“I’M A RETIRED (CITY OF CHICAGO WORKER), LIVING ON A PENSION…”

9/13/09

News stories in today’s (i.e., Sunday, 9/13’s) and Friday, 9/11/09’s Chicago Sun-Times, authored by ace political reporters Tim Novak and Art Golab, detailed the generous pensions public employees receive in the state of Illinois. I’ve been harping on this issue for years, even before I wrote my now seminal 11/16/07 piece, “ELIHU, WOULD YOU LOOFAH MY STRETCH MARKS?”, in which I related the pension time bomb, about to blow up our local government budgets, and to lead to near outright rebellion among property taxpayers, to the Drew Peterson case. The most salient paragraph in that piece was as follows:

The big problem in the muni market is just beginning to be felt and, admittedly, is not part of the market’s immediate difficulties but will be far greater as it comes to fruition. This problem is public sector pensions. Our local government employees get perhaps the most generous pensions, on a percentage basis, of anyone in the country. Just about anyone, for instance, knows a cop, teacher, fireman, or just a local bureaucrat who has retired in his or her early 50s on an astronomical percentage (70%-80%) of his or her salary. One of the less shocking aspects of the Drew Peterson story is that the scrofulous Mr. Peterson is now receiving a pension of $72,000 per year after “retiring” at the age of 53 from the Bolingbrook Police Department. And, for those readers not familiar with the Chicago area, Bolingbrook, while not Mayberry, is not exactly tough duty for a cop. These huge and growing pension obligations are consuming an ever greater share of municipal budgets and thus of residents’ property tax bills. Back in the days when local government workers were somewhat underpaid relative to their private sector colleagues and a large percentage of the taxpayers had defined benefit pension plans, the taxpayers, while never happy about paying taxes, were less hesitant to pay real estate taxes to support rich defined benefit plans for municipal workers. But now that local government workers salaries’ are getting higher, pensions are getting ever richer, and the defined benefit pension plan is going the way of the pterodactyl in the private sector, property taxpayers are getting more and more resistant to paying their growing real estate bills when an ever growing portion of those bills is going to fund pension benefits of which they can only dream. This resistance has the potential to turn into outright rebellion as property tax bills continue to skyrocket, local services deteriorate, or both. While not being the immediate source of problems in the muni bond market, this is going to result in a crisis in municipal budgets in the very near future.

The punch line, of course, is that state and local government pensions are currently a big financial problem and they will become an enormous political problem as they get more lucrative and fewer taxpayers, the people who are picking up the tab for these lavish retirement benefits, receive pensions from their employers.

Today’s Sun-Times reports on the time honored Chicago custom of “double-dipping,” i.e., working at a government job until one is about fifty, retiring with a generous pension, and then getting another government job covered by a separate pension plan, thereby collecting both salary and pension courtesy of the taxpayers. The story related the story of Mr. Craig Bazzani, who draws an annual income of $529,273 courtesy of the taxpayers, along with those of Glenn “Max” McGee ($409,976), Patrick Murphy ($292,644), Jim Edgar ($287,111), Dana Starks ($263,897), and so on down to Cherryl Thomas, barely scraping by on $104,463. I’m sure, as Mayor Daley has said in similar cases, that these people “could have done much better in the private sector.” Yeah. Uh-huh. Goldman would have hired all these people, I’m sure.

Interestingly, Jacquelyn Heard, the mayor’s press secretary, deigned to enlighten the benighted taxpayers with the wisdom that can only be derived from years of slopping at the public trough. This pension boondoggle is actually, according to Ms. Heard, a good deal for taxpayers, if only we had the intelligence to realize it. Ms. Heard condescended to tell us:

“I am, by no means, faulting taxpayers for looking askance at this. The thing is, they are out of (sic) no more money than if the jobs had been given to two other people. In some cases, it’s a benefit to the taxpayers because we’re getting someone with a higher skill level. In the case of Dana Starks, he was due his pension, and he was going to draw that from the Chicago Police Department. At the same time, we needed someone at the Department of Human Relations. Here, we have a person who has the (Here’s one of those cutesy-pie terms I referred to in the now seminal 9/31/09 piece “OOH E OOH AH AH, TING TANG, WALLA WALLA BING BANG…”) skill sets. He can hit the ground running. He can start improving relations throughout the city. He had other job offers and we didn’t want to lose him.”

Think about this statement for awhile. (I am only using Mr. Starks in this argument because Ms. Heard specifically referred to Mr. Starks in her observations. I don’t know any more about Mr. Starks than I read in the paper.) Mr. Starks retired from his administrative position with the Chicago Police Department, after 30 years with the Department, at the age of 57 and began drawing his pension of $131,000 per year. He then took a job as Chicago’s “human relations commissioner” (“Human relations commissioner?” C’mon! Only in the public sector and in those big corporations that have been effectively made arms of the public sector by so many government contracts and so much cross-pollination in their executive ranks.), which paid him $133,000 per year. The taxpayers are paying him $264,000. Ms. Heard’s logic is, however, on the surface, correct. Assuming the city needs something called a human relations commissioner, the taxpayers are paying three salaries/pensions:

Mr. Starks’ CPD pension
Mr. Starks’ new salary
The salary of Mr. Starks’ replacement (Assuming that whatever role he had with the CPD had to be filled. Note that Mr. Starks, though having started, one presumes, as a street cop, was, by the time he retired, a bureaucrat. What the CPD needs is more people on the street, not more bureaucrats, but I digress.)

Assuming, again, that either of Mr. Stark’s jobs is anything more than sinecures for political hangers-on and check writers, IF MR. STARKS RETIRED from his police job, we would indeed be paying these three salaries/pensions in any case. But what if the human relations commissioner job were not made available to Mr. Starks? He might have kept his desk job with the CPD, in which case the taxpayers would only be paying two salaries:

Mr. Starks’ CPD salary
The new human relations commissioner’s salary.

So, no, Ms. Heard, the current situation is not necessarily such a good deal for the taxpayers. Conceivably, the taxpayers are getting a two for the price of three deal. One could argue that, under the existing pension regimen, Mr. Starks, like any state or local employee who has accumulated a good sized pension and who has even a modicum of financial sense, would certainly retire and we would be paying for the three salaries/pensions outlined above. When one qualifies for a pension of 70% or 80% of one’s salary, if one continues to work at his or her current position, one is effectively working for a small fraction of one’s former pay. This, of course, goes back to the original question behind all these articles: Why are these public pensions so lucrative? That is grist for an even longer post.

There is, however, a potentially greater danger here than even the pension bonanza we have so generously made available to our public servants. Let’s assume that Ms. Heard’s contention is true, that Mr. Starks, or any high level bureaucrat “had other job offers.” Whence might those job offers emanate? Forget about Mr. Starks for a minute and broaden the discussion to include any of these public sector eminences. Are private employers lining up to hire these guys because of the skills and work habits they acquired in a lifetime on the public payroll? Or are they looking to hire these former public servants because of the connections they bring and the business, public business, effective access to the taxpayers’ wallets, they can generate? Think no-bid contracts, business as usual in Chicago, etc., and the answer becomes glaringly obvious. So maybe it is cheaper to keep these big time trough sloppers on the public payroll; they do less damage there than they can do helping hand out even more of your money to their friends, employers, and friends of those at the top of the power structure.

One final, and only tangentially related, note:

What makes Ms. Heard think that Mr. Stark’s years with the CPD make him so supremely qualified to be Human Relations Commissioner that he can “hit the ground running”? Assuming that there is no one capable of writing a campaign check or working a precinct who is NOT qualified to be Human Relations Commissioner, how does Mr. Stark’s CPD experience qualify him for that job? One could argue, very justifiably, that cops are masters at human relations; it goes with the job and helps keep officers alive in situations so fraught with danger that we who are not cops cannot possibly imagine them. So why couldn’t any police officer with more than a few years of street experience be just as qualified as Mr. Starks to be “Human Relations Commissioner,” whatever in the world that is.