For the Good of Illinois

Cumberland Advisors: More Revealed in Illinois

April 29, 2016 12:43 PM
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More Revealed in Illinois
April 29, 2016
David Kotok
Chairman and Chief Investment Officer
Email | Bio
We are pleased to offer a guest column by Adam Andrzejewski (CEO) with Matthew Tyrmand (Deputy Director) of OpenTheBooks.com. OpenTheBooks.com is the world’s largest private repository of public spending. Recently at Forbes, they covered the Pension Palace’ of Illinois Legislators and the ‘Big Dogs’ of Illinois Municipal Government.

New Tool Maps The Unsustainable Illinois Pension System

This week, our organization OpenTheBooks.com debuted our interactive info mapping platforma new tool that gives taxpayers greater context for how their dollars are spent. We found that 7,499 retired Illinois educators earn pensions of greater than $100,000These retirees cost Illinois taxpayers $900 million annually. Individually, these pension millionaires contributed so little to the system that they, on average, broke even on their cost basis within their first 20 months of retirement.

The Illinois pension problems are legendary, and the new numbers show it’s rapidly getting worse. Consider the following facts:

       7,499 ‘highly compensated,’ six-figure administrator/teacher retirees cost IL taxpayers nearly $1.0 billion per year.

      By 2022, over 20,000 ‘highly compensated’ educators will have annual pensions exceeding $100,000.

       Today, the equivalent of all income taxes paid by 2 million Illinois workers fund the annual 106,388 rank-and-file teacher pension payouts ($5.6 billion). 


In one of the poorest and worst performing school districts in Illinois, Chicago’s south suburban West Harvey-Dixmoor Elementary conferred seven six-figure pensions including former Superintendent Alex Boyd ($17,697/month, $212,364/year). In 2014, Boyd pled guilty to two counts of official misconductfor stealing $78,000 while superintendent, but got to keep his pension. 

In middle-class, suburban Cook County, the Lemont Township High School – a district on Illinois ‘financial review’ – has fifteen former educators retired on six-figure pensions including a former woodshop instructor ($9,929/month, $119,148/year) and a fine arts instructor ($11,898/month; $142,776/year).

Both of these examples are not outliers in our data, but show that pay and pensions have been decoupled from basic educational goals and financial metrics. In 2014 at Forbes, we wrote about
 a pair of union lobbyists who substitute taught for one-day in the public schools and then started collecting over $1 million of lifetime public ‘teacher’ pension payout – despite a state law expressly designed to stop them.

Now, after recent Illinois Supreme Court decisions confirming that pension benefits are constitutionally guaranteed (including the pensions for the pair of union lobbyists above), the ‘highly compensated’ public employee gravy-train is running faster than ever.

 
Click here to locate the 7,499 $100,000+ IL teacher pensions by district and recipient.
 
This system is unsustainable. Illinois only has 6.2 million people employed and more than 800,000 of those jobs are actually government positions. We calculated that it takes the full payment from 330,177 individual Illinois income-taxpayers to fund the nearly $1.0 billion in six-figure pensions for the 7,499 ‘highly compensated’ retirees.

We estimate that by 2017, Illinois income taxpayers will be on the hook for more than 10,000 $100K-plus educator pensions. The number of six-figure pensions increased by 57 percent in just the past two years: 5,930 (2014) and 4,767 (2013). 

 

4,767 (2013) six-figure IL teacher pensions to 20,000 recipients (2022) in 9-years
 
By 2022, at least 20,000 retired IL educators will receive six-figure pensions. Because of a built-in minimum three percent annual cost-of-living pension adjustment, another 9,741 retired annuitants with a current monthly payout of at least $6,900 will all join the $100,000 pension club within six fiscal years.

Locally, school districts are spiking salaries – granting raises near the end of a career to raise guaranteed pensions – which drives costs even higher. Taxpayers are fighting back in creative ways (read our Forbes
 piece on the ‘Shouse/ Tiny house’ movement in Illinois) but systemic abuse persists.

A few notable examples of abuse:

        The Top 100 All-Time pensions: #1 $302,991 (Lawrence Wyllie at Lincoln-Way CHSD) to #100 $200,812 (Michael Radakovic at Aurora East USD 131). See the Top 500 All-Time IL teacher pension list.

       The Top 5 school districts conferring six-figure pensions are Palatine TWP HSD 211, Palatine (449); Township HSD 214, Arlington Heights (419); Consolidated HSD 230, Orland Park (196); Northfield TWP HSD 225, Glenview (188); Maine TWP HSD 207, Park Ridge (180). Click here to look-up your school district or any district in Illinois using our interactive map.

      Northern Illinois school districts are driving the majority of $100,000 pensions. Districts in the Chicago metropolitan suburban area conferred 6,706 pensions totaling more than $800 million. Only 793 six-figure pensions totaling $95 million in annual payout were conferred by school districts in the rest of the state. Yet, income tax payers across the whole state guarantee the retirement annuities for everyone.

       Currently, there are 17,808 active IL teachers and administrators earning a six-figure salary, including 518 administrators out-earning every governor of the 50 states ($179,000). These educators represent the next generation of pension millionaires.

 

Not every IL ‘teacher’ is paid like a millionaire, but there are 17,808 earning six-figure salaries (FY2015)
 
Outside of the ‘highly compensated’ retirees, there are another 100,000 retired rank-and-file teachers. By our calculation, $1 of every $3 collected by the Illinois income tax ($16.9 billion) now goes toward these retirement annuities ($5.6 billion) – that’s the full income tax payments of 2 million hard-working Illinoisans each year.

Many receiving six-figure pensions really aren’t even ‘retired.’ Twenty-one highly compensated school administrators are now members of the municipal system, not the teacher’s system. They’re double-dipping: receiving a ‘teacher’ retirement pension, while also rehired by a school under the ‘municipal’ plan. 

This form of doubling-dipping is not prohibited under Illinois law. But, it should be. For example, Mohsin Dada made $503,200 by double dipping the Teacher’s Retirement System and the Illinois Municipal system. Dada’s teacher pension is $254,700 and his current salary from North Shore School District 112 is $248,510 – up from $202,903 just three years ago (2012).

Here is a graphic of Dada’s final salary years in the Teacher’s Retirement System (TRS):

 

Just one salary spiking graph. Many IL educator salaries have doubled since 2002.
 

The public pension largess is not only for government educators, but is also extended to private education associations and union bosses. For example, Reginald Weaver was President of the national teacher’s union, the National Education Association (NEA) in Washington, D.C. The Illinois teacher’s pension for Weaver is now $22,759 per month, or $273,108 annually.  Yet, Weaver paid in only $287,107 during his active career years.

The system looks impenetrable to reformers. For example, the small elementary school district of Park Ridge – Niles School District 64 pays 142 current teachers/administrators six-figure salaries, and 18 retirees receive $100,000 plus pensions. But taxpayers also funded the retirement party for pensioners at the Park Ridge Country Club complete with herb mustard-crusted filet mignon, special tilapia and high-end chocolate desserts.  

In Illinois, it’s a never-ending salary and pension party, all on your dime.


By Adam Andrzejewski (CEO) with Matthew Tyrmand (Deputy Director) of OpenTheBooks.com. OpenTheBooks.com is the world’s largest private repository of public spending. Recently at Forbes, we covered the ‘Pension Palace’ of Illinois Legislators and the ‘Big Dogs’ of Illinois Municipal Government

We thank Adam and Matthew for excellent research. Keep up the good work.
 
David R Kotok
 
 

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