Unintended consequence: Collective bargaining law may increase state pension costs by $87.5M
Wisconsin's controversial 2011 collective bargaining law may add $87.5 million to state retirement system costs next year due to a little-noticed change that will boost employee benefits.
The unanticipated costs aren't a back-breaking amount for the massive retirement fund, but they illustrate why laws that alter the complex retirement system should be examined carefully before enactment, said Robert Conlin, secretary of the Department of Employee Trust Funds.
Conlin's predecessor, David Stella, stepped down in January saying that elected officials disregarded his plea for a thorough examination of how changes in the law would affect the $82 billion pension fund.
Under provisions of the collective bargaining law, government employers — state agencies, local governments and school boards — are saving money because they no longer pay the employee's portion of payroll contribution to the pension fund.
But they are saving a little less than earlier believed, according to new financial projections provided to ETF board members Thursday.
It's possible that more surprises will be found later this summer when the department's 2011 financial books are closed and final 2013 contribution projections are approved in September, said Brian Murphy, president of Gabriel Roeder Smith and Company, the department's actuarial firm.