Department of Employee Trust Funds Clarifies Timeline for WRS Contributions
2011-07/22 Dean R. Dietrich and Mary Ellen Schill Printer Friendly PDF Version

A recent memo from the Wisconsin Department of Employee Trust Funds (ETF) has clarified the timeline that local government units should use for deducting the required employee contribution to the Wisconsin Retirement System. 

In its memo, ETF has determined that the deductions should begin with the first full pay period which begins on or after July 31, 2011.  Note that this may reflect a change in focus as to the effective date of the mandatory employee contributions.  Previously, the Wisconsin Department of Administration (DOA) on June 30 indicated that state employees would start having the mandatory contributions deducted with their August 25th paycheck, and advised local governments to try to “parallel” that timeframe.  Now, ETF is focusing on the applicable pay period for deductions, and has indicated that it views the DOA’s guidance to require deductions beginning with the first full pay period beginning on or after July 31.

Wisconsin Act 32 (the Budget Bill) gave DOA authority to declare the first day of any pay period beginning after the effective date of Act 32 (July 1) as the effective date of the mandatory contribution requirement.  While the DOA June 30 memo focused on the pay date, clearly Act 32 only allows DOA to designate a full pay period beginning after July 1 as the effective date.  This leads us to the conclusion that DOA in its June 30 memo was implicitly declaring the first full pay period beginning on or after July 31 as the effective date of the mandatory employee contribution requirement, through its use of the August 25 pay date as an example for state employees.  We now know that the August 25 pay date for certain state employees is the pay date for the first full pay period beginning on or after July 31 for such employees.

Reading the recent ETF guidance along with the DOA June 30 memo, we now advise local government employers to begin applying the mandatory employee contribution requirement as of the first full pay period which begins on or after July 31, 2011.  This effective date may be different for different groups of employees.  Of course, collective bargaining agreements and other binding contracts in existence on the effective date of Wisconsin Act 10 (the Budget Repair Bill) will continue to supersede the mandatory contribution requirement until the expiration of those contracts and agreements.  For employees who are subject to the mandatory employee contribution requirement on the effective date of Act 32, July 1, the actual deductions must commence with the first full pay period beginning on or after July 31.

The language from the ETF memo is below:

State employees will see the first new deductions coming out of their August 25, 2011 paychecks.  The Department of Administration (DOA) has recommended to local officials that the effective date for WRS, City of Milwaukee and County of Milwaukee pension contribution deductions from local employees parallel as closely as possible the timing for state employees.  http://etf.wi.gov/news/doa0630.pdf.  As the letter from DOA points out, the first pay period that the state will deduct money for the WRS employee required contributions is the pay period from July 31, 2011 to August 14, 2011.  Therefore, per DOA’s guidance, local employers should consider deducting the WRS employee required contributions from employees on or after the first pay period after July 31, 2011.

Please feel free to contact Dean Dietrich or Mary Ellen Schill, the authors of this article, or any of the attorneys in the Local Governments & Municipalities Focus Team, or the School Districts and Educational Institutions Focus Team of Ruder Ware: Steve Immel, Jeff Jones, Steve Lipowski, Randi Osberg, Ron Rutlin, Bryan Symes, or Kevin Terry if you have questions in regard to this update.

© 2011 Ruder Ware, L.L.S.C. Accurate reproduction with acknowledgment granted. All rights reserved.
This document provides information of a general nature regarding legislative or other legal developments. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations, or issues, and additional facts and information or future developments may affect the subjects addressed.