Former Chicago labor boss Dennis Gannon worked almost 20 years for the Department of Streets and Sanitation before taking a leave of absence in 1991. He got a refund of his pension contributions and pivoted to the private sector, first at International Union of Operating Engineers Local 150 and eventually as president of the Chicago Federation of Labor, an umbrella union organization.
But there was a blip on his resumé. During his leave, the city rehired him for 1 day in 1994, then released him again to his union leadership job. Ten years later, he was able to retire at age 50 with a city pension based on his union salary of at least $240,000. He began receiving more than $150,000 a year from a $56,000 city job he had left a decade earlier.
It was an unintended consequence – many would say abuse – of the state’s pension code exposed in a 2011 Tribune/WGN-TV investigation that drew the attention of federal prosecutors. Government employees who left to work for their unions could count that time toward their pensions. But the practice of applying their private sector union salaries toward their pensionable income, instead of calculations based on what they earned as city workers, was not the intention of the pension code. Even labor-friendly Democrats in the Legislature almost unanimously voted to tighten up the law after the journalists’ investigation. In 2012, legislators passed, and then-Gov. Pat Quinn signed into law, a strict prohibition on government workers applying union salaries toward final pension calculations.
Public pension funds are strained as it is. Why should private sector workers, just because they work for unions, be eligible for lofty pensions from a city and taxpayer-subsidized pension fund?
That law ushering in reforms, however, is now in question. The Illinois Supreme Court on Nov. 29 ruled it unconstitutional. A handful of workers for the city of Chicago and Chicago Public Schools who also went on leave to work for their unions had sued. The plaintiffs in the case were Rochelle Carmichael, June Davis, Zeidre Foster, Oscar Hall, Anthony Lopez, Kathleen Mahoney, Joseph Notaro, Michael Senese, David Torres and the unions representing them. The court sided with them.
The justices ruled that even if lawmakers didn’t intend to allow union salaries to be applied toward public pensions, they couldn’t go back and change the rules. The court said the law was “ambiguous on the question of whether the union salary while on leave of absence could be used as a basis for calculating the pension.” And ambiguity entitled the justices to rule liberally that the practice should be constitutionally protected.
That’s an extreme interpretation of the pension protection clause of the Illinois Constitution. The court’s ruling suggests that even pensions gained through an obscurity or loophole or mistake or abuse are protected as long as the workers got away with it.
In another pending lawsuit, an Illinois Federation of Teachers lobbyist who substitute-taught in a Springfield classroom for 1 day became eligible to participate in the Teachers Retirement System. The Legislature tried to fix that loophole too. But we fear the justices, if they eventually rule on the case, will deem the lobbyist’s pension a constitutional right.
Put short: Sub for a day. Pension for life.
In recent years, the justices also upheld as a constitutional right state employees’ access to certain taxpayer-funded health care coverage for life, and unionized workers’ level of benefits from their date of hire until their deaths.
The solution to the state’s multifaceted pension crisis should be crystal clear to taxpayers. The Illinois Supreme Court isn’t going to budge. The pension clause needs to be amended. In a Dec. 2 editorial we urged Chicago Mayor Rahm Emanuel to coalesce state leaders around a constitutional amendment before he leaves office.
Emanuel plans to present a pension solution to the City Council on Dec. 12. The squeeze of retirement costs is strangling Illinois and its taxpayers. We urge him and other state leaders to back that change.