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2 teachers union lobbyists teach for a day to qualify for hefty pensions

By Ray Long and Jason Grotto, Tribune Reporters

12:16 a.m. CDT, October 22, 2011

SPRINGFIELD —— Two lobbyists with no prior teaching experience were allowed to count their years as union employees toward a state teacher pension once they served a single day of subbing in 2007, a Tribune/WGN-TV investigation has found.

Steven Preckwinkle, the political director for the Illinois Federation of Teachers, and fellow union lobbyist David Piccioli were the only people who took advantage of a small window opened by lawmakers a few months earlier.

The legislation enabled union officials to get into the state teachers pension fund and count their previous years as union employees after quickly obtaining teaching certificates and working in a classroom. They just had to do it before the bill was signed into law.

Preckwinkle's one day of subbing qualified him to become a participant in the state teachers pension fund, allowing him to pick up 16 years of previous union work and nearly five more years since he joined. He's 59, and at age 60 he'll be eligible for a state pension based on the four-highest consecutive years of his last 10 years of work.

His paycheck fluctuates as a union lobbyist, but pension records show his earnings in the last school year were at least $245,000. Based on his salary history so far, he could earn a pension of about $108,000 a year, more than double what the average teacher receives.

His pay for one day as a substitute was $93, according to records of the Illinois Teachers Retirement System.

Over the course of their lifetimes, both men stand to receive more than a million dollars each from a state pension fund that has less than half of the assets it needs to cover promises made to tens of thousands of public school teachers. With billions of dollars in unfunded liabilities, the Illinois Teachers' Retirement System, which serves public school teachers outside of Chicago, is one of several pension plans that are in debt as state government reels in a fiscal crisis.

A spokesman for the Illinois Federation of Teachers emphasized that the lobbyists' actions were legal and that they made "individual decisions."

Even so, union President Dan Montgomery said the deal Preckwinkle and Piccioli landed "should never be allowed again." But the union, which provides its employees with a private 401(k)-type plan, is standing by the lobbyists' right to have access to the public pension.

"They entered TRS under the law and are participating members of TRS. As a TRS employer, the IFT is required to make the payments to TRS," the union said in a statement.

How did Preckwinkle and Piccioli become the only ones to take advantage of the change in law? Neither one consented to an interview.

Records, however, show that Preckwinkle applied for his first substitute teaching certificate four weeks before the legislation passed, then subbed at a Springfield school six weeks before the window to become eligible closed.

Preckwinkle even signed a witness slip in support of the legislation during a House committee meeting, although the teachers union says he lobbied for a different provision in the same bill, not the perk for union officials such as himself.

The revelation that one day of substitute teaching allowed officials from a state teachers union to tap into an ailing public pension fund is yet another example of how the Illinois pension system has been manipulated for political purposes and personal gain. A series of reports by the Tribune and WGN-TV have documented these pension games and how insiders have benefited.

Although the bill received bipartisan support, the benefit to union officials was sponsored by Springfield Democrats showered by IFT campaign contributions during the 2006 elections.

"The people that are on the inside and understand the process are going to be able to make the system work for their advantage," said Kent Redfield, who teaches political science at the University of Illinois Springfield. "That this legislation got a hearing and got considered and passed is a reflection of that close relationship between the IFT and the Democratic leadership.

"It feeds into the cynicism about all the deals, that it's an insider's game and that the system is rigged."

J. Fred Giertz, a University of Illinois economics professor and a trustee of the State Universities Retirement System, said teachers pensions for Preckwinkle and Piccioli undermine already meager public confidence in the state's retirement systems.

"It's outrageous," Giertz said. "The pension system was designed for schoolteachers and not for union employees to piggyback on at the end of their years."

Both lobbyists must make payments to the pension plan to purchase credit for their past union years, and they are required to pay compounded interest. Over the last five years, after the lobbyists joined the plan, the two men and their union have made standard payments into the fund.

Preckwinkle and Piccioli get to keep their 401(k)-styled retirement plan with IFT, although their union plan may be tapped heavily to help cover payments to the Teachers' Retirement System, according to union spokesman Dave Comerford.

The teachers union says Preckwinkle's salary has dropped recently with a restructuring of duties. Piccioli's earnings also fluctuate, and his estimated earnings this school year are closer to $151,000.

Preckwinkle, 59, stands to receive about $2.8 million by the time he turns 78, about $3.8 million if he retires next year and lives until he's 84. Piccioli, 61, stands to collect about $1.1 million by age 78, about $1.7 million if he lives until 84, according to an analysis by the Tribune and WGN-TV.

The Illinois Federation of Teachers and the lobbyists have made payments totaling $134,703 to the teachers fund to cover Preckwinkle's contributions to date and $98,701 to address Piccioli's contributions to the system. Records showed Preckwinkle still has to purchase most, if not all, of his prior years of union service, but Piccioli has paid for his.

The union said it does not help the two lobbyists pay for their prior years of union service that they can count toward the Teachers' Retirement System.

Despite the effort to qualify, Preckwinkle has yet to decide whether he will tap into the teachers pension fund when he retires, partly because he would owe a substantial lump sum to move forward, Comerford said.

The teachers union has a history of primarily supporting Democrats in Springfield, and that was the case at the time of this legislation as well.

Donations by the Illinois Federation of Teachers to Democrats dwarfed those to Republicans in the two-year 2006 election cycle. Gov. Rod Blagojevich, who won the union's endorsement, got more than $515,000; Michael Madigan, the state party chairman, and his rank-and-file candidates got about $567,000; Senate Democrats got roughly $388,000, according to Redfield, an expert on campaign finance who analyzed the races.

Madigan spokesman Steve Brown dismissed the idea that the union's campaign contributions favoring Democrats might have played a role in the legislation that ultimately helped Preckwinkle and Piccioli, a former member of Madigan's staff.

"The only template … on legislation is whether it represents a common approach to a problem, policy or program," Brown said. "That's the only template that was used there."

Brown said similar provisions have been added as "common practice" to state pension laws over many years, but the speaker has said for the last 15 years that the state would not be on the hook for any new expenses to a pension system. That means a person seeking to buy years of service must come up with payments to the Teachers' Retirement System equivalent to employer and employee payments as if they were made on time — in addition to compounded interest, Brown said.

Yet for years the legislature failed to require the actuarially required contributions for the state's pension system, which now has tens of billions of dollars in unfunded liabilities as a result.

The legislation that helped the lobbyists emerged during the November 2006 post-election veto session following Democratic victories in every statewide office and gains in the party's House and Senate majorities. The proposal was presented by then-Rep. Gary Hannig, a Litchfield Democrat who served as one of the top lieutenants for Madigan, the bill's House sponsor.

House Minority Leader Tom Cross, R-Oswego, supported the measure in large part because of the provisions that helped rein in huge end-of-career salary increases that school districts gave educators to spike the size of their pensions, spokeswoman Sara Wojcicki Jimenez said.

One of six House opponents to the bill, Rep. David Winters, R-Shirland, recalled in an interview that lawmakers were unaware the legislation could be employed by the lobbyists to get into the Teachers' Retirement System. He said he voted against the proposal because he was wary that the legislation's major proponents included teachers unions, and that union-friendly Democrats had put together the bill.

"Given the detail that the speaker (Madigan) goes through on every bill — and I've heard their bill review is extremely intense — he knows each bill," Winters said. "He bloody well knew what was in there. You can't tell me the unions got him to put in a provision that he did not understand. He's a brilliant politician, and he knows what he's doing."

Madigan spokesman Brown said the speaker becomes sponsor of pension bills as a normal practice "for purposes of managing the issue" rather than having multiple sponsors. The speaker was not the "chief architect" of the legislation, Brown said, noting that Hannig tended to be the floor leader on financial matters.

In a fiscal analysis, the legislature's bipartisan Commission on Government Forecasting and Accountability maintained the changes proposed throughout the bill would have minor or minimal fiscal impact.

Like many pension packages, the legislation rolled together enough provisions to appeal to Democrats and Republicans. It passed the House 109-6 and the Senate 55-0, with one present. Blagojevich signed the bill into law in February 2007.

State officials said Piccioli got certified as a substitute teacher in early December 2006. Only weeks into January, Piccioli taught a middle school history class in the Springfield school district, according to the district; Preckwinkle taught a high school special education class. The teachers union said neither man had prior teaching experience.

A third longtime union employee with many years of union experience has worked briefly in a school system, according to the union and the Teachers' Retirement System, but only is counting time with the union in the years since the law took effect — not piggybacking past union time onto the public pension.

By getting in the day of substitute teaching, Preckwinkle was able to claim 16.4 years of prior union service toward his teacher pension. For Piccioli, the numbers are smaller. He claimed nearly a decade of prior experience with the union.

In addition, both may count the nearly five years they've been union employees since the law took effect, and they also can claim all future work at the teachers union as service toward their Teachers' Retirement System pension.

Despite the state's pension woes, the Teachers' Retirement System can be a good plan for individuals because it provides a defined benefit plan, meaning it guarantees specific payments when people retire. The union's 401(k)-styled plan's value goes up and down with the economy and the stock markets.

"You just have to assume that if somebody is willing to move into a system and pay quite a bit of money for it, they expect to get even greater return from it," Giertz said.

The Teachers' Retirement System doesn't typically lobby for such bills but examines their potential impact once they are passed. David Urbanek, TRS spokesman, said the law was written with no minimum requirements for how long a person had to work as a teacher.

"Like any law that's passed by the General Assembly affecting the pension code, we look at it to see how that will affect the entire membership," Urbanek said. "In this case, it didn't affect very many."

WGN-TV producer Marsha Bartel and WGN-TV reporter Mark Suppelsa contributed.

rlong@tribune.com

jgrotto@tribune.com