By Bill Zettler
Gary Catalani District 200, $9.49 million, James Hintz Stevenson District 125, $8.63 million, and Mary Curley Hinsdale District 181, $8.20 million: total $26.32 million due in pension payments over their expected lifetimes.
Starting pensions beginning at age 56? Catalani $214,000, Hintz $209,000 and Curley $189,000. Ending annual pension at age 83 (their life expectancy at age 56) is $484,000, $472,000 and $423,000 respectively. How does that compare to your 401K?
Average salary increase over the last 3 years of their employment ending at about age 56? Catalani 74%, Hintz 99% and Curley 80%. And keep in mind in those last 3 years neither their title nor their responsibilities changed. Sounds better than cost-of-living increases doesn’t it?
For those of you reading this who are about the same age group as these three, do you know of anyone in your company, industry or profession who have these kind of end-of-career salary increases? If no, then you have to ask why do public employees have them?
These people are not alone of course. As of 2006 over 1,800 retired Illinois public employees had pensions of over $100,000/yr. Of the Top 100, 94% were educators (see here). The $100,000 pension list is growing by 25% per year here in Illinois meaning if that rate continues, in 10 years there will be over 14,000 former public employees with taxpayer funded $100,000 plus pensions.
And as bad as that seems it will get worse if the Illinois Federation of Teachers has it their way. One of their legislative initiatives is a retirement plan called “30, 80 and out.” That’s full retirement after 30 years instead of 35, 80% of their salary instead of 75%. That means a teacher or administrator could retire at 51 years of age with a pension equal to 80% of their 4 highest years salary.
If that were in effect for the $26 million dollar trio above, we would have to change the title to “36 Million Reasons Why We Need To Reform Illinois Public Pensions” since the dynamic trio would average $12 million each in taxpayer funded pension payouts NOT including any health benefits they might receive in addition to the pensions. In other words, taxpayers would be stuck with another $10 million just for 3 public employees if the “30, 80 and Out” plan was implemented. But remember that’s $10 million more “for the kids” so don’t worry about it.
The other key issue here is the fact that these three (and all teachers K-University) never took any risk to become millionaires. First of all there was never any job risk because they worked under tenure for most of their careers and later under contract as administrators and because the taxpayer guarantees their pensions, no investment risk either. One of them should write a book called “How to Become a Multi-millionaire Without Ever Taking A Risk”.
So here are 26 million reasons to implement Social Security and 401K programs for all public employees. How many more do we need?
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Bill Zettler is a free-lance writer and consultant specializing in public sector compensation.