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updated: 7/1/2015 9:41 AM

Griffin: Taxpayers foot six-figure pension for private employee

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  • Illinois Association of Park Districts President and CEO Peter Murphy

    Illinois Association of Park Districts President and CEO Peter Murphy

  • Park president salary

    Graphic: Park president salary (click image to open)

 
 

As Peter Murphy's taxpayer-funded salary nears $400,000, the cost of his eventual public pension grows with it.

Last year, in addition to his $360,000 salary -- more than double what former Gov. Pat Quinn made -- Murphy received $103,000 in contributions toward his future state pension, according to data from the Illinois Municipal Retirement Fund.

That's despite the fact that Murphy's job as head of the Illinois Association of Park Districts isn't actually a government job.

He leads a lobbying group largely funded by payments from more than 300 municipal and county park districts, conservation districts and forest preserves, which raise funds primarily by levying property taxes.

While Murphy's compensation comes mainly from public funds, the details aren't subject to public scrutiny. His pay rose nearly 12 percent from 2012 to 2014, but he declines to say what his current pay is.

IMRF officials say Murphy's pay raises are designed to do one thing: maximize how much he can collect on his state pension, which the 64-year-old is immediately eligible to receive once he retires.

"They are spiking salaries," said Louis Kosiba, IMRF's executive director. "It's really not good pension design and not what we're trying to achieve with public pensions."

Like all IMRF-eligible employees, Murphy contributes 4.5 percent of his paycheck toward his eventual retirement benefit. Meanwhile, employer contribution rates vary each year depending on payroll, investment and actuarial conditions. The average IMRF employer contribution rate last year was 12.6 percent, but the IAPD's was more than double at 28.6 percent because of the steep growth in salaries, IMRF officials said.

Yet Murphy blamed the association's higher than average contribution rate on other factors, including the recession and the retirement of longtime employees, which he said increased the agency's unfunded liability. Murphy said his salary was not to blame.

"While IMRF is a well-funded and managed retirement system, in large part due to Louis Kosiba's leadership, his assertion is a mischaracterization," he said. "I am not planning to retire, and my salary is competitive with other high-performing CEOs."

The parks association has a history of driving up executive pensions, Kosiba said.

At $245,867 this year, former IAPD head Ted Flickinger has the third-highest annual pension in IMRF, according to the retirement fund's financial records. Flickinger went from making $183,000 in 2006 to $341,000 in 2009 just before he retired, an 86 percent raise in three years. Since IMRF pensions are based on an employee's highest-earning four consecutive years, Flickinger's pension grew as well. The same thing will happen with Murphy's pension when he retires.

Murphy was paid $322,444 in 2012, $336,431 in 2013 and $360,554 last year, IMRF records show.

With nearly 35 years at IAPD, Murphy is eligible for a pension equal to 65 percent of the average of his four consecutive highest-paid years. With five more years of service he will be eligible for the maximum 75 percent of the average of his highest-paid years. Murphy could make a pension of roughly $227,500 next year if he retired today.

During his nearly 35-year career at IAPD, Murphy has contributed $200,553 to his own pension so far, less than he would get back in one year of retirement, IMRF records show.

"We may have to have a hearing about this," said state Rep. Fred Crespo, a Democrat from Hoffman Estates who serves as chairman of the general service appropriations committee. "The point of pension reform was to try and change behavior, but obviously it hasn't changed any kind of behavior."

Along with Murphy, the IAPD has eight other employees in line for eventual IMRF pensions. The association paid another $183,000 toward those pensions last year, which came largely from taxpayers, according to IMRF data.

By the end of this year, contributions to the IAPD's nine employees' eventual pensions will top $1 million since 2012, most of it from taxpayers, according to IMRF data.

Kevin Dolan, a Mundelein park district trustee who also sits on the IAPD board, said the association's higher-than-average employer contribution rate hasn't been an issue at board meetings.

"I don't know of anything we've done differently to any pension benefit," he said. "It wasn't brought up in any of our meetings that I remember."

But taxpayer advocacy groups blamed IAPD board members for creating these additional costs.

"It's unfortunate and unfortunately no longer shocking," said Carol Portman, president of the Taxpayers' Federation of Illinois. "This sort of thing falls right back on the board because they're responsible for managing costs and you don't like hearing about things like this."

IAPD Board Chairwoman Diane Main, a Westmont Park District trustee, did not respond to requests for comment about the association. In all, there are 18 IAPD board members. Kane County Board member John Hoscheit, Bloomingdale Park District Trustee Mike Vogl and Grayslake Community Park District Trustee Gayle Cinke are suburban representatives on the IAPD board.

The pay increases drove up the required pension contribution, Kosiba said.

Kosiba said employer contributions to properly fund pensions are based on an assumed 4 percent salary growth annually. When employees get salary increases larger than that, particularly late in their careers, it requires a major infusion of cash to cover the potential future pension obligation. IMRF requires additional pension obligations to be paid immediately for any annual raises above 6 percent.

Since 2005, Murphy has averaged an annual raise of 9 percent. He's never received less than a 4.2 percent pay hike, according to IMRF records.

"What can give public pensions a bad name is that the concept of prefunding and providing a reasonable pension over an employee's lifetime is being distorted by spiking salaries," Kosiba said. "That puts public pensions in a bad light."

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