Reprinted from Illinois Policy with its permission:
10 ILLINOIS PENSION ABUSES SHOW WHY TAXPAYERS DESERVE REFORM
Ten abuses of Illinois’ pensions systems go a long way to explaining how the state wound up in a $313-billion pension hole.
Roughly 1 in 10 Illinois adults is a member of an Illinois pension system. Their retirements are hurt by legal, but corrupt, rules and practices created by recently indicted former Illinois House Speaker Mike Madigan and other Illinois politicians.
Here are 10 examples of pension “rights” gone wrong.
No. 1: Madigan’s rules benefit Madigan’s pension
Madigan’s fingerprints on the pension crisis extend back even before he became an elected member of the Illinois General Assembly. As a delegate to the 1970 state constitutional convention, Madigan voted in favor of the pension clause. That clause was the basis for the Illinois Supreme Court’s 2015 ruling that meant no significant pension reform could take place – including those affecting only future benefit growth, such as altering cost-of-living adjustments – without a constitutional amendment.
Madigan directly benefited from some of the loopholes and rules he created. Perhaps the most egregious was a pension sweetener made available only to lawmakers that allowed him to “bank” 3% cost-of-living adjustments for 25 years. The special perk got him an extra $66,000 added to his pension after the first year of retirement, allowing his monthly payout to jump from $7,100 to $12,600. If Madigan collects his pension for 17 years, he will receive nearly $3 million in return for his $350,000 in contributions. That pension sweetener was eventually eliminated for lawmakers elected after 2002.
Because of the pension clause, no changes to Madigan’s benefits can occur absent a constitutional amendment.
No. 2: Gov. Edgar benefits from broken system he championed
Former Gov. Jim Edgar has also benefitted greatly from the pension system he helped create. Edgar championed “pension reform” that enabled the Edgar Ramp, which put the state on a 50-year repayment trajectory and deferred costs into the future. The policy has been a major reason why the state’s $15 billion pension deficit has exploded to over $313 billion, according to Moody’s Investors Service. Edgar and numerous lawmakers have become pension millionaires from the system they created at the expense of taxpayers.
The Edgar Ramp failed because of fundamental flaws in its design. The repayment schedule backloaded higher payments, keeping payments low during the first 15 years to ensure the budget for Edgar and his successor would not be restricted by high pension payments. The 50-year repayment cycle was much too long and did not result in the state discovering newfound money to make the higher payments as the cycle progressed. Its goal was to put just 90% of what would be needed into the pension systems, meaning even if the state kept up with the payment schedule it would still knowingly short its pension obligations by 10%.
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And no mention is made of the two pension systems Edgar belongs to.
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No. 3: Chicago Mayor Daley maneuvers money to increase pension payout
Former Chicago Mayor Richard M. Daley took full advantage of the pension system to give himself a huge benefit boost and save himself hundreds of thousands in contributions. Daley rejoined his legislative pension plan for a single month in 1991 before returning to the Chicago Municipal Pension Fund, which made him eligible to receive 85% of his mayoral salary as a pension benefit. At the time, he was just 49 years old and had he retired at 55, his one-month maneuver would have pushed his pension payout from just over $20,000 to nearly $98,000.
Daley went on to be reelected five more times and when he ultimately retired, he did so with a pension worth about $50,000 more than it otherwise would have been, with an initial annual benefit of more than $183,000. Around the time he greased the skids for himself, Daley also manipulated the pension system to hand huge benefit boosts to Chicago aldermen. Chicago’s eight pension funds now have more debt than 45 states.
No. 4: Union lobbyist gets full teacher pension for working a single day
David Piccioli was a union lobbyist for the Illinois Federation of Teachers who exploited a loophole signed by former Gov. Rod Blagojevich to receive a full pension from the Teachers’ Retirement System. He worked a single day as a substitute teacher. Piccioli paid $198,000 into the pension system to cover contributions for his 10 years of working as lobbyist, but he stands to become another pension millionaire set to receive over $3 million over 20 years.
Piccioli also earns a pension from the State Employees Retirement System that was worth $33,780 in 2019. He received that pension for 10 years of service as a legislative aid.
In 2012, lawmakers closed the Piccioli loophole. Initially, courts stripped Piccioli of the portion of his pension that was for his time working as a lobbyist and returned his $198,000 contribution with interest. Piccioli sued to more than double his pension by including credit for his years of lobbying. The Illinois Supreme Court sided with him in 2019, citing the Illinois Constitution’s pension clause that prevents earned and unearned benefits from being “diminished or impaired.” The ruling highlights the need for a constitutional amendment to enable even the most commonsense pension reforms.
No. 5: Dennis Gannon’s public pension based on pay as a union official, not as a city worker
Former labor leader and Streets and Sanitation Department employee Dennis Gannon retired in 2004 at age 50 while being credited for 33 years of service with the city of Chicago. Except he didn’t spend 33 years working for the city. He spent more than one-third of that time working for private labor unions. Gannon is projected to collect around $5 million in total pension payments during his lifetime. As of 2020, Gannon was receiving a monthly payment of $18,255, nearly $220,000 annually.
No. 6: Superintendent Troy Paraday spent his time crafting a self-enrichment scheme
Another egregious example of pension abuse comes from former Calumet City School District 155 Superintendent Troy Paraday. Paraday was the highest-paid school district administrator in the state with a salary over $430,000. He was fired after an investigation into numerous allegations of misconduct, including deceiving the school board on financial matters relating to his compensation, claiming the board gave him a 6% raise when it had not and accumulating compensatory time which his contract did not allow for.
The school board alleged Paraday allowed himself to accumulate unlimited compensatory time for work beyond an eight-hour day, logging phony time for duties considered part of his job such as conducting interviews, attending board meetings, conferences, graduations and collective bargaining negotiations. This led him to seek a payout of more than $1.75 million for 885 sick, vacation and personal days he “saved” while working for the district. His scheme helped inflate his pension payment, which currently stands at $25,265 per month, to over $300,000 annually.
No. 7: Reginald L. Weaver based his pension off his pay as a union official, not a teacher
Former teacher Reginald L. Weaver receives a nearly $290,000 pension despite last earning a salary of $60,000 as an actual teacher. Pension rules passed by the General Assembly in 1991 with no public debate or cost analysis allowed him to base his public pension off his six-figure salary as a union official, which has cost Illinois taxpayers millions since his retirement. That loophole has since been closed but highlights the general atmosphere of abuse surrounding the pension system. For the right people at the right time, the pension game can be rigged to an individual or select group’s extreme financial benefit.
No. 8: Lawrence Wyllie indicted on fraud, embezzlement in 2017 but still receiving pension
Former Lincoln-Way District 210 Superintendent Lawrence A. Wyllie was indicted in 2017 on fraud and embezzlement charges stemming from his administrative role with the school. His case continues to drag on. When he retired in 2013, his annual pension cost taxpayers just over $122,000. As of 2021, it now costs over $360,000 at over $30,000 per month. He has been paid over $2.75 million in total benefits so far. Wyllie’s trial has been delayed numerous times and shows no signs of resolution, which means he will continue to receive his full pension payments at taxpayers’ expense.
No. 9: Edward Acevedo helped delete five words as lawmaker to get a second pension
Edward Acevedo is a retired state lawmaker and Chicago police officer currently receiving two government pensions. He’s getting over $58,000 a year from the General Assembly Retirement System as well as over $4,500 from the Chicago police pension plan thanks to a law he changed to benefit himself. During his time as a state legislator, Acevedo helped to remove the words “prior to Jan. 9, 1997,” from state pension law that allowed Chicago cops serving in the legislature to get credit toward their police pensions for days spent as legislators in Springfield. Since Acevedo was hired after that date, removing those five words allowed him to count the 655 days he spent on leave from the police force to serve as a legislator to get over the 10-year threshold for pension benefits through the Chicago police pension system.
Acevedo is currently under federal scrutiny because two of his sons have been charged with tax cheating on federal returns concerning income from lobbying they did for Commonwealth Edison, the utility company embroiled in the Madigan scandal.
No. 10: Eddie Johnson endangers public, betrays their trust and keeps his pension
Former Chicago Police Superintendent Eddie Johnson is receiving his $15,800 police pension despite being fired in December 2019 for misconduct. Officers found Johnson slumped over the wheel of his car after consuming a significant amount of alcohol with a female member of his security detail. He had been stopped on the street with his vehicle running for two hours before someone called 911 and officers discovered him. The responding officers deferred to Johnson on what to do about the situation after realizing who he was. They followed him when he told them he was fine. Dashcam video showed Johnson went through a stop sign and turned into the wrong lane with the officers following him. Despite benefitting from his position of authority in the incident, engaging in misconduct and endangering the public, Johnson continues to receive his taxpayer-funded pension and was due a cost-of-living adjustment of more than $5,600 in 2021.
How to end these abuses
All 10 of these pension abuses and schemes have been enabled by a corrupt, broken system that is dragging down the state’s finances. Government insiders have gotten rich while taxpayers have been crushed by higher taxes and reduced services. The state’s credit rating has suffered, making it more expensive for Illinois to do business. The state’s economy has suffered because of outmigration, unaffordable housing and property taxes, and diminished job growth.
Fixing these abuses will take a constitutional amendment to allow for real reform that will put the state on a sustainable path forward. It’s time for lawmakers to let the people vote on pension reform.
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Of course, I also have a generous legislative pension for which I again thank Illinois readers.