Earlier this month we reported that the Chicago Teachers’ Pension Fund miscalculated retirement benefits and overpaid retirees by $2.78 million from 2012 to 2014.
Due to “an error in interpretation” of the Illinois Pension Code, fund officials said incorrect dates were used to determine pension start dates, which resulted in issuing back pay for 234 people.
Now the pension fund is trying to get the money back from the retired teachers and administrators, who owe between $566 to $217,185 each.
Turns out this is not the first time the pension fund has had an issue with overpayments.
The Chicago Board of Education sued the pension fund in 2005 claiming it overpaid more than $9.4 million to about 2,600 teachers who retired from 2000 to 2004, according to court documents.
The issue at the time stemmed from using incorrect salaries to determine retirement benefits. Some teachers did not always work a full pay period but when the fund calculated their pensions, they got salary credit as if they had, according to court documents.
In response, the pension fund alleged the board “consistently failed to provide accurate payroll and salary records” to the fund, court records show.
It was a lengthy court battle that was ultimately settled in 2012.
In the end, retirees did not have to pay back the overpayments, but their pensions were temporarily frozen so that annual increases did not kick in until their pensions reached the corrected amount, according to the settlement agreement.
The dispute was also blamed on different interpretations of the Illinois Pension Code.
“At the time the decision was made to include the extra salary, CTPF’s staff, legal counsel, and Board of Trustees believed they were correctly interpreting Illinois law,” according to a statement from the pension fund’s web site. “Unfortunately, an interpretation is just that — an evaluation which is subject to opinion — and all parties did not agree.”
The goal of the settlement, the web site says, was “preventing future overpayments.”
But as we now know, more overpayments began that very same year.
Chuck Burbridge, executive director of the teachers’ pension fund, said he was not familiar with the 2005 lawsuit and ensuing debate. But as for the latest overpayments, he said the fund does not want to “repeat that mistake.”
“Since my tenure here, we’ve taken every step to make sure we don’t make that mistake again,” Burbridge said. “We take this seriously. We are here to serve our members as best we can and we work tirelessly to protect our members.”
In other pension fund news, the board of trustees voted to approve at a special meeting on Aug. 18 a contract with Grant Thornton, an advisory firm who has been tasked with auditing the fund’s policies, procedures and internal controls.
The firm is going to take “a comprehensive approach” looking at every department “to make sure gaps don’t exist,” said Susan Rice, director of communications for the pension fund.
The audit is expected to cost roughly $835,000 to $1 million, Rice said.
Rice said there was no particular incident that initiated the review, rather the board “felt it was time” especially in light of the changing technological landscape.