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Republican Lawmaker Targets Controversial Pension Perk

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CHICAGO (CBS) – House Republican Leader Tom Cross said Thursday that he plans to push for legislation to repeal a 1991 law that allows union leaders from Chicago to reap inflated retirement benefits from ailing city pension funds.

The legislation is in response to a Chicago Tribune investigation that found at least 23 labor leaders stand to collect approximately $56 million from two city pensions funds.

The inflated pensions were the result of a 1991 law that allows city workers who have taken leaves of absences to work full-time for unions to remain in city pension funds. Although those union bosses made contributions to the pension based on their city salaries, they qualified for benefits based on their much higher union salaries.

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Cross said that law was passed before his time as a lawmaker, but said, “In my opinion, it essentially lets you game the system and you end up retiring with a pretty significant pension … that you haven’t paid for.”

Cross said legislation has yet to be drafted to repeal that law, but he has directed staff to examine whether they can apply the changes to labor leaders who haven’t yet retired from the city, but have applied for the perk. That would directly challenge the idea that all accrued benefits are protected by the state constitution.

“At minimum, going forward you would no longer be able to do what they’ve been doing,” Cross said in a phone interview. “To allow this to happen is crazy.”

Cross said he’s hoping for bipartisan support.

“This is kind of the typical ‘Chicago Way’ and however it happened, you need to undo it. The fact that you can make a contribution based on a smaller salary and retire on a higher salary with the pension is ludicrous. So, I would like to think that my friends on the other side of the aisle would support us in repealing it.”

Meantime, Mayor Rahm Emanuel agreed that the pension system needs to change, but he said he’s more interested in that than going after union leaders who are pulling in six-figure pensions thanks to the 1991 law.

“In the end of the day, the taxpayers are on the hook and I do not believe taxpayers should be left on the hook for a system that’s not honest to them and not honest to the people that are contributing to it,” Emanuel said.

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The mayor said the entire city pension system is broken and declined to single out specific union leaders who have been pulling in big pensions from the city that are based on their salaries as union bosses.

For example, former Chicago Federation of Labor President Dennis Gannon has netted a $158,000 city pension based on one day on the city payroll, according to the Tribune.

Emanuel did not mention any retired union leaders by name, but spoke in genenral about needing to correct the system.

“One individual is not the problem. That problem needs to be addressed in a system-wide systematic overhaul,” Emanuel said. “I understand the individual examples, but do not lose the forest for the trees.”

The mayor said the law is unfair to both taxpayers and average city workers.

“We are asking city employees … who are being honest, every month, every paycheck – contribute. We negotiated something that has left our taxpayers on the hook,” Emanuel said. “I said it wasn’t honest to the people planning for retirement and it’s not honest to the taxpayers.”

Emanuel said the city’s pension system requires better performance by its managers and better coordination between the city and the state.

The mayor indicated no plans to go after Gannon or any other union leaders to get back any of the pension money they have collected.

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