Thanks to a pension sweetener quietly engineered by Chicago’s City Hall, a top aide to former Mayor Richard M. Daley could collect at least $800,000 in additional payments over his lifetime from an already cash-strapped municipal retirement fund, the Better Government Association has found.
Former Fire Commissioner Ray Orozco Jr., who also served as Daley’s final chief of staff, collects an annual pension of $144,000 for his fire department service – the largest payout among roughly 2,800 retired firefighters, according to a BGA analysis.
Orozco started drawing payments two years ago, at age 52, pension records show. If he lives until age 82, he will have collected at least $4.3 million from the Firemen’s Annuity and Benefit Fund (FABF), the financially troubled public-sector pension system that administers benefits for retired city firefighters and their dependents.
Without the pension sweetener – in which the two years he served as fire commissioner was counted as four – Orozco would be collecting about $117,000 right now, or a total of $3.5 million by age 82, a generally accepted actuarial life expectancy for someone around Orozco’s current age, the BGA found. In other words, he now stands to collect an extra $800,000 – or more – over his lifetime.
That additional cost means more pain for the FABF – and therefore the taxpayers who help fund the system.
The fund is deep in debt and burning through cash because of chronic underfunding and punishing investment losses amid the recession. Its unfunded liabilities have more than doubled to $3 billion since 2003, and its funding level of 25 percent is lowest among the city’s four employee pension funds, according to interviews and public records.
Orozco, who moved from the Southwest Side to Will County after leaving city employment, personally contributed about $211,000 toward his pension during his fire department tenure, pension records show. He refused to comment for this story.
As such, there’s still some mystery as to why the sweetener was granted and who was the brainchild. But it appears this was not a secret among certain members of Daley’s inner circle, even if it wasn’t made public until now.
Orozco joined the Chicago Fire Department on Feb. 19, 1980, records show, during the contentious firefighters strike. He rose through the ranks to serve as commissioner, from May 2006 through July 2008, when Daley tapped him to lead the city’s Office of Emergency Management and Communications (OEMC), which operates Chicago’s 911 center and coordinates responses to major emergencies.
Daley picked John Brooks to succeed Orozco as fire commissioner. The Chicago City Council approved both appointments in July 2008. Yet three months later, the Daley administration, at Brooks’ request, quietly approved a new position for Orozco, one with a title of “fire commissioner/executive director of OEMC,” according to interviews, and pension records obtained under the Illinois Freedom of Information Act.
This new post was apparently never publicly disclosed. Even Robert Hoff, Chicago fire commissioner from 2010 to 2012, says he didn’t know of Orozco’s dual role until the BGA brought it to his attention.
Orozco remained in that post from August 2008 until September 2010, when Daley picked him to be chief of staff. Orozco served in that capacity until Daley left office in May 2011.
Orozco started collecting his pension in June 2011, shortly after he left the public sector and became CEO of the charity After School Matters, founded by Daley’s late wife Maggie. As the FABF computed Orozco’s benefit, he got a helping hand from then-Corporation Counsel Mara Georges, Daley’s top in-house lawyer.
The pension fund had questions about Orozco’s paperwork – specifically why he was listed as fire commissioner for four years, rather than two – and Georges wrote a letter to the FABF saying Orozco, while OEMC’s executive director, also had the “role and title” of fire commissioner.
Therefore, Georges wrote, Orozco’s pension benefits should be based on his “four year salary as fire commissioner.”
That time frame is noteworthy because the formula to determine a firefighter’s pension is based on a person’s highest four years of salary in his or her final decade of work. While at OEMC, Orozco’s salary exceeded $185,000 a year.
So by letting that figure count toward his fire pension Orozco’s payouts soared. However, the BGA could find no evidence that Orozco really acted as fire commissioner during his two years at OEMC, despite Georges’ claim.
Brooks was routinely described publicly as Orozco’s successor as fire commissioner – even in City Hall’s press releases and City Council minutes.
Daley didn’t return messages. Georges, now in private practice, denies she vouched for Orozco “with any pension enhancement in mind.”
“I am confident that my letter accurately put forth the facts,” she says.
| That time frame is noteworthy because the formula to determine a firefighter’s pension is based on a person’s highest four years of salary in his or her final decade of work. |
But Tom Ryan, president of Chicago Fire Fighters Union Local 2, said Orozco certainly “wasn’t running the day-to-day operations.”
“As far as I know John [Brooks] was at the helm.”
Brooks declined to comment.
Anthony Martin, FABF secretary, acknowledged the board questioned whether Orzoco was actually fire commissioner for four years. He says the letter from Georges guided the board’s decision to grant Orozco’s current pension.
Martin also added that Orozco, after becoming Daley’s chief of staff, could’ve paid into a different city pension fund and received a higher benefit but chose not to. That seems to be true. Had Orozco shifted his pension money to the Municipal Employees’ Annuity and Benefit Fund it appears he would have collected a smaller payout in the short run but a much larger one in the long run.
Over his lifetime, total payments through the MEABF could’ve topped $5.9 million, the BGA estimates, mainly because the fund has higher cost-of-living increases that compound annually. It’s unclear why Orozco didn’t take advantage of that option.
“That’s an issue between the mayor [Daley] and Orozco,” Martin says.
This story was written and reported by the Better Government Association’s Andrew Schroedter, who can be reached at (312) 821-9035 or aschroedter@bettergov.org.
