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'No six month solution': Report outlines Racine, Unified, County unfunded liabilities

RACINE COUNTY — As municipalities and school districts around the state wrestle with their budget, the nonpartisan Wisconsin Policy Forum has come out with a report that shows some favorable movement when it comes to unfunded liabilities.

However, based on the report, Racine County, the City of Racine and the Racine Unified School District continue to face challenges to fund pensions and health insurance — which representatives from all entities are tackling now as the 2020 budgets get finalized.

In total between the county, city and RUSD, there are an estimated $654 million in unfunded other post-employment benefit (OPEB) liabilities, which include retirement benefits other than pensions, health care coverage and some life insurance, according to the report, which uses 2018 figures.

Jason Stein, research director for the Wisconsin Policy Forum, said the state is “doing quite well as far as public retiree liabilities.”

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“One exception is this area of requiring health care, and to a lesser extent, life insurance liabilities,” Stein said. “Even some of the places that have made progress still have substantial challenges left. And the Racine area would be one of the ones with the largest challenges.”

To be clear, the numbers included in the Wisconsin Policy Forum report are projections of money to be spent over several years based on current financial reports, policies and other factors.

“This isn’t money that needs to be paid tomorrow — this is over many, many years — but it’s still a significant amount of money,” Stein said.

The report is meant to be a guide for municipalities and School Boards to consider when making decisions for the future.

“This problem did not arise overnight in communities like Racine,” Stein said. “It built up over many, many years. Obviously it isn’t going to be solved overnight. There’s no six month solution to this.”

The Wisconsin Taxpayer

City’s outlook

In the City of Racine, the report notes its data “does not account for any liabilities the City of Racine might face for Racine Transit System workers, who belong to a severely underfunded private pension plan that does not break out separate figures for the multiple transit systems with participating employees.”

The City of Racine has a projected unfunded liability of about $386 million, according to the report.

Racine Mayor Cory Mason said the city’s unfunded liability, per capita, is the largest in the state and health care costs are 28% of the annual budget.

“If nothing changes, health care costs will consume the entire property tax levy within five years. That is why we have had to make hard decisions in this year’s budget on health care costs,” Mason said in a statement. “However, Racine is not alone. Cities across the U.S. are struggling to cover their health care liabilities. At the national level, if we want our cities to be financially healthy, we need to implement universal health care in this country.”

County decreases, RUSD increases

The Wisconsin Policy Forum states the unfunded liability for other post-employment benefits for Racine County decreased by $76.7 million, the largest drop of any county included in the report, from 2013 to 2018.

Despite that drop, the Wisconsin Policy Forum calculates that the county still has about $176.8 million in unfunded liabilities, compared to Kenosha County, which saw a drop of $13.1 million during that time to $43 million.

One of the reasons why Racine County saw such a drop was due to a policy instituted in 2012 which states that any employee hired after Jan. 1, 2012 will not be eligible for health insurance as a retiree.

Also employees who were hired before 2012 and have or will be retiring after Dec. 31, 2012 are required to contribute more toward their post-employment benefits upon retirement.

“As the Wisconsin Policy Forum’s report notes, Racine County’s OPEB liability has dropped by over 30%, largely stemming from tough decisions made over the past several years to position the county for long-term financial success,” Racine County Executive Jonathan Delagrave said in statement. “While there are many variables involved in our OPEB liability beyond our control, we will continue to do all we can to protect Racine County taxpayers.”

In the report, Racine Unified saw an increase of $13.2 million to $91.1 million in unfunded liabilities between 2013 and 2018, but Superintendent Eric Gallien said the district is working to reduce that number.

“RUSD has worked to reduce our unfunded liability by making adjustments to our health plan. In fact, in 2018-2019, we did see a significant reduction in our unfunded liabilities of $25 million,” Gallien said in a statement. “We are continuing to look for additional opportunities to adjust retirement benefits to ensure they are competitive and cost-effective.”

The ebb and flow of financial responsibilities are not as simple as the numbers appear.

There are several factors such as the performance of the market and insurance costs, Stein said, that are outside of an employers’ control.

“When the liability for local government goes up it doesn’t necessarily mean (the local government) went out and gave a bunch more benefits to somebody,” Stein said. “(The report is) based on projections… the point being, again, this is the best estimate made by sophisticated people about what this is going to cost over the next 20 or 30 years.”

UPDATED: Bird's-eye view photos of Foxconn as it develops, as of March 2020

Bird's-eye view photos of Foxconn

Racine-area certified financial planner Michael Haubrich has taken Journal Times reporter Michael Burke on several flights for the purpose of taking documentary photos of Foxconn Technology Group's developing campus in Mount Pleasant.

Foxconn High Performance Computing Data Center

Foxconn Technology Group's future globe-shape High Performance Computing Data Center at the Wisconn Valley Science and Technology Park, is shown on March 15.

Foxconn HPCDC

Construction is underway on Foxconn Technology Group's future globe-shape High Performance Computing Data Center at the Wisconn Valley Science and Technology Park in Mount Pleasant, as seen from this aerial shot on March 15.

Foxconn, Feb. 3

Part of the Foxconn site is shown on Feb. 3, 2020, as seen from the cockpit of Racine certified financial planner Michael Haubrich's light-sport airplane. This photo shows the base of the future spherical High Performance Computing Data Center under construction.

Foxconn Feb. 3

Part of the Foxconn site is shown on Feb. 3, 2020, as seen from the cockpit of Racine certified financial planner Michael Haubrich's light-sport airplane. This photo shows the future Smart Manufacturing Center under construction, center. In the foreground is a private electrical substation. In the background is the fully enclosed future LCD fabrication plant.

Foxconn Feb. 3

Part of the Foxconn site is shown on Feb. 3, 2020, as seen from the cockpit of Racine certified financial planner Michael Haubrich's light-sport airplane. This photo shows the future Smart Manufacturing Center under construction.

Foxconn Feb. 3

Part of the Foxconn site is shown on Feb. 3, 2020, as seen from the cockpit of Racine certified financial planner Michael Haubrich's light-sport airplane. This photo shows the base of the future spherical High Performance Computing Data Center under construction.

Foxconn, Dec. 15, 2019

Part of the Foxconn site is shown on Dec. 15, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. The roof is now fully covering the future advanced-manufacturing plant.

Foxconn aerial 12/15

Part of the Foxconn site is shown on Dec. 15, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. The roof is now fully covering the large future advanced-manufacturing plant.

Foxconn aerial 12/15

Part of the Foxconn site is shown on Dec. 15, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. The roof is now fully covering the future advanced-manufacturing plant, and workers have begun to prepare building pads just east of that building for the next two structures.

Foxconn "fab" Oct. 18

Part of the Foxconn site is shown on Oct. 18, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future advanced-manufacturing plant. At that point in time, builders were installing the roof.

Foxconn aerial, "fab" Oct. 18

Part of the Foxconn site is shown on Oct. 18, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future advanced-manufacturing plant. At this point in time, the builders were installing the roof.

Foxconn aerial Oct. 18

Part of the Foxconn site is shown on Oct. 18, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future advanced-manufacturing plant. At this point in time, the builders were installing the roof.

Foxconn aerials, Oct. 18

Part of the Foxconn site is shown on Oct. 18, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future advanced-manufacturing plant. At this point in time, the builders were installing the roof.

Foxconn aerials, Sept. 20, 2019

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab."

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the multipurpose building.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. 

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. 

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. 

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab," at left in background and multipurpose building at right in background.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab," at left and multipurpose building in background.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab," at left and multipurpose building at right in background.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab," in the foreground and multipurpose building in background.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the new power plant at left and two large new retention ponds.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the new power substation.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab."

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the new power substation just east of the Foxconn campus.

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. 

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab."

Foxconn aerials

Part of the Foxconn site is shown on Oct. 18, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Shown here is the future thin-film-transistor fabrication plant, or "fab."

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. 

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. 

Foxconn aerials

Part of the Foxconn site is shown on Sept. 20, 2019, as seen from the cockpit of Racine certified financial planner Michael Haubrich's Flight Design CTLS light sport airplane. Journal Times reporter Michael Burke was Haubrich's passenger for the purpose of taking documentary photos of the developing site. Part of the Foxconn campus can be seen in the background; in the foreground is Sylvania Airport.

Mike Haubrich with plane

Racine-area certified financial planner Michael Haubrich is shown here on Sept. 20, 2019, with his Flight Design CTLS light sport airplane just before taking Journal Times reporter Michael Burke on a flight to document Racine County from above.

Delagrave

Mason

Below is the breakdown of unfunded other post-employment benefits (OPEB), which include retirement benefits other than pensions, health care and some life insurance, according to 2018 estimates. 

City of Racine: $386 million

Racine County: $177 million

Racine Unified School District: $91 million

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