Number
110740
Version
SUBSTITUTE 2
Reference
Sponsor
THE CHAIR
Title
A substitute charter ordinance relating to member pension contributions for certain city employes and elected officials.
Sections
36-05-6-a-2 am
36-08-7-a-1 ra
36-08-7-a-2 rp
36-08-7-a-3 rp
36-08-7-c am
36-08-7-m am
36-08-7-0 am
Analysis
This charter ordinance establishes that all general city employe members of the employes' retirement system who were hired prior to January 1, 2014, shall contribute 5.5% of their earnable compensation to the employes' retirement system commencing with the first pay period following the effective date of this charter ordinance. The charter ordinance also provides that elected officials who were enrolled in the retirement system prior to January 1, 2014, and whose accrual rate is 2.5%, shall contribute 7% of their earnable compensation to the employes' retirement system commencing with the first pay period following the effective date of this charter ordinance. Elected officials who were enrolled in the retirement system prior to January 1, 2014 and whose accrual rate is 2%, shall pay 5.5% of their earnable compensation to the employes' retirement system commencing with the first pay period following the effective date of this charter ordinance. In addition, general city employes and elected officials will no longer be required to pay 1.6% of their pensionable earnings as provided for in s. 36-08-7-m.
Body
Whereas, Section 36-14 of the charter provides the city with home rule authority over the employes' retirement system; and
Whereas, The Common Council has enacted amendments to s. 36-08-7-a-2 of the charter that required general city employes hired on or after January 1, 2010, and prior to January 1, 2014, to pay a 5.5% member contribution; and
Whereas, Section 36-08-7-a-3 of the charter requires general city employes hired on or after January 1, 2014, to pay a 4% member contribution; and
Whereas, Section 36-08-7-b of the charter provides that employes' retirement system members who are initially employed as firemen or policemen on or after October 3, 2011, shall contribute 7% of their earnable compensation as their member contribution; and
Whereas, The Wisconsin legislature enacted Wisconsin Act 10 on March 11, 2011, with final publication on June 28, 2011; and
Whereas, Section 167 of 2011 Wisconsin Act 10, subsequently amended by s. 1715 p of 2011 Wisconsin Act 32, provides in s. 62.623 that in any employe retirement system of a 1st class city, except as otherwise provided in subsection 2 of the statute and except as provided in a collective bargaining agreement entered into under subch. IV of ch. 111 of the Wisconsin Statutes, employees shall pay all employee-required contributions for funding benefits under the retirement system, and that the employer may not pay on behalf of an employee any of the employee's share of the required contributions; and
Whereas, On July 31, 2014, the Wisconsin Supreme Court issued a decision in Madison Teachers, Inc v. Scott Walker, which ruled that s. 62.623 neither violated the home rule provisions of the Wisconsin Constitution, nor violated the contract clause of the Wisconsin Constitution; and
Whereas, Employee payments of the member contributions will support the ongoing financial sustainability of the employes' retirement system and the security of retirement allowances, annuities, disability benefits, and other benefits provided for under ch. 36 of the charter; and
Whereas, Therefore, the Common Council should enact, under its home rule authority to govern the retirement system, the following changes to ch. 36 of the charter pertaining to member contributions; now, therefore
The Mayor and Common Council of the City of Milwaukee do ordain as follows:
Part 1. Section 36-05-6-a-2 of the code is amended to read:
36-05. Benefits.
6. SEPARATION BENEFITS.
a-2. Return of Member-Paid Accumulated Contribution. The retirement system shall return to members who separate from service prior to vesting the contributions made by the members under s. [[36-08-7-a-1 to 3, b or c]] >>s. 36-08-7-a, b or c<<. A member may elect to withdraw his or her contribution either after separation or upon termination of membership under s. 36-03-5. Upon filing with the board a request for return of member-paid contribution, on a form provided by the board, the member shall be paid his or her contribution and the regular interest credited on the contribution as it was at the date of separation and ½ the regular interest credited to the account thereafter. A member who withdraws his or her contribution shall not be eligible for any benefits under this chapter and his or her membership shall be terminated. In the event the member dies after separation, the contribution, if not previously paid, shall be paid with the credited interest to the member's estate or designated beneficiary.
Part 2. Section 36-08-7-a-1 of the city charter is renumbered 36-08-7-a and amended to read:
36-08. Method of Financing.
7. MEMBER CONTRIBUTIONS.
a. Members who are not firemen, policemen or elected officials shall contribute or have contributed on their behalf, 5.5% of the [[member's]] >>members'<< earnable compensation. [[Except as provided in subd. 2, subsequent]] >>Subsequent<< to and commencing with the first pay period of 1970, the city shall contribute on behalf of >>a<< general city [[employes]] >>employe<< 5.5% of such member's earnable compensation. Members employed by city agencies participating in the system shall contribute 5.5% of their earnable compensation less any contribution made on their behalf as determined by the governing bodies of such agencies. >>Notwithstanding the foregoing, subsequent to and commencing with the first pay period following the effective date of this charter ordinance, all members who are not firemen, policemen or elected officials and were enrolled as members of the retirement system prior to January 1, 2014, shall contribute 5.5% of their earnable compensation. General city employes who enroll as members in the retirement system on or after January 1, 2014, shall contribute 4% of their earnable compensation.<<
Part 3. Section 36-08-7-a-2 and 3 of the city charter is repealed.
Part 4. Section 36-08-7-c of the city charter is amended to read:
c. Members who are elected officials shall contribute or have contributed on their behalf 7% of the [[ member's]] >>members'<< earnable compensation, and in respect to such members subsequent to and commencing with the 1st pay period of 1971 the city shall contribute 7% of earnable compensation. >>Notwithstanding the foregoing, subsequent to and commencing with the first pay period following the effective date of this charter ordinance, elected officials who were enrolled in the retirement system prior to January 1, 2014, and whose accrual rate is 2.5% under s. 36-05-1-g, shall contribute 7% of their earnable compensation and elected officials who were enrolled as members in the retirement system prior to January 1, 2014, and whose accrual rate is 2% under s. 36-05-1-g, shall contribute 5.5% of their earnable compensation.<< Elected officials who enroll as members in the retirement system on or after January 1, 2014, shall contribute 4% of their earnable compensation. [[On or after January 1, 2014, a member who is enrolled in the retirement system prior to initially being elected to an office and who at the time of election is required to pay a member contribution under par. a-1 or 2, or b, shall continue to pay that same member contribution rate while serving as an elected
official.]]
Part 5. Section 36-08-7-m of the city charter is amended to read:
36-08. Method of Financing.
7. MEMBER CONTRIBUTIONS.
m. During the 8-year period immediately following their enrollment, general city employes who are enrolled as members on or after January 1, 2000 shall contribute to the combined fund a sum expressed as 1.6% of the member's pensionable earnings if they participate in the combined fund. If a member who makes contributions under this paragraph separates from service without a vested pension or withdraws his or her accumulated contributions, amounts contributed under this paragraph shall be returned to the contributor without interest. This subsection shall not apply to general city employes including elected officials, required to contribute a member contribution under [[par. a-1 to 3 or c]] >>par. a or c<<.
Part 6. Section 36-08-7-o of the code is amended to read:
o. Pre-Tax Deduction. All member contributions made under pars. a, b and c, except the policemen's $1 contribution, shall be implemented pursuant to the provisions of Internal Revenue Code Section 414(h) (2) by means of direct payment by the city or city agency to the combined fund. The city or city agency shall fund the cost of member contributions under [[par. a-2]] >>par. a and c and for members initially employed as firemen or policemen on or after October 3, 2011, as provided in par. b<< by means of a pre-tax salary deduction from the salary of employes on whose behalf such payments are made. Members shall not have the option of choosing to receive the contributed amounts directly instead of having them paid to the combined fund.
Part 7. This is a charter ordinance and shall take effect 60 days after its passage and publication, unless within such 60 days a referendum petition is filed as provided in s. 66.0101(5), Wis. Stats., in which event this ordinance shall not take effect until submitted to a referendum and approved by a majority of the electors voting thereon.
LRB
APPROVED AS TO FORM
____________________________
Legislative Reference Bureau
Date: ______________________
Attorney
IT IS OUR OPINION THAT THE ORDINANCE
IS LEGAL AND ENFORCEABLE
____________________________
Office of the City Attorney
Date: ______________________
Requestor
Drafter
LRB155161-4
Teodros W. Medhin
10/28/2014