April 3, 2023 – Certain Milwaukee firefighters receiving disability benefits are entitled to have a 5.8% pension offset payment included in the salary amount used to calculate their benefits, the Wisconsin Supreme Court has ruled.

In Milwaukee Professional Firefighters’ Association Local 215 v. City of Milwaukee, 2023 WI 20 (March 21, 2023), the supreme court held (7-0) that the disabled firefighters were entitled to have the offset payment included in the salary amount because they received the offset payments as part of their salaries when they were working.

Justice Rebecca Bradley wrote the opinion for a unanimous court.

Contribution and Offset Payment

Under the Milwaukee City Charter (Charter), firefighters who are injured on the job and are unable to keep working as firefighters are entitled to duty disability retirement (DDR) benefits.

The benefits include a monthly wage equal to either 75% or 90% “of the current annual salary for such position which he held at the time of such injury,” depending on whether the firefighter is subject to a career-ending disability.

Under the 2013-2016 collective bargaining agreement (CBA) between the city and the Milwaukee Professional Firefighters’ Association Local 215 (Local 215), certain firefighters receive a 5.8% pension offset payment as long as they contribute 7% of their salary to the pension fund.

All members of Local 215 make the 7% contribution; no DDR beneficiaries make the 7% payment.

New Math

The City of Milwaukee’s Retirement System (MERS) administers the DDR benefits.

Before 2017, MERS included the 5.8% offset payment in the “current annual salary” used to calculate DDR benefits for employees who were hired before Oct. 3, 2011.

Beginning in 2017, MERS excluded the 5.8% offset payment from the “current annual salary” used to calculate DDR benefits for firefighters who were hired before Oct. 3, 2011. That meant a decrease in the amount received by each DDR beneficiary who was hired before Oct. 3, 2011.

The Charter provides no definition for “current annual salary.” Under the CBA, the pension offset payments are described as “base-building and pensionable.”

Lawsuit and Appeals

Local 215 and the Milwaukee Police Supervisors Organization (MPSO) sued the city in Milwaukee County Circuit Court, challenging the change in how MERS calculated “current annual salary” for DDR benefits.

The circuit court granted summary judgment for Local 215 and MPSO. The city appealed.

The Wisconsin Court of Appeals reversed the circuit court with respect to Local 215 and affirmed with respect to MPSO. Local 215 appealed.

CBA Only Applies to Current Employees

Before the supreme court, Local 215 argued that because the CBA described the pension offset payments as “base-building and pensionable,” they should be included in “current annual salary” used to set DDR benefits.

But the city argued that DDR benefits operate as a replacement for wages, not as a pension.

Justice R.G. Bradley concluded that because the “current annual salary” for DDR beneficiaries who were hired before Oct. 3, 2011, included the pension offset payments, MERS must include the pension offset payments when calculating the beneficiaries’ payments.

The city and MERS argued that a provision of article 10 of the CBA specifies that only members who make the 7% contribution are entitled to receive the 5.8% pension offset payment.

But that provision, R.G. Bradley pointed out, applies only to active-duty employees.

“Under the CBA, ‘employees’ means only those who are ‘in active service,’” Justice R.G. Bradley wrote. “Their duty-related disabilities prevent DDR beneficiaries from being in active service.”

Salary Received When Working Governs

Justice R.G. Bradley reasoned that it was the “current annual salary” received by a DDR beneficiary while he or she was working that controlled.

The CBA provision cited by the city and MERS, she pointed out, did nothing more than disqualify active-duty employees who don’t pay the 7% contribution from receiving the 5.8% pension offset payment.

“The Charter entitles disabled firefighters to a disability benefit based on the ‘current annual salary’ for the position they held at the time of their disability for DDR benefits – without conditions or exceptions,” Justice R.G. Bradley wrote.

The court of appeals erred by failing to distinguish between active-duty employees and DDR beneficiaries, R.G. Bradley concluded.

Lack of Pension Contributions Irrelevant

The city and MERS argued that active-duty firefighters who receive the 5.8% pension offset payment do so only because they give up 7% of their salary in pension contributions – a contribution DDR beneficiaries don’t make.

But that was irrelevant, Justice R.G. Bradley pointed out.

“We do not balance equities in interpreting either ordinances or contracts – we apply their plain meaning,” R.G. Bradley wrote.

The city and MERS also argued that if the 5.8% offset payment were to be included in the salary upon which DDR benefits were calculated for DDR beneficiaries who were hired before Oct. 3, 2011, the provision that requires employees to make the 7% contribution in order to receive the 5.8% pension offset payment would apply to no one, because all active-duty firefighters who were hired before Oct. 3, 2011 make the 7% contribution.

That fact was immaterial, Justice R.G. Bradley reasoned.

“The extrinsic fact that the CBA may have created ‘a category into which no employee fits’ does not alter the interpretation or application of the contract’s clear text,” R.G. Bradley wrote.