Category Archives: pension, general

Two CUSD 200 administrators Scammed the system. Did someone break the Law?

(updated 7/20/2015)

How, When, by whom were their end of career raises approved?

Were these raises legal?  If not, can the district recoup its money?  What about their pensions that are based on these raises?  Can they be clawed back?

The 2010 contract extension was signed by the board president, but never on an agenda for approval.  Was that legal?  For a discussion of why signing a contract without board approval is a crime see: College of DuPage – Former Chairmen Carlin and Birt complicit in the crime?  edgarcountywatchdogs.com

 

Read any letter-to-the-editor about Illinois public pensions and someone will chime in with a comment pointing out that teachers paid their fair share and that public pensions are guaranteed in the Illinois Constitution.  But, should pensions based on large end or career salary spikes be guaranteed?  How about those that exceeded their contracted amount; exceeded the limits set by Illinois law; and were hidden from the taxpayers who are responsible for paying the bill?

 

Over view

Wheaton-Warrenville, CUSD 200 had two administrators whose contracts (ending in 2009) called for 20% raise the last year worked. The contracts were extended to 2010 and 2011. They actually got 20%, 0, 6%, 6% the last four years. Personnel reports for the 2011 contract extensions exist, but nothing approving or even mentioning the pay increases or the 2010 contract extensions in any board packet, attachment or meeting minutes. These (we contend illegal raises for two individuals) resulted in $111,572 penalty paid by the district and increased the pensions for these two by approximately 20%.

Their original contracts allowed for a 20% increase in her last year of work.  The updated contracts simply referenced the retirement plan in the original multi-year contract.  Nothing in these contracts allowed for the 20% raise prior to her last year.  The 20% is a one year increase that was maintained the following year by cashing in sick/vacation days.  The two years at 6% were in the new contracts, but never made public at any open board meeting.  These 6% increases were based on “gross pay” rather than the typical “base pay” – Thus, resulting in the one-time 20% becoming part of the base pay.

 

Note: the school year runs from July 1, of one year to June 30 of the next.

 

Margo Sorrick’s title was “Assistant Superintendent for Educational Services, SSC”

Dr. Lori Belha’s title was “Assistant Superintendent for Human Resources, SSC”

 

Details

The retirement clause from Dr. Margo Sorrick’s original 2004 to 2009 contract:

sorrick 04_09 retirement clause

Notice it says “Increase last year’s salary by 20%…”  That would be her last year worked.  Not 3 years prior to that, as actually happened based on her actual pay.

 

Lori Belha’s retirement clause from her original 2004 to 2009 contract reads the same.

belha retire clause 2004 to 2009

 

In Margo Sorrick’s retirement letter, she requests her 20% retirement benefit stating 2007 – 2008 school year, while acknowledging that would not be her last year worked.  She states that her current contract ends 2009, but she would like to extend the contract until June 30, 2010 or better yet 2011.  She notes that the district will not be assessed a penalty if they let her stay until 2010, but will pay one if the contract is extended to 2011.  She wrote “However, the penalty for District 200 is substantial and it is not my desire to burden the district with the consequences.”  But, she did burden the district.

In this letter, Ms. Sorrick requests the 20% end of career salary bump in the 2007-2008 school year.  She seams to acknowledge that this should be a one year bump as she states that she will cash in unused sick/vacation days to keep the same 20% for the 2008-2009 year.

sorrick retirement letter

 

Similarly, Lori Belha’s retirement letter requests her 20% retirement benefit stating July 1, 2007 and requests that her retirement date be extended.   She would like to work until June 30, 2011.  But, points out that “under TRS regulations the board may only extend the contract one year at a time.”  So she was requesting a retirement date of June 30, 2010.  Again she is requesting her 20% last year worked raise in the 2007-2008 school year, prior to her last year worked.

belha retirement letter

The 20% raises for both Belha and Sorrick took place in the 2007-2008 school year which began on July 1, 2007.  June 30, 2007 was the day superintendent Dr. Catalani retired.  Dr. Catalani had hired both Sorrick and Belha.  His three years in a row of 20% compounded raises had caused quite a stir in the community.   July 1, 2007 was Dr Drury’s first day on the job.    We have no way of knowing who approved the raises for the 2007-2008 school year.

The retirement letters were written in February 2007.  Both Belha’s and Sorrick’s new contracts with new end date (June 30, 2010) were signed by the board president on April 17, 2007. In each, the retirement section continues the plan from 2004-2009 multi-year plan.

In the Employment, Term and salary section they say “the Administrator shall be paid a 6% increase on the gross salary earned in the 2009-2010 contract year.”  The “Gross salary” includes any bonus or pay for cashed in sick/vacation days.   Most administrative contracts that I have seen mention percent increase over “base pay.”

sorrick 09-10 salaty clause

sorrick 09-10 retirement clause

 

Currently the CUSD200.org web site has old meeting agenda with personnel reports, supplementary personnel reports and minutes attached going back to July 2006.  None of these mention Sorrick’s or Belha’s 2010 contract extension.  A single Board member has no authority to incur a debt without board approval!  Board of education president, Andrew Johnson signed this contract without board approval.  Did he break the law?

 

 

Margo Sorrick’s new contract with new end date (June 30, 2011) was signed by Dr. Sorick on December 5, 2008 and by the board president on December 17, 2008.  Belha signed hers December 9, 2008 and the board president signed on December 17, 2008.  Again the retirement section continues the plan from 2004-2009 multi-year plan.  The Employment, Term and salary section basically the same as the previous one (6% increase in gross pay)..

sorrick 10-11 salary clause

sorrick 10-11 retirement clause

This extension was covered in the supplemental personnel report, which was attached to the meeting agenda and approved as part of the Consent agenda on December 18, 2008.  While the document is attached to the 12-17-2008 agenda, the header in the document has “October 8, 2008.”

sup pers 12)17)2007 sorrick belha

 

From a recent FOIA, we have an explanation of how these employees justified their salaries.

A 2008 letter from Dr. Sorrick to Dr. Drury

sorrick2drury

Requests a contract extension to June 30, 2011.

It says “My current contract allowed for a district-paid 20% increase from my 06-07 salary for the 07-08 school year.  The contract allows for my salary to remain, stable for the 08-09 school year subject to my submission of a combination of vacation and sick days to constitute the 20% increase from my 06-07 school year.   Finally the current contract allows for a 6% increase over my 08-09 salary for the 09-10 salary.

I would like to ask for two considerations for the extension of this contract.

First of all, I would like to ask for a 6% increase for the additional year as allowed for by TRS.  Also, I would like to exchange my current benefit of Family Medical and Family Dental for a $10,000.00 annuity contribution by the District.

 

A 2010 letter from Dr. Belha to Dr. Harris

belha2haris

In her letter to Dr. Harris, Dr. Belha requests that the district pay her retirement benefit of up to 59 vacation days and 17 sick days.

She acknowledges that she used 45.3 sick/vacation days to pay for the second year of 20% retirement.  “This was not a cumulative raise but a match of the previous year salary.”  She mentions meeting with Dr. Drury to discuss “consideration” for the extended contracts with M. Sorrick as a witness.  (Drury had “resigned” due to differences with the board.  Harris had been superintendent for five months at this time).

She claimed to have a verbal agreement with Dr. Drury that she could continue accruing vacation and sick days to be cashed in at retirement.  She mentions the value of these disputed days ($35,820) and having legal counsel.

 

Note: there were multiple superintendents over this time period.  And one of these two retirees was the Assistant Superintendent for Human Resources who should oversee contracts,  retirement packages and payroll.

  • Dr. Catalani retired June 30, 2007
  • Dr. Drury was superintendent from July 2007 to October 2009.
  • Dr. Baker was interim Superintendent from October 2009 to June 2010.  And
  • Dr. Haris was superintendent from July 2010 to June 2014

 

Dr. Margo Sorrick – details

The penalty paid by CUSD 200 for excessive end of career raises for Dr. Sorrick was $57,548.82

Based on data from TRS, Sorrick’s starting pension ($149,044) as percent of her salary when she applied for retirement ($158,337 in 2007) is 93%

 

Year      Salary                  % increase

2006      149,006.59

2007      158,337.04         6.26%

2008      190,004.49         20.0%

2009      190,004.58         0%

2010      201,404.76         6.0%

2011      213,489.04         6.0%

 

  • Starting pension on 8/12/2011 was $12,420.36/month or $149,044.32 annually.
  • Current pension as of Feb. 2015 was $12,420.36/month or $149,044 annually. (no COLA yet)

 

  • Sorrick had 33.026 years of service credit plus 1.974 year for unused sick-leave credit (total 35)
  • Her service included 1.026 years purchased credit for private school service.
  • From TRS she received a $23,001.62 refund ($18,592.62 for “2.2 refund” and $4,409.00 for not using the early retirement option)
  • From CUSD 200, she received lump sum payments of $ $21,085.22 ($6,487.76 for 53.2 vacation days and $14,597.46 for 18 sick leave days)

 

 

For comparison, if the final end of career raises had been 0%, 0%, 0%, 20% as contracted

  • Her salary in 2007 to 2010 would all have been 158,337.04
  • In 2011 her salary would have been $161,503.78
  • Total salary paid by the district would have been $158,387.97 less
  • And her pension would be 80.1% of what it is. (Based on the percent difference in the average salary for the final four years worked).

 

These excessive raises cost the district $215,936.79 ($158,387.97 in excess salary and $57,548.82 in penalties).

It has been costing the TRS $29,697.75 per year retired so far (She has not received a COLA yet)

For four years that is $118,791.

 

 

Dr. Lori Belha – details

For Dr. Belha, the timeline is very similar to Sorrick’s.  Penalty for Belha due to excess salary increase cost the district $54,023.61.

 

Based on data from TRS, Belha’s starting pension ($145,647) as a percent of her salary when she applied for retirement ($156,728 in 2007) is 94%

 

Year      Salary                  % increase

2006      146,536.96

2007      156,728.15         6.95%

2008      185,673.81         18.47%

2009      185,673.90         0%

2010      196,814.24         6.0%

2011      208,623.10         6.0%

 

  • Starting pension on 8/1/2011 was $12,137.27/month or $145,647.24 annually.
  • Current pension as of Feb. 2015 is $13,457.41/month or $161,488.92 annually.

 

  • Belha had 37 years of service credit plus 1.97 year for unused sick-leave credit
  • Her service included 10 years purchased credit for out of system service.
  • From TRS, she received a $28,105 refund ($23,784.95 for “2.2 refund” and $4,320.21 for not using the early retirement option)

From CUSD 200, she received lump sum payments of $32,889.26 ($25,200 for 59 vacation days and $7688 for 18 sick leave days)

 

 

For comparison, if the final end of career raises had been 0%, 0%, 0%, 20%

  • Her salary in 2007 to 2010 would all have been 156,728.15
  • In 2011 her salary would have been $159,862.71
  • Total salary paid by the district would have been $146,737.89 less
  • And her pension would be 81.1% of what it is. (Based on the percent difference in the average salary for the final four years worked).

 

These excessive raises cost the district $200,761. ($146,737.89 in excess salary and $54,023.61 in penalties).

It has been costing the TRS $27,513 per year retired so far plus a 3% COLA (in 2015 it cost $30,506)

For four years that is approximately $116,038.

 

 

See our previous post on the same subject:  http://dupagewatchdog.org/2015/02/cusd-200-sorrick-belha-admin-retirement-games-costs-taxpayers/ 

2015 Top Pensions & effect of end of career spikes

Taxpayer Education Foundation has published the top 200 Illinois pensions as of 2/1/2015. There are 12,154 state pensioners collecting more than $100,000 per year and 85,893 state pensioners collecting more than $50,000 per year.  http://www.taxpayersunitedofamerica.org/wp-content/uploads/2015-Top-200-grids1.pdf 

Many of these people will receive more in retirement than they did while working.   The system  is unsustainable.

To understand how pensions work, see:  pensions-explained/ 

I played with excel, (start with 100, but this makes no difference)

  • Assume 9% taken towards pension + employer matches.
  • Assume (simple annual compounding) 8.5% each year for return on investment
  • Assume our employee works 30 year and
  • the pension starts at 75% of the average pay for the last 4 years then has a 3% COLA each subsequent year.
  • If the employee received 5% raise every year while working the money runs out in 21 years.
  • Make it 4% raises and it runs out in the 28rh year.
  • With 3.5% raises it will last 34 years (This works)
  • Assume a 20% raise in the last year, and the money runs out 3 years earlier.
  • Reducing the return on investment to 8% (with 3.5% career raise, no spike) runs out in year 26.

The effects of compounding are huge. End of career raises make a big difference because they greatly affect the amount taken out with little affect on the amount invested. Big raises early in the career with small end of career raises would allow the investment time to grow.

Pension Fix un-Constitutional

Today [May 8,2015], the Illinois Supreme Court found Illinois’ 2013 pension reform bill to be un-Constitutional.  

The Daily Herald article http://www.dailyherald.com/article/20150507/news/150508857/  

 

Did some web searches to find history.

A long, interesting article about Illinois pension history:

http://www.sj-r.com/x846054923/State-of-Illinois-record-of-shorting-pensions-goes-back-decades

“Of principle concern to the Commission is the accumulation of large unfunded accrued liabilities resulting for the most part from the inadequacy of government contributions in prior years to meet INCREASES IN COSTS DUE TO THE UPWARD TREND IN SALARY RATES AND LARGE ADDITIONS TO THE MEMBERSHIP OF THE FUNDS.”

It has links to the details from 1984 to 2012 by fund and cause of pension shortage.

** See chart detailing the unfunded liability for all state pension systems (pdf) **

** See charts detailing the liability for individual state pension systems (pdf) **

Gov. Pat Quinn often has stated that Illinois pension underfunding dates back 70 years. Quinn’s budget office provided a copy of a letter prepared by the State Universities Retirement System that urged delegates to the 1970 Constitutional Convention to adopt a provision regarding vesting and funding of public employee pensions.

The letter reported that public employee pensions already were running a debt in 1946. The letter also noted that in 1967, legislators stipulated how much money should be allocated to SURS to prevent the system from falling further in debt.

“Despite this legislative mandate for stabilization of the past service liabilities, the General Assembly refused to appropriate the necessary funds to meet this requirement during the 1969 and 1970 legislative sessions,” the letter said.

Note: the pension sentence was added to the Illinois State Constitution on December 15, 1970.  The Illinois legislature and the unions already knew that the pension systems were underfunded.

 

Verbatim Debate about the Pension line for the 1970 Constitution

http://illinoisissues.uis.edu/archives/2013/02/Concon.html

The Pension line was put in the Constitution because the pension funding problem already existed, and the legislature had not agreed to increase funding.

Mr. Parkhurst said “…And the legislature has said, ‘For Heaven’s sake, we don’t have $2,200,000,000. Why can’t you let us run it like the federal government runs the Social Security program, which is to pay the benefits out of the income as they become due.’ And the proponents of 100 percent funding have said, ‘Nope, that’s not good enough. We want you to put all the money there right now, and not wait until the payment comes due before you wrestle up the money to make the payment.’

So they compromised. They added the line to the Illinois Constitution so that future legislators would need to deal with it.

The most clairvoyant line is from Mr. Parkhurst: “There just isn’t that much money available. There is no history in the state of Illinois of impairing or diminishing or welching on any pension plans when they come due. If we are going to get to the point in the state of Illinois where we can’t pay the pensions, we’re down the drain anyway; and anything you put in this constitution is not going to change that one bit.”

CUSD 200, Sorrick & Belha, Admin Retirement Games – Costs Taxpayers

On April 15, 2013, less than a week after the school board elections, the Daily Herald reported that CUSD 200 paid a fine of $140,000 due to recent pension spiking.

“Most of District 200’s penalties from the last school year, though, came from two administrators who had decided to retire and take raises under a deal struck before the 2005 law.  But when they stayed on two years longer, TRS decided the original contract had been altered and was no longer grandfathered in, and the district had to pay.”

http://www.dailyherald.com/article/20130415/news/704159922/?interstitial=1

From a FOIA:  The date on the bill from TRS to CUSD 200 for the two administrators (Belha and Sorrick) is 5/12/2012 and for the teachers is 8/25/2012. Penalties paid:
Sorrick $57,548.82
Belha $54,023.61
Cella $13,773.08
Hobson $4,562.20
Ingram $5,634.58
Morehead $10.02
Wagner, C $4,492.05

From a FOIA, we get the following data for the administrators:

Belha Belha Sorrick Sorrick
Fiscal Year TRS FOIA % increase TRS FOIA % increase
2005-2006 $146,537 $149,007
2006-2007 $156,728 6.95% $158,337 6.26%
2007-2008 $185,674 18.47% $190,004 20.00%
2008-2009 $185,674 0.00% $190,004 0.00%
2009-2010 $196,814 6.00% $201,404 6.00%
2010-2011 $208,623 6.00% $213,489 6.00%

We also found out that

  • Ms. Belha purchased 10 years of  out of system service and received 1.979 years of service for unused sick leave from TRS.  From the district, Belha received $25,200.86  for unused vacation and $11,214.36 for unused sick leave.
  • Ms. Sorrick purchased 1.026 years of  private school service and received 1.974 years of service for unused sick leave from TRS.  From the district, Sorrick received  $6,487.76 for unused vacation and $14,597.46 for unused sick leave.

Belha and Sorrick had contracts that promised a 20% end of career salary spike.   When the law changed so that school districts would be penalized for giving more than 6% raises during the last four years, CUSD 200 changed to giving four years at 6%.  This wide spread practice of end of career salary spiking is a leading cause of Illinois’ pension crisis.   Sorrick and Belha put in for their 20% bump, and requested that they could stay on another year.

During the time when Dr Drury was superintendent [2007-2009], the district cut aids, programs, and froze salaries that could be frozen.   Belha and Sorrick both had one year of no salary increase.

Dr. Drury left (with severance), Dr Baker served as interim Superintendent, then Dr. Harris became superintendent.  Belha and Sorrick both stayed two more year, with their 6% end of career salary spikes.

Comparing the average of their last four years, to what they were earning prior to the first spike, we see that they both increased their pensions by around 25%

Belha:

  • last four year average: $194,196
  • original [2006-2007] pay : $156,728
  • increase: 23.91%
  • Assistant superintendent for Human Resources
  • Retirement letter dated 2/15/2007
  • Contract at that time ended June 2009
  • Requested a one year contract extension – retirement date to 6/30/2010.
  • Actually retired June 2011

Sorrick:

  • four year average: $198,725
  • original [2006-2007] pay : $158,337
  • increase: 25.51%
  • Assistant superintendent for educational service
  • Retirement letter dated 2/5/2007
  • Contract at that time ended June 2009
  • Requested a one year contract extension – retirement date to 6/30/2010
  • Actually retired June 2011

Based on Ms. Sorrick’s retirement letter she was well aware of the rule change and was taking advantage of what she could:

 

sorrick retirement letter

Ms. Belha even noted that the board would not need to pay any penalty if she put in for retirement on June 30, 2009 and a one year extension to June 30, 2010… but would actually like 2011.  She also mentions being paid for unused vacation and sick leave days.  Belha summed it up as “I have no desire to retire but feel it is necessary for financial planning.”

belha retirement letter

In the December 17, 2008 meeting agenda, under Consent agenda, supplemental personnel report (which is dated October 8, 2008 in the document’s header) we found approval of their contract extensions.  The board did this despite knowing that the school district would need to pay a penalty.  

belha sorrick contract extensions

 The meeting minutes for December 17, 2008 meeting state: “Member Intihar moved, Member Slater seconded to accept the Consent Agenda as presented.  Upon a roll call vote being taken, the vote was: AYE 7, NAY 0.  The motion carried 7-0

Sorrick’s original contract allowed for a 20% increase in her last year of work.  The updated contracts simply referenced the retirement plan in the original multi-year contract.  Nothing in these contracts allowed for the 20% three years prior to her last year or the 6% increases.  Looking at the personnel reports  for July 2006  to May 2015, nothing references end of career pay raises or any raise for Sorrick and Belha.  How, When, By whom were these raises approved?

 

Sorrick 2004 to 2009 contract, Retirement Clause

 

sorrick 04_09 retirement clause Sorrick 2009 to 20010 contract, Retirement Clause

sorrick 09-10 retirement clause

 Sorrick 2010 to 20011 contract, Retirement Clause

 

sorrick 10-11 retirement clause

Their co-worker, Linda Knicker, did not trigger a penalty, but triggered a small penalty, $1,655.34 that was paid later than the original set.  Her late in career raises were as lucrative for her.

Fiscal Year TRS FOIA % increase
2005-2006 $134,786
2006-2007 $154,728 14.80%
2007-2008 $164,011 6.00%
2008-2009 $173,852 6.00%
2009-2010 $184,283 6.00%
2010-2011 $195,340 6.00%

 

  • Her contract allowed for 4 years of 6% increase.
  • Sick day payout in 2011: $13,356.54 and $42,666.72 for unused vacation.
  • On April 25, 2007 the personnel Report lists, Linda Knicker becoming an Assistant Superintendent Special Services, SSC Additional $9,955.  Effective:  July 1, 2006 – June 30, 2007.  
  • Average salary for the last four years: $179,372 which is 33.1% more than 2006 earnings, and 15.9% more than her 2007 earnings.

The good news is that starting in 2012, the teacher contract no longer gives an end of career salary spike that count toward the pension.  They replaced it with a lump sum bonus.

Why should any public employee receive any end of career bonus?  Why should anyone be allowed to accumulate vacation and sick leave days to count toward service or money at retirement?  How expensive are these practices?  More data to collect…

 

last updated 6-10-2015. changes indicated in blue

TUA – Top DuPage Pensions

According to Taxpayers United of America (TUA), 836 DuPage County Government Teacher Pensions are in the top 6.6% National Income Level.  click here.

  • Top 70 Naperville Police annual Pensions as of 6/30/2014 range from $106,595 to $20,465 view
  • Top 56 Naperville Fire annual Pensions as of 6/30/2014 rnge from $104,840 to $18,453 view
  • Top 50 Naperville Government Employees Pensions range from $156,146 to $51,539 view
  • DuPage County Government Schools Annual Pensions Over $100,000 has 836 entries ranging from  $284,674  to $100,007 view

“There are more than 11,054 Illinois annual government pensions over $100,000, in the state pension system alone, as of April 1, 2014; by 2020, there will be 25,000.” – TUA