Municipal Employees are Required to Contribute to Retirement;  The Only Question is When?
2011-06/23 Dean R. Dietrich Printer Friendly PDF Version

Based upon the dismissal of the lawsuit involving Wisconsin Act 10, municipal employees will be required to pay one half of the actuarially-determined cost of retirement benefits, but it is still unclear when this employee-required contribution is to begin.

Wisconsin Act 10 is supposed to be published on June 28 and become effective on June 29.  The assumption is that any municipal (but not public safety or transit) employee, who is not subject to an existing, non-expired labor agreement, will be required to pay the employee-required contribution to the Wisconsin Retirement System beginning in the first pay period after June 29.  This assumption, however, may not be accurate.  The Secretary of the Department of Administration has indicated that the Department of Administration will determine the effective date for commencing employee-required contributions for local government units.  A different date is apparently going to be determined for local government employees and for state employees.  What appears to be a delay in the implementation of the employee-required contribution is related to the ability of the Department of Employee Trust Funds to accept employee payments as part of the regular reporting of retirement fund contributions.

Here is what is known about the retirement contributions:

• Municipal employees are required to pay 5.8% of their salary as the employee-required WRS contribution;
• Municipal employers are required to contribute 5.8% toward the WRS contribution;  new language in the Budget Bill describes this requirement even though it was assumed to be the case;
• Public safety employees (police, fire or deputy sheriff) and transit employees are not automatically required to pay the employee-required contribution, however, such contribution is subject to negotiations with the labor union representing those employees; this is likely a subject for future negotiations with bargaining units representing these employees;
• The employee-required contribution identified under state law applies to all municipal employees except for:
  • those employees covered by a non-expired labor agreement;
  • an individual who is subject to an individual employment contract that has not been modified
    in any way; or
  • the municipal employee is a police or fire department supervisor,

which positions are exempt from the employee-required contribution if the municipal employer pays the entire retirement contribution for the unionized employees in the police or fire departments;

• The employee-required contribution for those employees who are currently covered by an existing labor agreement will commence at the time of expiration of the existing labor agreement for other than public safety and transit employees; and

• Newly hired employees in the police or fire departments (designated as public safety employees) will be required to pay the WRS employee-required contribution at the time of hire for a position in any public safety bargaining unit that does not have a settled labor agreement or starting with a successor labor agreement where one currently exists.

Ruder Ware will continue to monitor the developments regarding the payment of retirement contributions by municipal employees.  More information should be coming from the Department of Administration in the near future.  Please feel free to contact Dean Dietrich, the author of this article, or any of the attorneys in the Local Governments & Municipalities, or School Districts & Educational Institutions Focus Teams of Ruder Ware: Steve Immel, Jeff Jones, Steve Lipowski, Randi Osberg, Ron Rutlin, Mary Ellen Schill, or Bryan Symes, 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.