All the future Bobbie Steeles
Thursday, November 30, 2006
In her final days as a member of the Cook County Board, Bobbie Steele has chosen to make herself Exhibit A of the scandalous public pension schemes that are gradually bankrupting Illinois. State government, public education, county and municipal offices--choose your taxpayer-funded venue: Too many public officials and employees are current or future beneficiaries of unaffordable pension systems that insiders have negotiated to benefit insiders.
Steele confirmed this week that she will exploit a legal loophole in the county's pension system to boost her retirement income. Let's leave for another day the question of whether something that's legal is therefore right. This much is unarguable: Steele can tell herself she's entitled to a pension sweetener that's rich enough to cause rapid-onset diabetes. She can't tell herself, though, that she's earned the big bucks she'll collect. Consider:
After almost 20 years as a member of the Cook County Board, Steele has spent four months as interim board president, earning a salary that calculates out to $170,000 a year. But her brief stint as president adds a huge boost to her county pension (which comes on top of the public pension she earned years ago as a schoolteacher). Slice and dice the numbers, county taxpayers, and they come down to this: Until this summer you were paying Bobbie Steele $85,000 a year to be a part-time county commissioner. Now you'll pay her $136,000 a year--plus an annual cost of living increase--to stay away.
Not that Steele's pension boost is automatic. She has to request what state law calls this "alternative annuity," based only on her final salary, not on a more reasonable average of her salaries over the last several years.
This grab for the golden ring would be less galling if Steele hadn't spent all those years on a County Board that has chronically underfunded county pensions. As is, she'll be taking more than her fair share from a system she and her colleagues have allowed to deteriorate. Why? Because they'd rather spend taxpayers' money on today's needs and leave the job of fully funding pensions to tomorrow's taxpayers.
An analysis by the Civic Federation, a Chicago watchdog group, demonstrates the sloppy stewardship of Steele and her fellow board members: According to its fiscal 2005 numbers, Cook County's pension fund had $2.2 billion in unfunded liabilities--up from a more manageable $85 million in 1996. Over that same time, the pension fund went from being 97.6 percent funded to 75.8 percent funded.
And the shortfall could well grow. Taxpayer contributions of $218 million in fiscal 2005 were barely half of the $428 million needed to cover the system's costs for that year and to begin repaying the pension liability over the next 30 years. By the Civic Federation's reckoning, the county system's liabilities will continue to grow--and, like credit card debt, they'll become even more expensive as the shortfall continues.
So, county taxpayers, you can't afford the Bobbie Steele you're stuck with--and you can't afford all the future Bobbie Steeles who come to work every day and pile up more pension points.
And Cook County government is but one example of Illinois public pensions run rampant:
- Earlier this month the Tribune reported that Illinois officials must grapple with a problem 30 years in the making: keeping retirement promises to more than 660,000 active and retired teachers and state workers. The article said years of scrimping on pension contributions, coupled with benefit increases, have turned the state into a poster child for a growing national problem. Illinois, with an estimated $45.8 billion pension shortfall, has among the worst funding records in the country.
- The fallout from that state pension debacle should matter to every citizen who cares about education or health care or other crying needs. State Comptroller Dan Hynes warned in September that Illinois pension and debt obligations, combined with Medicaid spending, will absorb virtually all likely revenue growth in future years. Those obligations are so onerous, Hynes said, that they threaten to constrain spending for other programs and severely limit Illinois' ability to weather an economic downturn.
- Put another way: The Civic Federation calculates that by 2010 the state's required payments for pensions and pension bonds will surpass the $3.9 billion that the state is paying to school districts this year under Illinois' school aid formula. And remember, lawmakers eventually must meet pension fund obligations. School funding? That they can legally cut.
- For decades, Illinois political leaders have spinelessly enriched pensions--Cook County's included--for themselves and their pals in government jobs. We don't know how local and state taxing bodies will respond when all those debts come due. But we can guess. When that public pension crisis strikes with full force, many of the Springfield lawmakers who sweetened Illinois public pensions in late-night legislative deals will be dead and gone.
This slow-mo pension meltdown badly needs a hero, a legislative leader who'll make fixing it his or her priority.
Not years from now. Now.
In the past, looking to Springfield for profiles in courage on this issue has always been a fool's errand. But with public awareness about Illinois' scandalous public pensions on the rise--Thank you for that much, President Steele--maybe a leader will emerge to keep the pension monster from devouring future dollars for schoolchildren, for health care, for state police officers. The fixes can't be retroactive; Illinois constitutionally guarantees that retirement benefits be paid as they were promised. New employees, though, could be diverted into a different program, such as 401(k) accounts.
For Steele, then, jumping through a loophole pays great dividends. She took office four months ago with only one big responsibility other than warming a chair for her successor: She needed to propose a Cook County budget for the fiscal year that begins Friday.
Steele never did get around to drafting a budget. So many inauguration parties, so little time.
She did, though, have a lasting impact. A short-timer's pension that steps off at $136,000 creates a legacy that taxpayers will be discussing for years and years.