unpersuasive," the dissent concludes. "It turns a blind eye to the clear language of the session laws which must trump the amendment to the county ordinance."
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