Public pensions, fat retirements

Thousands who worked for government draw 6 figures a year -- the system costs taxpayers more than $800 million every month

Friday, September 11, 2009

Want to retire with a fat pension? Get a government job in Illinois.

Nearly 4,000 retired government workers have pensions that pay them at least $100,000 a year. They include politicians, judges, doctors and school administrators, as well as top cops, firefighters and park officials.

More than half have collected more than $1 million each since they retired. A few have topped $2 million. And five have gotten more than $3 million each, a Chicago Sun-Times investigation found.

And these numbers are soaring faster than taxpayers can afford.

Consider:

• 3,958 retirees have pensions paying $100,000 or more a year.

• 2,255 of those retirees have each collected more than $1 million in pension benefits. They include two doctors who have each gotten more than $3 million over the last 10 years.

• 14,280 retirees have pensions that pay them more than their final salaries. That's largely because all government pensions in Illinois automatically increase 3 percent every year.

• 11,521 retirees get checks from two or more government pension plans.

• 23 widows each get more than $100,000 a year, every year, in survivor benefits.

• 16 judges' widows have each gotten more than $1 million since their husbands died.

It's a frightening picture. It costs more than $800 million a month for state and local governments to cover their pension burden, according to a first-of-its-kind Sun-Times analysis of data obtained from the 17 largest retirement plans for government workers in Chicago, Cook County and the state of Illinois. Those plans cover 374,041 retired government workers or their survivors.

Even as the economy has forced governments to cut services and jobs, they've had to borrow money or raise taxes to meet their soaring pension costs.

And the problem has lingered for decades, as elected officials continually postpone dealing with it, much like a homeowner putting off needed repairs. In fact, they've kept sweetening retirement benefits for themselves and others, even as they shortchanged the pension funds, diverting money to other programs and services. And early retirement programs have made things worse.

"It's both illogical and extraordinarily expensive for the governments, and the taxpayers pay the burden,'' said Laurence J. Msall, president of the Civic Federation, a 115-year-old watchdog organization that has studied retirement benefits for government workers.

"We're facing increased taxes and lower services to pay for these extremely generous pensions. It's the unintended consequence of providing six-figure pensions to people who will live 20 years or more. People are drawing pension benefits far richer than they would in the private sector."

Only 18 percent of workers in private business still get a pension. Most American companies have abolished pension plans, deciding it was too expensive to give their retirees a monthly check until they die. Instead, most workers need to save for their retirements, say, through 401(k) accounts, which have taken a beating in the recession.

But we're all paying income and property taxes that finance lucrative pensions for government workers who, in many cases, can start drawing pensions as early as age 50.

The state's richest government pension goes to Dr. Alon P. Winnie, former chairman of anesthesiology at Cook County Hospital and the University of Illinois Medical Center at Chicago. Winnie, 77, has two pensions that total $447,233 a year. He has collected more than $3 million since retiring. He doesn't think that's excessive: "If you were with a good company, you'd have a helluva lot better benefits."

All together, the state and city pension funds are underfunded by an estimated $90 billion.

This year, Gov. Quinn plans to borrow $3.4 billion to cover the state's contributions to five pension funds covering university employees, state workers, judges, legislators and suburban and Downstate teachers. And Mayor Daley has given school officials permission to raise property taxes, in part to fund the city's pension plan for teachers.

Government workers contribute between 4 percent and 12 percent of their pay toward their pensions. The rest of the money comes from their employer -- the taxpayers -- and profits on investments. When government officials shortchange pension funds, there's less to invest.

Political insiders have made millions handling investments for public pension funds. Among them: Republican power broker William F. Cellini and his children, who handled investments for the suburban and Downstate teachers fund. Cellini is awaiting trial on corruption charges involving the teacher pension fund. And Daley's nephew Robert Vanecko is under investigation by a federal grand jury looking into how his company won $68 million in business from five city pension funds.

Quinn is among politicians and civic leaders calling for Illinois legislators to reform all government pension plans -- including one that gives legislators one of the richest retirement deals. Because the state constitution forbids legislators from reducing pension benefits for employees or retirees, they've suggested setting up less generous retirement benefits for new hires.

Among those calling for change is former Gov. Jim Edgar, who helped shortchange the state pension funds to balance the state budget.

"Some of these things they've put in place are expensive, and government can't afford them,'' said Edgar, whose annual pension is $127,111 and who has collected nearly $1 million in pension benefits.

"We cannot go on with our pensions and not put money aside. The big problem is we just never put the money aside that we should have."