The Chicago Employment Law Blog

Former Mayor Daley Used State's Pension System to His Advantage

During his time as Chicago’s longest-serving mayor, Richard M. Daley, used the state’s convoluted pension scheme to his advantage, significantly boosting his payout and saving $400,000 in contributions, the Chicago Tribune reports.

When Daley retired last year, his public pension benefits were $183,778 a year, around $50,000 more than he would have otherwise received.

Daley formerly served as a state senator. While serving as mayor in 1991, Daley briefly rejoined the legislative pension plan. He stayed on the plan for one month before switching back to Chicago’s municipal pension fund. The switches allowed him to receive benefits worth 85 percent of his salary as mayor.

Even if Daley never served another term as mayor, he could have started collecting a public pension of $97,750 a year when he turned 55. If he hadn’t made the series of pension switches, he would only be receiving $20,686 at that point. After five more terms as mayor, Daley now receives $183,778 a year in pension benefits.

Daley not only used the state’s pension system to boost his own benefits, but also as a political tool, according to the Chicago Tribune. In 1991, Daley helped aldermen achieve a significant pension increase, granting them benefits far greater than those of most city workers.

In order to fund his school reform package, Daley’s administration pushed for legislation allowing it to divert $1.5 billion from the Chicago Teachers’ Pension Fund. At the same time, Daley supported benefits increases for city workers without securing adequate sources of funding. The mayor’s actions combined with the recent economic downturn have led to the nearly $20 billion pension deficit the city is now experiencing, according to the Tribune.

The city is still reeling from the pension deficit caused in part by former mayor Richard M. Daley. Last week, Mayor Rahm Emanuel implored state lawmakers to move forward on pension reform measures.

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