I did not mean today to become a book report on the state of the Chicago Political Insider's Club, but this story was too tasty to pass up.
From the invaluable Better Government Association:
Ex-City Colleges Chief Gets “A+” in Personal Finance*(The alert reader will note the name "Terry Newman" and note that it shows up later in this post. Drawing a line between these two points will count for 1/3 of your final grade)
By Patrick Rehkamp/BGA
As graduation rates were bottoming out at the City Colleges of Chicago in 2009, then-Chancellor Wayne Watson was cashing out. Big time.
The Better Government Association previously reported Watson was paid more than $500,000 in unused sick and vacation time when he retired from the taxpayer-funded community-college system three years ago.
The BGA recently learned that Watson’s out-the-door compensation was richer than previously known, totaling as much as $800,000, according to public records and interviews.
On top of roughly $537,000 in sick- and vacation-day payouts, Watson also was given an exit bonus of $124,615, according to City Colleges records recently obtained under the Illinois Freedom of Information Act.
What’s more, City Colleges is providing him with free health care coverage for life – costing the system more than $22,000 to date in premiums and reimbursements – and a life insurance policy that he was allowed to cash out for $112,602, records show.
Watson, now president of Chicago State University, wouldn’t say whether he exercised the right to convert the policy to cash. ...
But this much is known: the exit bonus was signed by the City Colleges’ then-board chairman, Jim Tyree, in July 2009, the month before Watson retired, records show.
Tyree died in March 2011. (At the time, he was a co-owner of the Chicago Sun-Times, and chairman and CEO of Mesirow Financial.)
None of the current City Colleges board members were with City Colleges at the time the bonus was agreed upon.
Terry Newman, a close friend of former Mayor Richard M. Daley, was the City Colleges’ board secretary at the time. Through a spokeswoman, Newman said "as he recalls there was no discussion about this or any negotiation about his payout . . . that would have been a discussion and negotiation between the chairman and chancellor."*
Regardless, compensation experts consulted by the BGA said such perks – an exit bonus and a life insurance payout – are relatively rare in the private sector, and are rarer still in the public realm.
"Normally it doesn’t happen that way," said Paul Dorf, managing director of Compensation Resources, Inc., a New Jersey-based consulting firm.
Meanwhile, after the BGA inquired earlier this year about Watson’s sick- and vacation-time payday, Mayor Rahm Emanuel ordered a crackdown on the perk for non-union employees at city-related agencies.
Annual sick-day payouts at CSU were curtailed even earlier – but not before Watson took advantage of the allowance and cashed out $13,000 in unused sick time in 2011, school officials indicated. ...
Understand, this is not happening during budget surplus, high-cotton times at the City of Chicago, when virtually no one would notice or care. Ever since Chicago gummint revenues took a nosedive in 2007/2008, the city has been frantically cutting, consolidating, early retiring, selling off, selling out, privatizing, re-organizing, re-re-organizing and re-re-re-organizing itself to safe money.
Well...cutting, consolidating and so forth all of those parts of city gummint that are not safe and snugly behind the clout-shield. Because in Chicago, clout rules all things,
which is why even as Da Mare mourned publicly about how sad-sad-sad it was that he had to slash the guts out of anything that was not clout-protected, behind closed doors he was cooking up one last scheme to sell off taxpayer assets for enough dough to prop up his bloated administration just long enough to take a victory lap, pass Go, cash in some of his political chips and dance away into legend.
It was not a pretty sight, with stories like (from the Chicago Reader)...
As Mayor Daley cashes in, ousted teacher gets cut off...and this...
By Ben Joravsky @joravben
Mayor Daley's had a great run over the last few weeks.
Since leaving office May 16, he has, let's see, landed a gig at the University of Chicago, where he'll have to "coordinate" a handful of lectures in exchange for a reported $100,000 a year.
That would be the same University of Chicago that last year was part of a development team receiving the OK for a $20 million handout from the mayor's good old tax increment financing honeypot to help build a hotel, retail, and office complex in blighted (ha, ha, ha) Hyde Park.
Daley also got a gig as a lawyer for Katten Muchin Rosenman, the firm that employs his best friend, Terry Newman, and racked up more than a million bucks in legal fees from advising the city on such privatization schemes as the parking meter lease deal.
Thanks a lot for that one, fellows.
Then there's the company the ex-mayor's reportedly launching with his son, Patrick, which will be seeking overseas investors for deals in Chicago. Not to mention his speaking engagements and prospective book deals.
As my colleague Mick Dumke put it, they're all steps in Daley's "ongoing privatization of himself."
Oh, wait, can't forget his pension—about $184,000 a year.
To paraphrase the great Johnnie Taylor, it might have been cheaper to keep him around.
In contrast, consider the case of Anthony Skokna, 56, who was unceremoniously dumped from his job as a history teacher at Marshall High School, just about two years shy of claiming any of his pension. He's been applying for jobs all over town, but no one will hire him, most likely because he's too old.
Before he went to Marshall, Skokna taught for eight years at a couple of Catholic high schools in Chicago. He says he might have closed out his career in the Catholic schools but he had a growing family (eight kids) and needed a higher-paying job. In the fall of 1992, he started at Marshall. "The city was so short of teachers, they hired a bunch of us," he says. "Different than today."
Actually, not so different. That teacher shortage was in part induced by a pension buyout plan the central office cooked up to induce hundreds of older teachers into retiring so they could be could be replaced with younger ones (like Skokna) who made less money.
If this were a novel, it would be called ironic.
...
Arbitrator OKs CTA layoffs starting Sunday
February 3, 2010 6:09 PM
Labor unions at the CTA lost a challenge to the transit agency's plans to lay off more than 1,100 employees starting Sunday as part of major service cuts to reduce a budget deficit.
An arbitrator's ruling today against the unions means that the cuts -- an 18 percent reduction in bus service and 9 percent for trains -- will be implemented, barring any developments to erase a $95.6 million deficit that remains for 2010, transit officials said.
CTA management has introduced more than $200 million in internal cuts and other cost savings, and it said the unions must agree to salary and other concessions to help erase the rest of the deficit and stave off the service cuts. The unions representing CTA bus and rail workers have so far refused, saying they made concessions in the past.
...and this.
Fitch downgrades Chicago bonds
Posted by Greg H. at 10/28/2010 3:48 PM CDT on Chicago Business
Chicago's bond rating has suffered another hit, this one from Fitch Ratings.
The New York-based firm on Thursday lowered its rating on $7 billion in outstanding general-obligation city debt to AA- from AA, particularly citing the city's increasing reliance on one-time revenues to fix its budget.
"While the economy remains broad and diverse, the city's financial position has weakened," Fitch wrote. Revenues have been hurt by high unemployment and above-average home foreclosures, while the city has reduced reserves from around $2 billion a couple of years ago to a projected $790 million by December.
Fitch applauded layoffs and other payroll trims implemented by outgoing Mayor Richard M. Daley, but added, "The ability to make further expenditure cuts to personnel is extremely limited" due to union contracts.
"Rising costs for public safety and the continued slow economic recovery will severely limit the city's ability to achieve structural balance without working (politically difficult) structural solutions," it said
...and this...
Chicago Community College Budget Calls for Hundreds of Layoffs
Alex Keefe Jul. 29, 2010
Hundreds of non-teaching staff members could be laid off under the new budget proposal for Chicago's community college system.
Next year's budget for City Colleges of Chicago could fund 311 fewer positions, some through attrition.
But that could include 225 non-teacher layoffs.
Chancellor Cheryl Hyman they would affect administrators, as the district tries to consolidate some workers from its seven colleges.
...and this...
New Chicago Public Schools Budget: Layoffs, Furlough Days, And Larger Class Sizes To Make Ends Meet
Chicago Sun-Times | Fran Spielman | 04/16/09
About 1,200 city school workers will receive layoff notices this week, and principals will begin sharing the budget pain via pay freezes and six furlough days, as Chicago Public Schools officials move today to plug their remaining $370 million deficit.
...and this....
Standard & Poor's lowers Chicago bonds
(Crain's) — The city of Chicago's general obligation bonds took a hit by Standard & Poor's, which lowered its long-term debt rating, citing ongoing budget strife.
The ratings agency assigned Chicago's general obligation debt an A+ rating, down one notch from AA-. It gave the same A+ rating — also lowered from AA- — to nearly $804 million in general obligation refunding and taxable project bonds.
S&P said in its report that the new rating "reflects our view of the city's ongoing structural imbalance and heavy reliance on non-recurring revenues to bridge its 2011 budget gap, including the use of most of its remaining reserves from the sale of its parking meters."
...and this...
Daley To Union: 1,600 City Lay Offs Unless Concessions Made
Chicago Sun-Times:
Mayor Daley will be forced to lay off up to 1,600 city employees -- none sworn police officers or firefighters -- unless organized labor agrees to another round of givebacks to wipe out a potential $300 million shortfall, union leaders were told this week.
...showing up with depressing regularity.
And just in case you thought the Machine stopped rolling just because it changed drivers, this is how Mare Rahm handles things (from yours truly, a year ago):
...
Having already laid off thousands and still facing a $720 million deficit, the Completely-Broke-So-Don't-Even-Ask City of Chicago apparently stumbled across a windfall in the sofa cushions of the teacher's lounge of one of the many, many, many schools it has financially short-sheeted.Of course, in a city starved down to its last nickles, a story about throwing absurd, private sector, boom-era pay and perks at the outgoing chancellor of a deeply flawed and failing public institution doesn't make a damn bit of sense until you understand two things.
Guess what the New Mare did with it?
Brizard Set to Earn $250,000 as CPS CEOOne of the iron rules of the Clout Club is that there is always plenty of money for whatever the Boss wants to spend money on.
by REBECCA VEVEA | May 25, 2011
Incoming Chicago Public Schools CEO Jean-Claude Brizard will officially begin work Thursday, after the outgoing Chicago Board of Education unanimously approved a one-month contract at its monthly meeting Wednesday. Mayor Rahm Emanuel’s hand-picked board will approve Brizard’s longer-term contract when it convenes in June.
Brizard, who did not attend the meeting, will make $250,000 a year under a the resolution approved by the board — $15,000 more per year than he was earning as superintendent of the Rochester, N.Y. school system. It’s a $20,000 increase from the salary of the last full-time CPS CEO, Ron Huberman. Interim CEO Terry Mazany worked for a token salary of $1.
...
Always.
First, the city's clout system sometimes gets bottlenecked with hungry, hungry hippos: what Abraham Lincoln once refereed to as "too many pigs for the teats." When this happens, the city college system provides a safe place away from prying eyes where the Machine can quietly dump its loyal, overpaid, surplus lieutenants (or, as one wag once put it, "for decades the ossified city college system has been used as the pasture out to which politically-connected friends have been put".)
And second, while Mr. Watson may have been a glad-handing empty suit, he was Mare Daley's glad-handing empty suit. He presided discretely and faithfully over Hizzoner's unsanctified resting place for the politically undead and was compensated commensurate with his years of loyalty and discretion.
In other words, there is a Club.
And you are not in it.
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