From:	Owczarski, Jim
Sent:	Thursday, April 25, 2013 11:55 AM
To:	Black, Tobie
Cc:	Rodriguez, Charlotte
Subject:	FW: file 121417 on April 29 Council agenda

For the file, please.

Jim


Jim Owczarski, CMC
City Clerk
City of Milwaukee
(414)-286-2998
http://milwaukee.legistar.com

From: Nicolini, Mark  
Sent: Thursday, April 25, 2013 11:53 AM 
To: Hines Jr., Willie; Murphy, Michael (Alderman); Kovac, Nik; Coggs, Milele; Dudzik, Joseph; 
Hamilton, Ashanti; Bauman, Robert; Bohl, James; Davis Sr., Joe; Wade, Willie; Witkowski, Terry; 
Puente, Robert; Zielinski, Tony; Donovan, Robert 
Cc: Owczarski, Jim; Pfaff, Richard; Yaccarino, Dennis; Crump, Clifton; Curley, Patrick; Allen, Jerry 
(contact) 
Subject: file 121417 on April 29 Council agenda

Dear Common Council members:

On April 24 the Finance and Personnel Committed recommended adoption of file 
121417 on a unanimous 5-0 vote.  This file will be included in the Committee’s April 29 
report for the Common Council’s consideration.

File 121417 restructures employer contributions to the Employes’ Retirement System 
(ERS).  The proposed modifications will reduce the potential volatility of annual 
contribution changes, which could otherwise be very disruptive to effective Budget 
planning and the capacity to provide City services.  Under this proposed Charter 
ordinance, the ERS actuary would establish an “actuarial contribution rate” which would 
govern annual employer contributions as a stable percentage of payroll for a five-year 
period.  This replaces the annual valuation method which can generate substantial 
variations from year-to-year in employer pension contributions.

The ERS actuary, who is appointed by the Annuity and Pension Board, worked closely 
with the Budget Office to develop this proposal.  He has confirmed that this proposal is 
actuarially sound, and will maintain the financial strength of the ERS.  

The City Attorney has indicated that this charter ordinance is legal and enforceable.  In 
addition, an independent outside counsel retained by the Annuity and Pension Board 
has expressed the opinion that pension plan financing is a prerogative of the plan 
sponsor—that is, the City, through legislation that the Mayor and Common Council 
adopt.  There are no legal obstacles to this charter ordinance.

This file makes no changes to current benefits.  The ERS Combined Fund currently has 
a market value of almost $4.5 billion.  This far exceeds the $300 million of annual benefit 
obligations that are paid to our retirees.  

The file contains a considerable amount of material regarding this proposal.  In 
particular, I recommend that you refer to my January 30, 2013 memorandum to the 
Council on this file if you desire additional information.  Also, I have previously offered 
the Council members an opportunity for a briefing on this file.  If you would like a briefing 
prior to the April 29 Common Council meeting, please contact me at extension 5060.

Thank you for your consideration.

Mark Nicolini
Budget & Management Director
City of Milwaukee
414-286-5060
mnicol@milwaukee.gov