Park district pension ploy pays off handsomely

Park executives in Highland Park collected huge salaries, bonuses — even a free SUV — during height of recession

Tuesday, August 03, 2010

As the economy was taking a historic nosedive, parks officials in Highland Park were paying three of their executives far more — $435,203 in one case — than anyone in similar posts across the suburbs, the Tribune has found.

Parks officials in the northern suburb say it was a good use of taxpayer dollars, even though the off-the-charts spending spree included giving the three executives nearly $700,000 in bonuses while paying one of them $185,120 for no work and signing over an SUV to him as he left town.

The Park District acknowledges it did so, in part, to pad the executives' pensions, a practice pension officials say is wrong. The district's 58-year-old former executive director is now paid more in retirement — $166,000 a year — than he was typically paid to run the agency.

Board president Lorry Werhane says he doesn't regret the payments, but the district has stopped giving out new bonuses and is hiring an outside firm to review compensation policies because of the sluggish economy.

"We were doing what was in the best interests of the Park District, and that is rewarding employees for a job well done, and continuing to recruit and attract and retain employees of the highest caliber," Werhane said.

Records obtained under the state Freedom of Information Act show an already high-paying Park District taking compensation to the extreme.

When two executives announced in 2007 that their retirements were looming, the board dramatically boosted their pay, saying the raises were needed to induce them to stay and groom replacements, while rewarding them for a job well done.

Yet, the deal didn't go as planned, as one manager left before he was to take over the executive director post. That didn't stop the district from paying him for another 17 months on his six-figure contract and giving him the keys to a 1-year-old 2007 Ford Explorer.

The Park District of Highland Park is one of the state's biggest, with a budget of $20 million and about 75 full-time employees who run a golf course, recreation facility, ice rink, public beaches, hundreds of acres of parks and an aquatic facility.

It also sits in one of the state's wealthiest enclaves, with a pay scale that has long reflected that.

In 2005, Park District executive director Ralph Volpe, finance director Kenneth Swan and facilities director David Harris were paid $138,733, $124,908, and $135,403, respectively. That was about as much as the head of Illinois' park system, who presided over a budget 14 times larger and had 17 times the number of employees as Highland Park.

Then came the raises and bonuses that sent district pay soaring.

By 2008, Volpe was paid $435,203, Harris $339,302 and Swan $218,372.

That same year, as the recession deepened, commissioners backed off pushing a $32 million tax hike to fix the district's beachfront.

Meanwhile, they were paying out individual bonuses as high as $86,500.

It started Jan. 1, 2007, when the district penned new contracts with Volpe, Swan and Harris.

The executive director and finance director planned to retire in the coming years, and commissioners wanted Harris to take over the district in January 2009, according to Werhane and public documents.

Werhane said Volpe and Swan's contracts were intended to "provide them with a good pension for what they had accomplished for the community."

Volpe landed $270,999 in bonuses for 2008, and Swan had a five-year deal that included about $75,000 in bonuses each year. These came on top of further increases to their six-figure salaries.

Harris' big payday came when he left in August 2008, about four months before he was slated to take over Volpe's position.

Because he resigned, Harris didn't have to be paid the $185,120 left on the three-year deal. But the district paid him anyway, and it gave him the SUV, which was not mentioned in his contract. As a result, Harris received $339,302 — not including the value of the SUV — for eight months of work in 2008.

The district rejected the Tribune's request to view Harris' separation agreement, a move being reviewed by the Illinois attorney general's public access counselor. Separation agreements are typically open to the public.

The district provided a resignation letter from Harris in which he thanked commissioners for his 20 years on the job, but stated he left to pursue other employment opportunities.

Harris accepted an executive director position a year later at the much smaller Butterfield Park District covering unincorporated areas near Glen Ellyn and Lombard, and paying about $65,000 a year.

After Harris' departure, commissioners paid a firm $21,014 to find someone to replace Volpe and extended the executive director's contract 90 days, paying him an additional $73,969.

The Park District in spring 2009 hired Liza McElroy, then-director of the nearby Winnetka Park District, to replace Volpe. She is paid $151,098.

Volpe, Harris and Swan declined to comment when reached by the Tribune.

No other park executive in the Chicago suburbs makes nearly as much as they did, according to a review of salary records by the Tribune.

Volpe's 2008 compensation exceeded the next highest salary for a suburban park district executive director in each of the last five years by about $165,000, or 62 percent, according to compensation records.

Swan's 2009 compensation exceeded the next highest paid park district finance director in the suburbs by about $100,000 that year.

Werhane said Volpe, Harris and Swan were largely responsible for a booming district and that they deserved to be paid for their good work.

"We have always thought that the board has acted in the best interests of the district," he said.

The district has certainly grown.

Between 2000 and 2010 it doubled its property taxes from nearly $5 million to more than $10 million. The district added a recreation center, and the number of programs jumped 29 percent from 2006 to 2008. The number of people served rose 40 percent in the first eight years of the decade, according to data provided by McElroy.

Werhane credits Volpe with spearheading the district's efforts to rebuild its beachfront, working with community input and with outside firms to devise plans. The project is still being pursued piecemeal after a referendum seeking to raise taxes for it failed in 2008.

Meanwhile, the commissioners' goal of creating large pensions benefitted Volpe, who rose from a district intern in 1977 to executive director in 2001.

Volpe's $166,332 annual pension would likely have been about $110,000 if his salary had increased 4 percent a year in his last 4 years on the job, according to pension formulas.

Asked about the district's move, a spokeswoman for the Illinois Municipal Retirement Fund said the practice will cost the agency in the long run because huge pay hikes are not accounted for in annual contribution requirements meant to spread the tab over many years.

"Pension spiking is wrong because it is in direct opposition to good actuarial practice," said Linda Horrell.

In Swan's case, if he had retired last year fully vested in the system his pension would have been about $148,000. Without the bonuses and just a 4 percent raise over the last 4 years, his pension would have been about $107,000, using pension system calculations.

An employee since 1994, the 55-year-old remains the finance director with one year left on his contract.

The pensions are funded by local taxes, district fees, employee contributions and investment profits from that money. Last year, the district had 118 employees in the Illinois Municipal Retirement Fund and had to make pension contributions of $645,996.

Told of the high spending at the district, those who frequent the suburb's public golf course and recreation facility expressed a range of reactions on a recent weekday afternoon.

Some didn't care. Several jaws dropped.

"It is lousy," said Mel Sered, a Deerfield resident.

Highland Park resident Lynn Darin said the figures concerned her, but she is used to hearing stories of public employees landing huge pay raises. Darin said the district delivers good value for her tax dollar.

"I think they do a fine job here," she said.