Saturday, December 09, 2006

Better Late Than Never


I've gotten several requests to post last week's press release about closing the Cook County pension loophole, so here you go:

Fritchey, Claypool Seek to End Pension Boondoggles

Measure Would Close Existing Loophole

State Representative John Fritchey (D-Chicago) and Cook County Commissioner Forrest Claypool (D-Chicago) announced plans today to introduce legislation in the Illinois General Assembly closing the pension loophole used by retiring Cook County Board President Bobbie Steele to double her annual pension.

Steele resigned the county commissioner seat to which she won re-election on November 7, so that she can collect a retirement benefit based on her four month salary as President ($170,000) instead of her salary as county commissioner ($85,000). The move will boost her annual pension to $136,000 a year, with annual cost of living increases as well. Steele’s exercise of the pension law loophole will likely cost taxpayers in excess of $1 million in additional pension payments.

Six years ago, the General Assembly amended a nearly identical passage in the state pension law that applies to elected officials in every county in Illinois except Cook County. The amendment based pension payout on the average highest salary over a four-year period and not the final salary at the date of employment termination. Fritchey’s amendment would require Cook County to follow the same rules as the rest of the state.

“When you have a system that is ripe for abuse, it should come as no surprise when it gets abused,” said Rep. Fritchey. “Taxpayers in Cook County deserve the same accountability from their elected officials as do the taxpayers in every other county in Illinois. Closing this loophole is one step in that direction.”

Claypool noted that pensions for elected officials are by far the most generous—and that the addition of “sweeteners” or loopholes in the laws has often added even more generous returns to enterprising politicians.

“Politicians have consistently rigged the pension laws for their benefit, leaving taxpayers holding the bag,” said Claypool.

Both the Sun-Times and Tribune have revealed similar pension abuses. Former state Senator and County Commissioner Ted Lechowicz, for example, retired with a $130,000 pension despite never making more than $61,000 as an elected official. Similarly, former Sen. Art Berman’s yearly pension is $164, 612, almost three times higher than his salary with the state. Berman paid $109,292 into the state pension plan in his 31 years in the Senate.

After public disclosures of such pension manipulations, the General Assembly amended pension laws to prohibit similar abuses for officials elected after the date of the law. The Illinois Constitution prohibits pension rights from being modified retroactively.

In 2005, Cook County had $2.2 billion in unfunded pension liabilities, up from $85 million in 1996. The state is no better off. Years of scrimping on contributions, coupled with benefit increases, has left Illinois with an estimated $45.8 billion pension shortfall, which is among the worst funding records in the county according to the Chicago Tribune.

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14 Comments:

At December 9, 2006 at 9:43 AM, Anonymous Anonymous said...

Of course this should be fixed.

However, the real solution is not
just fixing loopholes but revising the compensation packages for government employees in general. Right now, when you consider that most have lifetime job security unless they are convicted of a serious crime, and taking into account both their almost-free health benefits and their pension benefits, they are way overpaid in relation to their counterparts in the private market.

The myth that government employees are underpaid in relation to their
private sector peers is just that--a myth, perpetuated by government employees who want to hold onto a good thing.

There are solutions. Government employees, including state and ocunty employees, could pay more towards their pensions. Better yet, they should be switched to a 401k plan with a good match. The latter would go a long way towards solving the pension crisis. And if they say they'll quit, well, there are lots of very qualified, probably better qualified people who would likely be happy to take those jobs with a 401k instead of a pension.

And anyone still harboring illusions about wonderful underpaid government employees doing the Lord's work for practically nothing should read the articles about patronage and staff resistance to change at the Cook County Juvenile Correction Center or Lethal Lapses,
the Belleville News Democrat series on errors by Illinois DCFS' child protection staffers resulting in violent deaths of young children. These folks, and their $100,000k plus managers, are apparently not only overpaid but are accountable to no one. Not exactly what most taxpayers think they are paying for.

 
At December 9, 2006 at 9:46 AM, Anonymous DuPage Saint said...

So you are going to stop pension abuse, why not stop greed too. Will you stop judges in all counties from coming back from retirement for a few months to bost their pension to current levels too? I doubt it.

 
At December 9, 2006 at 6:22 PM, Blogger Hon. John Fritchey said...

DuPage,

I'm not completely postive, but I don't believe that they can even do that anymore. Perhaps there are some whose rights were somehow vested in the previous iteration of the Pension Code. If you could point me to a cite on the issue that supports what you're saying, I'd be happy to take a look at it. Despite your unwarranted cynicism.

 
At December 10, 2006 at 7:50 AM, Blogger Bill said...

anon,
Your anti-public servant rant may have made you feel better but your attempt to formulate a solution is laughable. In fact, if pensions for public employees ended today the cost to the gov't agency per employee would increase and the amount that would be deducted from the employee's check would decrease. The gov't agency would be required to make social security payments to the US gov't far exceeding what they contribute to the pension plans and the Feds would not stand for any "pension holidays".
The problem is not employee benefits,which are average at best, but the way these pension plans have been used as piggy banks to fund the cost of gov't on the backs of its employees and to further feather the nest of some elected officials like Steele and the King of All Pensioners Ted Lechowitz whose pension probably still tops Bobbie's.
John,
Good luck on trying to end the abuses. But be careful! I wouldn't turn my back on Claypool after what he did during the last election. I think he is a Republican.

 
At December 10, 2006 at 4:06 PM, Anonymous Anonymous said...

Bill-

I don't think expressing concern about abuse of children supposedly under state protection including abuse deaths is a "rant." Perhaps you should actually read Lethal Lapses. More citizen employees should be ranting, including the highly paid citizens employed by the governor's office and our lethargic, please-don't-make-me-actually-do-something legislators.

I don't believe government entities get a discount on their Social Security if they have a pension plan. The Social Security pay-in is the same whether there is a pension plan or not. And Illinois state employees have both...the state pays for their pensions (along with a very modest payment from the employee) and also pays into their Social Security. Nice deal if you can get it....but most private sector workers get neither...only the 401k.

 
At December 11, 2006 at 4:47 AM, Blogger Bill said...

Wrong again, anon.
Most state and local gov't employees are not covered by social security.Hence, the state's contribution to social security is zero. That contribution would increase greatly under your "proposal".
Under the state pension plan the employee pays a very substantial contribution. The problem is that the state has not been paying their share. But don't let the truth get in your way.
Insulting the legislature and accusing hard working DCFS workers of being responsible for child abuse is not a very convincing argument.

 
At December 11, 2006 at 9:15 AM, Blogger steve schnorf said...

Bill,
I fear there is not much to be gained by arguing with either uninformed or duplicitious people who who snipe out of the cover of anonymity.

 
At December 11, 2006 at 3:19 PM, Anonymous Anonymous said...

Whether benefits for state workers are at an appropriate level or not is a legitimate subject for debate, but people shouldn't have to be guessing at the actual facts. There should be better transparency. I couldn't find employee benefits info on the state website. Anyone know if it's posted, and if not why not?

 
At December 12, 2006 at 3:46 PM, Anonymous Reality Check said...

The average retired state employee gets about $18K a year in pension benefits. I don't think this amount is excessive, out of line, or the cause of the state's fiscal problems. And I have a feeling Schnorf agrees with me.

Fritchey, what about you? You were quick to respond to Dupage's errorneous comment but not to this anonymous troll's slander of public servants.

 
At December 12, 2006 at 10:49 PM, Blogger steve schnorf said...

There are several mix-ups that frequently come into play when state pensions are discussed. The first is the failure to remember there are multiple systems, with very different rules, level of benefits, and procedures.

Another is a failure to understand the real problem, and thereby end up offering solutions that suit the advice-givers personal philosophy about what pensions should be like but aren't particularly related to the real problems that need to be solved.

It's important to remember that when talking about what is happening nationally that for better or worse, you can't compare the State with Jim Bob's Oil Change and Muffler Shop. To get any since of what's both true and relevant, you need to compare the state with it's peers, large (more than 10,000 employees) heavily unionized employers.

You also have to think about what's important to the employers in the different systems. For example, for the UofI system it has always been very important to keep university benefits at least somewhat comparable to the other institutions they are competing with for faculty. So, one of the measuring sticks that was used (at least in the past)was Big Ten public university benefits.

I haven't looked at the numbers in several years, but I can almost promise you that our SURS benefits are not extraorinarily rich compared to those institutions. It also helps explain why the SURS system is set up to accomodate mobility, because that was an important factor in recruiting facutly who had no intention of staying anywhere 10 much less twenty years.

Anyway, I've gone on far too long, and we haven't even talked yet about what the real problem is, and why switching to a defined contribution plan won't solve our problem any more than President Bush's privatized savings plan weren't a real response to the coming crisis we face in the Social Security program.

 
At December 13, 2006 at 9:33 AM, Anonymous Anonymous said...

Conceptually, the real problem is this. Quality employees are looking to make a package that equals 'x' amount of money. They'll either take it all up front in salary, or they'll settle for less salary coupled with a nice retirement package down the road. The latter option proves to be bad for the taxpayers because politicians are able to exploit this. They refuse to pay as they go. They pour money into their pork schemes and dump all pension legacy costs on to the next generation. Something like a 401k plan would force them to pay as they go.

 
At December 13, 2006 at 11:16 AM, Anonymous Anonymous said...

And there's another problem with these benefit packages. It obscures, to the tax payers, exactly what we're paying our public servants. Even though the state may claim that we're only paying somebody, say $50k, the truth is that the guy could really be making the equivalent of $150k when benefits are factored in. The tax payers are entitled to know about the true actual costs.

 
At December 14, 2006 at 4:58 PM, Anonymous Anonymous said...

I have a novel idea. How about eliminating all the various pensions, which would cut off all the double and triple dippers, and make them pay into one fund, just like Social Security. And raise the age to a minimum of 62 before you can collect.

 
At December 21, 2006 at 4:17 PM, Anonymous DuPage Saint said...

I was not in error on Judges pension it is refiguted here is response from state:A State of Illinois Judge's pension is recalculated based upon service during the recall and the salary during the recall. That dollar amount is then added to the original pension resulting in the new pension payable upon re-retirement.

Jayne Waldeck, JRS

I assume JRS is judges retirment system

 

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