Governor, sign this pension abuse bill
After Illinois politicians enabled brazen corruption, union officials looted their members' retirement funds
Wednesday, November 30, 2011
For decades, Illinois politicians have used public pension systems as their private slush funds. They've used those honey pots to provide favors and sweeteners and other goodies for their cronies — many of them officials of public employees unions. In return, the pols reaped labor peace, campaign contributions and armies of labor volunteers during election cycles.
In recent months, investigative reporters from the Tribune and WGN-TV have been exploring, and regularly exposing, some of the astonishing corruption these political deals have wrought. Among those who profited: the union leader collecting a $108,000 pension for a former city of Chicago job that paid him $40,000 a year; another labor official who, because the city rehired him for one day, collects a $158,000 pension; and union lobbyists with no prior teaching experience who, by substitute teaching for one day, became eligible for lifetime teacher pensions.
The two clusters of victims targeted by the political schemers who enabled these and other rip-offs are easy to identify:
•As Chicago union officials legally loot their members' severely underfunded pension coffers, tens of thousands of rank-and-file workers can only pray they will receive the much more modest retirement benefits they've been promised. And imagine how members of the Illinois Federation of Teachers must feel, knowing that their own union lobbyists were masquerading as teachers — with schoolchildren as unwitting pawns — in order to someday claim far richer benefits than classroom educators ever will receive.
•The connivers also saw taxpayers as easy marks; public dollars pour into the pension funds that would pay undeserved benefits to all of these union officials. What's more, taxpayers surely would be on the hook if the pension funds eventually run dry. But is that glib assumption accurate? We hope never to find out. Yet Illinois governments may not, in fact, be legally liable to make benefits payments whole if and when their pension systems run out of money.
On Tuesday, Illinois House members voted overwhelmingly to echo their Senate colleagues' prior approval of a bill to prohibit these abuses going forward. Gov. Pat Quinnr esponded with a statement enthusiastically denouncing pension abuses — although he stopped short of saying he'll sign this bill into law. Governor, we appreciate the need for your office to perform due diligence. That said, we hope you'll sign this bill pronto — in part to keep any more scamsters from gaming the outrageous provisions that now sully state law.
The new law would block city of Chicago employees who take leaves of absence to work for their unions from receiving public pension benefits earned on their typically much higher union salaries. It would keep union officials from double-dipping by earning pensions from the city and from their labor organizations for the same years of service. It would require pension system officials to report their suspicions of pension fraud to law enforcement. And it would close the loophole that let the teachers union lobbyists count their years as union employees toward state teacher pensions — provided they spent that one bogus day subbing in a public school. The bill would kill whatever claim to a public pension the lobbyists might assert based on that loophole.
The pension abuse bill doesn't fully reform Illinois pensions to assure future retiree benefits that taxpayers can afford. A bill that would have moved Illinois in that direction by revising future pension benefits earned by today's employees hasn't won approval in either chamber.
We've argued previously that the Republicans and Democrats who cut these deals — we've referred to these spectacularly unaffordable retirement giveaways to their union allies as suicide pacts — were playing with other people's money. The pols knew they were creating somebody else's problem. When the devastating costs came due, they would be gone, out of office, retired. A year ago this week, we wrote:
Expect courts eventually to decide whether, in the words of New York University law professor Richard Epstein, officials "violated all their duties of loyalty to the public at large when they entered into deals from which union pension funds got all the upside and everyone else got the downside." If judges find what constitutes the fiduciary breach known as self-dealing, they could undo the suicide pacts. For now Illinois is stuck with metastasizing pension and retiree health costs. In the future those costs will even more boldly crowd out spending on education and other needs. Note that no state's retirement system is as underfunded — as unready to face that future — as is Illinois'.
Gov. Quinn, we wish your enthusiasm for pension reform extended to making the state system secure for future generations of retirees. On that issue, you've consistently whiffed. Signing this abuse bill promptly at the very least would affirm that brazen pension corruption has to stop.