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03/29/83 STATE EX REL. ROBERT C. CANNON v. J. DENIS

March 29, 1983

STATE EX REL. ROBERT C. CANNON, JOHN A. DECKER, ROBERT M. CURLEY, LEANDER J. FOLEY, JR., ROBERT W. LANDRY, HUGH R. O'CONNELL AND CHRIST T. SERAPHIM, RELATORS, AND EACH IN HIS OWN RIGHT, INDIVIDUALLY, PLAINTIFFS-RESPONDENTS-PETITIONERS,
v.
J. DENIS MORAN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS DIRECTOR OF STATE COURTS, GARY GATES, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE DEPARTMENT OF EMPLOYE TRUST FUNDS; AND KENNETH LINDNER, INDIVIDUALLY AND AS SECRETARY OF THE DEPARTMENT OF ADMINISTRATION (ALL OF SAID ADMINISTRATIVE AGENCIES BEING OF THE STATE OF WISCONSIN), DEFENDANTS-APPELLANTS, ASSEMBLY COMMITTEE ON ORGANIZATION, INTERVENOR-APPELLANT



Review of a decision of the Court of Appeals. Reversing William G. Callow, J.

The opinion of the court was delivered by: Callow

This is a review of a decision of the court of appeals *fn1 which reversed a summary judgment in the plaintiffs' favor ordered by the Dane county circuit court, W.L. Jackman, Reserve Judge.

The issue presented is whether Chapter 38, Laws of 1979, which operates to reduce the plaintiffs' *fn2 salaries by the amount of pension benefits they receive from prior judicial service in Milwaukee county is unconstitutional. A brief historical review of the retirement benefits which have been provided to Milwaukee circuit court Judges *fn3 is necessary to develop the facts *fn4 surrounding this controversy.

In 1937 the legislature mandated the development of retirement systems in counties with a population of five hundred thousand or more. Chapter 201, Laws of 1937. *fn5 Pursuant to this law the Milwaukee County Employees' Retirement System (MCERS) was established on January 1, 1938. All persons who were regularly employed by Milwaukee county, except elected officials, were eligible for the MCERS.

On May 14, 1945, the legislature published Chapter 138, Laws of 1945, *fn6 which provided that employe benefits under county retirement systems "shall be assured by benefit contracts." Chapter 138 further provided that "each member and beneficiary having such a benefit contract shall have a vested right to such annuities and other benefits and they shall not be diminished or impaired by subsequent legislation or by any other means without his consent." *fn7 Also in 1945 eligibility for county retirement systems was expanded enabling state employes who received part of their compensation from Milwaukee county to participate in MCERS. Chapter 77, Laws of 1945, Section 2. Their participation was limited, however, to the extent they were compensated by the county. Chapter 201, Laws of 1937, was further amended by the legislature in 1947 to make elected officials, including circuit court Judges, eligible for the MCERS. Chapter 357, Laws of 1947, Sections 1, 4. The MCERS was funded by employer contributions from Milwaukee County and personal contributions by the circuit court Judges.

The Wisconsin Public Employes Retirement System (WPERS) was established in 1943. Chapters 175 and 176, Laws of 1943. On January 1, 1952, Wisconsin circuit court Judges became eligible for the WPERS to the extent they received salaries from the state. Chapter 475, Laws of 1951, Sections 1, 3. Circuit court Judges were not, however, required to participate in the WPERS until August 17, 1957. Chapter 527, Laws of 1957, Section 1.

Prior to the enactment of the Court Reform Act, *fn8 which became effective on August 1, 1978, Milwaukee circuit court Judges were paid a legislatively fixed sum by the state and a supplemental salary by Milwaukee county. Accordingly, they were eligible to participate in both the WPERS and MCERS to the extent they received compensation from each respective source.

The Court Reform Act converted all county courts to circuit courts and created the court of appeals. Under the Act circuit court Judges and court of appeals Judges are paid a legislatively authorized salary by the state which is subject to the WPERS. County supplements were abolished effective July 1, 1980, making the state the sole provider of judicial compensation. As a result, Milwaukee circuit court Judges and those Judges elevated to the court of appeals ceased to be eligible for the MCERS. Instead, their retirement benefits were thereafter provided exclusively by the WPERS.

The Court Reform Act, however, provided an exception for Milwaukee circuit court Judges who held office on July 31, 1978, and would continue to serve in that capacity. Those Judges could elect to continue receiving a portion of their salary from the state and the balance from Milwaukee county. Judges making this election would participate in the MCERS to the same extent as they had prior to August 1, 1978. Under the Court Reform Act the state must reimburse Milwaukee county for its expenditures for compensation and employer contributions to the MCERS. *fn9

The legislature required the circuit court Judges to exercise their option to remain under the MCERS on or before November 1, 1978. The election which was irrevocable became effective on August 1, 1978. Chapter 449, Laws of 1977, sec. 309(5) [sec. 753.07(5), Stats.].

On July 31, 1978, there were nineteen (19) circuit court Judges for Milwaukee county. One of those Judges assumed office as Justice of the supreme court of Wisconsin. Three other Judges, two of whom are plaintiffs in this action, became Judges of the Wisconsin court of appeals. These four Judges could no longer receive compensation from Milwaukee county and, therefore, did not have the option to participate in the MCERS. Of the remaining fifteen (15) circuit court Judges, nine (9) elected to remain under the MCERS. The other six, five of whom are plaintiffs in the instant case, chose not to continue as participants in the MCERS.

As a result of the termination of their membership in the MCERS, the plaintiffs became eligible to receive immediate pension benefits from that system. Of the seven plaintiffs, three satisfied the requirements for normal retirement, three satisfied the requirements for both deferred vested retirement and early retirement, and one satisfied the requirements for deferred vested retirement and had the option of withdrawing his membership account balance in one lump sum. Pursuant to the terms of their retirement benefit contracts, each of the plaintiffs elected to begin receiving a pension from the MCERS.

Subsequently, the legislature enacted Chapter 38, Laws of 1979, for the following purpose:

"SECTION 1. Legislative purpose. The legislature finds that the payment of retirement benefits to public employes by Wisconsin public employe retirement systems results in a fortuitous, unseemly and unintended large increase in the effective rate of compensation the public employes receive for their service to the public. This occurrence imposes unintended costs upon the Wisconsin public employe retirement systems, discriminates against and discourages public employes performing comparable service, results in the unnecessary expenditures by public employer for employment compensation, stimulates inappropriate and spurious transfer and loss of experienced public employes and undermines the confidence of the public in their civil servants. The purpose of this act is to reduce the costs imposed upon the Wisconsin public employe retirement systems and the public employers, to restore equity of compensation among public employes, to remove the incentive for inappropriate transfers between ...


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