Illinois school superintendents get rich on pension benefits by fleeing state

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Retired school superintendents are making a mad dash for the border, that is, the state border, in order to effectively double up on their annual compensation.

And that’s exactly what’s happening in Illinois, and likely other states, according to an investigative report in the Chicago Tribune. In fact, while educators are moving out of state to get around pension payment rules, superintendents from other states are moving into Illinois, presumably to fill in for the jobs left by those taking advantage of the loophole.

Illinois state laws are in place to prevent its public school superintendents from retiring and triggering outsized pensions, and then taking another superintendent job to collect two checks from the state. Unfortunately, when politicians crafted the law, they forgot to limit retirees’ pensions if a superintendant took a job across state lines.

In many cases, those moving into Illinois are also retirees, hiding from their state while cashing pension checks and continuing to earn large salaries.

Even though the state’s pension system is in serious financial straits, there’s nothing much that can be done under existing rules, since it’s all legal.

“We have allowed a system to develop that is grossly underfunded and that has very generous benefits,” said Laurence Msall, president of Chicago’s Civic Federation, a nonprofit government research organization. “To draw a pension from the state … and then immediately go get another job as a superintendent or in another teaching capacity — they’re really not retiring.”

Some examples found by Tribune investigators include:

  • Retired superintendent of New Trier Township High School District Hank Bangser, collects a $261,681 state pension, while working as a school superintendent in Southern California’s Ojai Unified School District making $170,000. His total annual compensation: $431,681.
  • Retired Wheaton Superintendent Gary Catalani receives a $237,195 Illinois state pension while earning another $195,000 from the Scottsdale, Arizona school district. His total annual compensation: $432,195.
  • Retired South Cook superintendent Eric King receives a $166,608 Illinois state pension and earns another $168,343 salary as the superintendent of the Muncie, Indiana school district, for a total of $334,951.
  • Retired East Maine Superintendent Kathleen Williams receives a $177,711 Illinois state pension, and earns another $156,000 in Wausau, Wisconsin. Her total compensation: $333,711.
  • Retired Superintendent Rebecca van der Bogert collects a $169,050 Illinois state pension, another $21,974 from Massachusetts, and currently works in Florida as the head of the Palm Beach Day Academy.
  • Retired superintendent of the Oak Park and River Forest Districts Attila Weniger, receives an Illinois state pension of $180,302 while earning another $149,500 as the superintendent of the Stevens Point Area Public Schools District in Wisconsin, for a total of $329,802.

The is no system in place that monitors how many retired school superintendents are crossing state lines to work while they are “retired,” and there is no system in the state that checks to make sure that the superintendents are not working another job in Illinois.

Tribune reporters tracked down retired superintendents through Internet searches, newspaper articles and public records, since state records do not track the whereabouts or employment of the retirees.

However, data at the Illinois State Board of Education does show dozens of superintendents moving into its system with 20 or more years of employment at out-of-state districts, but does not show how many are receiving pensions.

All of the superintendents who were contacted by the Tribune defended their employment while collecting retirement benefits, and some were angry that the issue was being raised.

“Somebody who retires can go to another state and work. To me, that is the story, and that’s what I’ve done,” Weninger said.

“I worked uninterrupted for 36 years and obviously made all the (retirement) contributions, as did all of my colleagues,” Bangser, 61, said. “The point is that, I think like anything else, you operate under the rules, restrictions and guidelines of whatever is in place at the time.”

Others see it differently.

One critic, Jeremy Gold, a New York-based actuary and pension expert, called earning multiple government incomes “indicative of sloppy governance and a cavalier attitude by those ‘public servants’ who exploit these loopholes selfishly.”

Gold said “Illinois is the poster child for pension abuses. One of my colleagues calls this child because or children must pay for fiscal irresponsibility.”

“We have allowed a system to develop that is grossly underfunded and that has very generous benefits,” said Laurence Msall, president of Chicago’s Civic Federation, a nonprofit government research organization. “To draw a pension from the state … and then immediately go get another job as a superintendent or in another teaching capacity — they’re really not retiring.”

Another issue that arises when school superintendents play musical chairs, by retiring for the pension and then taking a position elsewhere, is that they deprive employment opportunities for younger administrators moving up in the system, potentially adding to unemployment.

The Chicago Tribune

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Oklahoma dumps anti-fraud investigators, hires former politicians instead

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The incoming Oklahoma Insurance Commissioner, John Doak, plans on laying off the majority of investigators in the state’s anti-fraud unit, a move recommended by newly-appointed Deputy Insurance Commissioner Randy Brogan, a former state senator who ran for the GOP nomination for governor and lost.

The insurance department says it plans to lay off six of the unit’s nine investigators, citing budget concerns and a refocusing of the unit on white collar crime. Brogan said that of the existing 142 open cases in the unit, 120 of them are investigations against policyholders that were initiated by insurance companies.

Some of the investigators, who wish to remain anonymous for fear of retaliation, say the layoffs are intended to help offset the cost a three former politicians who are friends of Commissioner Doak, who were recently hired in the department as deputy commissioners.

Although the anti-fraud unit is funded by $750 annual assessments on insurance companies for the “investigation of suspected insurance fraud and civil or administrative action in cases involving suspected insurance fraud,” Brogan said that the companies should handle their own investigations. “Investigating policyholders is not a function of the insurance department.”

One critic of the staff cuts, Dan Ramsey, CEO of the Independent Insurance Agents of Oklahoma disagrees, saying that whether the fraud is committed by an insurance company or the insured, the net effect is that premiums end up being increased for all policyholders.

Insurance investigators cited cases where a former Tulsa area funeral director stole more than $100,000 through a scheme of submitting false death claims, and an attorney who was suspected of embezzling $200,000 by failing to pay insurance premiums. Under the slimmed-down unit, they expect those investigations to be dropped.

The three new deputy commissioners, including former state Sen. Brogan, former state Rep. Mike Thompson and former state Sen. Owen Laughlin, were all hired at a salary of $99,000.

Assistant Insurance Commissioner Rick Farmer said that the department made cuts in other areas to pay for the cost of the three new deputy commissioners, and their hiring has nothing to do with the cuts in the anti-fraud unit.  He said overall departmental cuts made so far should save the state over $500,000 this year.

Even so, questions remain regarding the hiring of the three former politicians, when so many staff cuts are being made elsewhere.

Brogan, who is overseeing the anti-fraud unit, ran a heating and air conditioning business before becoming a state senator. Some of the investigators questioned his ability to lead the department, citing the complexity of the investigations and claiming that even seasoned law enforcement investigators need a while to get up to speed on how to prosecute insurance fraud cases.

The Oklahoman

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Detroit School Board member “bugged” confidential legal settlement meeting

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As though Detroit’s public school system doesn’t have enough issues to deal with, apparently at least one of its school board members is trying to secretly sabotage its efforts to reach a legal settlement with embattled Emergency Financial Manager Robert Bobb.

In happier times: Detroit School Board President Anthony Adams and Emergency Financial Manager Robert Bobb.

The espionage was detailed in a memo sent by school board president Anthony Adams to all the board members, saying that during a “closed door” meeting to confidentially discuss a settlement, at least one board member had their cell phone turned on to send the 2-hour discussion to “outside community participants.”

The memo said in part “Such conduct is not to be tolerated. We need to do things in private.  To intrude on our process that way shows a tremendous level of disrespect.” The memo did not contain the name of the offending board member.

One board member, Dr. Carla Scott said “If it’s true, they should be sanctioned. I have no idea why someone would do something so inappropriate, so juvenile and unprofessional. I hope it’s not true,” she said.

The settlement with Bobb follows a ruling in December by Wayne County Circuit Court Judge Wendy Baxter, in which she said that Bobb overstepped his authority by making academic decisions that should have been made by the school board. The decision came as the result of a year-long civil lawsuit brought by the school board against Bobb.

Bobb was appointed by Democratic Gov. Jennifer Granholm in March 2009 to deal with the district’s ongoing financial crisis. This year, the school system is expected to have a budget deficit of over $325 million.

Bobb was given a one-year contract that was extended through March 2011.

The Detroit News

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Talk about math problems, Philly’s school admin finds another 25,000 empty seats

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Only two months ago, officials at the Philadelphia School District said that there were 45,000 empty seats in the district’s 248 schools.

On Wednesday, they came up with a slightly different figure: 70,000 empty seats, larger than the number at Lincoln Financial Field, home of the Philadelphia Eagles.

Despite the seemingly impossible number of classroom vacancies, the school district has done little in recent years to downsize the system, even while facing budget deficits such as the $430 million shortfall projected in its next fiscal year. Although some schools are only half-utilized, the school district still needs to staff each one with management, security, utilities and maintenance.

The student population has been shrinking over the years, partially due to the rise of charter schools, and the decline in school-age children as the city’s population has decreased. Even though the growing number of empty seats is not a new issue, the school district is only now looking at doing something about it.

Daniel Floyd, the deputy for strategic initiatives, said that “school closing is one option, but not the only one.” Some others are relocating programs to underutilized schools, offering space to charter schools and repurposing some of the school buildings.

The school district currently has 162,000 students, down 11,000 over the last five years, and expects the number to be at 144,000 by 2015.

The Philadelphia Inquirer

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California lawmaker pushes for “Amazon tax”on Internet retailers

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Hoping to cash in on the billions of dollars of online transactions made by its residents, a California state assemblywoman, Nancy Skinner (D-Berkeley) proposed legislation on Wednesday that would impose a  sales tax of up to 10.75 percent, on customers of companies such as Amazon.com.

Skinner said that the new tax could bring more than $250 million to the state.

Even though a U.S. Supreme Court ruling bans the collection of sales sax on purchases made outside a state, legislators have been busy looking for ways to get around the law, or overturn it.

California is only one of several states that are considering legislation to tax sales from out-of-state retailers, which is currently illegal based on a 1992 U.S. Supreme Court ruling, Quill v. North Dakota.

Other states have passed similar legislation, only to see the matter end up in a costly legal fight. A number of recent court decisions have ruled that companies which do not have stores, warehouses or offices, are not required to collect the tax from customers.

Skinner is supported by a coalition of local and national merchants, all of whom have a physical presence in the state, such as Amazon rival Barnes & Noble. They say that despite the law, the current system is unfair. “This legislation will close the current loophole in tax law which has allowed out-of-state companies to avoid collecting California sales and use tax,” Skinner said.

California and other states argue that companies like Amazon.com or Overstock.com, have arrangements with marketers known as “affiliates”, individuals or companies that provide sales leads for the retailers. When the affiliates are located in-state, they say that’s the same as though the retailer is located there.

Amazon has roughly 25,000 affiliates located in California, according to Rebecca Madison, a spokesperson for the group. She says if the state attempts to use the affiliate relationship as the basis for charging the taxes, Amazon will terminate its agreements and stop paying the group.

“Out-of-state retailers will simply stop advertising on the California websites to avoid having to collect California sales tax,” she said. “So, at the end of the day, California website advertising income is cut off, and the state doesn’t collect sales tax revenue.”

Former Gov. Arnold Schwarzenegger vetoed similar legislation in the past, saying that it would cost the loss of thousands of affiliates jobs in the state.

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Government debt at a record $14 trillion

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The U.S. just passed a dubious milestone: Government debt surged to an all-time high, more than $14 trillion.

That means Congress soon will have to lift the legal debt limit to give the nearly maxed-out government an even higher credit limit or dramatically cut spending to stay within the current cap. Either way, a fight is ahead on Capitol Hill, inflamed by the passions of tea party activists and deficit hawks.

Today’s debt level represents a $45,300 tab for each and everyone in the country.

Already, both sides are blaming each other for an approaching economic train wreck as Washington wrestles over how to keep the government in business and avoid default on global financial obligations.

Bills increasing the debt limit are among the most unpopular to come before Congress, serving as pawns for decades in high-stakes bargaining games. Every time until now, the ending has been the same: We go to the brink before raising the ceiling.

All bets may be off, however, in this charged political environment, despite some signs the partisan rhetoric is softening after the Arizona shootings.

Treasury Secretary Timothy Geithner says failure to increase borrowing authority would be “a catastrophe,” perhaps rivaling the financial meltdown of 2008-2009.

Congressional Republicans, flexing muscle after November’s victories, say the election results show that people are weary of big government and deficit spending, and that it’s time to draw the line against more borrowing.

Defeating a new debt limit increase has become a priority for the tea party movement and other small-government conservatives.

So far, the new GOP majority has proved accommodating. Republicans are moving to make good on their promise to cut $100 billion from domestic spending this year. They adopted a rules change by House Speaker John Boehner that should make it easier to block a debt-limit increase.

The national debt is the accumulation of years of deficit spending going back to the days of George Washington. The debt usually advances in times of war and retreats in peace.

Remarkably, nearly half of today’s national debt was run up in just the past six years. It soared from $7.6 trillion in January 2005 as President George W. Bush began his second term to $10.6 trillion the day Obama was inaugurated and to $14.02 trillion now. The period has seen two major wars and the deepest economic downturn since the 1930s.

With a $1.7 trillion deficit in budget year 2010 alone, and the government on track to spend $1.3 trillion more this year than it takes in, annual budget deficits are adding roughly $4 billion a day to the national debt. Put another way, the government is borrowing 41 cents for every dollar it spends.

In a letter to Congress, Geithner said the current statutory debt ceiling of $14.3 trillion, set just last year, may be reached by the end of March – and hit no later than May 16. He warned that holding it hostage to skirmishes over spending could lead the country to default on its obligations, “an event that has no precedent in American history.”

The Associated Press

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Rep. Jesse Jackson Jr. bucks trend, wants bigger budget for own office

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Unhappy with the cuts that lawmakers in Washington agreed to last week in their own office allowances, Rep. Jesse Jackson Jr. proposed Tuesday that they award themselves a raise instead.

In a gesture signalling their commitment to reducing government overhead, last week the House voted 408-13 to reduce their annual office allowance by 5 percent. House members are allotted $1.5 million annually for the cost of staffing an office in Washington and in their home districts.

On Tuesday, Jackson proposed that instead of a cut, the office allowance be increased by 10 percent, citing the need for additional security after the Arizona shooting spree that injured Rep. Gabrielle Giffords and killed 6 others.

In a statement, Jackson said: “My staff is working on a proposal to restore last week’s 5 percent cut in member budgets, because in this economic climate, we should be providing more services to our constituents – not less.  On top of that, I will propose a 10% increase in member budgets for security measures.  In some districts, that will mean hiring security personnel for public events.  In other areas, that may mean installing surveillance cameras at district offices as a deterrent or improving the locks or the entry systems in district offices.  Some will need more resources in order to move their offices to a safer area.

“I do not feel that fear should grip us, but since 9/11 we’ve secured every federal facility with the exception of our district offices. After the events of last weekend it is clear that our district staffs are vulnerable. Members should have the resources and the latitude to take the appropriate security measures in order to protect themselves and their staffs.”

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