THE WATCHDOGS: CTA board retirees on pension gravy train

Valerie Jarrett was on the Chicago Transit Authority board for nearly eight years before becoming a top aide to President Barack Obama. Howard Medley was on the CTA board for a decade before he was convicted in a scheme involving a CTA fuel contract.

Despite their divergent paths, the time Jarrett and Medley spent there proved lucrative to both of them. They and other retired CTA board members — all of them political appointees who worked only part time — each came away with five-figure pensions that have cost the public transit agency a total of more than $3 million over 10 years, a Chicago Sun-Times and Better Government Association investigation has found.

In 2014, the most recent year for which records were available, the CTA paid $330,000 into its board pension fund and doled out $329,744 in pension payments to 19 board retirees or their survivors.

Fifteen board retirees also get CTA-subsidized health insurance — another perk that comes at the expense of riders and taxpayers. Citing federal health privacy law, CTA officials declined to identify those retirees.

Between the start of 2005 and the end of 2014, the CTA put $3.04 million into the board retirement fund, according to the transit agency’s financial statements. Board members contributed only a fraction of that amount to the fund in that time — $96,351 in all — through deductions from their part-time government paychecks.

The board pensions, established in 1947 under state law, are more lucrative than the pensions afforded to retirees who served on the Regional Transportation Authority, Metra commuter rail and Pace suburban bus boards, the Sun-Times and BGA found. Of the 40-plus RTA, Metra and Pace board retirees with pensions, the overwhelming majority get less than $5,000 a year.

Jarrett was appointed CTA board chairman in 1995 by then-Mayor Richard M. Daley. She left the $50,000-a-year part-time post in 2003 and began collecting her $35,660-a-year pension three years later, at 50 — the minimum age at which former board members can take their pensions.

Now 59, Jarrett had collected a total of $306,080 in pension payouts as of last summer, records show. That’s more than 27 times the $11,132 that she paid toward her board pension through payroll deductions from her CTA paychecks.

Besides her CTA pension, she makes $173,922 a year in her role as Obama’s senior adviser — a job she has held since his first term in the White House in 2009.

A White House spokeswoman declined to comment on Jarrett’s CTA pension, referring questions to the transit agency.

Medley, 88, was appointed to the board in 1979 by then-Mayor Michael Bilandic. Medley now gets a yearly CTA pension of $15,361.

As of last summer, records show he has collected a total of $207,376 from his CTA pension over the past quarter-century — 331 times the $626 that was deducted from his checks during his board service. He retired from the board in 1989 at 62.

Most government officials and employees convicted of crimes related to their posts have to forfeit their pensions. But the CTA had no such rule in place at the time of Medley’s conviction in 1989 for “accepting a thing of value with the intent to be influenced or rewarded” in his duties as a CTA board member, according to court records. That changed the following year, when the CTA board began “requiring forfeiture of pension benefits following conviction for a felony relating to service on the board,” CTA spokesman Steve Mayberry said.

In 1988, federal authorities accused Medley of trying to stop a CTA investigation of inflated prices by a CTA fuel contractor because Medley had accepted a $22,500 fee on a real estate deal involving the contractor. Medley’s first case ended in a mistrial. He was convicted at his second trial and sentenced to 30 months in prison.

Medley, who was a top campaign fundraiser for the late Mayor Harold Washington, says he spent about 10 months behind bars and served the rest of his sentence on parole.

Since his release, he has fought to get his conviction overturned, arguing that his attorneys failed to introduce recordings that would have proved his innocence. His latest effort to win a new trial is now pending before the Seventh U.S. Circuit Court of Appeals.

During his time as a CTA board member, Medley says he turned down perks — including the free use of a CTA car and free phone service — while tightening CTA financial controls.

“I’m sure I saved the board millions of dollars,” says Medley, who headed the board’s operations committee. “They had no knowledge of how much money was coming in at all. There were no records of how much gas was being used. . . . I did my duties. . . . I earned my pension.”

Other CTA board pensioners include:

• Susan A. Leonis, who worked in state government under Republican governors Jim Thompson and Jim Edgar and was a close friend of Daley’s late wife, Maggie Daley. She had the highest pension of any board retiree: $41,596 a year. That’s the result of her fellow board members allowing her to make extra contributions to the board pension plan stemming from the 13 years she worked in state government.

Leonis, an Edgar appointee, was on the CTA board between 1996 and 2009, when she transferred $51,236 she’d withdrawn from her state retirement account to the CTA to bolster her board pension. After she retired, CTA officials determined “this transfer was not appropriate because the board-member plan is not a tax-qualified plan and therefore cannot receive a rollover of funds,” according to CTA meeting minutes.

Rather than diminish Leonis’ pension, the CTA board decided that Leonis had relied on advice from CTA employees and “acted in good faith.” So the board refunded the $51,236 and started deducting the equivalent of that contribution from her pension by withholding all payouts to her for more than two years.

Leonis, now 58, ended up contributing a total of $61,066 to the board retirement plan. Since getting her first pension check in February 2011, she has been paid more than $185,000. She declined to comment.

• Arthur F. Hill Jr., who replaced Medley on the board and now makes $181,220 a year as an associate Cook County judge. Hill, 62, is drawing a CTA board pension of $15,913 in addition to his judicial salary. A board member between 1989 and 1996, he began collecting his CTA pension in 2003 after turning 50. As of last summer, he’d received $186,982 in pension payments — 35 times the $5,230 that was deducted from his board paychecks. Hill declined to comment, except to say he isn’t getting CTA-subsidized health insurance.

• Cynthia A. Panayotovich, who was appointed to the board by then-Gov. George Ryan and served between 2002 and 2009, when she began collecting a $17,788-a-year pension at age 59. She’s the wife of former state representative and Illinois Liquor Commission executive director Sam Panayotovich, who is partners in a lobbying business with Cook County Assessor Joseph Berrios, the Cook County Democratic Party chairman. She couldn’t be reached for comment.

Two and a half years ago, in the wake of outrage over a patronage hiring scandal at Metra, the Illinois Legislature put a stop to giving pensions and retiree health insurance to any future political appointees to the four transit boards.

State Rep. Jack Franks, D-Marengo, who sponsored that legislation, was flabbergasted by the size of the pensions that Jarrett and other CTA board retirees receive.

“It’s terrible for the taxpayers; it’s great for those with clout,” Franks said. “At least, we ended that nonsense.”

But about two dozen CTA, RTA, Metra and Pace board members might still be eligible for pensions because they were appointed before July 2013, when the law went into effect.

CTA board members appointed before then will be eligible to draw pensions at 65 as long as they serve two years on the board.

Those who serve five years will become eligible for a pension after they turn 50. They include Terry Peterson, the current CTA board chairman, appointed to the board in late 2009. He’s paid $50,000 a year as part-time board chairman.

Peterson, 57, had paid a total of $21,485 into the board pension plan as of last summer. A onetime Daley campaign manager and CEO of the Chicago Housing Authority, he stands to make back more than that amount in the first year after he retires from the board. He’ll be entitled to an annual pension of $35,660 — the same as Jarrett’s pension.

Carole L. Brown, Mayor Rahm Emanuel’s chief financial officer, chaired the CTA board between 2003 and 2009 and is now eligible for a board pension because she has turned 50. But, according to the transit agency, Brown hasn’t begun to draw her pension. She declined to comment.

Besides its contributions for board pensions, the CTA reported spending an additional $802,000 in 2014 on health insurance-related costs for the 15 CTA board retirees and 41 CTA supplemental-plan retirees with health coverage.

Mayberry says that figure is “not what the CTA actually” paid for their health care but is an actuarial estimate of expected spending that the agency “is required to include in our financial statements. . . . As a matter of policy, CTA does not disclose actual health-care costs.”

Chris Fusco is a Sun-Times reporter. Patrick Rehkamp is an investigator for the BGA.