McHenry Co. Board member Mike Walkup is seated far right, Andrew Gasser back row center
McHENRY – McHenry County and its county board is currently Ground Zero for pension reform in Illinois. Specifically, questions have been raised by Illinois State Representative Jack Franks (D-Marengo) about whether or not county board members were completing the work necessary to qualify for the Illinois Municipal Retirement Fund (IMRF) benefit.
McHenry County Board Member Mike Walkup (R-Crystal Lake) and Republican Nominee for McHenry County Board Chairman spoke to some of the very specific challenges about IMRF that perhaps many Illinois Residents did not know. To be specific:
- IMRF is not a government agency and is a private corporation that pays its CEO close to $300,000 per year.
- Once you sign up for IMRF you cannot withdraw from IMRF – you are stuck.
- Requirements of the pension are not disclosed on the sign up form or briefed before new members are asked to sign up.
- When an elected official does not vest in the pension, while the official does get their investment back, IMRF keeps the “government contribution” for themselves.
Below is the text of County Board Member Michael Walkup at the May 3rd, 2016 McHenry County Board meeting. A video of his testimony is HERE and posted below.
Briefly this morning the issue of pensions and the IMRF that have surfaced this over the past year.
Senator Althoff has taken the lead on this recently and has introduced a bill, which has passed the senate, that makes some attempts at fine tuning the pension system as it applies to elected legislative officials in counties, municipalities, townships and other local government bodies.
What it does not do, however, is address the overall question.
What I am hearing from the public as well as other local legislators, is that the public does not want local or state legislators to receive pensions. Period.
Our own pensions are a case in point.
We are solicited to sign up for our pensions during freshman orientation before we have even been sworn in as new board members, and at a time when we don’t know anything about our new jobs.
Some salient points of the pension system are also not highlighted at that time.
For example, it was news to many board members this year that once they had signed up for the pensions they are not thereafter allowed to withdraw.
In fact, even in the past couple of weeks, when I have spoken of this with other board members, they were not only unaware of it, but positively refused to believe me and wanted to seek verification from other sources.
It is like roach motel. You can check in but you can’t check out.
Or hotel California. You can check out any time you like but you can never leave.
This is, unfortunately, not addressed in the bill which is now being shepherded through the [Illinois] House by Rep. Jack Franks.
Another, even more disturbing situation which is likewise not emphasized to new members, is what happens if you don’t vest.
A few years ago, the period of time which was required to vest in the pension was increased from 8 to 10 years.
This sounds like a good thing, evidencing responsible government.
However, in the case of elected officials who usually have four or two year terms after which they have to be re-elected, it means that they have to be elected to three terms of office to vest in the pensions.
This encourages legislators to become career politicians in order to qualify for their pensions.
What is more disturbing, however, is what happens to the money that has been put in when someone does not seek election or is not elected to a third term.
Although the money that the member put in personally is returned, the portion put in by the governing body that employed them, which means by the taxpayers, is retained by IMRF.
Bear in mind here that IMRF, despite it’s name, is not an agency of the state but is a private company interested in making a profit.
Therefore, the taxpayer money is taken out of the government and given to a private company.
The amount may also surprise you.
The contribution amount of the legislator at the local level is 4.5% but the governing body’s contribution is around 10.24%, or about two and a half times the amount put in by the member.
Therefore, in the case of county board members who are paid $21,000 per year, the share that is lost to the taxpayer over, say eight years, is more than $17,000, almost a full year’s salary for a board member.
This is even more egregious where the member has decided in advance to term limit themselves to less than three terms. (You will remember that we cannot impose term limits on ourselves without a constitutional amendment and that amendment cannot be put on the ballot except by the General Assembly.)
These members are told that it is nevertheless a good idea to join IMRF for the deferred tax advantages. What is not emphasized, however, is that now IMRF will be getting over $17,000 of taxpayer money when that member retires.
It is a scam perpetrated by the IMRF company on unsuspecting newly elected local legislators and on the local taxpayers.
It is a transfer of taxpayer money to a private company to enhance their profits and allow their executives to be paid large salaries totaling, in the case of the chief executive, nearly $300,000 per year.
The bill now being handled by rep. Franks does not attempt to change this.
The situation is far worse in the state legislature, which is not a part of the IMRF system.
There, the average lawmaker makes over $80,000 per year, also for part time work, but the taxpayers contribute over $120,000 per year just for the pensions, for a total of over $200,000 per year per state legislator.
I am therefore going to be calling on our board to do two things:
First, I do not think that we should continue to receive pensions, notwithstanding the possible passage of the Althoff/Franks bill.
I believe that we should terminate our involvement effective with the new terms of office that begin in December of this year.
This will not affect the ability of those members who have vested to receive their benefits.
Why try to make something work that shouldn’t exist in the first place?
Second, I would call on our Legislative Committee Chairman Provenzano to place on the agenda for the next legislative committee meeting, discussion of an initiative to remove the pension system for all legislative officials, whether local or state, while allowing those who have vested to keep the pensions they have contributed towards.
McHenry County has for some reason been singled out for the problems of the entire pension system in Illinois.
Therefore, it is only fitting that McHenry County be the catalyst and provide the leadership for change.
Fellow county board member Andrew Gasser tells us the board has not approved Walkup's proposals.
