MADISON, Wisc. (CN) - Whether Milwaukee County can reduce pension rates mid-employment was the subject of a Wisconsin Supreme Court hearing Wednesday.
County employee Suzanne Stoker, through her attorney Jeffrey Sweetland, says she and other employees have a vested right in their pension multiplier, so it cannot be lowered after the start of employment.
But Alan Levy, on behalf of Milwaukee County, begged to differ. He said the rights to a multiplier are not vested when the multiplier is set.
"These rights only get vested when they're earned," Levy told the court.
The case was one of two the court heard Wednesday, regarding modifications to benefits for retired Milwaukee County employees.
At issue in Stoker v. Milwaukee County is whether the county can reduce the pension multiplier midway through employment, provided that service rendered before the change is calculated at the higher rate.
Stoker was hired when the multiplier was 1.5 percent. Milwaukee County raised the multiplier to 2 percent for certain employees, with an opportunity to receive the higher rate retroactively if they continued their employment, which Stoker did.
In 2011, the county entered an agreement with Stoker's union that the multiplier would change to 1.6 percent for all work performed beginning in 2012. Stoker did not personally agree to the decrease in the multiplier.
Stoker and her union sued the county and its pension board, claiming the new rate was invalid for her and other employees with "vested rights in the higher multiplier before that date," according to a case summary from the Wisconsin Supreme Court.
The Milwaukee County Circuit Court granted summary judgment to the plaintiffs, a decision affirmed by the Court of Appeals.
Because the ordinance was not retrospective, Levy argued, it did not take away anything that county employees had earned. The multiplier in effect at the time the pension was earned is what would be used for calculation, so anything before 2012 would be calculated at 2 percent in Stoker's case.
Beth Hanan, attorney for the Milwaukee County Pension Board, argued that Wisconsin laws allow for prospective changes to pension multipliers, but not retrospective changes, making the Milwaukee County ordinance legal.
Sweetland said the assumption of the multiplier continuing at the given rate or higher is the only thing that gives it power.
If, for example, the county can promise a certain rate at the time of hiring, then change it the very next day, then the multiplier is "worthless."
Justice Roggensack said that because Stoker's union agreed to the lower multiplier on her behalf, the argument that she had not personally agreed did not matter.
But in this case, Sweetland said, Wisconsin Supreme Court precedent says it does.
"When you're dealing with vested rights ... you have to get their consent," Sweetland said. "Unions cannot bargain away the vested rights of their members."
Both attorneys pointed to Wisconsin laws modifying the Milwaukee County Employee Retirement System.
Chapter 138 addresses vested rights of employees in their pension, and states that no changes to the pension can be made without a member's consent.
Chapter 405 gives Milwaukee County home rule over the pension system, and restates the assertion that no negative change can be made to a pension prior to the effective date of the change.
Justice Bradley said the case probably would not be decided on which approach is a more responsible policy.
"The answer lies in the language of the contracts and the statute," she said.
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