Biggest pension in city, courtesy of labor

Pension for ex-city steamroller operator isn't based on his city paychecks -- it's tied to his salary as a powerful union boss

Monday, September 14, 2009

City Hall's biggest pension doesn't go to a police superintendent, fire commissioner or even an alderman.

It's paid to a former steamroller operator named Dennis J. Gannon.

But Gannon's City Hall pension -- $153,649 a year -- isn't based on what he was paid as a steamroller operator and foreman for the city's Department of Streets and Sanitation.

Instead, Gannon took advantage of a little-known state law that allowed him to base his taxpayer-supported pension on his much-larger salary as president of the Chicago Federation of Labor, a private organization that represents more than 300 unions affiliated with the AFL-CIO.

And he didn't even have to retire as the federation president. He's still in that job, which paid him $215,484 in 2007, the most recent figures available.

Thanks to that law, Gannon now collects a city pension that's nearly three times what he made at City Hall. He began collecting that pension five years ago, when he was 50. By the time he turns 70, that city pension will have paid him a total of more than $3 million.

Gannon is perhaps the city's most prominent labor leader. When Mayor Daley was seeking cost-cutting concessions from city workers this summer, he turned to Gannon -- and largely got them.

Dates back to 1957
Gannon defends his city pension deal.

"I'm probably not the only labor guy taking advantage of that state law,'' Gannon said.

He's right. A Chicago Sun-Times examination of the state's 17 largest government retirement plans found more than five dozen retired government workers whose pensions are based not on their public salaries but, instead, on what they were paid by labor unions, lobbying groups and other non-governmental organizations.

The practice goes back to at least 1957, when Illinois legislators passed a law allowing employees of the Illinois Municipal League -- a non-governmental agency that lobbies Illinois lawmakers on behalf of suburbs and cities -- to be part of the state's generous pension plan. Other laws expanded the practice.

Among those who've benefitted:

• Reginald L. Weaver, a former elementary school teacher in Harvey, gets a yearly state pension of $226,485 based on his salary as president of the National Education Association in Washington, D.C. He began collecting his state pension in August 2008, a dozen years after he took a leave of absence from the Harvey schools to become a labor leader.

Weaver, 70, has 44 years of service with the Illinois Teachers' Retirement System, including 12 years with the NEA and the Illinois Education Association, two labor groups representing teachers. Weaver contributed about $200,000 toward his state pension, state records show, while the unions contributed about $492,000.

"It's unfortunate that people focus on a pension rather than why kids in urban areas aren't receiving the education they should," Weaver said. "Those are the kinds of things I wish people would focus on.''

• Kenneth Alderson gets a state pension of $175,479 based on his pay as executive director of the Illinois Municipal League. Alderson, a onetime state employee, spent 36 years with the lobby group. Before he retired in January 2008, the league gave Alderson several raises that helped him get one of the biggest pensions from the Illinois Municipal Retirement League, the state pension plan for local governments.

Alderson contributed $148,678 toward his state pension -- he has already recovered all of the money he invested -- while the Illinois Municipal League contributed $1.7 million toward his pension, according to Louis Kosiba, the retirement plan's executive director. While Alderson gets to benefit from being in a government pension plan, his pension won't cost taxpayers any money, Kosiba said.

• James J. McNally, another former steamroller operator for the City of Chicago, gets an annual city pension of $114,935 based on the salary he made as business agent for Local 150 of the International Union of Operating Engineers. His pension is twice his final city salary as a foreman of steamroller operators.

McNally, 53, started working for the city when he was 18. As a city employee, McNally was a member of Local 150. He went to work for the union in 1995 as its business manager, helping negotiate contracts with government agencies, according to the union's Web site.

Credited for union service
While McNally worked for the union, he remained in the city pension plan, getting credit for his years of service with the union. He had 34 years of combined service with the city and the union -- enough for a maximum pension -- when he decided to retire in March 2008 so he could collect his city pension. Shortly after he retired, McNally was appointed vice president of Local 150.

McNally contributed nearly $271,000 toward his pension. So far, he has collected more than $160,000.

"I really don't know how I found out about this," McNally said of the pension law he took advantage of. "I had to pay the city's portion, as well as my own portion. It was a financial hardship on me. I guess good things come to those who wait."

Gannon's pension deal is just like McNally's. Gannon was 19 when he started driving a steamroller for Chicago's Department of Streets and Sanitation in 1973. He'd moved up to foreman, making $55,700 a year, when he took a leave of absence in 1994 to go to work for Local 150 as business agent. Gannon never returned to the city payroll -- but he remained in the city pension system, piling up credits for his union service. He joined the Chicago Federation of Labor in 1995, while continuing to amass credits toward his city pension.

Since retiring Jan. 31, 2004, under one of Daley's early-retirement programs, Gannon has collected about $800,000 from his pension. Gannon had contributed $403,175 toward his pension, including an unspecified amount the Chicago Federation of Labor was required to pay on Gannon's behalf.

"I worked for the city since 1973," Gannon said. "I got no free meal ticket here."