Stopping union boss pension abuses: Can the legislature defend needed reforms?

by Jacob Huebert In its November veto session, the Illinois General Assembly failed to pass the comprehensive pension reform that Illinois needs to avoid fiscal disaster. But at least it took one step in the right direction: It voted to repeal provisions of state law that allowed a few privileged individuals to receive large public pensions for the years they spent...

by Jacob Huebert

In its November veto session, the Illinois General Assembly failed to pass the comprehensive pension reform that Illinois needs to avoid fiscal disaster. But at least it took one step in the right direction: It voted to repeal provisions of state law that allowed a few privileged individuals to receive large public pensions for the years they spent working for private unions.

Now – after that bill passed with nearly unanimous bipartisan support – some House Democrats are trying to undo even this small victory for taxpayers and ordinary government workers.

As the Chicago Tribune revealed earlier this year, Illinois law has allowed some Chicago city employees and teachers’ union officials to receive credit in public pension plans for years spent on “leaves of absence” working for private labor unions. Many who took such a “leave” actually had no intention of returning to work full time for the city or public schools. Instead, they used gimmicks, such as substitute teaching for just one day, which allowed them to receive huge public pension benefits that were based on their high union salaries rather than their lower city salaries. For example, in 2010, Liberato “Al” Naimoli, president of Cement Workers Local 76, “retired” from a $15,000-a-year city job that he hadn’t actually worked at in nearly 25 years.  Now he receives not only his union salary but also a city pension that pays him about $158,000 a year – about five times the average city worker’s benefits.

Even worse, pension fund administrators interpreted the old law in a way that allowed union bosses to “double dip,” receiving credit in both public and union pension funds for the same years of work.  For example, when Mr. Naimoli retires from his union job, he’ll keep receiving his annual six-figure city pension paycheck, and he’ll also receive a pension from Laborers’ Pension Fund for Chicago and Vicinity.

If Gov. Quinn signs the recently passed bill, it will put an end to these unlawful benefits. From now on, public employees who go on leave to work for a union won’t get public pension credits.

The bill also clarifies what objective legal scholars already knew: that double dipping is not and never was permissible. And it clarifies that the city employees’ pension benefits should be – and always should have been – calculated on their city salaries, not their union salaries. This means that union bosses who have been improperly receiving taxpayer-funded pensions would see their benefits reduced or eliminated, effective immediately.

It is about these last two clarifications that some legislators are now having second thoughts.  They want people who have already begun their leaves of absence to still be able get the inflated benefits the old laws allow.  These legislators claim that – by confounding the expectations of a few people who were planning to receive inflated benefits – the recently passed bill may “run afoul of the state’s constitution.”

In fact, however, the Illinois Constitution comes down on the other side of this issue.  It requires that all public funds be spent on a public purpose and that all laws serve the general interest. Because the old law used taxpayer money to fund the pension expenses of private organizations, that law was unconstitutional and therefore invalid from the beginning.

If the governor signs the original bill, two scenarios could play out:

• If fund administrators adjust pensions as the law requires, it won’t be surprising if union bosses sue to preserve their high incomes. Then it would be up to the government to defend the new law in court.

• If pension fund administrators don’t reduce benefits, taxpayers and ordinary city workers may have to go to court to insist that the law be followed.

The courts should uphold the new law as not merely permissible but obligatory in light of the Illinois Constitution’s prohibition on spending that serves narrow private interests rather than the public interest.

Meanwhile, let’s hope that the majority of legislators can have the backbone not only to stand behind their original legislation but also to pass comprehensive pension reform when they return to Springfield in the new year.  Their obligation to the Illinois Constitution and to the taxpayers demands no less.