Union Report: When It Comes to Double-Dipping Pensions, Union Officials Are Happy to Take — but Not So Happy to Give
Mike Antonucci’s Union Report appears most Wednesdays; see the full archive.
“Teachers union” is a term that combines two worlds. One world consists of public employees hired and paid by government entities — schools. The other consists of private employees hired and paid by a private enterprise — the union. The overlap has brought about a series of byzantine labor laws, contract provisions and litigation that results in headaches for some — and a financial windfall for others.
Two cases appeared (or reappeared) recently that showcase how union officers can game the system to draw on public benefits for private work. They also show how the union reacts when someone tries to work the scheme in the opposite direction. But first, some explanation is required.
Teacher union staffers are entirely private employees. Many of them may have been public school teachers at one time, but they left the profession in order to be hired by the union. If they were vested in a teacher retirement system, they will receive pension credit for the years they served. Otherwise, their pension comes from a private plan, operated by the union itself.
Elected teacher union officers remain public school teachers. Arrangements vary from state to state, but union officers in small locals and states report to their classrooms regularly and have to receive release time to conduct union business. The amount is usually spelled out in their local collective bargaining agreements. Larger locals and states release elected union officers full time, granting them a leave of absence.
This is where it gets tricky. The officers remain employees of the local school system. Their pay is calculated and they move up the salary scale as if they have been in the classroom the entire time. They also receive public pension credit.
Generally, the union will reimburse the district for the officer’s absence. Sometimes, it’s the full amount of what that individual officer is making. Other times it’s only for the cost of a substitute. Sometimes, the union will reimburse the district for the officer’s contribution to the pension system.
This arrangement could go on for decades. It is not unusual for a union officer to receive her first union leave of absence as the president of a large local, followed by another as state treasurer, then state vice president, then state president, then national executive committee member, then national treasurer, vice president and president. She could reach the top of the salary scale and accumulate maximum pension credit without having taught in a classroom for 30 years.
The public may be shortchanged by this arrangement, but additional teacher pensions for a handful of union officers won’t break the government bank. There have been a number of cases over the years, however, in which union officers converted their union jobs into gigantic public pension payouts.
In Rhode Island, the teacher unions were successful in getting a state law passed that not only allowed union officers to receive pension credit for their union work but also allowed their union salaries to be included when calculating their public pension.
The result was that 24 union officers were projected to receive a rate of return of 1,250 percent on their pension contributions.
When legislators realized this, they repealed the law and booted the union officers out of the pension system. The officers filed suit, with the help of the National Education Association, and prevailed at trial. But the decision was overturned in 1999 by a federal district court.
A similar law existed in Illinois, where Reg Weaver was receiving a $60,000-a-year teacher salary before he rose through the union ranks and eventually became NEA president in 2002. When he retired, he was able to add the more than $300,000 he took in annually as NEA president to his teacher pension calculations, resulting in an annual public pension of $242,657.
David Piccioli was a hired lobbyist for the Illinois Federation of Teachers and was never a teacher. But the law allowed him to purchase pension credit and apply his union salary to the computation as long as he was certified as a teacher. In 2006, Piccioli applied for and received a substitute teacher certificate. He subbed for a single day in January 2007, purchased pension credit for $190,000, retired from “teaching” in 2012 and received an annual pension of $36,000. He recouped his investment in less than six years.
The state pension board tried to block this scheme, which the Chicago Tribune editorial board decried as “Sub for a day. Pension for life. It’s outrageous.” But Piccioli sued, and on April 4 the state Supreme Court ruled in his favor, 4-3. The Illinois teacher retirement system was saddled with $75 billion in unfunded liabilities as of 2018.
Judging by this record, one might think that unions are more than happy to see their officers take clever advantage of some poorly crafted laws. But this month the shoe ended up on the other foot.
Michael Crossey was a longtime public school teacher in Pennsylvania. He accumulated more than enough credit in the state teacher pension system to retire. In 2007, he was elected vice president of the Pennsylvania State Education Association. In 2011, he was elected president. That position also gave him the responsibility of chairing the union’s pension plan board of directors.
As is common, PSEA directly paid Crossey a reduced salary, using the rest to reimburse his school district, which was still paying him his teacher salary.
Having already secured his public pension, Crossey did the reverse of the union officers cited above. He purchased 12 years of union pension fund credit in 2013 for almost $124,000. Crossey paid the balance by retiring from teaching and using funds from his public pension. Now that he was no longer teaching, PSEA paid Crossey the full president’s salary.
So, in addition to his public pension, Crossey was now eligible for a union pension of about $4,200 a month.
Crossey retired from PSEA in 2016 and received both pensions without incident until March of last year, when the union informed him that it had miscalculated. It had charged him $124,000 for pension credit based on the reduced pay he was receiving in 2007 (about $45,000) but computed his pension benefit based on his full salary in 2016 (about $190,000).
PSEA essentially gave Crossey two choices: 1) pay back $40,000 and have his monthly pension reduced to $2,400; or 2) retain his current pension benefit by paying PSEA a lump sum of $244,000.
Crossey chose a third option: Earlier this month he sued in federal court the PSEA Pension Plan he once oversaw and its board of directors. His argument is basically that he cannot be held financially responsible, with interest, for PSEA’s screw-up.
Union pension plans are having as much difficulty remaining fully funded as public employee pension plans are. Perhaps both could benefit from ensuring that employees are justly compensated for time served, rather than for gaps in labor law.
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