Dillon: What Part Of 'No Golden Parachutes' Is So Hard To Understand?

A new law meant to end outrageous severance deals for public executives took effect Jan. 1. It didn't take long for Western Illinois University to find a way around it.

Solomon Lieberman / BGA

You might have been surprised to learn that former Western Illinois University president Jack Thomas, who stepped down in June, will get two years off with pay — $270,000 a year plus benefits — before returning to teach at an inflated faculty salary.

A number of Illinois lawmakers were certainly surprised, since they’d passed a law last year that was supposed to end so-called “golden parachutes” for public executives. 

The bill was based on an analysis conducted by the Better Government Association that found 14 examples of six-figure severance deals over the course of a decade, at a cost to taxpayers of $5.8 million. The BGA policy team drafted the bill and lobbied hard for it to pass. So we’re surprised, too. And disappointed. And angry.

Aren’t you?

The Government Severance Pay Act, which went into effect Jan. 1, says that public executives who are fired for misconduct aren’t entitled to severance, period. Otherwise, severance packages are limited to 20 weeks’ salary.

Thomas, though, will be on administrative leave through June 2021. After that, he can join the faculty, teaching one class per semester, at a salary of at least $225,000. Last year, Western’s highest paid professor made $159,000.

How did this happen with the new law in place? One argument is that Thomas’ contract pre-dated the law, which requires the severance limits to be spelled out. So he was grandfathered in. 

Another argument is that the law doesn’t apply because Thomas is not getting a severance package. He wasn’t fired, and he isn’t leaving. He’s simply stepping down. 

Members of the Senate Higher Education Committee aren’t impressed with either argument. Sen. Bill Cunningham, D-Chicago, called the deal “a de facto golden parachute” meant to circumvent the intent of the General Assembly. Sen. Laura Murphy, D-Des Plaines, called it “a gross misuse of taxpayer dollars.” They’re both right.

Murphy said framing the buyout as a transition package rather than a severance package is not “a credible excuse” for a deal that violates the clear intent of the law. Still, she plans to work with colleagues to pass a bill with more explicit wording during the coming veto session.

Cunningham said he’s on board, but he has come to doubt whether language can be drafted that lawyers won’t find a way around. He’s frustrated that boards of trustees continue to cut generous deals after two legislative attempts to stop them. “There may not be a statutory silver bullet,” he said.

But there are other ways for lawmakers to enforce the intent of the law. A university that negotiates a cushy exit deal could see its state appropriation reduced by the same amount, for example, Cunningham suggested. He’s also willing to consider whether the governance structure for state universities should be changed so exit agreements aren’t brokered by individual boards of trustees.

Thomas wasn’t accused of misconduct. Declining enrollment at Western Illinois, reduced state funding and a budget standoff led to program and staff cuts  — struggles shared by other state universities. As president, Thomas had to make unpopular decisions, and he endured some ugly community backlash. The conversations that led to a change in leadership at the university weren’t aired publicly, so let’s assume trustees didn’t have cause to fire Thomas. Fair enough. 

But the deal he got is simply too generous to pass the common-sense test. After a two-year paid leave, he can collect a president’s salary for a teaching job, for as long as he chooses to stay. It’s exactly what Murphy said: a gross misuse of taxpayer dollars. 

Allowing a public executive to step down instead of leaving is a common cop-out, especially in higher education.  Golden parachutes are too often awarded by trustees who haven’t built a case to fire an employee, or don’t have the backbone, or fear a legal fight. Taxpayers get the bill for soft landings negotiated in place of hard decisions. It has to stop.

This column was published in the State Journal-Register.