PENSION EXPRESS’ EXTRA COSTS
Additional fees amount to $ 2.7M over past decade on top of $ 97 million- plus spent by CTA to finance big pensions for CTA execs, part- time board members
Besides the $ 97 million- plus spent over 15 years to finance lucrative pensions to CTA executives and parttime board members, there are millions more in investment, actuarial and legal fees associated with the retirees’ payments.
In all, those fees have cost the publicly funded transit agency more than $ 2.7 million over the past decade, a Chicago Sun- Times and Better Government Association investigation has found.
The fees are on top of the pensions paid in 2014 to 19 CTA board retirees, including top White House aide Valerie Jarrett, whomade $ 11,132 in payroll deductions into the board’s pension fund and began drawing a $ 35,660- ayear pension at age 50. Jarrett, now 59, has been paid more than $ 306,000 stem ming from the nearly eight years she served as the CTA’s part- time board chair, records show.
The fees also are in addition to hefty “supplemental retirement plan” pensions being paid to CTA executives who left the agency in their late 40s and early 50s. Fifteen CTA board members and 41 of the supplemental retirees also get CTA- subsidized health care, another perk that comes out of riders’ and taxpayers’ pockets.
The Sun- Times and BGA dis closed the largess shared by several beneficiaries of the retirement programs in Sunday’s and Monday’s Sun- Times editions.
On Monday, the head of the Regional Transportation Authority — which oversees the CTA, as well as the Metra rail and Pace suburban bus systems— called on the CTA to study whether the estimated $ 3.6 million a year in savings thatwere supposed to have been gained by the supplemental plan’s “voluntary termination program” actually occurred.
No cost- savings analysis of that program has been done, CTA officials say. “As a transit rider and taxpayer, I at first cringed when I looked at the Sun- Times stories. However, this was a voluntary retirement plan used by many private and public companies,” said RTA board chairman Kirk Dillard, a former west suburban state senator and Republican candidate for governor. “Out of curiosity and for the benefit of other governmental units, Iwould like the CTA to go back and crunch the numbers to see if that plan did, in fact, save money.”
CTA spokesman Steve Mayberry said the CTA would be “happy to work with Chairman Dillard and provide him with information about the early- retirement program, whichwas offered in 2008” and “closed in 2009.”
Sixty- nine CTA executives agreed to participate in the early retirement program after the CTA board approved it in 2008. At that time, Carole L. Brown, now Mayor Rahm Emanuel’s chief financial officer, was CTA board chair.
In all, the supplemental retirement plan, which includes the early retirement program, has cost CTA riders and taxpayers $ 93.8 million over 15 years, according to the CTA’s financial statements. The board pension plan has cost $ 3.04 million over 10 years.
The additional fees associated with the programs over the past decade include:
• $ 2.05 million to two investment management companies, United Investment Managers and Gray & Company.
• $ 507,604 in legal fees to Burke, Warren, MacKay & Serritella, P. C.
• $ 173,463 in actuarial fees to two firms: MWM Consulting Group and Gabriel Roeder Smith & Company.
Civic Federation President Laurence Msall, whose organization studies the CTA’s budget, said the supplemental and board retirement programs were ill- conceived from the outset.
All CTA employees pay into the CTA’s regular pension system, aswell as into Social Security. “They’re going to get a defined- benefit plan and Social Security — and then we have the supplemental plan on top of the regular plan,” Msall said. “For them to have additional incentives to allow people to retire early at a greater benefit means that you’re going to have decades of benefit payments.”
Msall said of board pensions: “It’s hard to justify that the CTA needs to pay people and give them a defined benefit for part- time activity.”
The Illinois Legislature ended pension and health care benefits for RTA, CTA, Metra and Pace board members in 2013. More than two dozen transit boardmembers appointed before then are likely still eligible.
Kenneth Franklin, president of Amalgamated Transit Union 308, says unionized CTA workers are paying more than 13 percent of their paychecks into the CTA’s main pension fund and the CTA retiree health care trust. He’s now trying to negotiate a new contract for more than 3,000 rail workers.
“The members’ morale is low because they’re not taking home what they’re earning,” Franklin said. “And then you look at someone getting hundreds of thousands of dollars [ in pension money] and only have to contribute small amounts, and it’s very disheartening.”
‘‘ IWOULD LIKE THE CTA TO GO BACK AND CRUNCH THE NUMBERS TO SEE IF THAT PLAN DID, IN FACT, SAVEMONEY.”
RTA BOARD CHAIRMAN KIRK DILLARD