June 20, 2012 02:51 PM
Hey Lansing, Why Wait? Take Public Pension Cure
The Village of Lansing knows there’s a big problem with the way it’s awarding some public pensions. Lansing’s leaders just need to show some courage and fix it.
By Robert Reed/BGA
A Better Government Association investigation reveals that over the past 20 years about 40 veteran Lansing police officers and firefighters were given salary boosts by the village as they were retiring, boosting their individual pensions by at least $6,000 each in the first year alone.
All together, at least $2.5 million in added pension payouts have been distributed since this taxpayer-funded perk was created in 1993.
It’s a great deal for these selected pensioners but a lousy break for taxpayers. Pure and simple, this is pension spiking--a practice that pads the final salaries of employees to enhance their pension benefits.
It’s another disturbing trend in an increasingly growing list of pension abuses the BGA has uncovered throughout various levels of Illinois government. These include little-known sweeteners, such as the Lansing perk, that unfairly boost taxpayer costs while the state’s public pension system is breaking down and the overall economy is ailing.
Yes, early retirement incentives can be legitimate ways to cut back on the cost of payroll expenses; high earning employees with seniority can be moved into retirement, and governments can bring in employees with less seniority who are less expensive.
But Lansing’s final-day bonus is not a legitimate early retirement incentive under the Illinois pension code, according to the state’s Department of Insurance (DOI), the public body charged with monitoring the operations of the public pension system.
Even the Illinois Municipal Retirement Fund, which oversees pensions for retired law enforcement and other safety personnel, says this practice is "antithetical to a sound and efficient system for providing retirement income."
In short, it stinks and Lansing officials know it.
On four separate occasions, since the mid 1990’s, DOI has told Lansing that these end-of-career bonuses, which they’ve determined this kind of payout to be, cannot be used to recalculate and increase pension payouts under Illinois law.
Yet for the past 20 years, Lansing has ignored DOI’s advisory opinions.
Now, the Village Board President says he wants to end the pension spiking, but can’t get the majority four votes he needs on the Village Board to revoke the benefit.
It doesn’t help that a couple of trustees have relatives on the police force and are opting to abstain from taking a vote to roll it back.
This isn’t Chicago, so the mayor may have trouble pushing the City Council to play follow-the-leader. But he and Lansing residents should remind these "sit-it-out" trustees that they’re also public servants, just like their relatives.
It’s their duty to vote for the greater good and not take a pass from a tough vote that admittedly could make for some uncomfortable family conversations.
If Lansing can’t muster the political will, then it’s time for DOI to get tough with the Lansing Village Board.
DOI’s legal department can initiate a more formal investigation into Lansing’s pension spiking scheme, and can issue an administrative ruling.
But administrative hearings can take months or even years to wrap up.
So, who knows? Perhaps someone may want to take the matter to court instead? Perhaps it will be the BGA, which is lucky to have a stable of pro bono lawyers eager to help us shine a light on government and hold public officials accountable to protect taxpayers from abuse.
But let’s hope that Lansing officials can do the right thing without threats of sanctions or lawsuits and provide immediate relief to its taxpayers by eliminating this pension-spiking perk and moving on to other matters.
Robert Reed is the BGA’s director of programming and investigations. Contact him at email@example.com. Follow him on Twitter @RReedBGA.