This year marks 40 years since legislation implementing the Wisconsin Retirement System became effective. Strong legislative oversight has fundamentally shaped the WRS and the other public employee benefits administered by the Department of Employee Trust Funds.
We like to say our journey to success began in 1943, when Gov. Walter Goodland requested the legislature override his veto of a state employee retirement system bill. Ingeborg Sidwell, an 80-year-old state employee who scrubbed floors at the state capitol, is credited with compelling Goodland to change his mind. Sidwell received a monthly pension of $14.70.
1945-1948: Build Up and Consolidation
The general trend in Wisconsin was a proliferation of separate state and local government pension funds. During this period the legislature set a course to consolidate and merge existing public employee pension funds. In 1948, the Wisconsin Municipal Retirement Fund and the State Employees Retirement Fund merged to become the Wisconsin Retirement Fund.
1967: A State Agency is Born
Chapter 75, Laws of 1967, create the Department of Employee Trust Funds and the ETF Board, as a result of the Kellett Commission: Reorganization of State Government.
1975: Pathway to Merger
Chapter 280, Laws of 1975, directed the ETF Board to prepare legislation for the next legislative term (1977), to effectuate the merger of the Wisconsin Retirement Fund, State Teachers Retirement System, and the Milwaukee Teachers Retirement Fund. It ended up taking two legislative sessions before the statutes of the to-be-merged systems were reconciled with the successful passing of Chapter 96, Laws of 1981, and the creation of the WRS.
1982: A System is Born
Effective January 1, 1982, legislation (1981 Chapter 96) merged the Wisconsin Retirement Fund, State Teachers Retirement System, and the Milwaukee Teachers Retirement Fund into one Wisconsin Retirement System.
WI Act 141 was a major benefits bill. Changes include reducing the actuarial discount for an early retirement between ages 60 and 65; increasing formula factors; and establishing age 62 as the normal retirement age for teachers and general category employees with 30 or
more years of service. The bill funded benefit improvements by creating the Benefit Adjustment Contribution, which increased employee contributions by 1%.
WI Act 27 directs early recognition of $230 million from the WRS Transaction Amortization Account, an asset smoothing method used at that time. The annuity reserve received a total of $84.7 million, which was used in place of General Purpose Revenue to pay a Special Investment Performance Dividend to certain WRS retirees. A lawsuit ensued, which was resolved by a Wisconsin Supreme Court decision 10 years later, directing that the money must be repaid to the fund.
WI Act 13 creates an early retirement window for certain employees by, among other things, reducing the monthly actuarial discount. The act also changed vesting requirements, WRS participation standards, and interest crediting on separation benefits. The law also increased the annuity dividend paid on May 1, 1990, by recognizing $500 million from the TAA.
WI Act 116 adds an annuitant member seat to the ETF Board, to be elected by WRS annuitants. Fourteen candidates filed nomination papers in the first election, which was won by Otto Schultz.
WI Act 185 changes the spelling from “employe” to “employee” in statutes. Some say the single “e” was in place in order to avoid confusion between “employee” and “employer” -- that there was a risk for error because the “e” and the “r” keys are located next to each other on the keyboard.
WI Act 11 makes some of the most significant changes in WRS history. These included: increasing the formula multiplier for service performed before January 1, 2000; increasing active employee death benefits; increasing the maximum formula benefit for certain WRS employee categories; re-opening the Variable Trust Fund (closed to new participants since 1979); phasing out the TAA to create a Market Recognition Account for the distribution of gains and losses. A lawsuit ensues. In June 2001, the Wisconsin Supreme Court ruled the provisions were legal and could be implemented.
WI Act 53 establishes that a positive or negative annuity adjustment (dividend) will be paid from the Core annuity reserve if at least a .5% increase (or decrease) is generated in all Core annuities.
WI Act 10 eliminates the Benefit Adjustment Contribution; prohibits employer pick-up of employee contributions for certain employee categories; prospectively reduces the formula multiplier for some; sets parameters on employer-paid health insurance contributions; requires a 5% cut to health insurance program costs; and much more.
WI Act 32 changes WRS eligibility and participation requirements, return-to-work rules, and vesting requirements. It also prohibits municipal employers from paying certain employees’ required contributions; specifies that employee contributions be made from employees’ federal and state pre-tax income; and orders a study of potential modifications to the WRS.
2016 to Present
Since 2016, no legislation has significantly affected the WRS and the public employee benefits administered by ETF.