Curbing Golden Parachutes: BGA Policy Team's Government Severance Pay Act Becomes Law

Public executive severance packages will be limited to 20 weeks' salary and no severance is allowed for those fired due to misconduct.

A plan to curb severance packages for public executives was signed into law today by Gov. Bruce Rauner. Drafted by the Better Government Association’s Policy team, the Government Severance Pay Act is a commonsense approach to ending the exorbitant severance packages that too often are handed out to public executives and managers who leave their jobs under questionable circumstances. The law (SB 3604) now ends severance for executives fired for misconduct. The law limits severance packages to 20 weeks’ salary for other executives.

"Illinois officials took a big step forward by turning the Government Severance Pay Act into law,” said David Greising, the BGA’s President and CEO. “Taxpayers now can rest assured they won't be paying for exorbitant golden parachutes to make public executives go away.”

The BGA’s Policy team examined public severance deals over the past decade and found at least 14 examples of six-figure severance packages that cost taxpayers more than $5.8 million. The go-away deals were given to executives at housing authorities, transit agencies, elementary districts, municipal government and higher education institutions.

Some of the more sizable packages included former NIU President Doug Baker getting $617,000 and former College of DuPage President Robert Breuder getting $762,000. Baker gave contracts to friends and hired pricey consultants, while COD board members agreed to a severance deal for Breuder after it was revealed he had spent millions of dollars on special perks for himself. Breuder since has filed a breach of contract lawsuit against trustees.

State Sen. Tom Cullerton, who was the chief sponsor of the legislation, said, “The Government Severance Pay Act will set a clean, clear path that will eliminate those decisions for elected officials. Now is the time to get control of these huge buyouts and use good, taxpayer-focused judgment.”

"Government should invest in its people, not enrich fired or outgoing employees,” added state Rep. Stephanie Kifowit, the House sponsor. “These publicly-funded golden parachutes granted to dismissed government employees break the public trust every time they occur.”

Change was needed to rein in payouts, stop the abuse, and restore accountability. The Policy team’s research showed that several states including Minnesota, California, and Idaho, restrict the severance pay of some or all public employees. Since 2011, Florida has restricted severance pay for any “officer, agent, employee, or contractor” to no more than 20 weeks’ salary.

With that in mind, the BGA Policy team wrote the Government Severance Pay Act with Cullerton. The bill passed the Senate unanimously and the House nearly unanimously. It takes effect January 1, 2019 and will apply to future public executive contracts.  

“This law begins the process of restoring taxpayer trust in Illinois,” Greising said. “The Better Government Association is proud to have been the catalyst for a law that ensures better stewardship of the public's money."