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Union leader draws lucrative pension perk based on false information
Chicago Federation of Labor's Jorge Ramirez (left) and Chicago Building Trades Council's Tom Villanova. (Michael Tercha/Chicago Tribune)
By Jason Grotto, Tribune reporter
10:09 p.m. CDT, September 1, 2011
Every month, Thomas Villanova gets a $9,000 reminder of how lucrative it can be to serve as a union leader in Chicago.
The sum is part of a city pension that comes on top of the $198,000 annual salary he is paid to represent the interests of thousands of city workers.
Villanova last worked for the city in 1989 as an electrical mechanic with the Department of Streets and Sanitation, making about $40,000 a year. Yet in 2008 he was allowed to retire at age 56 with a $108,000 city pension. That's because, under a little-known state law, his pension was based not on his city paycheck but on his much higher union salary.
This kind of deal is available only to union officials who meet certain requirements, but a Tribune/WGN-TV investigation has uncovered documents that show Villanova violated state law when he applied for the pension and cast doubt on whether he truly qualifies for all that money.
To boost his taxpayer-supported city pension, Villanova signed documents certifying that he had waived his union pension and had two union officials write letters supporting his claim. In fact, records show dues collected from the rank-and-file were still set aside for Villanova's union pension.
When city pension fund officials discovered last year that Villanova never gave up his union pension, they gave him a pass and didn't move to take away his city retirement benefits.
What's more, labor leaders can get an inflated city pension only if they are on a leave of absence from a city job to work full time for a union. But officials from the municipal pension fund approved Villanova's application despite city employment records that show he took a leave to go back to school and then let that leave of absence expire in 1992.
Now just 58, Villanova stands to collect approximately $3 million from the city's municipal pension fund during his lifetime, according to a Tribune/WGN-TV analysis based on the fund's actuarial assumptions. And because the state's pension laws are so broken, he didn't have to contribute enough to the city pension fund to cover the costs, which means taxpayers will make up the shortfall.
"It's egregious. I haven't seen this anywhere else in the country," said Keith Brainard, research director of the National Association of State Retirement Administrators, when he heard about Villanova's deal. "The spirit of a pension plan is insurance against poverty. It's not to become wealthy."
In order to receive an inflated city pension, state law says labor leaders can't be part of any pension plan from their union. Yet Villanova is one of four officials from Local 134 of the International Brotherhood of Electrical Workers who received city pensions based on their union salaries even though they never gave up their union pensions.
Terrance Stefanski, executive director of the Municipal Employees' Annuity and Benefit Fund of Chicago, conceded that the union leaders violated state law by participating in both the city and union pension funds at the same time. But he said the law is confusing and the city pension fund isn't in a position to determine whether the labor leaders knowingly submitted false information, which would be a felony.
"We are not an investigative agency," he said.
Stefanski said the city still considered Villanova to be on a leave of absence, and therefore he qualified to receive the pension perk.
Villanova declined to be interviewed. Through attorney Patrick Deady, Villanova said he followed the city pension fund's directions and that he qualified for his city pension because he taught union apprenticeship classes while in school.
Now president of the Chicago and Cook County Building and Construction Trades Council, Villanova helped negotiate every current collective bargaining agreement between Chicago and the 33 trade unions that do business with the city.
With the Emanuel administration struggling to fill a $635 million budget hole, Villanova sits at the bargaining table and speaks on behalf of 8,000 city tradesmen who face layoffs, furlough days and reduced benefits, in no small part because of the city's rising pension costs.
Today, the municipal pension fund is racing toward insolvency, with barely half of the assets needed to cover its liabilities. That means city workers face threats not only to their current job security but also to their future retirement security.
The average city retiree receives a pension of about $28,000 a year, roughly a quarter of what Villanova is drawing from the same fund.
Meanwhile, about $200,000 in rank-and-file dues that were paid into a union pension fund for Villanova have yet to be returned to the union. Documents show that Villanova agreed in writing last year to "disclaim" the pension money — but left the door open to taking it back if the rules change.
Union leader draws lucrative pension perk based on false information
Chicago Federation of Labor's Jorge Ramirez (left) and Chicago Building Trades Council's Tom Villanova. (Michael Tercha/Chicago Tribune)
By Jason Grotto, Tribune reporter
10:09 p.m. CDT, September 1, 2011
Every month, Thomas Villanova gets a $9,000 reminder of how lucrative it can be to serve as a union leader in Chicago.
The sum is part of a city pension that comes on top of the $198,000 annual salary he is paid to represent the interests of thousands of city workers.
Villanova last worked for the city in 1989 as an electrical mechanic with the Department of Streets and Sanitation, making about $40,000 a year. Yet in 2008 he was allowed to retire at age 56 with a $108,000 city pension. That's because, under a little-known state law, his pension was based not on his city paycheck but on his much higher union salary.
This kind of deal is available only to union officials who meet certain requirements, but a Tribune/WGN-TV investigation has uncovered documents that show Villanova violated state law when he applied for the pension and cast doubt on whether he truly qualifies for all that money.
To boost his taxpayer-supported city pension, Villanova signed documents certifying that he had waived his union pension and had two union officials write letters supporting his claim. In fact, records show dues collected from the rank-and-file were still set aside for Villanova's union pension.
When city pension fund officials discovered last year that Villanova never gave up his union pension, they gave him a pass and didn't move to take away his city retirement benefits.
What's more, labor leaders can get an inflated city pension only if they are on a leave of absence from a city job to work full time for a union. But officials from the municipal pension fund approved Villanova's application despite city employment records that show he took a leave to go back to school and then let that leave of absence expire in 1992.
Now just 58, Villanova stands to collect approximately $3 million from the city's municipal pension fund during his lifetime, according to a Tribune/WGN-TV analysis based on the fund's actuarial assumptions. And because the state's pension laws are so broken, he didn't have to contribute enough to the city pension fund to cover the costs, which means taxpayers will make up the shortfall.
"It's egregious. I haven't seen this anywhere else in the country," said Keith Brainard, research director of the National Association of State Retirement Administrators, when he heard about Villanova's deal. "The spirit of a pension plan is insurance against poverty. It's not to become wealthy."
In order to receive an inflated city pension, state law says labor leaders can't be part of any pension plan from their union. Yet Villanova is one of four officials from Local 134 of the International Brotherhood of Electrical Workers who received city pensions based on their union salaries even though they never gave up their union pensions.
Terrance Stefanski, executive director of the Municipal Employees' Annuity and Benefit Fund of Chicago, conceded that the union leaders violated state law by participating in both the city and union pension funds at the same time. But he said the law is confusing and the city pension fund isn't in a position to determine whether the labor leaders knowingly submitted false information, which would be a felony.
"We are not an investigative agency," he said.
Stefanski said the city still considered Villanova to be on a leave of absence, and therefore he qualified to receive the pension perk.
Villanova declined to be interviewed. Through attorney Patrick Deady, Villanova said he followed the city pension fund's directions and that he qualified for his city pension because he taught union apprenticeship classes while in school.
Now president of the Chicago and Cook County Building and Construction Trades Council, Villanova helped negotiate every current collective bargaining agreement between Chicago and the 33 trade unions that do business with the city.
With the Emanuel administration struggling to fill a $635 million budget hole, Villanova sits at the bargaining table and speaks on behalf of 8,000 city tradesmen who face layoffs, furlough days and reduced benefits, in no small part because of the city's rising pension costs.
Today, the municipal pension fund is racing toward insolvency, with barely half of the assets needed to cover its liabilities. That means city workers face threats not only to their current job security but also to their future retirement security.
The average city retiree receives a pension of about $28,000 a year, roughly a quarter of what Villanova is drawing from the same fund.
Meanwhile, about $200,000 in rank-and-file dues that were paid into a union pension fund for Villanova have yet to be returned to the union. Documents show that Villanova agreed in writing last year to "disclaim" the pension money — but left the door open to taking it back if the rules change.
