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Latest News - January 2012

January 5, 2012
Quinn signs public pension overhaul
Source: Chicago Tribune
By: Ray Long and Jason Grotto

SPRINGFIELD — Gov. Pat Quinn today signed into law a major crackdown on lucrative public pension abuses that saw top union officials land hefty retirement packages, double dip and substitute teach for one day but win benefits for life.

"The pension abuses unearthed were flagrant. They needed to be stopped immediately and prevented from ever happening in the future," Quinn said in a statement Wednesday. "I'm pleased that the Legislature voted overwhelmingly to address this issue. We look forward to working together in 2012 to tackle the remaining pension challenges that face Illinois."

The law takes effect immediately.

While the reforms may serve as an antidote to a variety of pension problems that Tribune and WGN-TV investigations disclosed during the last year, they could be challenged in court. Opponents argue it's unconstitutional to scale back retirement benefits already in place.

The Democratic governor's signature also won't address the broader issue of Illinois' overwhelming debt caused by years of underfunding the state pension systems. Quinn has said he'll convene a task force to come up with recommendations on how to stabilize and strengthen the pension system.

Major changes like cutting benefits or raising taxes, however, would be a tough sell to jittery lawmakers facing an angry, recession-weary electorate in a year when every seat in the General Assembly is on the ballot.

The Tribune-WGN series published last year exposed a string of pension maneuvers that benefited insiders, outraged the public and prompted lawmakers to take action.

One key goal of the law, which takes effect immediately, is to end the practice in which some city of Chicago municipal and labor union workers have taken leaves of absence from their city jobs, moved to full-time positions with their unions and then collected pensions from both. That double-dip possibility will be eliminated for current and future union officials.

The reforms also mean some current Chicago-area union leaders will be unable to base their public pensions on hefty union paychecks. Instead, their pensions would be calculated on the city salary they had when they left to work for the union, factored for inflation. Those officials already on the books would be allowed to keep counting their years as union employees to rack up public pension credit. Going forward, however, both current and future city employees who leave city jobs to work full time for unions no longer will be able to count union experience toward their pensions.

The changes address a 1991 state law that resulted in at least 23 retired Chicago union officials standing to receive about $56 million from city pension funds over their lifetimes thanks to tweaks made to a few sentences in the state's pension code. At least eight labor leaders eligible for inflated city pensions also were receiving benefits from union pension funds for the same period.

Liberato "Al" Naimoli is one example. The former Streets and Sanitation worker who last worked for the city a quarter-century ago also received contributions toward two union pensions, even as he made $158,000 a year from the city laborers' fund. His public pension isn't based on the $15,000 a year he made as a city worker. Instead, it's pegged to his roughly $300,000 union salary.

The reforms also take aim at a 2007 law that helped two lobbyists for the Illinois Federation of Teachers get into the Illinois Teachers' Retirement System after substitute teaching in Springfield schools for just one day.

 

 


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