THE BIG PENSION FUND RIP-OFF: Walker bill strikes again | WisCommunity

THE BIG PENSION FUND RIP-OFF: Walker bill strikes again

Scott Walker's attack on public employee unions is part of a bill that includes other onerous changes now just coming to the attention of the public, such as his attempt to grab total control of Medicaid funds from the legislature, create more political appointeeships from current civil service jobs, add language assigning himself the right to sell state-owned power plants without competitive bidding, cutting aid to our state's heretofore superior university system, and more. But in its impact on public workers, the bill gets even worse, as Walker channels his mentor, former Gov. Tommy Thompson.

Another assault on public employees is tucked away on Page 125, Section 9115 of the bill now stuck in the state Senate. This particular provision would let the state take $28 million from the state Employees Trust Fund in order to pay the state's portion of employee medical and pension contributions through 2013. 

Get that? Walker wants to raid the pension fund -- which is money belonging to employees -- to pay the state's portion of further contributions owed them.

That's like borrowing ten bucks from somebody and then telling them you need to borrow ten more bucks to pay them back.

The Legislative Reference Bureau's analysis of this provision says that under the bill, the secretary of Employee Trust Funds is required to allocate the $28 million from reserve accounts in those funds for group health and pharmacy benefits for state employees; the purpose, according to the analysis, being "to reduce employer costs for providing group health insurance for state employees for the period beginning this July 1 2011, and ending this Dec. 31. After 2013, under the Walker plan, the state will no longer pay anything towards the state employee medical and pension fund. State employees will be required to pay the entire cost for those benefits. Meanwhile, Gov. Walker is helping himself to the till.

[on EDIT: I've taken out the line below because, while I've seen numerous references to this this number, and have since tracked them back to one source, the number appears to be the result of either an errant calculation, errant language and/or a misunderstanding of certain language in Walker's bill. The assertion is usually accompanied by a citation from the bill -- Section 62.623. That section merely says that employees of first-class cities (currently only Milwaukee) shall pay half of their retirement contributions, except of course for municipal public safety workers.

[The bottom line is that the reductions will remain significant and severe for many state and local government workers -- totaling 8 percent or more of their pay checks, or hundreds of dollars per month in many cases. If I find examples where the figure below could apply, I'll share them here or in a new message.]

One estimate averages out these lost benefits to roughly $1,500 per month for each state employee, going forward. Not chump change if you're middle class, as are many state workers.

Thompson pulled a similar but more transparent stunt in the mid '90s, when he manipulated the law to extract tens of millions of dollars out of the pension fund in order to balance his budget. He called it a "dividend" for the state based on the fund's superior performance. In other's words, it was a raid. After a decade-long legal battle, public employees succeeded in a union-backed lawsuit fighting the maneuver. A court ordered the state to replace the funds to the tune of $230 million, which included lost pension earnings on the amount that Thompson raided.

So is Walker's own raid legal? We'll see, if it is enacted. It appears the Walker administration has tried to side-step Thompson's legal problem by designating the $28 million for its costs related to the benefits it is savaging, rather than grabbing the money into the state's general fund. But either way, the state is swiping back money that arguably was vested into the possession of state employees, and in doing so helping it balance its books. On the backs of its workers, once again.

It's all reminiscent of similar raids on private sector pensions by unscrupulous businesses back in the '70s. One Doonesbury cartoon lampooned those incidents, having the morally bankrupt character Uncle Duke protesting as he's led away in handcuffs: "But the pension fund was just SITTING there!"

In Scott Walker's eyes, the state employee pension fund apparently is just sitting there.

Wisconsin Republicans were outraged when Gov. Jim Doyle reappropriated transportation construction funds to balance his budget, but taking money from an inanimate object like a road is a lot less offensive than taking it from hard-working men and women who will be hard pressed as a result. Score another goal for the GOP in the game of upward income redistribution.

Published

February 25, 2011 - 2:48pm

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