September 15, 2012 09:28 AM
End Pension Scams for Clout Crowd
No public pension fix will ever be complete, or successful, if it doesn’t end the costly and wasteful perks and sweeteners that suburbs, towns and villages dole out to favored workers.
Most of the conversation about reforming our cash-strapped public employee pensions focuses on government’s "Big Three" – Illinois, Chicago and Cook County.
But no fix will ever be complete, or successful, if it doesn’t end the costly and wasteful pension perks and sweeteners that suburbs, towns and villages dole out to favored workers.
The Better Government Association has uncovered multiple examples of small and mid-sized municipalities exploiting the public pension system to benefit a handful of powerful or connected employees.
The abuse generally falls into one of these categories:
- Spiking. End-of-career raises that boost pension payments for life.
- Double dipping. Employees who get multiple pensions from different units of government.
- Tacking. Consultants and contractors improperly joining pension plans even though they’re not government employees.
These perks can pile up and become a serious drag on a suburb’s financial health, especially at a time when hundreds of local governments are already reeling from heavy debt obligations.
That’s a painful reality south suburban Lansing finally recognized after 20 years of rewarding police officers and firefighters with end-of-career pay hikes that boosted their final salaries by at least $6,000 each.
As a result, Lansing’s doled out at an additional $2.5 million since 1993—a nice deal for the retirees but no bargain for the Lansing taxpayers who foot the bill.
After a BGA investigation exposed the pension plan, Lansing ended the practice, which was used to encourage early retirement of older workers so they could hire younger, less expensive, ones.
While there is arguably some method to Lansing’s pension madness, that’s not always true in other suburbs.
Consider a recent BGA story in the Sun-Times about Calumet City, which quietly made its top attorney, a former contract worker, a full time city official eligible for a boost in his taxpayer-subsidized retirement by at least $1 million and probably more.
The Illinois Municipal Retirement Fund, which oversees the payouts, began investigating after the BGA and Sun-Times started asking questions about the deal.
Then there’s Thomas Sheahan, former police chief in Oak Brook, current village manager of Lyons, and a member of a powerful Democratic Party family that’s helped run Chicago’s Southwest Side for decades.
In `07, with a little help from a friendly state lawmaker, a bill was passed to sweeten Sheahan’s pension by $30,000 annually, which sticks Oak Brook taxpayers with a liability of about $750,000.
The western suburb is trying to overturn that legislative slight-of-hand but the proposal is stalled in Springfield.
That’s just some of what we know. Odds are there’s more going on at the local level we haven’t uncovered yet.
But there’s a track record of enough shady sweeteners to warrant independent audits of pension obligations by every suburban board or council to weed out the sweeteners, double dippers and other outright abuse.
Will this solve the state’s giant pension problem? No. But a crackdown sends an important grassroots message: Governments of all sizes have to stabilize public pensions for the hard-working rank-and-file workers--not the insiders who use power, clout and cunning to game the system.
Andy Shaw is President & CEO of the Better Government Association. He can be reached at email@example.com or 312-386-9097.