All it took to give nearly two dozen labor leaders from Chicago a windfall worth millions was a few tweaks to a handful of sentences in the state's lengthy pension code. The changes became law with no public debate among state legislators and, more importantly, no cost analysis. Twenty years later, 23 retired union officials from Chicago stand to collect about $56 million from two ailing city pension funds thanks to the changes, a Tribune/WGN-TV investigation found.
Because the law bases the city pensions on the labor leaders' union salaries, they are reaping retirement benefits that far outstrip the modest salaries they made as city employees. On average, their pensions are nearly three times higher than what the typical retired city worker receives. No one from either the state Legislature or city government will take credit for the law, which passed in 1991, and the process of drafting pension legislation in Springfield is so shrouded in secrecy that there's no way of knowing exactly whom to hold responsible. The Tribune and WGN-TV found that Senate President John Cullerton was one of only 10 lawmakers on the committee that inserted the changes into a much larger bill. He's also the only one who is still in office. Cullerton, who declined to be interviewed for this story, denied being involved in the changes and issued a statement that acknowledged the law now looks like a bad idea.
"Municipal pensions should be for the hard-working municipal employees, who typically toil in obscurity, loyally contribute to the pension funds and aren't about to get rich off of their retirements," he said in a prepared statement. "Outliers such as those highlighted by the WGN and Tribune reports should be corrected in order to help restore the system's fiscal and public integrity." Making changes won't be easy, however. That's because the state constitution says pension benefits cannot be diminished once they are earned. Pension experts from around the country say they've never heard of such a perk for union leaders. They warn that it not only creates opportunities to scam the system but also robs the city of its ability to control pension costs. The city doesn't set union salaries, the most important ingredient in determining the size of the leaders' pensions. What's more, none of the labor officials retired in the traditional sense. Even as they collected their inflated city pensions, they held on to their high-paying union jobs. A decade ago, those public pension funds were flush, but they're now in such deep financial trouble that they threaten to burden taxpayers and dues-paying union workers alike.
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And every year, those city pensions grow by 3 percent. Records show the top earners are:
•Liberato "Al" Naimoli, president of the Cement Workers Union Local 76. He retired last year from a $15,000-a-year city job that he last held a quarter-century ago. Today, Naimoli receives more than $13,000 a month from the city laborers' pension fund even as he continues to earn nearly $300,000 annually as president of Local 76. His city laborers' pension will pay him about $4 million during his lifetime, according to a Tribune/WGN-TV analysis based on the funds' actuarial assumptions.
•James McNally, vice president of the International Union of Operating Engineers Local 150. He receives nearly $115,000 a year even though at the time he retired, in 2008, he had not worked for the city in more than 13 years. He was only 51 when he started collecting a city pension. By the time he turns 78, he will have received roughly $4 million from the city laborers' fund.
•Dennis Gannon, former president of the Chicago Federation of Labor. In 2004, he began receiving more than $150,000 a year after retiring at age 50 from a $56,000-a-year city job that he had left nearly 13 years earlier. He received his city pension while collecting a salary of about $200,000 from the federation. During his lifetime, the city municipal pension fund will pay him approximately $5 million. Gannon told the Tribune that he was only following the law in filing for a city pension.
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