Report: Wisconsin cities face $2.25B in unfunded liabilities

MADISON, Wis. (AP) — Wisconsin’s 25 largest cities face $2.25 billion in unfunded retiree health care liabilities, with increasing costs over a three-year period in Milwaukee and Racine negating savings elsewhere, the Wisconsin Policy Forum reported Monday.

The report examined the size of unfunded commitments between 2013 and 2016 in the state’s 25 largest cities. While 23 cities cut costs by just over $120 million during that time, that was more than negated by $228 million increases in expenses in Milwaukee and Racine.

The analysis found that cities took on the liabilities by promising generous health care benefits to workers after they retired, sometimes in exchange for lower pay raises. The costs quickly add up, the report found, because some city workers such as police and other public safety employees can retire in their early 50s with the same health benefits and monthly premiums as active employees.

Overall, the costs increased 5 percentage points over the period examined.

Racine’s costs rose the most — 24 percent — for an increase of nearly $97 million over the three-year time frame. However, changes in the city’s benefits reduced its liability by more than $117 million in 2017, the study said. The Wisconsin Policy Forum did not look at data for the other cities beyond 2016.

Appleton’s costs rose at 20 percent between 2013 and 2016 followed by Sheboygan at 17 percent for the next two largest percentage gains. Milwaukee’s went up 15 percent.

Manitowoc had the largest decrease at 80 percent, followed by Franklin at 78 percent and Fond du Lac at 71 percent.

The report highlighted work by some cities to cut costs.

For example, La Crosse raised eligibility standards for retiree health care and phased it out for employees hired after 2014. That helped to reduce the city’s liability from $76.7 million in 2013 to $66.4 million in 2016, a drop of 13 percent.