Thursday, May 21, 2009

Ament ought not to be asking for his reputation

I should have known that some people would claim that the County's settlement with Mercer somehow vindicates Tom Ament and the Board. According to capper, Supervisor Wieshan apparently believes:
"This vindicates the County Board. You don't get $45 million for just being a nice guy. It wasn't the County Board or the evil politicians that created this. We were given bad information from them."
He gave a similar statement to the Journal Sentinel. Lee Holloway claims to have been vindicated.

A few problems.

1. Settlement for roughly ten cents on the dollar is normally not considered a win. $45 million dollars is a lot of money. The cost to the County of this fiasco is much more. I generally have told clients that any case that will go to a jury that you can settle for ten (or even twenty) cents on the dollar is a no brainer.

When the jury consists of people who are essentially being asked to vote themselves money, the incentive to settle is even greater. (Assuming that there were Milwaukee County residents on the jury.)

2. The sense one gets from following the testimony is that no one at the County was particularly curious about this. A provision that essentially pays people retirement benefits for the period in which they were working and then tries to calculate an offsetting reduction has the potential to cause millions of dollars. One doesn't have to be a rocket scientist, much less Tom Ament and Karen Ordinans, to understand that the cost is going to turn on predictions about what will happen in the future, i.e., how will retirees react, how long will they live, how will the portfolio perform. There can be no one answer to that question - only a range of possible answers that will vary according to the assumptions one makes about that future. The real scandal is that Ament, Ordinans, Holloway, et al., couldn't be bothered to think very hard about this.

3. Vindication generally does not consist of a claim that I voted for what I did not understand and allowed myself to be fooled about.

1 comment:

Dad29 said...

It is NOT uncommon for consultants to deliver the conclusion(s) desired by the paying client.

The "lack of curiosity" you mention is a very kind phrase indeed, Rick.