City of Sun Prairie employees will now have the option to enroll into the Wisconsin Retirement System starting January 2017 thanks to a new state law.
Alders say the move is a “windfall” for city employees and a good recruiting tool to lure qualified job applicants to Sun Prairie, one of nine cities in the state, that doesn’t participate in WRS.
But the city is still working out the WRS transition details, to make sure employees get equal retirement opportunities if they stay with the current defined contribution plan. The current system requires a 6.2 percent employer contribution, WRS mandates 6.6 percent.
The Committee of the Whole gave its OK this week to the plan but deadlocked on deciding whether Sun Prairie Utilities employees will be required to join WRS. Some had concerns that it will discourage linemen, looking for higher wages and less for retirement benefits, from seeking jobs in the city.
Wisconsin 2015 Act 174, signed into law by Gov. Scott Walker on Feb. 29, allows a one-time enrollment into WRS.
The bill was authored by Rep. Jeremy Thiesfeldt, with the help of his staff member, District 1 Alder Hariah Hutkowski, who crafted it with the City of Sun Prairie’s situation in mind.
Under a defined benefits program like WRS, benefits paid at retirement are predetermined based on final years salary, rewarding long-service employees. The employer liability changes based on future salary increases, investment earnings and employee turnover.
With the city’s current defined contribution, employer costs are specified in advance and are more predictable, based on employee salaries. The employee assumes the risk and any adverse experience in investing does not increase employer funding costs.
Sun Prairie City Administrator Aaron Oppenheimer said recruitment and retention have been difficult over the last couple of years, with employee quitting to move other municipality, county or state jobs that offered WRS.
He also said higher department level applicants already in the WRS system, didn’t want to come work at the city without the benefit.
“This is a big change on how the Sun Prairie does business and will attract people and keep them here,” Oppenheimer said at the March 8 COW meeting.
All non-union/non-sworn employees that work 1,200 hours/ a year or more would be able to enroll. Sworn officers are already on WRS.
Employees hired after Jan. 1, 2017 would be automatically enrolled in WRS.
City alders OK’d recommendations by staff to mirror benefits of WRS for those employees who want to stay on the current plan.
That could include contribution rates,
eligible pays, vesting periods and eligibility definition for part-time employees.
The law allows the city to exclude SP Utilities from mandatory participation.
SP Utilities representative Rose Schulze said mandatory WRS would cause problems with recruiting lineman, who usually want higher wages, instead of a
retirement package where they would have to invest 6.6 percent of their pay.
She said SPU already has a high linemen turnover and faces competition from private utilities in Madison in getting employees.
Alders Bill Connors, Al Guyant, Mike Jacobs, and Diane McGinnis voted against excluding SP Utilities from WRS.
McGinnis said she understood that the contributions could be a burden to some employees but that didn’t sway her vote. “We shouldn’t treat city employees different, we need to stay consistent,” McGinnis said.
The city council is set to take up the WRS vote on March 15.