BGA Exclusive: Inside Preckwinkle’s Campaign Coffers

Cook County unions, vendors are among the board president's biggest financial backers. That's raising conflict of interest questions but she says it's not an issue.

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Cook County Board President Toni Preckwinkle / CookCountyGovernment YouTube

Cook County Board President Toni Preckwinkle, who was elected in 2010 on promises of reform and change, is tapping some old political interests to replenish her campaign coffers: Unions and big companies doing millions of dollars of business with her government.

From the time she announced her Cook County candidacy in January 2009 through early January 2013, Preckwinkle has raised about $5 million in cash or in-kind donations with nearly $1.5 million—or 30 percent—from unions, union executives, county vendors and their political action committees, or employees of county contractors, according to an analysis of campaign data by the Better Government Association. At the end of 2012, Preckwinkle had more than $570,000 on hand.

The BGA's analysis includes all contributions received from January 2009 through December 2012, plus contributions of at least $1,000 reported during the first two weeks of January 2013. The next comprehensive campaign filing is due this week.

The bonanza of campaign cash raises conflict-of-interest concerns, especially as the county negotiates with unions over critical public pension concessions or cutbacks, say government observers and election funding experts. Moreover, such hefty corporate contributions bolster the political power and prestige of incumbent Preckwinkle, who's on the verge of amassing a stockpile large enough to discourage opposition and gut the prospect of a competitive election, they add.

"The best opponent is no opponent: If you have a big enough war chest, it looks hopeless for a challenger," says Kent Redfield a fellow at the Springfield-based Institute for Legislative Studies and Director of the Sunshine Project, a campaign finance research project funded by the Joyce Foundation. "People raise big money and have big balances to discourage the opposition."

Preckwinkle's spokeswoman, Kristen Mack, said the contributions do not present a conflict because they have no bearing on the decisions Preckwinkle makes in her role as county board president.

"Contributing to her campaign does not guarantee access or favoritism," Mack said.

The largest union donor is the Service Employees International Union (SEIU), according to Illinois State Board of Elections records reviewed by the BGA. SEIU represents about 4,000 Cook County employees, nearly half of them hospital workers.

Various SEIU locals and the union's political action committees gave almost 450 contributions worth almost $815,000, the data shows.

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Aside from a $150,000 cash contribution made about two weeks before the Feb. 2, 2010, primary, much of SEIU's support came in the form of in-kind donations for fieldwork. SEIU provided nearly $650,000 for calls, data entry, food for volunteers, mileage, staff time and other campaign-related activities.

Jerry Morrison, executive director of the SEIU Illinois State Council, said the in-kind donations were part of a general get-out-the-vote campaign that was not intended to support Preckwinkle or any particular candidate. Morrison said SEIU chose to work with Preckwinkle because she was an ally and had the infrastructure—office space, phones and staff—that the union needed to conduct their get-out-the-vote effort. "She was a countywide candidate, and we wanted a countywide get-out-the-vote effort."

But four other unions have paid out, too.

Preckwinkle also received $103,000 from the Teamsters, $54,000 from the International Union of Operating Engineers, $28,500 from the United Food and Commercial Workers and $26,000 from the American Federation of State, County and Municipal Employees (AFSCME). Of those four, AFSCME and the Teamsters represent county workers.

Aside from issues connected to ongoing labor agreements, union leaders and the board president are also locked in serious talks over ways to salvage the county's leaky employee pension fund. As of 2011, the county has $7.9 billion in assets and $13.7 billion in liabilities—a funded ratio of 57.5 percent and an unfunded liability of $5.8 billion—according to the county's most recent audited report. (Eighty percent is considered the benchmark for a financially healthy fund.)

Mack said the county seeks to close that gap within the next 30 years. She said some general concepts being discussed include increasing employee contributions that would be matched by the county; changing the cost-of-living-adjustment formula; phasing in increases in retirement age; providing guaranteed funding for retiree healthcare but limiting cost increases; and capping pensionable wages and tying them to Social Security, among other ideas.

Preckwinkle met with union leaders in February and set a 30-day deadline for them to come up with a proposal. At the time, Preckwinkle stressed that she did not give the unions an ultimatum and they were trying to work together. Labor leaders presented their proposal on March 14.

Mack said Preckwinkle is reviewing the unions' ideas and plans to draft a measure that she will seek legislative support for in Springfield later this spring after it has been vetted by outside counsel and an actuary.

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SEIU at Take Back Chicago Rally / Flickr: SEIU Local 1

Indeed when it comes to the issue of pensions, Preckwinkle is dealing mostly with political allies—unions that have contributed to her political campaign. They include: AFSCME, SEIU, and the Teamsters. In all, those unions have contributed nearly $1 million to Preckwinkle since 2009.

Union leaders say they didn't support Preckwinkle to gain favor in pension negotiations or any other matters. And Preckwinkle says the support won't affect how she negotiates with the unions.

"We did support [Preckwinkle] in the primary and the general election [in 2010] because we knew she was a true progressive and that's who we believe we need in these positions," said SEIU Illinois State Council president Tom Balanoff. He said SEIU has known and supported Preckwinkle for more than 20 years, since her earliest days in the Chicago City Council.

"The public can remain confident that President Preckwinkle will continue to be fair, but tough, in negotiations with labor on pension reform," said Mack. "[Preckwinkle] has had a year's worth of conversations and negotiations with labor unions on pension reform and continually reiterated there must be shared sacrifice."

While Preckwinkle has been more cooperative than other elected officials about pension reform, labor hasn't always seen eye-to-eye with her administration. "We've butted heads," said Christine Boardman, president of SEIU Local 73, noting the layoffs of nearly 600 hospital workers, all SEIU members, since Preckwinkle took office.

However, others argue that the financial support from labor groups casts doubts that Preckwinkle can be tough in difficult negotiations with unions.

Sylvester Schieber, a former chairman of the Social Security Advisory Board, a bipartisan advisory board created by Congress, who has written extensively on retirement and pension issues, said that reducing unfunded public pension liabilities pretty much boils down to cutting back benefits and increasing pension contributions. And the money to increase those contributions will either come from workers or from taxpayers.

"So, if the unions have someone sitting in the judgment chair … who is somewhat beholden to them, they're probably going to get more consideration than they would from someone with whom they don't have that relationship," Schieber said. "It does create a potential conflict of interest, but it's so pervasive. It seems to be a type of accepted behavior."

Rey Lopez-Calderon, executive director of Common Cause Illinois, said that elected officials can develop a subtle dependency on certain supporters.

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Rey Lopez-Calderon / LinkedIn

"At the very least, the public is going to have [questions about] her ability to be fair," Lopez-Calderon said.

While organized labor is backing the county board leader so are many large companies including those doing business with Preckwinkle's administration, which annually doles out millions in government contracts and payments to private firms.

Since 2009, corporate interests contributed about $1.2 million to Preckwinkle's political funds.

Among the largest business contributors: Brinshore Development LLC gave $30,250; Treasure Island Foods Inc. donated $20,250; while Antunovich Associates Inc. and O'Connor Contractors Inc. each gave $10,000.

In addition to his company's contribution, Joseph Antunovich, president of Antunovich Associates, personally contributed $14,500. He said his support for Preckwinkle is because he believes in her leadership. "And that's with no strings attached," said Antunovich, who stressed that his company has no business relationship with the county.

Insurance executive Pat Ryan gave at least $20,000 to the Preckwinkle for President committee since January 2010.

Among those business contributors are also firms hired by the county as government contractors.

Over the past four years, Preckwinkle received $144,000 from 72 Cook County vendors and an additional $198,000 from executives and other employees of county vendors.

The estimated $340,000 in contributions from vendors and their workers account for almost 7 percent of the $4.96 million Preckwinkle raised since January 2009. Most of that money was contributed to the Preckwinkle for President committee. However, Preckwinkle has also received contributions to Citizens for Preckwinkle, her primary committee as a Chicago alderman, and the 4th Ward Democratic Organization, where she is the committeman.

"President Preckwinkle follows the rules laid out by the Cook County Board of Ethics," said Mack, Preckwinkle's spokeswoman. "Since taking office, she has returned more than $10,000 in donations that exceeded county contribution limits."

While companies that do business with the county are limited in what they can donate to county officials—no more than $1,500 in election years and $750 in other years—their executives and workers are not bound by the same restrictions unless their employers reimburse them for their contributions, according to Cook County campaign finance law.

For instance, SCR Medical Transportation gave a combined total of $4,750 to Preckwinkle for President and Citizens for Preckwinkle since June 2009. Before Preckwinkle launched her run for county board president, the company had donated just $200.

"Contributing to her campaign does not guarantee access or favoritism"

- Preckwinkle's spokeswoman, Kristen Mack

Preckwinkle returned $1,000 to the company to help keep those donations below contribution limits.

But SCR Medical Transportation CEO Stanley Rakestraw gave $5,000 to Preckwinkle for President in June of last year, and his wife and the company's co-founder, Pamela Rakestraw, gave $1,500 in September, state election records show. In February 2012, Preckwinkle appointed Stanley Rakestraw to the Metra Board of Trustees.

SCR provides transportation to patients traveling between home and Cook County health facilities. Since December 2009, the county has paid the company nearly $894,000. SCR was awarded a $2.9 million Cook County contract in 2007 after an existing vendor, Chicago Medicar Transit, defaulted on its agreement with the county. In June 2010, SCR was awarded a $3.8 million contract to continue providing service to the county.

Three executives with Globetrotters Engineering, including company president Niranjan Shah, have donated a combined $7,750 to Preckwinkle since she announced her run for county board president, state records show. Globetrotters has been an active contributor, giving thousands of dollars to Democratic and Republican politicians. The firm was a big backer of Rod Blagojevich, giving tens of thousands of dollars to the now imprisoned ex-governor.

Shah said he has contributed often to political figures and nonprofits because he likes them or he admires their work. "It's not that we're pushing and hustling to get a contract," Shah said.

(Shah has donated to the BGA, a nonpartisan nonprofit that is funded by contributions from the public, but that money was returned.)

Globetrotters, which previously gave money to the board's ex-president Todd Stroger, was paid $238,000 by Cook County since December 2009, according to the county's online check register.

"It's not a lot of money," said Shah, noting that the roughly $80,000 a year Globetrotters has received from the county since December 2009 isn't enough to pay for a full-time staffer at the engineering, architectural and construction management firm.

Rush University Medical Center, one of the largest Cook County vendors, can't make political contributions as a tax-exempt non-profit. But CEO Larry Goodman gave more than $3,000 to Preckwinkle for President since November 2011. Rush's trade group, the Illinois Hospital Association, contributed more than $30,000 to Preckwinkle through its political action committee since 2009. (Goodman also gave $3,000 to the hospital association PAC in February 2010.)

Cook County has paid Rush almost $29 million since December 2009, for training, research and other services, according to the county.

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Walsh Construction / Photos by Alden Loury

Preckwinkle enjoys a long relationship with Walsh Construction, a county vendor who ranks near the very top for dollars paid in county government contracts. Walsh gave $4,000 to Preckwinkle since she became a candidate for the county board.

Daniel Walsh, president of Walsh Construction, gave $1,500 to Preckwinkle for President in March 2009 and another $1,000 in January 2010. As a Chicago alderman, Preckwinkle's haul from the construction company was even greater. She took $9,500 from Walsh between 2001 and 2007.

Walsh Construction is a major government contractor having won multi-million-dollar contracts with Cook County, the City of Chicago, the Public Building Commission and other local government agencies. Since December 2009, Cook County paid Walsh Construction $69 million to build a new prison facility, according to the county's online check register.

Blackwell Consulting has never contributed to Preckwinkle. However, all told, the company's executives donated more than $41,000 to Preckwinkle since January 2009.

"I raised money for Toni Preckwinkle, and I didn't know her. I did it because she seemed to be a … step up from [the previous administration]," said company CEO Robert Blackwell, who sold Blackwell Consulting in 2011 to a Peoria-based firm called CGN.

On June 10, 2010, Blackwell made a $25,000 contribution to Preckwinkle, and another company executive gave $15,000 a week later.

"It's perfectly reasonable for somebody to say: 'What'd you get for that $25,000?' " Blackwell said. "And my answer to that is 'nothing.' "

In 2010, between February and October, the county paid Blackwell Consulting a total of $436,000, according to county records. But the company hasn't received any county business since Preckwinkle took office in December 2010.

"You give money for a bunch of reasons, and I'm not trying to act like a Puritan. You hope if you support somebody, somewhere down the road they'll remember your name," Blackwell said.

The ties to county vendors raise questions about potential conflicts of interest for the county board president as millions of dollars in government payments are paid out to private contractors each year.

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CEO Robert Blackwell sold Blackwell Consulting in 2011 to a Peoria-based firm called CGN / pepperdine YouTube

"Anytime you have campaign contributions from groups that have business with the government, that raises a conflict of interest," says Redfield. "It makes for a complicated relationship."

However, limiting campaign contributions, even for government contractors, can be tricky because those restrictions often fail to hold up when they're challenged in courts, says David Morrison, deputy director of the Illinois Campaign for Political Reform.

Such restrictions are challenged at the local, state and federal levels as infringements on free speech.

That leaves only a few remedies for campaign finance reform.

Redfield says candidates can either set their own restrictions—in the case of Preckwinkle, she could refuse money from county vendors and their executives and still have a large sum of money raised—or governments can put some form of public financing in place. In New York City, for instance, political candidates can receive matching funds from government for small contributions to their campaigns. The idea is to bring more small donors into the fold.

"We need to think of a different model," Redfield says, because unless the candidates themselves can agree to limits, changes are unlikely to occur. "Nobody wants to engage in unilateral disarmament."

Lopez-Calderon lauded Preckwinkle for the reforms she's implemented and for her efforts to prevent the nepotism and contracting scandals that marred the administration of her predecessor. But Lopez-Calderon said questions about Preckwinkle's ties to unions and companies doing business with the county could diminish those gains. "This is the kind of thing that can take us two steps back," he adds.

"It's the appearance of impropriety that causes the average citizen to lose faith in their government," Lopez-Calderon said. "Knowing the administration she replaced, [Preckwinkle] ought to be much more cognizant of that."