A union lobbyist who qualified for a teacher pension windfall by subbing at a school for one day is now suing a state retirement board because his benefits were scaled back once his sweet deal was exposed.
Retired Illinois Federation of Teachers lobbyist David Piccioli, 65, is arguing that lawmakers violated the state constitutional provision that says a pension cannot be “diminished or impaired” once it is set.
Piccioli is already collecting $31,485 from the Teachers Retirement System. If he wins his case, his teacher pension could increase by more than $36,000, the Tribune estimated — more than doubling what he gets now.
Piccioli also gets a second state pension worth just over $30,000 that covers time he served as a legislative aide. Both pensions are based on an average of his six-figure salaries as a union lobbyist.
With another federation lobbyist, Piccioli entered the pension system for teachers outside of Chicago through a small window opened by a 2007 law. One day of teaching in Springfield qualified them for pensions based on all the years they spent as employees of the union.
After the Tribune and WGN-TV reported on the pension maneuvers, legislators passed a bill aimed at scaling back the lobbyists’ benefits. Piccioli is now arguing that 2012 law should be declared unconstitutional and voided.
Sen. Kwame Raoul, the Chicago Democrat who sponsored the latter bill, called Piccioli’s attempt to secure more money from the teachers fund “kind of bold.” Piccioli’s attorney, Carl Draper, said the retired lobbyist “did what the law allowed and in good faith.”
The lawsuit takes on an added dimension because the “diminished or impaired” clause sits at the heart of a case argued before the Illinois Supreme Court last week. Public employee unions and retirees want to block a law, signed by former Gov. Pat Quinn, that scales back some retiree benefits to help reduce Illinois’ more than $100 billion in pension debt.
Their advocates argued to the justices that the constitution’s ban on pension reductions is absolute. Illinois Attorney General Lisa Madigan’s office disagreed, saying such a stance meant pension payments would take priority over spending to stop a health epidemic or responses to other catastrophes.
If Piccioli’s lawsuit succeeds, the outcome may suggest to lawmakers that they cannot reduce pension benefits under any circumstances.
“It’s bold and it’s unfortunate given the image that that gives about people who are receiving public pensions,” Raoul said. “That’s not characteristic of the common, hardworking public-sector worker who makes a modest income and has a modest retirement benefit. It gives people the impression of otherwise.”
Draper said he expects the far-reaching case before the Supreme Court to provide reasons for a circuit judge to side with Piccioli.
The pensions secured by Piccioli and fellow union lobbyist Steven Preckwinkle are just one example of how Illinois’ public pension rules have been manipulated for political purposes and personal gain.
The teachers union, a longtime supporter of Democrats in Springfield, endorsed Democratic Gov. Rod Blagojevich in his 2006 re-election campaign, donating more than $515,000 in the two-year election cycle. Blagojevich signed the pension bill, which included various unrelated measures, in February 2007 after voters returned him to office.
The law allowed Piccioli and Preckwinkle to enter the Teachers Retirement System by spending one day teaching before the law was enacted, and it allowed them to count their work with the Illinois Federation of Teachers toward a pension.
Piccioli later bought retroactive pension credits so his prior service with the union would count toward his benefits. Preckwinkle did not buy such retroactive credits. But for both lobbyists, time spent in their union jobs after their one day of teaching would help boost their pensions.
The later law, which Quinn signed in January 2012, revoked the lobbyists’ ability to put their earlier years with the union toward their pensions. At the time, legislators widely interpreted that move as equivalent to kicking them out of the system.
But Piccioli and Preckwinkle remained in their union jobs and in the pension system, continuing to rack up time until they retired — Piccioli in December 2012 and Preckwinkle in November 2013. Preckwinkle now receives $38,659 a year from the teacher pension fund, records show.
The new law also allowed Piccioli to obtain a refund for the retroactive time he had purchased. According to the Teachers Retirement System, he received the $192,668 he paid for that time plus $34,319 in interest. The fund also returned money he had contributed to a teacher retirement insurance plan, without interest, for a total of $234,456 in refunds.
Piccioli’s second state pension comes from a fund for rank-and-file state workers that includes his time as a House Democratic staffer, according to Tim Blair, who oversees the State Employees Retirement System. For the second pension, Piccioli got to count nine years and 11 months worth of state experience, Blair said.
The last annual salary Piccioli received as a state employee was $46,000 in December 1997, according to Blair. But because of the way Illinois law is written, his state pension is based on the same salaries used when he entered the teacher pension system — the higher pay he drew as a union lobbyist.
In response to Tribune requests, the Teachers Retirement System showed that Piccioli’s current $31,485 teacher pension is based on the nearly six years he worked for the union after subbing, as well as on two years of unused, unpaid sick leave accumulated in his union job.
Pensions in the teacher system are based on a formula that includes the number of years of service and an average of the four highest consecutive years of salaries in the last 10 years that a person works. For Piccioli, those four years ranged from about $151,000 to nearly $204,000, according to the system.
If Piccioli is permitted to add nearly 10 more years of union service to his benefits, his pension would increase by more than $36,000 a year, the Tribune estimated based on the system’s formula. That would push his total public pension benefits above $97,000 a year.
David Urbanek, a Teachers Retirement System spokesman, declined to comment on Piccioli’s lawsuit.
Piccioli’s attorney said the suit presents a clear legal question regarding the 2012 law that scaled back the lobbyist’s benefits. “Is this public act something the General Assembly has the power to pass? I think the answer to that is, ‘No,’ ” Draper said.
If the question is the wisdom of the 2007 law that opened the window for Piccioli, he added: “That’s what the General Assembly is supposed to be responsible for when they pass things in the first place.”
Twitter @RayLong
