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IHSA retiree costs rise, but court says details can remain secret

The Illinois appellate court recently ruled that the IHSA doesn't have to disclose details about its deals with sponsors because it's a private, not-for-profit group, not a government body. | IHSA website

The not-for-profit association that oversees high school sports in Illinois can continue to keep details about its contracts, sponsorships and other financial matters secret under a court ruling that comes in the wake of it reporting a six-figure increase in payouts related to retirees.

The Illinois High School Association paid $888,425 out of its two retirement funds in the 2014-15 school year, according to financial statements it filed with the Illinois attorney general’s office. That’s up $259,876, or 41 percent, from the previous year.

The organization’s contributions into its main pension plan and the second retirement plan went up by 48 percent over the previous year, to $592,710, the records show.

If the IHSA were a public agency, it would have to reveal the names of the retirees getting the money, how much they’re paid and who’s managing the organization’s retirement accounts.

But a three-judge panel of the first district Illinois Appellate Court unanimously ruled in June that the IHSA isn’t a government body and thus isn’t subject to disclosure requirements under the Illinois Freedom of Information Act. That case has since been appealed to the Illinois Supreme Court, which hasn’t decided yet whether to hear it.

The IHSA has refused to say what it pays individual pensioners out of its main pension fund, which it closed to new employees in 2008 because of cost concerns. It also hasn’t made public details about the separate “nonqualified deferred compensation plan” it created in 2009 to provide “supplemental retirement benefits to certain employees.”

“The only outcome I foresee occurring by releasing the individual pension benefits of past employees is for them to be scrutinized for accepting a pension they were promised and worked hard to earn,” says Craig Anderson, the IHSA’s executive director.

The steep increases in retirement-related costs happened because “additional individuals became eligible to draw benefits,” and also because of “a one-time lump sum tax liability payment that was paid directly to the IRS,” Anderson says.

The Better Government Association sued the association in 2014 after the Chicago Sun-Times reported its costs for salaries and benefits had gone up as revenues and profits from its marquee event, the state boys’ basketball tournament, declined. The BGA argued the IHSA should be treated like a government body because it “performs a governmental function” and generates income “from events involving predominantly public schools.”

But the appellate court ruled that “any school can decide to forego participation in the IHSA.” Justices also noted the association doesn’t get money directly from taxpayers, generating most of its income through revenue-sharing agreements on ticket sales at school playoff sporting events.

Attorneys Matt Topic and Joshua Burday filed the watchdog group’s appeal to the state’s high court on July 29.

“This is an issue of significant public interest,” they wrote. “Government is increasingly privatizing a wide array of its functions. Without a broader and more sensible test for ‘governmental function,’ crucial government business could be privatized in a way that leaves the public in the dark and without the ability to hold anyone accountable.”

As a not-for-profit, the IHSA must file yearly reports with the IRS and provide audited financial statements to the state attorney general. Those documents give an overview of its finances but few details.

March sadnessThe IHSA’s most recent filings, for the 2014-15 school year, show:

• It reported paying $1.75 million in salaries to 30 employees, including four paid more than $100,000. That’s a $102,755 decrease from the previous year’s payroll.

• Its former executive director, Marty Hickman, who retired in January, had a base salary of $107,673 — down from $202,676 the year before. But Hickman’s “W-2 wages” also “included $473,771 of non-cash taxable benefit from the nonqualified deferred-compensation plan . . . related to his retirement.”

“This item has been misconstrued in the past as being a cash benefit,” Anderson said. “The $473,771 is an actuarial figure that estimates the potential value of a pension benefit over its lifetime.”

The IHSA told the IRS the “normal form of benefit” for Hickman is an “annuity payable over the life of the participant with a 50 percent spouse survivorship.”

• The IHSA paid $400,000 into its $9.2 million pension fund, which paid $644,909 to pensioners, up nearly 9 percent. It anticipates paying $400,000 into the fund in 2015-16 and making about $676,000 in payouts.

• It paid $192,710 into the nonqualified deferred compensation plan, whose payouts went up sevenfold, from $35,170 to $243,516. The association anticipates paying $54,147 from that plan for 2015-16.

• Profits from the boys’ basketball tournament in 2015 rose by $29,000, to just over $1.1 million. But that’s still down about 30 percent from 2006.

• The association, headquartered in Bloomington, took in and spent about $11 million.