Says it has offered $12 million in savings through 2011 and $184 million in savings over the next 25 years in contract negotiations with the City of Milwaukee.
After the Green Bay Packers won the Super Bowl in February 2011, news in Wisconsin centered on Gov. Scott Walker’s attempt to curtail the collective bargaining powers of most government workers and make those workers pay more for their benefits. Only police and other public safety employees were exempted. Yet on March 7 and 9, 2011, the Milwaukee Police Association ran a half-page ad in the Milwaukee Journal Sentinel touting how the union had offered to make financial sacrifices worth millions of dollars. The reference was to contract talks between the union -- which represents 1,700 officers, detectives and other police employees -- and the City of Milwaukee. MPA offered $12 million "in immediate savings through 2011" and $184 million in savings "over the next 25 years," the ad announced. The claims were recited the next day in a news release issued by Milwaukee Ald. Bob Donovan. Let’s see if they’re true. Contracts for Milwaukee police and firefighters expired in 2009. Both unions are in mediation with the city over contracts that would be retroactive to January 2010 and continue through December 2011. Mayor Tom Barrett, who lost to Walker in the November 2010 gubernatorial election, asked the unions in March 2011 to agree to pay more for pensions and health insurance, as called for in Walker’s budget-repair bill. MPA president Mike Crivello said at the time his union would consider the request -- and he reiterated the concessions that MPA had already offered. That is, the $12 million in savings through 2011 and the $184 million over the next 25 years. There are quite a few figures, but hang us with us; we’ll walk through the three main ways the union claims the money will be saved. Pay freeze for 2010 and 2011 The ad says a two-year pay freeze would save the city $5.4 million per year. But Crivello acknowledged the ad is in error on this point and that $5.4 million would be the total savings through 2011, the two-year period of the contract. Where did the number come from? MPA arrived at the figure by assuming -- based on raises in newly-signed police contracts around the country -- that an arbitrator would award 2.5 percent raises for 2010 and 2011 if the union and the city could not agree on a contract, according to MPA vice president Mark Buetow. Let’s pause here for some perspective. First, the union assumes raises would be virtually automatic. But there is no way to know what an arbitrator would decide. Second, avoiding 2.5 percent pay raises through a pay freeze may be a figurative savings of $5.4 million for the city, but it’s not a literal savings. With a pay freeze, the city would still be spending as much on payroll as it does today. Reduced wage for training The ad says the city would save $1.04 million per year through a "reduced wage for training." That would be a total of $2.08 million through 2011. Crivello said the union would accept a reduced starting wage for new officers for the nearly six months they spend in training before hitting the streets. The $2.08 million in savings is based on the city hiring 200 new recruits per year. But that 200 is a big if. Crivello said 200 new hires would give the department roughly the number of officers that have been authorized as part of the city budget. But he acknowledged that the city commonly keeps roughly that many police positions vacant. Troy Hamblin, the city labor negotiator, said the city has hired an average of 79 police recruits per year since Barrett was elected mayor in 2004. Based on that number, he said the lower training wage would save the city $1.09 million through 2011 -- about half the union’s estimate. So, the union is banking on the city more than doubling its usual police hiring in order for the $2.08 million through 2011 to be saved. A more realistic number would be about half that. Those aspects relate directly to the immediate savings. The next is the central part of the claim of saving $184 million over 25 years. New hire pension contributions The newspaper ad says that if new hires make contributions to their pensions -- current employees represented by MPA make none -- the city would save $184 million "over the next 25 years." That’s an awful specific number, and 25 years is a long time away. Where did the figure come from? The union says the estimate -- based on today’s payroll -- is for what the annual savings would be 25 years from now. That is, the amount saved each year, once we are 25 years into the future. Why 25 years in the future? Since contracts allow police officers to retire after 25 years on the job, by that point nearly the entire force would be under the new provisions. (The city’s estimate, using that measure is $179 million in savings a year, based on today’s payroll. So, the two sides are not far off.) That may seem clear enough. But the wording in the ad -- savings "over the next 25 years" -- is confusing. We read it as the total amount saved during the course of those 25 years and think most others would as well. That figure is even harder to calculate, since it depends on how many officers retire or leave the force and at what point; how rapidly those officers are replaced and what happens to their salary in the meantime. Indeed, by that measure, the overall savings is likely much higher. The annual savings would grow as the force shifts over time from most being under the current no-contribution system, to most being under the new approach. Of course, the numbers in the short term on this point are stronger. As for the immediate savings in the contract, Crivello said that if new hires paid 7 percent of their base wage toward their pensions, the city would save $432,000 through 2011 (the city’s estimate is $462,000, so there is not a big disagreement on this one either). All right, let’s tally the estimated savings from the three areas to see if they back up the two major claims in the union ad. Those were the ones in large, bold print: $12 million through 2011 and $184 million "over the next 25 years." $12 million through 2011: Savings from a pay freeze are figurative, based on forgoing an assumed pay raise. The city’s payroll costs would actually remain flat, so there would be no direct savings to the budget. The reduced training wage would save the city about $2.08 million and pension contributions would save $432,000 -- both according to union estimates. That’s a total of $2.51 million (the city’s estimate is $1.55 million). And that’s a fraction of the $12 million claimed. So, the first of the ad’s two claims is wrong. $184 million "over the next 25 years": This claim focuses on the pension change. The city doesn’t quarrel much with the dollar estimate, which is an annual savings using today’s dollars. But it’s a figure that wouldn’t be reached until the entire workforce turns over, perhaps 25 years from now. There would be savings in the interim years, tallying over the intervening 25 years even more than that amount -- but no one knows how much. So, the second claim may actually be low, but it is also off -- potentially way off. One final note. An asterisk at the bottom of the ad says MPA offered the three concessions "in exchange for non-monetary and monetary items." In other words, it’s clear that the union would only make the three concessions if it gets something in return. MPA estimates the monetary items -- including higher life insurance benefits and higher pay for certain officers -- would cost the city less than $1 million per year, Buetow said. The city has not produced a complete estimate, but Hamblin said the union estimate appears reasonable. So, that would further reduce the savings claimed in the MPA ad. Time for the Truth-O-Meter. The Milwaukee Police Association said concessions it offered in contract talks with the City of Milwaukee would save taxpayers $12 million through 2011 and $184 million "over the next 25 years." A proposed pay freeze would affect current employees, but wouldn’t save the city any money, while changes in training pay and pensions would save money but affect only new hires. The savings through 2011 would be, using union estimates, $2.51 million -- a far cry from $12 million. On the second point, the MPA is correct there would be about $184 million in savings … in the 25th year. But the wording in the ad refers to the savings during that entire time frame. So this number is also off -- apparently by a lot. The MPA’s case would actually be stronger if they used a more accurate number, since during the previous 24 years the annual savings would ramp up until it reaches that projected $184 million in year in year 25. We rate the Milwaukee Police Association claim Barely True. Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.
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