Under s. 77.70 (2) (b), Wis. Stats., Milwaukee County may use a portion of the additional 0.4 percent sales and use tax increase to address the ERS’s unfunded actuarial liability and payments associated with $135.1 million in outstanding Milwaukee County pension bond obligations and related interest payments as of December 31, 2025. In addition, as required by Act 12, Milwaukee County enacted changes to its ordinances to close the ERS to employees hired after December 31, 2024. New employees hired after this date are required to participate in the Wisconsin Retirement System.
Employees’ Retirement System of the County of Milwaukee
Calendar Year 2025Report 26-06 | July 2026
SUMMARY
The Employees’ Retirement System of the County of Milwaukee (ERS) is a single-employer, defined-benefit retirement system with 12,335 participants and a fiduciary net position of $1.9 billion as of December 31, 2025. The ERS is administered by Retirement Plan Services (RPS), which is a unit within Milwaukee County’s Department of Human Resources, with oversight by the Pension Board.
We provided unmodified opinions on the ERS financial statements as of and for the years ended December 31, 2025, and December 31, 2024. Our unmodified opinions are included in RPS’s 2025 Annual Report of the Pension Board, which can be found on the RPS website. These financial statements account for the financial position and activity of the ERS. We conducted this financial audit by auditing the ERS financial statements in accordance with applicable government auditing standards, issuing our auditor’s opinions, reviewing internal controls, and issuing our auditor’s report on internal control and compliance.
2023 Wisconsin Act 12 and subsequent Milwaukee County actions required changes to the ERS
The ERS is funded by contributions and investment income. ERS contributions are calculated using actuarial methods recommended by the Pension Board and authorized by the Milwaukee County Board of Supervisors during the annual budget process.
In 2025, RPS reported $86.7 million in total contributions, including $73.3 million from Milwaukee County and $13.4 million from participants. In 2025, participant contributions varied between 5.2 to 9.1 percent of employee pay.
From 2021 through 2025, contributions represented 36.0 percent of total funding for the ERS. Funding also includes amounts related to the OBRA 1990 Retirement System, and excludes contributions reported from Milwaukee County to fund RPS administrative costs.
RPS investment assets were entirely managed externally. The Pension Board contracted with an investment consultant to assist in monitoring the investment policies and guidelines and select investment managers to manage the assets of the ERS. In 2025, RPS reported an investment return of 13.8 percent and net investment income of $232.4 million. From 2021 through 2025, net investment income represented 64.0 percent of total funding for the ERS.
Pension benefit payments totaled $193.4 million in 2025
The amount of pension benefits provided to retired participants or their beneficiaries as annuity payments decreased from $200.1 million in 2024 to $193.4 million in 2025, or by 3.3 percent, due in part to a decrease in newly retired participants receiving a back drop pension benefit. ERS pension benefit amounts are determined by:
- the use of a multiplier, which is typically 1.6 percent;
- the number of creditable years of service the participant had completed; and
- the participant’s final average salary.
Each year, participants receive a fixed 2.0 percent postretirement pension adjustment to their monthly pension benefit amount, as authorized by Milwaukee County Ordinances. The average annual annuity payment for ERS retirees increased from $24,900 in 2024 to $25,100 in 2025, or by 0.8 percent.
In 2001, Milwaukee County established “back drop” pension benefits to incentivize employees to work beyond their retirement date. These back drop benefits were subsequently limited effective April 1, 2013. In 2025, RPS authorized 32 back drop benefit payments totaling $6.9 million, compared to 44 payments totaling $13.0 million during 2024.
As of December 31, 2025, the net pension liability was $560.0 million
The ERS reported a net pension liability for each of the last five years. As of December 31, 2025, the net pension liability was $560.0 million, compared to $686.5 million as of December 31, 2024. The ERS was 76.7 percent funded as of December 31, 2025. The net position liability as of December 31 was $330.8 million for 2021, $620.0 million for 2022, and $729.4 million for 2023.
The ERS had a fiduciary net position of $1.9 billion as of December 31, 2025
Fiduciary net position, which is the assets less liabilities, is a measure of overall financial condition. The fiduciary net position of the ERS on the basis of generally accepted accounting principles (GAAP) increased from $1.7 billion as of December 31, 2024, to $1.9 billion as of December 31, 2025, or by 6.9 percent. The increase is primarily attributable to an increase in the value of investments due to favorable market conditions during 2025. The fiduciary net position as of December 31 was $2.0 billion for 2021; $1.7 billion for 2022, which was a restated amount; and $1.7 billion for 2023.
We identified one significant deficiency in internal control at RPS
We previously reported concerns with the adequacy of the system of internal control in the 2023 financial audit (Finding 2024-001, report 24-7) and the 2024 financial audit (Finding 2025-001, report 25-12). Although RPS took certain corrective actions to improve its internal controls in 2024 and 2025, certain actions were not in place during the entirety of 2025 or were not completed as of December 31, 2025. As a result, we continued to identify concerns similar to those we included in both report 24-7 and report 25-12.
We also followed up on the status of corrective actions RPS took to address other findings we reported in report 25-12.
We make five recommendations to RPS for improvements
As part of this audit, we retained an actuary to conduct an independent review of the actuarial calculations and actuarial valuation report for the ERS as of December 31, 2025. In addition to the recommendations made by the actuarial auditor, we made five recommendations related to the significant deficiency in internal control we reported.
Please see the complete list of our recommendations on our website.