Milwaukee County pension chief loses job after overpayment error

The head of the Milwaukee County retirement system is out of the job after public disclosure of another pension payment error, and at least one County Board supervisor is pushing for the troubled system to be turned over to the state.

County retirement plan services director Marian Ninneman resigned after failing to correct an ongoing overpayment to one person that amounted to $140,000 over several years even though Ninneman was informed of the mistake nearly three years ago, County Executive Chris Abele said.

"This pensioner didn't do anything wrong" but now that person is being asked to pay it all back, Abele said in an interview.

"This kind of error is devastating financially to the person," he said.

On Wednesday, County Board Chairman Theodore Lipscomb Sr. placed responsibility for the error on Abele.

“This latest error is another example of the Abele administration's failure to maintain effective day to day management of the county pension system," Lipscomb said.

“Accountability for these errors ultimately lie with County Executive Abele, and that is why I have asked for a full report from the Abele administration and asked the Milwaukee County audit department to be involved in an independent investigation of the management and daily operations of the pension system,” he said.

Auditors from Baker Tilley have been brought in to work with auditors in the county comptroller's office to determine the extent of payment errors among the 8,150 pension checks issued each month, Abele said.

"If someone asked me, 'Do you think that's all the mistakes?' I would say, 'I don't think so, ' " Abele said.

The county paid out more than $212.5 million in monthly pension benefits in 2016, records show. As of Dec. 31, the market value of the county pension fund stood at more than $1.66 billion.

When Ninneman was told of the overpayment to an individual in April 2014, it had been going on for more than a year, county risk management director Amy Pechacek said. Pechacek found the mistake and reminded Ninneman of the error in May 2016 but nothing was done, she said.

Ninneman could not be reached for comment.

Abele has named Pechacek interim director of the pension system and the county has notified the person, the spouse of a deceased county employee, of the error.

One way for the county to recover the $140,000, and alleviate the impact to the pensioner, is to reduce future monthly pension payments, Pechacek and Abele said.

Letters have been mailed to other county retirees notifying them of the latest mistake and the upcoming review of other pension payment calculations, Pechacek said.

The county pension board was scheduled to discuss the overpayment Wednesday in closed session during a regular monthly meeting.

But Supervisor Sheldon Wasserman, vice chair of the board's Finance Committee, has had enough and wants a change.

"We're the only county in Wisconsin that has its own pension system," Wasserman said. "All the others are in the state system."

"I'll be drafting a resolution calling for turning Milwaukee County's independent pension system over to the state," he said. "We have to change course. The county has to get out of the pension business."

The Wisconsin Department of Employee Trust Funds administers retirement, insurance and other benefits for state and local government employees.

Disclosure of the long-ignored overpayment comes less than three months after the county had to pay out $11 million to make up for pension underpayments to nearly 1,300 county retirees that started 15 years ago.

RELATED: County pays $11 million in pension error

Those mistakes were made between 2001 and 2008 after county pension office workers used the wrong mortality table to calculate the payments. Ninneman was not director of the office at that time. She became director in January 2011, a few months prior to Abele's election as executive in April of that year.

After adjusting the 1,300 payments, the county expects to distribute an additional $6 million to those retirees over their projected life expectancy.

Consequently, the county will need to increase contributions to the pension fund by more than $1.5 million a year over 20 years to make up for the unexpected payouts, according to the Pension Board's actuarial consultant.

That follows on the heels of an additional $20 million contribution to the pension fund in 2016 to correct for previous actuarial errors and a Pension Board decision to shorten the period for fully funding the county's pension liability from 30 years to 20 years.

ARCHIVES: Consultant undershot county pension funding by nearly $20 million

Among headlines about the pension fund earlier this year was the report of four retirees receiving lump-sum checks exceeding $1 million in addition to regularly monthly pensions.

Backdrop payments are bonuses paid to workers who stay on the job past their retirement date. Milwaukee County has paid out more than $294 million in backdrop bonuses to retirees since 2001.

Approval of such a lucrative windfall caused a scandal that continues to reverberate through county government today, Wasserman said. The political firestorm that followed led to the ouster of then-County Executive F. Thomas Ament and seven county supervisors.

In January, Ninneman came under fire for asking the city to pay part of the cost of a $424,000 backdrop payment to a retiring county worker. The person had worked at the city from 1979 to 1981 so Ninneman in December requested the city share the cost of 10% of the backdrop in addition to 10% of the regular pension.

Abele said he was not informed of the request beforehand and he withdrew it as soon as he was made aware of the communication. Although the county and the city have a reciprocity agreement on workers' pensions for employees who work for both local governments, it was not extended to backdrop payments.

Don Behm can be reached at don.behm@jrn.com and twitter.com/conserve.