Firefighter Retired on Disability Uses Bow to Hunt Suburban Deer

ST. LOUIS POST-DISPATCH -  February 19, 2012 12:00 am

Lou Salamone suffered knee injuries several times during his fire career, according to workers' compensation claims against the city.

He retired from the St. Louis Fire Department in 2007 with an injury to his left knee. He said after three surgeries doctors for the pension board told him he could no longer work as a firefighter.

Today, Salamone, 50, prowls the suburbs with a bow and arrow while earning a $44,203 annual disability pension.

As organizer of Suburban Bowhunters, his mission is to remove problem deer from west St. Louis County communities, where they pose a threat to motorists.

A Post-Dispatch reporter and photographer spent time with Salamone for a story in January 2009. The camo-clad ex-firefighter climbed a ladder to the top of a tree stand in a Clarkson Valley neighborhood and waited for hours without seeing a deer.

On a hunt with a photographer, Salamone hit a doe from a tree stand and carried the carcass out of the woods.

Salamone told the Creve Coeur City Council last May that if certain property owners gave him access to their land, "just me alone, I could reduce 15 deer easily, maybe 30, maybe 40."

COMMENTARY: Politicians Put Taxpayers at Risk Chasing Gain for Pension Plans

Watchdog News - http://watchdog.org - February 16, 2012 

By Frank Keegan | State Budget Solutions ^[1]

Politicians are setting up taxpayers and government workers for an even bigger crash by forcing retirement funds into risky investments, chasing gains required to pay promised benefits. That means trillions of dollars in higher taxes to provide no services or millions of betrayed public workers who will not get pension checks.

The public pension crisis just keeps getting bigger every year, as governors and legislators fail to deal with it, and fund managers have to go after higher and higher returns.

A recent Upjohn Institute “Analysis of Risk-Taking Behavior for Public Defined Benefit Pension Plans ^[2]” concludes: “An investment policy of increasing risk exposure on the asset side, while liabilities continue to increase with near certainty, can be a very poor gamble. Why would managers play this game?

“One motivation might be political decisions to make certain investments. Another could be transferring funding shortfalls as tax burdens to future generations. In addition, bargaining by unions could result in higher benefits, accounting incentives tend to guide behavior, and states may feel pressure because of fiscal constraints.”

Politicians want to project higher return rates, because that means­ less money they have to put in every year. Assuming delusional rates of return on investments lets them “balance” annual budgets by borrowing from retirement funds. That hidden debt just gets bigger every year.

By the time it comes due, they will be safely out of office. All state and municipal politicians have been pushing this time bomb into the future for decades. Now the clock is ticking down. None of them want to be holding it when it detonates.

The idea is simple. If you double the rate of return over 30 years, you only have to invest a third of the money required to pay the benefit.

At 8 percent — which is the rate public pension plans use  — you only have to invest 6 cents to pay $1 in benefits 30 years from now.

At 4 percent return, you have to invest 18 cents this year to pay $1 in benefits three decades from now.

Most lawmakers haven’t even been investing the 6 cents. And what they did invest, pension fund managers recently lost after pocketing billions of dollars for themselves and their cronies.

In just four years through 2010, 222 state pension funds lost $1.46 for every dollar “contributed” by taxpayers through state governments and employees.

It all adds up to trillions of dollars ^[3] somebody must pay.

Sure, all investors are dealing with 30-year, 15 percent, risk-free bonds recently rolling over into 3 percent bonds. And the Federal Reserve Bank’s ongoing policy of keeping interest rates artificially low makes it harder for pension fund managers to lie about how much they are going to gain.

Thirty years ago to guarantee $1 in benefits to be paid in 2011, you had to invest less than 2 cents. Right now to guarantee a $1 benefit in 2042, you must invest about 22 cents. Politicians do not want to do that.

So now they are shifting into riskier investments — which puts even more billions of dollars into insiders’ pockets — to try to claim future returns politicians can use to justify paying even less into pension and retiree health-care funds.

It is a perfect circle of deceit, corruption and racking up debt somebody else will have to pay.

Actuaries, the people who do the detailed accounting on pensions, call it “moral hazard ^[4].”

The fiscal immorality is all on politicians, but all the hazard is on taxpayers present and future.

Pension managers are betting our money that there never, ever will be another market downturn, and overall economic growth and investment gains will be beyond any in history.

If they are wrong, we pay the price. Even the Pew Center on the States’ “Widening Gap ^[5]” study, which showed a 26 percent increase in state and municipal retirement debt in just one year using official assumptions, admits the debt actually doubles when calculated realistically.

The Upjohn report cites as an example an average Ohio teacher. For that one teacher, the State Teacher Retirement System ^[6] will have only $518,000 in the bank to cover $1.3 million in pension checks, according to standard calculations used by everyone but governments.

STRS admits, “… long term, there is a shortfall in the funding …. If no changes are made, STRS Ohio will eventually be unable to pay pensions,” and says “The current expected long-term actuarial rate of return of 8 (percent) … cannot be raised; STRS Ohio cannot count on higher investment returns as a solution.”

The board does not explain how they plan to get even 8 percent. But the Ohio Public Employees Retirement System ^[7] last week revealed one way it plans to get the big bucks: hedge funds.

Ohio’s five state pension funds lost $31.4 billion, down 19.4 percent, from 2007 through 2010. And 2011 is not exactly shaping up to be the year they got it back, plus the 8 percent a year they continue to claim they will always get every year forever even when stark reality proves they never will.

Their solution is to double down on hedge funds, among the riskiest and most expensive investments anyone can make.

Even using delusional accounting, Ohio state pensions are only 66 percent funded, and politicians are not making full contributions, according to Pew. The retirement health-care fund is even worse at 31 percent funded and only 40 percent of the already low-ball annual contribution.

This supports the Upjohn finding that “managers take on more risk if the plan is underfunded and experienced poor investment returns in the previous three or five years. …” and, “… higher union membership percentages and a higher percentage of employees covered by collective bargaining are associated with more risk.”

Of course, none of that risk is on fund managers, politicians or government workers. It’s all on taxpayers, the only people not invited to the table.

Frank Keegan ^[8] is editor of Statebudgetsolutions.org ^[1], a project of sunshinereview.org ^[9]. The State Budget Solutions Project is nonpartisan, positive, pro-reform, proactive and anchored in fundamental-systemic solutions. The goal is to successfully engage political journalists/bloggers, state officials and opinion leaders in a new way of thinking about state government and budgets, fundamental reforms, transparency and accountability. frankkeegan@statebudgetsolutions.org ^[10]

MFPD Board Solves Issue Other Entities Won't Tackle

By MIKE ANTHONY - Executive Editor

CALL NEWSPAPERS

February 15, 2012 - We've been reading with great interest the debate over St. Louis Mayor Francis Slay's proposal to change the pension plan for city firefighters.

One published report noted that even before Slay's proposal was introduced to the city's Board of Aldermen, members of International Association of Fire Fighters Local 73 staged a press conference at City Hall to announce a counterproposal.

Firefighters' pension costs have escalated from $7.2 million in 2007 to an estimated $32.9 million in 2014, according to city officials. But the skyrocketing cost of employee pensions is not something that will keep Mehlville Fire Protection residents up at night, thanks to the efforts of the district's Board of Directors.

Chairman Aaron Hilmer and Treasurer Bonnie Stegman were elected in April 2005 after campaigning on a re-form platform, vowing to eliminate fiscal waste while improving services.

The biggest reform by far, according to the two, was changing the district's pension plan to a defined-contribution plan from a defined-benefit plan.

Less than a year after taking office, Hilmer and Stegman voted to change the district's pension plan. To listen to the outcry from members of Local 1889 of International Association of Fire Fighters and their legal counsel, one might have thought the world was coming to an end.

Heck, the union's legal counsel at the time was ranting about the need for a grand jury investigation.

Within days of the vote, Local 1889, which merged with Local 2665 last year, filed a lawsuit seeking to prohibit the board from changing the plan. After a nearly three-year legal battle in which the district and board — including Secretary Ed Ryan, who was elected in 2007 — prevailed every step of the way, union leaders agreed to settle the dispute.

Quite frankly, we're baffled why the proposal to change the plan met so much resistance. Under Mehlville's defined-contribution plan, the district contributes from 8 percent to 11 percent of an employee's total compensation to the retirement plan based on years of service.

Calculations performed about a year ago found the old pension plan's un-funded liability would have totaled nearly $18 million if the plan hadn't been changed.

We applaud the MFPD board for its foresight and courage to solve the pension issue instead of doing what most elected entities have done — kick the can down the road and hope a future board will solve the problem.

State Auditor Calls For Better Practices in Monarch Fire District

BY PATRICK M. O'CONNELL - ST. LOUIS POST-DISPATCH | Posted: February 16, 2012 

CHESTERFIELD • As he released a state audit of the Monarch Fire Protection District on Wednesday, Missouri Auditor Tom Schweich said he wasn't there to settle political scores or take sides in squabbles that have recently plagued the sprawling district.

"I hope this is a starting point for putting political differences aside," Schweich said.

Those contentious differences among board members, firefighters and residents over issues ranging from salaries, a sex discrimination suit and legal fees eventually led to the call for the audit a year ago.

The auditor's findings revealed several problems with district expenses and practices, leading to an overall "fair" rating and a series of recommendations to tighten spending, clean up financial record keeping, obey open meetings laws and re-examine a costly retirement incentive package.

Among the specifics cited by the auditor's report were $231,000 in retirement incentives over two years that his office said violated the state constitution, a $26,000 awards banquet and at least 40 instances of questionable closed meetings. The auditor also said the district needs to get bids and written contracts for legal services that in 2010 cost a total of $212,000, and perform a salary survey of administrative positions to ensure the pay structure is in line with those of other districts.

"I don't get involved in the politics. These are concrete, tangible ways to improve the problems of the district," Schweich said during a meeting to release the findings at district headquarters in Chesterfield. "All you have to do is fix these problems, and you will have a pretty well-run district."

Board members said they already have begun to implement changes, and the auditor praised district officials for their willingness to correct issues. The district serves Chesterfield and parts of west St. Louis County.

"If this audit is the mechanism for us to right the ship on the controls and processes of the district and cut down on the rhetoric and the politics, I'm all for it," board secretary Steven Swyers said.

Gov. Jay Nixon ordered the audit of the district in February 2011. Kim Evans, the current Monarch board president, had voiced concerns about possible wasteful spending of taxpayer money.

Schweich reviewed the findings Wednesday in front of board members and about two dozen residents. Afterward, Evans was unavailable for comment.

In terms of the Sunshine Law issues, the auditor's office criticized the district's closed meetings, saying the board did not document specific reasons for them. The auditor said such sessions, which happened 40 times from January 2010 through September 2011, prevent the public from becoming aware of the discussions and votes held in secret.

"We don't think anything devious was happening, but we did feel some of the meetings should have been open," Schweich said.

The auditor's office said the district's retirement incentive package, which provided $231,000 in compensation in 2010 and 2011, violated state law that prohibits extra compensation to public employees for services already rendered.

The incentive package gave employees $1,500 to $2,000 for each year of service and also set up a health insurance benefits plan for retirees, up to $2,000 per quarter for five years.

The auditor said the board should "ensure all retiree benefit expenditures are necessary and beneficial to district residents." The district formally responded in the report, saying it created the retirement package in coordination with the district's labor law attorney "to reduce long term labor cost."

The audit says the district spent about $26,000 for an employee awards banquet in September, and $16,000 of that went for 'service awards" to employees. It says 63 employees received awards including bronze bells, rings and watches the district bought. The audit calls the event "a questionable use of district funds."

It says the district paid $5,000 for the conference room and dinner, $2,000 to a guest speaker and $2,000 in miscellaneous attendance prizes.

Assistant Chief John Borgmann said the banquet was held on Sept. 11, 2011, in the pavilion at the Doubletree Hotel and Conference Center in Chesterfield. He said the speaker was John O'Leary of Webster Groves, a motivational speaker who was severely burned as a boy in 1987.

Borgmann said J.R. Terrell, manager of the district's health plan, later donated $1,500 to the district to help cover O'Leary's fee.

"Twenty-six thousand dollars for a party is too much money and we believe that was a waste of taxpayer resources," Schweich said.

The district responded that it will review "the dynamics of the awards banquet" and that it is "dedicated to cutting costs."

The audit also cited $212,000 in legal expenses in calendar year 2010, listing fees by legal service.

The audit says that the district sought formal applicants for general counsel but not for the other legal functions, and that the district had no written agreements for general or pension counsel. The audit says seeking proposals and written agreements provides more control at the "lowest and best cost."

The report also found the district made a $2,100 duplicate payment to a pension attorney, paid $1,200 to the wrong vendor for cleaning supplies and does not adequately document some expenditures.

Tim O'Neil of the Post-Dispatch contributed to this report.

Fiscal Reckoning: Not If, But When

By WALTER E. WILLIAMS

2012-02-09 15:02:02

THE ORANGE COUNTY REGISTER

Let's think about the kind of mess that we're in. Federal 2010 Medicare and Medicaid expenditures totaled $800 billion. The projected annual growth of both programs is about 7 percent. Social Security expenditures are more than $700 billion a year. According to the 2009 Social Security and Medicare trustees reports, by 2030, 49 percent of federal revenues will go for Social Security and Medicare payments. The unfunded liability of both programs is already $106 trillion.

But not to worry. The Congressional Budget Office estimates that it's possible to sustain today's level of federal spending and even achieve a balanced budget. All that Congress would have to do is raise the lowest income tax bracket of 10 percent to 25 percent and the middle tax bracket of 25 percent to 66 percent and raise the 35 percent tax bracket to 92 percent. That's a static vision that assumes that people will have no response and they'll work just as hard and send more money to Washington. If Congress did legislate such tax increases, it would be the economic equivalent of committing national hara-kiri.

Professor Daniel Klein, editor of Econ Journal Watch, and Professor Tyler Cowen, general director of the Mercatus Center, both based at George Mason University, organized a symposium to promote a better understanding of the U.S. debt crisis. The symposium's title, "U.S. Sovereign Debt Crisis: Tipping-Point Scenarios and Crash Dynamics" (http://econjwatch.org), is a strong hint about the seriousness of our nation's plight.

Professor Cowen introduced the symposium pointing out that in 2011, the major crisis was in the eurozone, where Greece, Italy, Spain, Portugal and Ireland dealt with the risk of default. The survival of the eurozone is now seriously doubted. Cowen added: "When it comes to a sovereign debt crisis, it is no longer possible to say 'it can't happen here.' Right now, we are borrowing about 40 cents of every dollar the federal government spends, and the imbalance has no end in sight."

Jeffrey Rogers Hummel, associate professor of economics at San Jose State University, says that a default on Treasury securities appears inevitable. He says that the short-run consequences for the economy will be painful but that the long-run consequences, both political and economic, could be beneficial. That's because an economic collapse is the only way we will come to our senses. That's a tragic statement about the foresight of the American people.

Participant Garrett Jones, associate professor of economics at George Mason University, is a bit more optimistic, seeing default as being less likely. But he argues that "default is still possible, and the GOP offers a uniquely American path to default: an unwillingness to raise taxes."

Dr. Arnold Kling is a member of the Financial Market Working Group at the Mercatus Center and tells us that the "U.S. government has made a set of promises that it cannot keep." He says that the "promises that are most important to change are Social Security and Medicare."

Joseph J. Minarik is senior vice president and director of research at the Committee for Economic Development. He argues that a "U.S. financial meltdown today is eminently avoidable. The wealthiest nation on earth, despite a painful economic slowdown, maintains the wherewithal to pay its bills. The open question is whether it maintains the will and the wisdom."

Peter J. Wallison holds the Arthur F. Burns chair in financial policy studies at the American Enterprise Institute. He agrees with Kling that "the most likely source of a U.S. sovereign debt crisis ... is a failure of the U.S. political system to address the growth of the major entitlement programs – Social Security, Medicare and Medicaid."

My translation of the symposium's conclusions is that it is by no means preordained that our nation must suffer the same decline as have other great nations of the past – England, France, Spain, Portugal and the Ottoman and Roman empires. All evidence suggests that we will suffer a similar decline because, as Professor Cowen says, "the American electorate has dug in against both major tax increases and major spending cuts."

© Copyright 2012 Freedom Communications. All Rights Reserved. 

Slay Offers St. Louis Firefighters a Pension Plan With Major Cuts for New ires

BY DAVID HUNN • dhunn@post-dispatch.com > 314-436-2239 | Posted: Thursday, February 9, 2012 12:45 am

ST. LOUIS • New city firefighters would earn a pension stripped of some current benefits deemed "unaffordable," according to two bills championed by Mayor Francis Slay and to be introduced Friday to the Board of Aldermen.

The bills, ready after months of preparation and debate, would essentially close the current Firemen's Retirement System of St. Louis, which is partly controlled by state law, and start a new, city-governed fire pension plan.

The bills, if passed, will not change benefits already earned by the city's 600 firefighters, according to copies obtained by the Post-Dispatch. They also would retain for new hires the maximum basic retirement — 75 percent of their pay per year, for life.

But Slay's proposal would reduce retirement earnings for nearly all firefighters going forward — and most drastically for new firefighters. New hires would have to wait until 55 to retire with a full pension. (There is no minimum age now; firefighters can retire after 20 years of service.)

In addition, new firefighters would get fewer cost-of-living increases and no more deferred retirement options — which pay firefighters their pensions while they continue to work.

Moreover, all firefighters would have to pay more into the system. And new firefighters would no longer get that money back. Current firefighters would not get back money they put into the system in the future.

And disability pensions, which both city leaders and firefighters agree have been abused, could get slimmed to just 25 percent of a firefighter's salary, depending on the injury. (Now, firefighters disabled on the job get 75 percent of the maximum salary for their position.)

The bills lay out Slay's legal and moral argument for reform of the system.

And they outline the financial strain it puts on the city, saying that city payments into the fire pension system have gone up nearly 600 percent, to $23 million in 2010 from $3.4 million in 2001, and now "consume nearly a third of the fire department's budget."

All three of the city's retirement systems — for firefighters, police officers and civil service employees — are under scrutiny now.

"This is a critical juncture for the city," said Slay's chief of staff, Jeff Rainford, who has been meeting with aldermen for months on the subject. "In a lot of ways, the city is a better place than it was. Tax revenue is going up. Crime is going down. We've gotten our financial house in order in every way — except for pension costs."

The city is focusing on firefighters' pensions first, Rainford said, as the most expensive per worker.

Rainford acknowledges that the bills won't be easy to pass. The mayor will need the support of at least 15 of the city's 28 aldermen. Some have already vowed to fight him.

In addition, the proposal, if passed, will likely face court challenges from the pension board, called the Firemen's Retirement System of St. Louis.

Executive Director Vicky Grass declined to comment on the bills' details. But the system's private attorney, Dan Tobben, said Wednesday that the mayor wasn't going about reform correctly.

"The fact that they're 'opting out' and setting up a different pension program seems clearly to be against state law," he said.

Moreover, he said, courts across the country have ruled that cities can't change benefits for existing workers, only new hires.

SICK PAY SUIT

Using similar arguments, the system sued the city more than a year ago after it stopped allowing workers to accumulate sick leave days. The case is still in court.

Some aldermen buy Tobben's argument.

"Haven't we tried this before, been sued and lost?" said Alderman Joe Vaccaro, D-23rd Ward, who introduced a bill last year to reduce disability costs and retrain injured firefighters. He had support of the firefighters union and the state legislature, before the mayor squashed the effort, saying it didn't go far enough.

Still, the mayor has already lined up supporters. Alderman Craig Schmid, D-20th Ward, will sponsor the bill, and, as chairman of the board's public employees committee, is likely to be its first shepherd through the city's legislative process. He said his aim is a "realistic, sustainable" pension system.

The bills outline the mechanisms the city plans to use to sidestep the concerns of Tobben and others.

The first bill would repeal 33 city laws and discontinue the accrual of benefits under the old system, effective June 1. It says the system has "transformed" from its origins and is now "unsustainable" with "unaffordable secondary benefits, which must be funded by City taxpayers but over which the City has no influence or control."

The second bill would establish the new system, merge it with the assets and liabilities of the old one, and dramatically change benefits for new hires.

It would eliminate the popular Deferred Retirement Option Plan, which aims to keep top brass for five years longer by paying them a pension and a salary at the same time.

Slay said he hoped to reach agreement with the union, the International Association of Fire Fighters Local 73, but on Monday his office sent it a letter of impasse.

UNION RESPONSE

Chris Molitor, president of the union, said the city never gave him a final offer to take to his members.

"That violates every proper protocol that's involved in negotiations," he said. "It is further proof that the mayor had no true desire to reach a compromise with firefighters."

Moreover, he said, the union has a plan to save about $6.6 million next year and for the next several years, which it will disclose soon.

Fire Chief Dennis Jenkerson said that he hadn't seen the bills' details but that he was concerned they could lead to a glut in retirements this year. "I think you always worry about wholesale retirements with upper management," he said.

Aldermen will need at least three meetings to pass the bills and have only about six left before the session ends.

New Pensions for New Times

Charles Chieppo | February 8, 2012

GOVERNING

The California Public Employees' Retirement System (CalPERS) has announced a return of only 1.1 percent on its investments during calendar 2011, and the fallout offers the latest evidence that traditional state pension plans no longer are sustainable.

You've heard the horror stories about huge unfunded liabilities. In 2010, California's total pension funding gap (including separate systems for teachers and University of California employees) was estimated at anywhere between $59.49 and $425 billion--and that's for a state whose assets were sufficient to fund 81 percent of future promises made as of fiscal 2009, when the national average was 78 percent.

Much of the problem with state pension systems stems from sins of the past. In Massachusetts, taxpayers paid about $306 million to fund current pension costs last year, but more than $1.1 billion to pay down previously accumulated liabilities.

The Massachusetts AFL-CIO pegs the average annual state pension at $26,000. Even though that includes retirees who spent a relatively short time in state service and have other sources of retirement income, the problem in most cases is not that public-employee pensions are extravagant.

Instead, California's current fix demonstrates a fatal flaw in most public-employee pension plans. Just as employers say they need a predictable tax and business climate to invest, states need predictable cost estimates, and traditional defined-benefit pension systems make that impossible.

California assumes that its pension investments will post annual returns of 7.75 percent. When, like last year, the returns don't materialize, taxpayers either need to make up the difference or dig their kids into an even-deeper unfunded-liability hole. California's 81 percent funding level may be better than many other states, but CalPERS was 120 percent funded as recently as 2000.

Of course, the years in which returns don't meet the target are almost always during a recession, when states are least able to make up the difference. If they do, it's often at the expense of programs that provide for the neediest citizens. California Gov. Jerry Brown has made several proposals to improve the current system, but none of them would solve this fundamental problem.

It's all good when times are flush. During fiscal 2001, years of strong returns meant California taxpayers had to kick in only about $160 million to fund pensions. Just over a decade later, that number is more like $3.5 billion.

The time has come to move away from defined-benefit pensions, though it will have to happen gradually. Longer-serving employees in particular have rightly come to expect a defined pension and made decisions based on that assumption.

Alaska, Colorado, Georgia, Michigan and Ohio are among the states that already have begun, in differing degrees, to move toward defined-contribution plans. By the middle of the last decade, two-thirds of private-sector pension money was already in such plans.

The usual argument against defined-contribution plans is that they aren't fair to employees. While they do shift risk to workers, the evidence is that the long-term state employees who benefit most from defined-benefit pensions would still do well under 401(k)-type plans. According to the Employee Benefit Research Institute, "even if equity returns ... replicate the worst 50-year segment in S&P 500 history (1929-1978), 401(k) accumulations are still projected to replace significant proportions of projected income."

And there need not be just one alternative. Cash-balance pension plans, which guarantee an annual interest rate on employee contributions and the employer's match, are a viable option for more risk-averse (often older) workers. In addition to offering stability to employees, they would also provide states with the predictability they need. The interest rate on a cash-balance pension changes annually and is often tied to the return on 10-year Treasury Bills, currently around 3.25 percent. Over the past 20 years, it has averaged closer to 5 percent.

For employees, these options offer the additional advantage of fairness--benefits are tied directly to a worker's contributions. And for states already grappling with structural budget deficits and fluctuating revenue, they offer relief from existing pension systems that demand the most when taxpayers can afford it least.

Teachers Union Staffers Set Sail on 7-Day Caribbean Cruise

TOWNHALL.COM - FEBRUARY 9, 2012

By Kyle Olson

Imagine your organization is facing attacks from all sides. Imagine it’s losing members and revenue.

Imagine governors and mayors – of both political parties – publicly denouncing your industry as “broken” and move swiftly to stifle your power and influence, while you flail away helplessly.

What to do? What else to do but go down drinking?

That’s what members of the National Education Association’s National Staff Organization have apparently decided. The NSO is an association of sorts for teachers’ union staff – political and communications types.

Following an “Advocacy Retreat” with the theme “Building Our Unionism,” members set sail on a 7-day cruise from Miami on February 5th “with stops at Cozumel, Grand Cayman Island and Isla Roatan.” Sounds fun! [In case the Facebook link disappears, never fear: here’s a PDF of the NSO newsletter.]

Guess what union staff? There are going to be cameras all over the ship documenting your every move – from every Fuzzy Navel to every game of shuffle board. Just think how your rank-and-file members might appreciate seeing all the “fun in the sun” you’re having, courtesy of their dues dollars.

Dues payers – especially those in states with compulsory unionism – can think fondly this week about their “employees” cavorting in the Caribbean as they’re looking at layoffs, decreased pay and increased insurance co-pays.

(Technically, NEA staffers exist to serve the union members. That might come as a surprise to some, considering that those roles have been reversed for decades.)

Incredibly, this isn’t the first cruise NEA staffers have taken. Last year, the destination was the Mexican Rivera, according to the trip’s contact person. Next year, who knows? As long as the members keep paying, who cares?

As the union staffers set sail, I hope they’ll remember the eyes of their dues-paying members are on them. Bon voyage!

Kyle Olson - Kyle is founder and CEO of Education Action Group Foundation, a non-partisan non-profit organization with the goal of promoting sensible education reform.

CPS Spends Millions on Workers For Unused Sick and Vacation Days

BY BARBARA ROSE AND PATRICK REHKAMP

Better Government Association

CHICAGO SUN-TIMES

Last Modified: Feb 3, 2012 02:13AM

The cash-strapped Chicago Public Schools system spends tens of millions of dollars annually on a perk that few other employers offer: cash to departing employees for unused time off.

Since 2006, the district paid a total $265 million to employees for unused sick and vacation days, according to an analysis of payroll and benefit data obtained by the Better Government Association under the Illinois Freedom of Information Act.

By far the largest share — $227 million — went to longtime employees for sick days accumulated over two or three decades.

Mayor Rahm Emanuel recently ordered a halt on paying unused sick time to non-union employees at City Colleges of Chicago after the BGA found at least $3 million in such payouts to former employees over the last decade. Among the biggest beneficiaries was former Chancellor Wayne Watson, who has received $300,000 of a promised $500,000 payout for 500 unused sick days.

“This policy is unacceptable to the mayor and not consistent with the city’s sick day policies for its own employees,” said Jennifer Hoyle, a spokeswoman for Emanuel. The mayor also directed other city agencies, including CPS, to halt such payments, review their policies and devise plans to end the practice permanently.

At CPS, the top payouts went to top brass, including more than 300 longtime principals and administrators, who received more than $100,000 during the six-year period from 2006 to 2011, the BGA found. The highest payment topped $250,000.

Beneficiaries included former schools CEO Arne Duncan, now U.S. Secretary of Education, who received $50,297 for unused vacation time when he left in January 2009, according to the data. Duncan now believes the policy should be re-evaluated.

“People should take a good hard look at whether or not that policy makes any sense and whether it should be kept in place in these tight budget times,” Duncan said through a Washington D.C.-based department spokesman.

The district’s policy of paying for accrued sick and vacation time drains an average of $44 million annually at a time when CPS is struggling to balance its nearly $6 billion budget by hiking property taxes, cutting staff and dipping into reserves. The obligation to pay this accumulating benefit contributes to the district’s long-term debt, showing up as a fast-growing liability on CPS’ balance sheet.

Moreover, payouts increase the Chicago Teachers’ Pension Fund’s liabilities because employees are allowed to use sick leave payouts to boost their final average salaries, which in turn increases their annual pensions.

In all, about 19,000 employees received sick and vacation payments during the six-year period. The average payout was just under $14,000.

Most private employers adopt a “use or lose it” policy for sick and vacation days to hold down costs and limit future obligations. Many question the wisdom of rewarding employees when they leave.

“What you’re doing is paying someone when they’re walking out the door, and that’s basically money walking out the door,” said Mark Schmit, vice president of research for the Alexandria, Va.-based Society for Human Resource Management.

Only 6 percent of employers pay for unused sick leave, while 16 percent pay unused vacation time, according to the association’s 2011 employee benefit survey of 600 human resources managers, largely at private employers.

CPS may be alone among Illinois school districts in paying cash for unused sick leave, said Thomas Kersten, professor emeritus of educational leadership at Roosevelt University.

“I’m not familiar with any district besides Chicago that pays for sick days,” he said.

Members of the Teachers’ Retirement System, which includes Downstate and suburban teachers, can accumulate as many as 340 uncompensated sick days for up to two years of credit, allowing them to retire two years early with full pension benefits.

CPS employees can accumulate as many as 325 days. They become eligible for payouts after working at least 20 years or reaching age 65. Depending on their tenure, they receive between 85 percent and 100 percent of their accumulated sick leave value.

Here are the top recipients of the practice, according to the data:

◆ Ascencion Juarez, CPS’ former chief human resources officer, collected $250,787 after he retired in 2009 after 38 years, including $200,285 in sick pay. Juarez declined to comment.

◆ Former Chief Education Officer Barbara Eason-Watkins collected $239,849 after she retired in 2010 after 35 years, including $159,843 in sick pay.

◆ Former Lake View High School Principal Scott Feaman received $211,641 after he retired in 2011 after 36 years, including $171,604 in sick pay.

Eason-Watkins and Feaman each used sick days to sweeten their pensions. As a result, Eason-Watkins collects an additional $7,440 annually in pension payments for the rest of her life, and Feaman collects $4,425 more, according to the Chicago Teachers’ Pension Fund.

Niether Eason-Watkins nor Feaman returned calls seeking comment.

Copyright © 2012 — Sun-Times Media, LLC