WISH-TV 8 | Indiana pensions: A state secret
Updated: Wednesday, 16 Nov 2011, 9:03 AM EST
Published : Tuesday, 15 Nov 2011, 11:00 PM EST
INDIANAPOLIS (WISH) – During the last fiscal year, Indiana’s public retirement system paid out more than $2.3 billion in benefits to nearly 120,000 Hoosiers. But, after months of investigation, I-Team 8 found out some could be taking home much bigger payouts than many of us could imagine.
With so much money in play, and the health of our system at risk, 24-Hour News 8 spent more than two months working to find out who’s cashing in. The results of that investigation showed huge estimated public pension payouts in states across the country going to everyone from university administrators and professors to state hospital administrators, legislators, judges, prosecutors and public officials.
In neighboring Illinois alone, a recent investigation by the Better Government Association (BGA) and Chicago based Taxpayers United of America (TUA) shows more than 10 percent of retired politicians have already collected over $1 million in pension payments each. TUA says it uncovered government records showing 5,294 government retirees in Illinois who currently receive annual pension payments of over $100,000.
After exposing serious concerns about a shortfall of nearly $14 billion in the funds used to pay for the retirements of public workers in Indiana, I-Team 8 wanted to see if some Hoosier retirees receiving similar pension payments here too. So, we spent months working sources and combing through documents to find out.
Almost immediately, we hit a legal roadblock.
A VEIL OF SECRECY
“We are only allowed to give information regarding a person’s name and their years of service in the fund. Anything else is prohibited by law for us to release,” replied Jeff Hutson, Communications Director for the Indiana Public Retirement System (INPRS) to I Team 8’s request for documents outlining pension payments to public employees and officials in Indiana.
“We’re prevented from providing specific information with—say–a specific individual’s name. Our job is to follow the law,” Hutson said.
That law is House Enrolled Act 1285, passed by the Indiana General Assembly and signed by former Governor Joe Kernan (D) in 2004. At the time, Kernan said the measure would help protect public employees from having their private information used by criminals. But, it also left taxpayers with no way of tracking billions of dollars in benefits paid out from the state’s publicly funded retirement system every year.
“The law currently makes so much of the information secret that it’s virtually pointless to look at,” said Dr. Tony Fargo, Indiana University Associate Professor of Journalism, who teaches a continuing legal education course at the Indiana Statehouse for legislators, legislative employees and state agency attorneys.
Asked by 24-Hour News 8’s Troy Kehoe if that veil of secrecy surrounding pension payments was troubling, Fargo quickly nodded.
“It does,” he said. “From a public access standpoint, anything that involves the use of public money and the word secret is problematic. It does send a clear message that they don’t believe we deserve to know this type of information. And, I don’t think–from a public policy standpoint–that’s a compelling argument. At a time when the public polls are telling us that people’s trust of public institutions is at an all time low, this is probably not a good message to be sending.”
I Team 8 traveled to Chicago to find out just how common that type of policy is in other states.
“That depends where you’re looking,” said Jim Tobin, a former economics professor and founder of Chicago based Taxpayers United of America, one of the nation’s largest taxpayer advocacy groups. “I can tell you that can get that information real fast in Illinois, but not in Indiana. We started [looking up information on public pension payouts] in Illinois, and we found out that the highest pension was $414,470 a year. And it goes up three percent a year.”
But, as Tobin and his research team from the non-profit Family Taxpayers Foundation began digging into pension data from other Midwest states, they found reliable information much harder to come by.
“Indiana’s been the most difficult state so far to gather pension information. They won’t give us the pensions at all,” Tobin said.
And, Indiana’s not the only state keeping pension payout information confidential.
According to a recent survey by the National Association of State Retirement Administrators (NASRA), at least 16 other states deny public access to pension data altogether, and as many as five more only release limited data on payouts. In total, I Team 8 found billions of dollars in public pension funding being distributed in states across the country without any oversight by the taxpayers footing the bill.
But, that hasn’t stopped TUA and other taxpayer reform groups from estimating what payouts might be in states that limit access to pension information.
CALCULATING POTENTIAL PAYMENTS
Using publicly available data showing employees’ current salaries and at least 30 years of
public service at retirement (assumed to be age 55), Tobin’s researchers calculated potential annual and lifetime payouts. Their estimates do not include employee contributions or changes in value due to market fluctuations, and assume a 1.5 percent cost of living adjustment per year. It’s not an exact science, but Tobin says it can give taxpayers an idea of where at least some of their money might eventually go.
In Wisconsin, for example, Tobin says his researchers estimate at least 100 current public employees could receive total pension payouts of at least $3 million each over a typical 30-year retirement. In Missouri, Tobin estimated one public employee could get even more.
“His estimated total lifetime pension payout will be $4,742,391,” Tobin said. “And it’s estimated because they won’t give us the pensions in Missouri.”
In Indiana, I Team 8 was able to acquire data from the state showing pension payment averages.
In order to qualify for most pension benefits in Indiana, a member must complete at least 10 years of service. In some positions, that service requirement is as high as 15 years.
According to INPRS actuarial reports, the average public pensioner in Indiana only gets about $24,000 per year, though most take home far less. The average retired public school teacher in Indiana gets a $17,292 annual pension. Those enrolled in the Public Employee Retirement Fund (PERF)—from city and county workers to university professors and state employees–get an average of $7,470 per year. And retired legislators receive an average of $6,846 per year.
That average is boosted by police officers, prosecutors and firefighters, who receive an average of between $21,000 and $24,000 and retired judges, who receive an average of $66,180 in annual pension benefits, according to data supplied by INPRS.
But, our requests for data on individual pension payouts were again denied.
So, I Team 8 asked Taxpayers United of America and the Family Taxpayer Foundation to estimate what pension payments might be for current public employees in Indiana, as well. Both groups said privacy laws here made that a trickier task than in other states.
But, they were able to estimate what some of Indiana’s most highly paid current employees might get when they retire. Like many other states, most at the top of the list are employees of the state’s public universities.
TUA estimates Indiana University basketball coach Tom Crean’s current $600,000 annual salary could result in a $198,000 annual pension, if Crean were to continue working for the state for 30 total years before he retired. If that were to happen, Tobin estimates more than $7.4 million would be paid out over a 30 year retirement, including a two percent cost of living adjustment per year.
Also among the top five on Tobin’s estimated list are the current presidents of Purdue University, Indiana University and Ball State University, as well as the athletic director at Indiana University. If each worked for the state for 30 years and retired at the age of 55 at their current salary, Tobin estimates each would receive an annual payout between $117,612 and $148,500 when they retired, in addition to a single lump sum payout of between $302,940 and $382,500.
Using the same assumptions of service and salary, TUA also estimates at least five Indiana state hospital administrators could receive annual pensions of between $63,545 and $80,384 upon their retirement.
Because of Indiana’s law regarding pension privacy, TUA says it can’t accurately estimate the pensions of other former highly paid state, county or municipal employees who have already retired.
While not all on TUA’s list of estimations will likely put in 30 years of service to the state—thus reducing their estimated annual payouts, in some cases, drastically—Tobin says the figures are designed to illustrate a point.
“If we don’t reform the pensions, there’s going to be a collapse in the system. And, this is why they don’t want us to see the pensions. This is why they don’t make them available,” he said.
Even more concerning, Tobin said, is the practice of what’s become known as “double dipping”–a legal loophole where retired public employees can be re-hired in a new position, allowing them to collect both a pension and a salary at the same time.
According to state records obtained by I Team 8, at least 190 elected officials in state, county and municipal governments are double dipping in Indiana every year, receiving an average of nearly $13,000 in retirement benefits each.
None are actually retired.
But, because of the state’s privacy law, who they are remains a mystery.
Asked what that suggested to him, Tobin shrugged his shoulders.
“It suggests to me they’re trying to hide something,” he said.
I Team 8 took those questions over confidentiality to the latest meeting of the General Assembly’s newly formed Pension Management Oversight Commission (PMOC). Most lawmakers we spoke with there said the state’s confidentiality
law regarding pension payment information is there for a reason.
“There is a lot that does deserve to be private,” said Rep. David Niezgodski (D-South Bend). “I don’t have a problem with people knowing what is put into someone’s account or what percentage of their pay might be matched by the employer. I don’t necessarily know that, for every single employee, that you should be able to say this person has that many dollars in his or her retirement account. Sometimes those things can be used inappropriately, and I think to some degree, you have to protect the integrity of the individual.”
“I’m not sure it’s privacy as much as it’s the disclosure and the means by which government pensions operate by different accounting rules than private pensions,” said Sen. Greg Walker (R-Columbus), who chairs the PMOC committee. “In terms of private balances, I’m not sure that is acceptable information. But, I will say that any contributions going to any elected official or public employee in any sense, I think that information should have full disclosure.”
Another PMOC member is now working to make that happen. In each of the last 3 years, Hendricks County Rep. Jeff Thompson (R-Lizton) has filed legislation at the Statehouse that would lend additional transparency to pension payouts.
“From my point of view, we [should] do the taxpayer portion. That should be public. What did the public put in? They have a right to know for that part,” Thompson said.
When asked if the state is trying to hide something by legislating confidentiality over pension payments, as Tobin asserts, Thompson shook his head.
“In my view, not,” he said. “But, I still believe the portion that taxpayers fund should be made public. The way the bill is drafted, the gain or loss in investment due to market change will not be public. Any rollover amount under the current plan will not be public. So, really it’s just the taxpayer dollars we’re going to talk about reporting. Taxpayers [have a right to know that].”
TRACKING THE SYSTEM
In states where that information is public, taxpayers have been able to track some high profile pension payments in recent weeks, like those going to former Penn State Coach Jerry Sandusky. According to pension documents obtained by The Patriot News in Harrisburg , Pennsylvania, Sandusky continues to collect an annual state pension, in addition to a lump sum payment that was paid out when he retired as a full time coach in 1999. Charges that Sandusky sexually abused eight young boys are unlikely to stop those checks, though any potential felony conviction could result in forced forfeiture future pension payments, the newspaper reported.
Requests for documents pertaining to pension payments for former Penn State head coach Joe Paterno have not been released yet, the newspaper reported.
Forfeiture of state pension funding is also likely for former Illinois Governor Rod Blagojevich, who was convicted on federal corruption charges earlier this year. The Associated Press reports, Illinois officials said in October that they plan to deny Blagojevich’s $65,000-a-year pension, just as they did to his predecessor, former Gov. George Ryan, who also was convicted of corruption.
But Blagojevich would be due a refund of more than $129,000 he paid into the fund as a state legislator and later governor. And he’s entitled in the future to at least $13,000 annually from his six-year stint in Congress.
In Indiana, similar records of state related pension payments from both cases would be confidential.
Thompson says he believes that should change, but his efforts to do so have not been met with action by the legislature. Each of the bills he filed never received a hearing in the House Rules Committee.
Asked why he thinks the measure has stalled out, Thompson thought for a moment.
“Well, my take is, about a decade ago, there was some reports made public about the amount in someone’s pension fund. And, there’s still some soreness over that,” he said.
Some aren’t convinced that’s the real reason. They say it’s because lawmakers are the ones who benefit from hiding the information over payouts.
A RIGHT TO KNOW?
“There really isn’t any good reason to keep this information secret,” said Julia Vaughn, Policy Director for Common Cause Indiana. “It’s not a private company. This is our government. This is the State of Indiana. This is the citizens funding these pensions. We have a right to know.”
Vaughn says she’s concerned that the law was passed so quickly, with what she says was little input from the public.
“The General Assembly, when they want to, can be extremely swift to act and can do so without the public being able to find out what’s going on. And, I think that’s what happened. They knew that this was something the public wouldn’t support, and it would be unpopular, and there’s really no good reason to do it. So, [they said] let’s rush it through and do it behind closed doors.
Vaughn says Common Cause and other grassroots groups will be working
to back Thompson’s proposal in the upcoming legislative session. She believes added pressure could force the legislature to act.
“It’s difficult in the General Assembly to be a maverick–to go against the grain, to do something the leadership doesn’t want done. And, you have to believe that’s what’s happening to efforts like Rep. Thompson’s. If there is a big enough outcry from the grassroots, from people all across the state, this could be changed,” she said.
Thompson, for his part, isn’t quite sure what form that push will take. But, he remains committed to the cause.
“I’m an optimist,” he said. “It may not happen in this session. It may be in 2016. It may be somebody else doing it. But, I think someday it will change.”
I Team 8 took the results of our investigation to Governor Mitch Daniels (R) to ask if he would support a change to the law.
“I’m very open to idea,” he responded in a statement. “We always must be careful to strive for a balance between personal privacy and public transparency, but we generally tilt toward transparency. We’d give it a close look.”
In response to I Team 8’s investigation, INPRS also agreed Tuesday to release data on average payouts. According to those documents, fewer than one percent of all current public retirees receive annual pension payments in excess of $36,000, and no current INPRS recipients receive annual defined benefit payments (funded solely by taxpayers) in excess of $100,000. Still, state data shows at least five current INPRS retirees do get more than $100,000 in annual payments through a combination of pension and annuity savings accounts (paid in part by the recipient) or personal retirement accounts.
However, unless Indiana’s privacy law is changed, who they are will remain a mystery.