Local Government

Taxpayer group highlights McHenry County government employee pensions

McHenry County’s top-earning government retirees found themselves again in the sights of an anti-tax group bringing attention to the need for tax and pension reform.

But those sights are undergoing adjustments after the Northwest Herald discovered that Taxpayers United of America had inaccurately calculated the lifetime maximum that many of them are eligible to collect.

While it’s far from the first time that the group has published a list of what it calls “pension millionaires,” their review of the county comes just after the Illinois Supreme Court declared a 2013 attempt at pension reform blatantly unconstitutional.

The group on Tuesday released lists of top pensioners for McHenry County teachers and McHenry County College, county government employees, and retired municipal employees of Crystal Lake and McHenry. But while the group's annual pensions were accurate, its estimates for lifetime payouts for city and county workers – assuming a lifespan of 85 – incorrectly used the 3 percent compound-interest formula for the five state-run systems. County and municipal employees are under the Illinois Municipal Retirement Fund, which calculates annual increases with simple interest.

Taxpayers United concluded that more than 1,000 retirees of McHenry County units of government receive six-figure pensions, or a substantial chunk of the more than 12,000 retired government employees statewide whom group President Jim Tobin says are pulling down $100,000 or more in retirement.

“While taxpayers struggle to make their property tax payments, working well beyond retirement age, these government pensioners enjoy lavish, gold-plated retirements beginning on average at the age of 58,” Tobin said in a statement.

Educators, with High School District 155 in particular, topped out the group’s lists, with retired superintendent Michael Mills receiving an annual pension of $197,517. Six of the top 10 pensions for teachers are collected by retired administrators for the Crystal Lake-based district, including two other former superintendents. Retired superintendents for Cary District 26, Crystal Lake District 47, McHenry District 15 and Johnsburg District 12 round out the list.

Topping the list for McHenry County College is retired president Walt Packard with a $155,482 pension. Recently-retired McHenry County Department of Health administrator Patrick McNulty tops the list of retired county government employees at $100,396.

Packard’s departure came under fire when it was revealed that he did not step down voluntarily as the college’s board originally claimed, but was in fact ousted. McNulty’s retirement last year caused a bit of a stir on the County Board when it was discovered that his contract contained a clause that bucked established practice and allowed him to cash in 80 days of unused vacation days. State law required the county to pay extra into IMRF to compensate for the slight increase to his pension.

The five state-run pension systems for teachers, college professors, state lawmakers, judges and rank-and-file state employees is at least $111 billion underfunded – about one dollar in four of the state’s general fund now goes to pay retirees. Lawmakers in 2013 attempted to address the problem by lowering benefits for existing retirees and current workers, but the state’s powerful public-sector unions immediately sued, citing the clause in the Illinois Constitution that states that pension benefits cannot be diminished.

The Illinois Supreme Court earlier this month sided with the unions and overturned the law. The opinion released for the 7-0 vote blasted state lawmakers over the bill, and pointed out that the crisis has been caused in large part by lawmakers not paying what they should into the system for decades while approving plusher benefits.

Tobin said his group is releasing pension data by county to drum up support for initiatives that include amending the state constitution to eliminate the pension clause, increasing government employees’ contributions to their pensions by 10 percent, and passing a law allowing local governments to file for bankruptcy to give them a mechanism by which their pension debt can be restructured.

Unlike the state-run systems, the IMRF is almost fully funded. Besides using simple rather than compound interest to calculate annual increases, the base payment is calculated differently, and local governments are required by law to pay the amount that the state determines is needed to keep the system solvent.

Conversely, only a handful of the more than 660 local police and fire pension funds statewide are considered fully funded, meaning they have enough money on hand to cover 80 percent or more of payments.

New data recently released by the state Commission on Government Forecasting and Accountability included several local funds as among those in the worst shape. The police pension fund for Spring Grove is only 36.4 percent funded and has $3.3 million in unfunded liabilities – voters earlier this year rejected a referendum to raise property taxes to shore it up. Lakemoor’s fund is slightly worse off at 32 percent of funding.

But the report also showed that several local fire pensions are doing well. The pension funds for McHenry Township and Huntley are almost fully funded, and the funds for Cary and Barrington fire pensions are more than 80 percent funded.

Rae Ann McNeilly, the taxpayer group’s executive director, said it will release corrected lifetime IMRF pension data in the coming days – the group made the same miscalculation when it released data for the other collar counties.

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