The corporate funded Better Government Association and its head Andy Shaw was a big supporter of the unconstitutional Senate Bill 1 pension theft.
One of the favorite ploys of the Better Government Association is to find an example of corruption or cheating by some high-level government official and then twist it into a story about all public employees.
Particularly when it comes to pensions.
This isn’t altogether surprising when you consider that the BGA is funded by the same Civic Committee corporations that have been targeting public employee pensions for years.
Yesterday it was about the former City Treasurer Stephanie Neely.
In 1991, the state legislature passed a law that carved out a special exemption for elected officials in Chicago, allowing them to qualify for a pension at eight years.
In October, Neely announced she would resign November 30, exactly eight full years after her first day on the job. On October 23rd, five weeks before leaving office, Neely switches her pension credits into the elected official’s plan. Because that plan requires a higher contribution rate, Neely then wires an additional $35,784 to the pension fund to make up the difference. It’s money well spent, as she now will be able to collect a $34,716 annual pension when she turns 60 in 2023.
The BGA calls the eight year eligibility period a perk.
“It’s not illegal. What she did is allowed under the law. But it’s a perk that’s afforded to elected officials that regular city workers don’t get,” Rehkamp said.
Neely, who’s now working for a private company, would not talk to FOX 32 on camera, but told the BGA she hasn’t decided whether to take her pension.
“I wanted to make sure I had the option to do whatever is in my best interest since I didn’t contribute to social security… I didn’t create the law (allowing this),” she said.
As city treasurer, Neely served on that very same pension fund’s board and knows about all its financial problems.
MEABF has only 37-cents for every dollar it owes in pension payments, and carries an unfunded liability of more than $8-billion.
“It’s a great deal for Stephanie Neely and it’s a horrible deal for taxpayers,” Rehkamp added.
Who wouldn’t be pissed that the legislature created a perk like this for itself and other elected officials?
But the story ends with this: “That could be said for many of the pensions for public employees, which are woefully underfunded and will cost taxpayers billions to patch up down the road.”
And so an ethical issue involving the City Treasurer becomes a story about pensions for public employees.
A BGA bait and switch.
Much more of a threat to pension system members and to taxpayers than the $34,000 a year pension Neely will receive when she turns 60 is the hinky investment strategies of Neely’s successor, City Treasurer Kurt Summers.
Summers’ plan to move city pensions to high risk investments was outlined yesterday in Mark Anderson’s Ward Room report.
The overall market for public pension dollars has seen a significant shift into alternative investments in the past decade or so. By 2012, the use of alternative investments in public pensions has more than doubled since 2006, with the use of alternative investments reaching 23 percent of all plan portfolios. By some estimates, as much as a quarter of the $3 trillion in public pension funds are already in alternative investments—which means $660 billion of public money is now under private management.
Adopting a more risk-friendly approach centered on alternative investments is a move Summers, as a veteran of Grosvenor Capital Management, is likely to feel comfortable with—which may well be one of the reasons Emanuel appointed him. Grosvenor has made its mark in the financial world primarily through managing alternative investments such as hedge funds-of-funds, with over $47 billion currently in alternative assets under management.
“The reality is, you have just as much, if not more exposure to risk and volatility in the market with investments in basic public securities than you do with alternative products meant to mitigate risk and limit volatility,” Summers told the Sun-Times. “That’s the business I was in — trying to do that for clients around the world.”
The Treasurer’s office did not respond to repeated requests for information and comment for this story.