Milwaukee, Racine drive increase in unfunded liabilities

Wisconsin’s 25 largest cities had $2.25 billion in unfunded liabilities at the end of 2016 for post-employment benefits, much of that health care for retirees, according to a new report.

The Wisconsin Policy Forum found that’s up $108 million from 2013 when looking at the 25 cities together.

Still, WPF noted Milwaukee and Racine drove that increase, canceling out savings by other communities. Between 2013 and 2016, the costs for those two communities rose $228.1 million, the group found. That offset the $120.1 million decrease in expected benefit costs for the other 23 largest cities.

Racine officials, though, say their projected liability is expected to drop in 2017 due to changes they’ve made to their benefits, according to the report.

WPF points out some cities are taking action to lower their liability, by upping eligibility standards or eliminating benefits entirely for new workers. But the group cautions that with unemployment at or near a record low, cities will be competing with businesses to hire and keep workers.

“If leaders drop the benefits for future retirees or make all workers cover more of their health care premiums or copays, some workers may decide to change jobs or retire more quickly,” report authors say.

Milwaukee’s funded liability climbed to just over $1 billion, an increase of 15 percent over the three-year period, while Racine’s was up 24 percent to $503.2 million. West Allis was No. 3 among the 25 cities at $140.9 million, up 1 percent.

The bottom three were: Manitowoc, $652,054, a drop of 80 percent; Green Bay, $512,561, a decrease of 62 percent; and Sun Prairie, $112,192, a drop of 11 percent.

By cutting off workers hired after January 2014 and taking other steps, La Crosse has brought down the city’s projected liability by 13 percent, from $76.7 million in 2013 to $66.4 million in 2016.

Fond du Lac has lowered its liability 71 percent, from near $6.3 million to $1.8 million over the three-year period. And Franklin has gone from $5.8 million to just under $1.3 million — a 78 percent drop.

Report authors point to some options for city leaders for bringing these numbers down. Among the options: planning health programs for employees, asking employees to contribute more or changing eligibility requirements, as La Crosse has done.

Read the report: