In Chicago, teacher union leaders have won the lottery of municipal benefits. Twenty-three union leaders will be receiving a total of $56,000,000 in retirement. For most, these pension benefits will be greater than the salaries that they made while employed by the union. On the 1991 law that has secured these benefits, the Chicago Tribune reports:
All it took to give nearly two dozen labor leaders from Chicago a windfall worth millions was a few tweaks to a handful of sentences in the state’s lengthy pension code.
The changes became law with no public debate among state legislators and, more importantly, no cost analysis.
Because of the secrecy surrounding the collective bargaining process between policymakers and organized labor in Chicago, the article explains that it is difficult to determine the lawmakers responsible for this policy. The $56 million in pension benefits is a relative drop in the bucket at this point for the Chicago Teachers’ Pension Fund, which has been underfunded by $5 billion in the last 10 years.
However, the process by which union leaders secured these benefits is symptomatic of Illinois’ larger pension problems. Twenty years ago when lawmakers agreed to guarantee these benefits, they were not concerned about the long-term repercussions to the pension funds’ solvency, or for that matter what the size of the bill might be for future residents.
Lawmakers have the incorrect incentives to manage pension funds because they think in terms of election cycles, where strong union support can make sure they stay in office, rather than the long horizon over which taxpayers will be forced to fund these promises. Eileen Norcross documents this misalignment of incentives in a forthcoming we will be discussing further here.