Madison Record|Two SIU retirees among top 400 pensioners in the state, report says

Taxpayers United of America’s Executive Director, Jared Labell,was quoted by Madison Record about the recent release of TUA’s 10th Annual Report of Illinois State Pensions.

Two Edwardsville pensioners, whose combined annual pension is almost $476,000, made the top 400 in Tax Payers United of America‘s 10th Annual Report of Illinois State Pensions.
More than 15,000 state pensioners in Illinois each collect more than $100,000 a year while more than 92,000 annually collect more than $50,000, according to the report issued June 23.
“Nearly 75 percent of these top government pensioners are collecting more than $200,000 a year in taxpayer-funded pensions,” Taxpayers United of America Executive Director Jared Labell said in the press release that announced the report. “These government pensions accumulate to multi-million dollar payouts over a natural lifetime, and for many government retirees, they will collect more than their total contributions to their pension fund while employed within two years of retirement.”
Taxpayers United of America is a Chicago-based tax watchdog group that was founded 40 years ago this month.
The report analyzes data from Illinois’ General Assembly Retirement System (GARS), Judges’ Retirement System (JRS), Teachers’ Retirement System (TRS), State Universities Retirement System (SURS), State Employees’ Retirement System (SERS) and the Illinois Municipal Retirement Fund (IMRF).
Taxpayers United of America is not the only group pointing to pensions as a contributing factor in the state’s present financial crisis. Southern Illinois University Paul Simon Public Policy Institute Director David Yepsen told the Madison – St. Clair Record earlier this month he predicted it taking several years of bringing pension deficits into balance.
There also has been an analysis of how much taxpayers in Madison County would have to pay if they were to fund existing pension debt. Tax bills would at least double, that analysis showed.
The Taxpayers United of America report lists actual pension amounts, particularly those paid to the top 400 pensioners in the state.
Labell said that it is difficult to break all those figures down by county and determine how much Madison County taxpayers contribute toward the pensions of those 400 and more.
“Unfortunately, the six pension funds (five state funds, plus IMRF) did not provide sufficient data to accurately breakdown all of the pensioners by county,” Labell said. “However, our research shows that there are about 300 government retirees in the Madison and St. Clair area collecting pensions of at least $100,000 annually. While those are staggering numbers, the six-figure threshold isn’t enough to be included on our list of Top 400 pensions. Nearly our entire list contains pensions in excess of $200,000.”
Among those 400 are David Werner and Morris Cooper, both retired from Southern Illinois University in Edwardsville, who are No. 76 and 156 respectively on that list and who draw their pensions via the State Universities Retirement System.
Werner, chancellor of Southern Illinois University from 1998 to 2004, receives an annual pension of $252,704, more than the $246,018 he contributed to the fund, according to the report. Cooper, who remains professor emeritus in the University’s Medical Microbiology, Immunology and Cell Biology department, receives an annual pension of $223,187, slightly less than the $226,656 he contributed to the fund, according to the report.
“Nearly 90 cents of every income tax dollar sent to Springfield during the 2011-2015 67 percent income tax hike went to funding the state pensions,” Labell said. “So taxpayers in the Madison County area are losing out with the rest of the state.
Taxpayers United of America also suggests some solutions in the report, including short-term and long-term policy changes.
“Firstly, the defined benefit pension system is always a financial risk, so defined contribution 401(k)-style plans are preferable, and new hires should be transitioned immediately,” Labell said. “Current employees should also be allowed to transition to these new plans. Decreased cost-of-living-adjustments are necessary, as well as increased retirement ages and contribution totals to their own government pensions.”
Long-term solutions must include amending or repealing the pension-protection clause, Article XIII, Section 5, of the Illinois Constitution to make substantive changes to the government pensions in the state, Labell said.
“Allowing municipalities, school districts, and other taxing districts to reorganize through Chapter 9 bankruptcy is another option to protect taxpayers and restructure unfunded liabilities,” he said. “Federal legislation to expand the US bankruptcy code would preempt state level prohibitions to making necessary reforms and override the Illinois Constitution’s pension-protection clause. This is the most difficult but systemic reform of Illinois’ unfunded government liabilities.”

Chicago Tribune|Retiring Arlington Heights park district director gets salary spike in final years of service

Jared Labell, Executive Director of Taxpayers United of America, was quoted on the recent release of 10th annual Illinois State Pensions Report by Chicago Tribune.

As the Arlington Heights Park District’s executive director retires this week, about $85,000 worth of unused sick and vacation days he had accumulated since his hiring in 2008 have led to a significant salary spike during his final years of service, according to public records obtained from the park district by the Arlington Heights Post.
Retiring executive director Steve Scholten, 62, whose last day on the job is this week, was paid $182,533 in 2014, with his salary rising $32,516 – almost 18 percent – to $215,049 in 2015, officials said.
Scholten also received a six percent raise on Jan. 1, just months after he had alerted the park district’s board of commissioners that he would be retiring on June 30, but officials said most of the recent salary increase can be attributed to the park district paying out on Scholten’s unused sick and vacation days.
As of December 2015, Scholten was paid out half of his vacation and sick time, which was included in his $215,049 wages, said Donna L. Wilson, the park district’s director of finance and personnel.
“Once an employee announces they are retiring, we start paying out right away, so there’s not such a huge hit at the end,” Wilson said.
Since his hiring in 2008, Scholten had accumulated unused vacation days adding up to about $57,000, and unused sick days adding up to about $28,000, Wilson said.
While belt-tightening measures by the park board in 2012 eliminated the policy of allowing employees to be paid for unused sick days for those hired after 2007, Wilson said Scholten had an exception in his contract that allowed him to be exempt from the new provision.
Officials said that the park district’s new executive director, Rick Hanetho, who previously served as executive director of the Northbrook Park District, will have a base salary of $185,000, plus a $625 monthly car allowance, but has no payout provision in his contract for any unused sick days.
Prior to 2012, the park district paid half of an employee’s accumulated sick days up to 90 days, or a maximum of 45 days, Wilson said.
Scholten will have received all of his unused sick leave pay by Thursday, Wilson said.
Scholten’s monthly pension, which will be administered by the Illinois Municipal Retirement Fund, or IMRF, will be roughly 75 percent of the average of his highest annual salary earned over four consecutive years, IMRF spokesman John Krupa said.
In Scholten’s case, since he was employed by several local park districts during his 40 years in parks and recreation prior to being hired in Arlington Heights, including Elk Grove, Medinah, Glen Ellyn and Bloomingdale, Krupa said in addition to Scholten’s employee contributions, the remainder of his pension will be paid by each of the municipalities where he worked.
“It’s shared, and each park district’s liability is proportional to the amount of service credit earned,” Krupa said.
Krupa said it’s neither illegal nor unusual for public employees to “accrue a lot of sick and vacation days, and have a lump sum payment near the end of their employment.”
Indeed, Krupa said IMRF pensions are not contributing to the state’s budget crisis, adding, “IMRF is the best-funded pension system … it’s 87 percent funded.”
“These pensions are not funded by the state of Illinois, and most employers levy a tax for their employees’ IMRF-managed pensions,” said Krupa, adding that while IMRF does administer pensions for retiring executives like Scholten, most of the retirees were earning modest salaries.
“These are blue collar public servants who are not making executive salaries,” Krupa said.
Nonetheless, officials with the Chicago-based nonprofit Taxpayers United of America warned that when public service administrators reap sharp upticks in their wages shortly before retirement, local taxpayers end up picking up the tab for what the organization refers to as “pension spiking.”
“For many retirees in the private sector, they are looking at getting only a Social Security pension of about $15,000 a year,” TUA’s executive director Jared Labell said. “That pales in comparison to these public pensions, especially when you’re facing retirement on a fixed income, and you might not be able to stay in your home, because you can’t afford to pay your property taxes any longer.”
This week, the TUA released the results of its 10th annual Illinois State Pensions Report, which analyzed the IMRF, as well as several other retirement systems, including the Teachers’ Retirement System (TRS) and State Employees’ Retirement System (SERS).
According to the TUA report, the top 400 Illinois pensioners of 2016 will collectively receive $91.5 million in pension payouts this year alone.
“When you look at these huge public pensions, and you look at how much the employee has contributed, the system is lopsided, and it’s left to the local taxpayers to pay the bills,” Labell said.