MILWAUKEE COUNTY GOVERNMENT:
HISTORY AND CHALLENGES
Rob Henken, President
November 2013
Public Policy Forum Mission
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Established in 1913 as a good government
watchdog, the Public Policy Forum is a nonpartisan,
independent government research organization that
focuses on a broad range of public policy issues.
We seek, discover and disclose true and accurate
information to enhance the effectiveness of
government and public policy in southeastern
Wisconsin, the state and the nation; and we
facilitate public policy discussion and action.
Wisconsin Counties
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County government in Wisconsin dates back to
1818, when the territorial governor created three
counties to perform law enforcement and taxing
functions.
Today, county governments exist as creations of the
state , with specific reference in the Wisconsin
Constitution. Article IV, Section 23 empowers the
legislature to “establish one or more systems of
county government,” while Section 22 allows the
legislature to “confer upon the boards of
supervisors…such powers of a local, legislative and
administrative character as they shall from time to
time prescribe.”
Wisconsin Counties
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Unlike cities & villages, counties do not have broad
“home rule” authority; may only undertake
functions expressly authorized by state; in fact,
often called “administrative arms” of the state.
Certain county officials are specified in the
Wisconsin Constitution: Sheriff, Register of Deeds,
District Attorney, County Clerk, County Treasurer.
Prior to 1960, county boards functioned as both
legislative & executive branch; in 1960, position of
county executive mandated for Milwaukee County;
separation of powers specified in statutes.
Milwaukee County
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With 950,000 residents, Milwaukee County is the largest
county in Wisconsin. Several provisions of the state
statutes pertaining to counties refer only to Milwaukee
County.
County’s $1.3 billion budget covers a broad array of
programs and services that impact virtually every facet of
the region’s economic competitiveness and quality of life.
Those include: a 200-bed mental health complex; a
15,000-acre parks system; a 2,000-specimen zoo; a 400bus transit system; a 10,000-client care management
organization; a 3,000-inmate set of adult corrections
facilities; a nine million passenger-per-year airport; and a
judicial system that handles 50,000 cases annually.
Milwaukee County
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Counties originally were intended by the state to
administer local functions on its behalf, but not
necessarily to do anything more.
Over time, Milwaukee County has elected to do
much more, which is a reason for its unique nature
and, arguably, its unique problems.
A good deal of the public debate about Milwaukee
County’s financial challenges has centered on the
condition of its parks, cultural facilities and transit
system – three functional areas that the county
elected to assume with the permission of state
government, but not at its behest.
Milwaukee County Expenditures
Milwaukee County Revenues
The Problem: Operating Budget
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State/federal revenue sources that support mandated
services have not kept up with extraordinary cost
pressures, necessitating increased use of local
revenue sources to make up the difference.
Closing the state/federal aid gap for mandated
services with local tax funds leaves fewer local
resources for discretionary services; also, local
revenues stagnant.
Because it is difficult to reduce spending on mandated
programs or debt service, annual budget cuts borne
largely by discretionary functions, creating difficult
questions regarding the future of those functions.
2013 locally allocated revenue by function
Major sources of state revenue
$60
Income
Maintenance
$50
Court Support
$40
Mass Transit
Fixed Route
$30
Youth Aids
$20
Community
Aids
$10
Shared
Revenue
$0
2003
2004
2005
2006
2007
2008
2009
Milw. Cty local tax revenues, shared revenue,
and inflation, 2003-2011 (indexed to 100)
$125
Property tax
$120
Sales tax
$115
State Shared
Inflation
$110
$105
$100
$95
2003
2004
2005
2006
2007
2008
2009
2010
2011
Milwaukee County pension and health
care expenditures, 2001-2010 (millions)
$160
$140
Pension
Health care
$120
$100
$80
$60
$40
$20
$0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
History of initial funding gaps
2009
2010
2011
2012
2013
2014
$0
-$10
($15.3)
-$20
-$30
($26.6)
($28.5)
-$40
($44.9)
-$50
($51.5)
-$60
-$70
-$80
-$90
-$100
($90.0)
Primary Causes of Budget Gaps

Annual increases in pension contributions
and health care costs

Transit system budget imbalance
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Debt service

Mental health system cost pressures
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Deferred maintenance needs
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Stagnant or reduced state revenues
The Problem: Capital Budget
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Milw. County holds $748 million of direct long-term
debt: $369 million in general bonds/notes for
capital improvements, $379 million for POBs. Debt
service of $68 million included in operating budget.
County’s 2003 debt restructuring initiative
accompanied by new debt management policy caps on annual bonding for 2005-2008, annual
increases after that not to exceed 3%.
Imperatives to limit annual debt issuances and
control debt service contradict imperative to
maintain and repair aging infrastructure.
The Problem: Capital Budget
Source: Milw. Co. Exec Budget Briefing, Aug. 2011
www.publicpolicyforum.org
GMC Report: Challenge
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Eliminating a government with a $1.4 billion
budget, 5,700 full-time employees, several critical
state-mandated functions, and unfunded retirement
liabilities exceeding $2 billion is far easier said than
done.
Most big restructuring initiatives in other metro
areas (e.g. Indianapolis, Louisville) have taken the
opposite approach: moving municipal functions into
a county or regional government.
GMC Report: Questions

What are biggest logistical hurdles to eliminating
county government & how can they be addressed?

What is the appropriate home for the different
county services, and would other appropriate
entities be willing to take them on?

Would elimination of county govt. save taxpayer
dollars & truly improve the quality of services?

What could and should be done with $2.4 billion in
unfunded liabilities, most of which will remain even
if the government is eliminated?
GMC Report: Approach
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Break down budgets of critical county functions that
could most logically be moved elsewhere: parks,
transit, cultural institutions, airport, mental health,
Family Care, courts/DA, sheriff, public works.
Determine actual annualized cost of providing those
functions (as opposed to “county cost,” which
includes legacy); this essential in consideration of
transferring them to some other entity.
Analyze potential receiving entities, discussing pros,
cons & practical considerations associated w/each.
GMC Report: Approach
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Next, model and analyze what county government
would look like under various scenarios in which
key functions are moved to other entities, as well
as a scenario under which it is eliminated entirely.
Fold in case studies, including MMSD privatization,
Milwaukee Public Museum model, transfer of
Milwaukee County DA’s to state.
Discuss Massachusetts’ experience with abolishing
county governments.
GMC Report: Courts
Cost to operate as
county department
(current practice)
Cost to operate
minus legacy
costs
Administrative
Information technology
Legal counsel
Facility management
Fleet management
Central charges/overhead
Salary and wages
Social security
Employee healthcare
Employee pension
Retiree healthcare
Retiree pension
Other
Personnel costs
Non-personnel expenditures
TOTAL EXPENDITURES
State revenue
Federal revenue
Other revenue
TOTAL REVENUES
$886,653
$537,469
$0
$6,180,188
$176
$7,604,486
$13,905,509
$1,007,629
$4,000,322
$1,499,219
$4,000,322
$749,609
($44,046)
$25,118,564
$18,676,152
$51,399,202
$6,021,195
$76,467
$4,741,112
$10,838,774
$800,107
$485,007
$0
$5,576,938
$159
$6,862,210
$13,905,509
$1,007,629
$4,000,322
$1,499,219
$0
$0
($44,046)
$20,368,633
$18,676,152
$45,906,995
$6,021,195
$76,467
$4,741,112
$10,838,774
TOTAL LEVY
Unfunded OPEB liability ***
Unfunded pension liability***
Outstanding debt/ interest****
TOTAL LONG-TERM DEBT
$40,560,428
$67,507,074
$21,243,829
$0
$88,750,903
$35,068,221
$67,507,074
$21,243,829
$0
$88,750,903
Courts
Legacy costs
Using 2008 fringe
Based on retiree
allocation method*
history**
$86,546
$83,955
$52,462
$50,892
$0
$0
$603,250
$585,189
$17
$17
$742,276
$720,052
$0
$0
$0
$0
$0
$0
$0
$0
$4,000,322
$2,925,158
$749,609
$596,998
$0
$0
$4,749,931
$3,522,156
$0
$0
$5,492,207
$4,242,208
$0
$0
$0
$0
$0
$0
$0
$0
$5,492,207
$67,507,074
$21,243,829
$0
$88,750,903
$4,242,208
$67,507,074
$21,243,829
$0
$88,750,903
GMC Report: State Takeover of Courts
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Counties have long cited courts as most egregious
example of under-funded state mandate – part of
state judicial system so no levy should be required.
WCA: in 2007, counties spent $150 million on
circuit courts statewide, but received only $19
million in circuit court support grants; state keeps
$26 million in court fees.
State officials say counties have long tradition of
providing funding for trial courts, makes sense
given that courthouses traditional home of county
government; counties also get shared revenue.
GMC Report: State Takeover of Courts
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2002 WI Supreme Court subcommittee:
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No “right way” to finance circuit courts; ideal of stable
funding “impervious” to political forces unrealistic.
Refine distinction betw. county- and state-funded court
operations by re-establishing definition of “court services”.
Personnel-related services most difficult to distinguish –
county or state employees?
National trend has been shift to state financing, but
logistical hurdles (e.g. health care) experienced.
If it’s going to happen, needs to be phased approach.
GMC Report: State Takeover of Courts
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Pros
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Improved accountability by linking funding to outcomes
Better opportunity for chief judge to lobby for fiscal
support
Shield courts from county’s financial difficulties, legacy
costs, personnel rules
Cons
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Court services not as responsive to Milwaukee’s unique
needs
Chief judge’s lobbying capacity diluted in larger state govt.
Local budget affords greater accountability
GMC Report: State Takeover of Courts
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Logistical questions/obstacles
Would state really replace $35 million of local tax
levy support?

Who would pay $4 million in annual legacy costs?

What about the state’s other 71 counties?

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Treatment of retirement benefits for courts
employees if moved to state payroll.
Constitutional issues re. clerk of circuit court?
Hypothetical Governance Reform Models
Key
functions
removed
Current
Elimination
All
Streamlined
parks,
culture,
airport,
transit, all
HHS
Mandated
parks,
culture,
airport,
transit
Budget
Tax
levy
Legacy
as %
of levy
FTEs
$1.3 B
$236 M
34%
5,707
$85.6 M
$80.6 M
100%
0
$370.3 M
$104 M
77%
2,424
$1.0 B
$182 M
44%
4,567
Who takes over county services?
Functions moved to the
STATE
State
Elimination
Courts
Sheriff
District Attorney
Medical Examiner
Register of Deeds
Election Commission
Highway Maintenance
Dept of Health and Human
Streamlined
Dept of Health and Human
Services
Child Support Enforcement
Aging
Behavioral Health Division
Care Management
Organization
Services
Child Support Enforcement
Aging
Behavioral Health Division
Care Management
Organization
Milwaukee
County
Mandated
(None)
Functions moved to
SPECIAL DISTRICTS/ SEPARATE TAXING AUTHORITIES
Special Districts
Who takes over county services?
 BHD
Parks
 CMO
Elimination
Airport
Zoo &
Cultural
Transit
 Sheriff
 BHD
Parks
 CMO
Airport
Streamlined
Transit
Zoo &
Cultural
Parks
Milwaukee
County
Airport
Mandated
Zoo &
Cultural
Transit
Who takes over county services?
Elimination
Services
Highway Maintenance
Election Commission
Milwaukee
County
Functions moved to
MUNICIPALITIES
Municipalities
Emergency Medical
Streamlined
Emergency Medical
Services
Mandated
(None)
What costs might still remain for
county taxpayers?
Legacy for
retirees
Long-term
debt
Airport
$2.2 M
$16 M
Behavioral Health
Care Management
Organization
12.3 M
$301 M
$1.4 M
$34.2 M
Courts
$4.2 M
$88.8 M
District Attorney
$1.3 M
$28.7 M
Zoo
$1.8 M
$73.9 M
Parks
$9.5 M
$345 M
Sheriff/HOC
$12.1 M
$293 M
Transit
$0.04 M
$24.2 M
Where there would be savings…
Elimination
Streamlined
Mandated
($830,000)
($657,000)
($285,000)
County Board
($5.5 M)
($4.4 M)
($1.7 M)
County Treasurer
($1.2 M)
($5.1 M)
($1.9 M)
County Executive
County Clerk
Election Commission
($310,000)
($1.2 M)
Community Business
Development Partners
($418,000)
Personnel Review
Board
($171,000)
Civil Service
Commission
($28,000)
Total
($9.6 M)
It all depends on Madison
Decisions to be made
Immediately decide the future of discretionary
functions
House in county government or in special districts?
What level of service is desired?
Continue to fund with property tax, move to a
sales tax, or other?
Could this be an opportunity to change the
mindset?
Decisions to be made
Isolate and control legacy costs
Close current pension system to new employees &
new benefit earnings?
Move current employees to state pension system?
Change to defined contribution plan for current and
new employees?
Join the state health care plan?
Modify retirement benefits?
Decisions to be made
Take stock of county’s assets
Could asset sales or leases buy down liabilities?
Are physical assets underutilized & too expensive to
maintain?
Best use of County Grounds?
Pursuit of long-term leases for airport and other
assets?
Decisions to be made
Alternative governance structures
Where are services being duplicated?
Which level of government is most appropriate for
which services?
Does consolidation of services make sense?
Is there any appetite for regional service delivery?
The Latest

$23 million surplus in 2012 and $6.4 million surplus
projected for 2013.

2014 “gap” of $15.3 million the lowest in years;
reflects progress on structural deficit.

Debt service costs reduced by $15 million in 2015.

Mental health system in process of redesign; still may
be a need for increased investment.

Structural hole in transit budget remains; CMAQ funds
about to expire.

Comprehensive facilities assessment now in hand.

Legislation that cuts Board to part-time makes
problem-solving all the more difficult.