Tim Foley is part of a long, ongoing Chicago tradition of public-sector income double-dipping. But two days ago he became a casualty of another Chicago tradition: investigative reporting. This Monday, on October 3, Foley resigned as business manager-financial secretary of International Brotherhood of Electrical Workers Local 134 following weeks of allegations that he and three other local officials had violated Illinois law by simultaneously collecting lucrative pensions from the city government and the local. “Recent focus in news reports has impacted how we are perceived by the public,” Foley stated in a press release. “Placing each of the 15,000 members and their families ahead of me is the easy part of my decision to resign.” In his absence, Vice President Terry Allen will become interim head of the Chicago union, which represents private- as well as public-sector electricians.
Foley, who assumed the reins of IBEW Local 134 in 2006, had been less modest when opportunity beckoned. Back in 2008, at age 54, he took a leave of absence from his $47,000-a-year city job to purchase credits for a city pension that, by state law, would be based on his far higher $160,000 annual union salary. He paid $347,000 out of his own pockets to buy the credits. It was a high front-end investment – and a smart one. Foley now stood to collect $105,000 annually, as opposed to $20,000. The $85,000 extra per year effectively would pay off his initial investment in about four years, while generating a six-figure income for as long as he lived.
To seal this sweet and legal deal, a guarantee of what amounted to a 25 percent permanent annual return, Foley and fellow union officers only would have to sign an affidavit stating they were not participating in another pension plan. This eventually proved to be their trip wire. In 2010, City pension fund officials discovered that Foley and three other Local 134 officials, including Tom Villanova, president of the Chicago and Cook County Building and Construction Trades Council, indeed were participating in their union pension plan as well. The City of Chicago notified the union officials that they were in violation of Illinois law. Foley, Villanova and the others responded that the law was vague, claiming they were guilty of nothing more than making an honest mistake. The City decided to allow them to keep their city pensions provided they each signed affidavits vowing to disclaim their union pensions.
But the lure of double-dipping remained powerful. This past August the Chicago Tribune and WGN-TV reported that the lawyer for IBEW Local 134, less than a year after the signatures of the new affidavits, had attempted to transfer about $300,000 in union dues into a separate pension fund for the officials. Once this became public knowledge, the outrage was palpable. Foley withdrew his participation in the union plan. Anonymous sources within the local told the Tribune and WGN that the U.S. Department of Labor had requested information from the union about its leaders’ pensions and informed them of a pending audit. A DOL spokesperson would not confirm or deny departmental action, but Foley’s reputation took a severe hit. Rank and file members called for, and got, his resignation.
Tim Foley and fellow union officials indeed very likely broke the law, but here, as in so many other contexts, the real scandal is what is legal. Foley and Villanova each formally resigned from their city jobs in 2008 without actually having worked at them since the mid Nineties. And even without their union pension, they were collecting a generous union salary and a city pension; Villanova’s city pension, for example, had risen from $14,000 to $108,000 a year. FOX Chicago News in August did some digging of its own, and discovered that six union officials, each in their 50s, had purchased city pension credits. FOX then ran the numbers by pension expert Bill Zettler, who calculated from actuarial tables that these officials stood to collect an additional $12 million in city pension benefits over their expected lifetimes – not bad for a combined initial investment of $1.1 million. Illinois legislators created the pension credit program decades ago as a way to attract union support. There’s no surprise here. Union leaders long have known that the best way to invest economically is to invest politically. The cost, as usual, is borne by taxpayers.