Professional Police Ass'n v. Lightbourn

• Citation: 243 Wis.2d 512,627 N.W.2d 807,2001 WI 59
• Decision Date: 12 June 2001
• Docket Number: No. 99-3297-OA.,99-3297-OA.
• Parties: WISCONSIN PROFESSIONAL POLICE ASSOCIATION, INC., John Charewicz, David Mahoney, Susan Armagost, Steven Urso and State Engineering Association, by its President, Thomas H. Miller, David Buschkopf, Ross Johnson, Melvin Sensenbrenner, Bernard Kranz and Thomas H. Miller, Petitioners, v. George LIGHTBOURN, Secretary of the Wisconsin Department of Administration, Jack C. Voight, Wisconsin State Treasurer, Wisconsin Education Association Council, by its President Terry Craney and its Vice-President, Stan Johnson, and Donald Krahn, Margaret Guertler, Gerald Martin and Phyllis Pope, Respondents.
• Court: United States State Supreme Court of Wisconsin

243 Wis.2d 512

2001 WI 59

627 N.W.2d 807

WISCONSIN PROFESSIONAL POLICE ASSOCIATION, INC., John Charewicz, David Mahoney, Susan Armagost, Steven Urso and State Engineering Association, by its President, Thomas H. Miller, David Buschkopf, Ross Johnson, Melvin Sensenbrenner, Bernard Kranz and Thomas H. Miller, Petitioners,¹ v. George LIGHTBOURN, Secretary of the Wisconsin Department of Administration, Jack C. Voight, Wisconsin State Treasurer, Wisconsin Education Association Council, by its President Terry Craney and its Vice-President, Stan Johnson, and Donald Krahn, Margaret Guertler, Gerald Martin and Phyllis Pope, Respondents.

No. 99-3297-OA.

Supreme Court of Wisconsin.

Oral argument October 4, 2000.

Decided June 12, 2001.

For the petitioners, Wisconsin Professional Police Association, Inc., John Charewicz, David Mahoney, Susan Armagost and Steven Urso, there were briefs by Lester A. Pines, Carol Grob, Linda Harfst and Cullen, Weston, Pines & Bach, Madison, and oral argument by Lester A. Pines.

For the petitioners, State Engineering Association, Thomas H. Miller, David Buschkopf, Ross Johnson, Melvin Sensenbrenner, and Bernard Kranz, there were briefs by Michael E. Banks and Haus, Resnick and Roman, LLP, Madison, and oral argument by William Haus.

For the respondents, George Lightbourn, Secretary of the Wisconsin Department of Administration, and Jack C. Voight, Wisconsin State Treasurer, there was a brief by Ann Ustad Smith and Michael Best & Friedrich, LLP, Madison, and oral argument by Ann Ustad Smith. For the respondents, Wisconsin Education Association Council, Terry Craney, Stan Johnson, Donald Krahn, Margaret Guertler, Gerald Martin and Phyllis Pope, there was a brief by Lucy T. Brown, Anthony L. Sheehan, Michael J. Van Sistine and Wisconsin Education Association Council, Madison, and oral argument by Anthony L. Sheehan.

An amicus curiae brief was filed by Timothy E. Hawks and Shneidman, Myers, Dowling, Blumenfield, Ehlke, Hawks & Domer, Milwaukee, on behalf of the Wisconsin Federation of Teachers, WFT, AFT, AFLCIO.

An amicus curiae brief was filed by Bruce F. Ehlke and Shneidman, Myers, Dowling, Blumenfield, Ehlke, Hawks & Domer, Milwaukee, on behalf of the AFSCME District Council 40.

¶ 1. DAVID T. PROSSER, J.

This is an original action under Article VII, Section 3(2) of the Wisconsin Constitution.²

¶ 2. The petitioners consist of two groups: (1) the Wisconsin Professional Police Association, Inc. (WPPA) and several of its individual members, and (2) the State Engineering Association (SEA), by its president, Thomas H. Miller, and several of SEA's individual members. The interests and claims of these petitioners are not identical, but all petitioners challenge the constitutionality of portions of 1999 Wisconsin Act 11 (Act 11) as amended by 1999 Wisconsin Act 12.³ Together, the two acts make numerous changes in the Wisconsin retirement system (WRS or the system).

¶ 3. The respondents are George Lightbourn, Secretary of the Wisconsin Department of Administration, and Jack C. Voight, Wisconsin State Treasurer, as well as the Wisconsin Education Association Council (WEAC) by its president, Terry Craney, and its vice-president, Stan Johnson, and four other individuals who are now or have been affiliated with WEAC. WEAC is the largest organization in Wisconsin representing teachers. Many of WEAC's members are participants in the WRS.

[1,2]

¶ 4. The supreme court limits its exercise of original jurisdiction to exceptional cases in which a judgment by the court significantly affects the community at large. We accepted original jurisdiction in this case because it meets that test. The challenges to Act 11 impact the pension interests of more than 460,000 "participants"⁴ in the system, as well as the fiscal responsibilities of the State of Wisconsin and all government employers⁵ within this state whose past or present employees are participants in the system. Historically, several of the major cases examining public employee pension issues have begun as original actions. See State ex rel. Dudgeon v. Levitan, 181 Wis. 326, 193 N.W. 499 (1923); State ex rel. Thomson v. Giessel, 262 Wis. 51, 53 N.W.2d 726 (1952) (Giessel I); State ex rel. Thomson v. Giessel, 265 Wis. 558, 61 N.W.2d 903 (1953) (Giessel II); Columbia County v. Bd. Of Trustees of Wis. Ret. Fund, 17 Wis. 2d 310, 116 N.W.2d 142 (1962). Moreover, Act 11 includes a nonstatutory provision requesting this court to "take jurisdiction of any original action relating to the implementation of this act." 1999 Wis. Act 11, § 27(4t).

¶ 5. Petitioners present multiple challenges to components of Act 11. SEA also challenges the legality of the entire Act on procedural grounds. We have carefully examined each claim presented and conclude that none of the challenged portions of Act 11 is unconstitutional beyond a reasonable doubt. We also conclude that the Act was not approved in violation of Article IV, Section 26 of the Wisconsin Constitution. Consequently, the injunction issued by this court on December 29, 1999, is lifted so that Act 11 may be enforced.

I. FACTUAL BACKGROUND

¶ 6. This case requires a thorough grasp of the Wisconsin retirement system. For its facts, the court relies on the lengthy Stipulation of Facts agreed to by the parties, under the supervision of Reserve Circuit Judge Michael J. Barron, and an invaluable 75-page analysis of the system by Tony Mason of the Legislative Fiscal Bureau. See Tony Mason, Wisconsin Legislative Fiscal Bureau, Informational Paper No. 73, Wisconsin Retirement System (1999) [hereinafter Wisconsin Retirement System]. Mason's analysis is listed as a stipulated exhibit by the parties. The court draws heavily upon these two documents, as well as Chapter 40, of the Wisconsin Statutes, for its discussion in this section.

¶ 7. The Wisconsin retirement system is the product of many years of legislative action on public employee retirement in Wisconsin. This state's first retirement plan for public employees was created for Milwaukee protective service employees (police and fire) in 1891.⁶ Many additional retirement plans followed, including a pension plan for Milwaukee teachers in 1909, and a statewide plan for teachers in 1911.⁷ As a general rule, these early plans operated independent of each other, either as county or municipal retirement plans or as retirement plans covering certain types of employees, such as teachers and protective service employees.⁸

¶ 8. In 1945, the legislature began studying the possibility of consolidating various public employee retirement plans;⁹ and in 1947, it consolidated many of the plans into a state system known as the Wisconsin Retirement Fund.¹⁰ The legislature also created a 10-member Joint Survey Committee on Retirement Systems to monitor public pension plans and proposed statutory changes to the state-operated plans.¹¹

¶ 9. Over the years, consolidation moved forward. In 1967, the legislature reorganized the executive branch of state government, and it created the Department of Employee Trust Funds (DETF) as well as a seven-member Employee Trust Funds Board (ETF Board or Board) to direct and supervise the new department.¹² One result of this legislation was to bring all non-Milwaukee pension plans under the administration of DETF.¹³

¶ 10. In 1975, efforts began to unite the Wisconsin Retirement Fund, the State Teachers Retirement System, and the Milwaukee Teachers Retirement Fund into a system to be known as the WRS.¹⁴ By 1982, the legislature completed this merger and folded 90 percent of all public employees in Wisconsin into one pension system.¹⁵ This legislation solidified the administration and management structure of the WRS under the ETF Board.¹⁶

¶ 11. For purposes of this litigation, the WRS consists of approximately 461,000 participants: roughly 255,000 active employees, 103,000 annuitants, and 103,000 "inactive participants" (former participating employees who have not yet become annuitants).¹⁷

¶ 12. There are four categories of active participating employees. The vast majority (about 234,000) are classified as general employees.¹⁸ The other three categories are (1) elected officials and executive employees; (2) protective service employees not subject to Titles II and XVIII of the federal Social Security Act; and (3) protective service employees subject to the federal Social Security Act.

¶ 13. At the end of 1998, the WRS was supported by nearly 1,200 different employers, including the agencies of the State of Wisconsin.¹⁹ The WRS is funded by contributions from employers and employees, and the interest earned on these contributions.²⁰

A. Employee Contributions

¶ 14. Employee required contributions are determined on a statutorily-mandated percentage of an employee's income.²¹ The four different categories of employees are required to contribute different percentages of their income to their retirement.²² Employee required contributions range from 5 percent to 8 percent of employee income, depending upon an employee's statutory classification.²³ In recent years, the state and other public employers have "picked up" most employee required contributions as part of their overall compensation of employees.²⁴ This practice is permitted by Wis. Stat. § 40.05(1)(b).²⁵ State and local employers "pick up" about 99 percent of employee required contributions.²⁶ With certain limitations, employees may enhance their pensions by contributing more than the statutorily-required amount.²⁷ This supplementary payment is a voluntary contribution.

¶ 15. A different kind of employee required contribution is known as a "benefit adjustment contribution."²⁸ The benefit adjustment contribution resulted from the increased retirement benefits approved by the legislature in 1983 Wis. Act 141.²⁹ Wisconsin Stat. § 40.05(2m) sets the benefit adjustment contribution at 1 percent of employee earnings.³⁰ Many employers have chosen to pick up this contribution for their...