Highland Park News

Park Board's largesse leaves taxpayers on hook

Wednesday, August 11, 2010

Highland Park property taxpayers will be paying for a good chunk of the multimillion-dollar pension payouts resulting from the Park District Board's generosity in rewarding top executives with bonuses after they announced retirement.

Ralph Volpe, who retired as executive director at age 57 in 2009, saw his compensation soar from $138,734 to $435,204 during the four years that were used to determine his pension benefits.

During 2008, his last full year of employment, he received more than $285,000 in compensation characterized as merit pay and bonuses in addition to his base salary of $149,551.

According to published reports, Volpe is receiving an annual pension from the Illinois Municipal Retirement Fund of $166,332, an amount that will rise by nearly $5,000 each year with guaranteed 3 percent pay raises. Retirees also receive a partial 13th check each July in addition to their 12 normal payments.

Cost implications

Had Volpe received only 4 percent raises during the four years before retirement, his lifetime pension benefits might have predictably ranged from $2.7 to $3.9 million.

While park officials have said they believed they acted in the best interests of the community, Board President Lorry Werhane has issued an apology to the community.

"It is our hope that this does not overshadow the outstanding work of our staff or undermine the ongoing support of the people of Highland Park," said Werhane in an open letter posted on the district's website. "We want to become a model for handling compensation the right way and have already begun to make changes."

Like all IMRF recipients, Volpe also is eligible for Social Security when he is age-eligible and elects to begin drawing those benefits. Retirement income is not taxed in the state of Illinois.

Two other top park officials also received large pay packages. In 2008, deputy executive director Dave Harris, who has since left the district, received payments of more than $200,000 in addition to his base salary of $130,300.

The pay of finance director Ken Swan jumped from about $125,000 in 2005 to more than $218,000 in 2008.

Separate accounts

Unlike the statewide pension system for suburban and downstate school teachers and administrators, the Illinois Municipal Retirement System keeps separate accounts for each local employer and pension payouts are drawn from the local employer's account. The money from 2,900 employer accounts is pooled for investment purposes.

"When an IMRF employer provides large, late-career pay increases, that employer is impacted by that increase," said Linda Horrell, communications manager for IMRF. "Defined benefit pensions, like IMRF, are designed to be pre-funded and the money needed to pay a member's lifetime benefits should be available at retirement."

Horrell said the actuaries assume certain salary increases when calculating an employer's contribution rate.

"When an employer's salary increases greatly exceed the assumed salary increases, it throws the equation out of balance," Horell said.

Horrell said the pension fund for the Park District of Highland Park is currently 63 percent funded.

Hefty school pensions

Several former Highland Park school administrators also are drawing annual pensions of more than $160,000. Former North Shore District 112 Superintendent Maureen Hager pulled $231,700 in retirement pay during the 2009-2010 year and is among the highest-paid pensioners in the Teachers' Retirement System.

Others earning hefty retirement paychecks include Linda Hanson, former superintendent of Highland Park Township District 113, who pulled nearly $190,000, and Joanne Desmond, a former North Shore 112 superintendent whose pension was $176,000 last year. While local taxpayers picked up the bulk of their paychecks while they were working, once they retire, their benefits are paid from a statewide fund financed by state contributions, employee contributions and investment earnings.