Water agency pays $2.4 million to departing employees

It cost taxpayers almost $2.4 million when 78 Metropolitan Water Reclamation District of Greater Chicago employees quit late last year rather than lose some accrued financial benefits.

Policy changes that took effect Jan. 1 drastically reduce sick-time payouts for employees leaving the agency and eliminate a program that paid departing employees a day's wage for every year they worked for the district.

The average severance payout amounted to more than $30,500 and ranged between $357 for an administrative assistant and $103,509 for a lawyer leaving after 41 years, according to data requested by the Daily Herald under the Freedom of Information Act.

The total severance payout for the employees also includes more than $290,000 in earned vacation time.

Terry O'Brien, president of the agency's board of commissioners, said it's a good deal for taxpayers in the long run. He said the costs can be recouped by hiring replacements at lower wages.

“In the long term we'll have tremendous savings as we hire back and there will be cost savings if we don't replace all the positions,” O'Brien said.

The district is responsible for treating wastewater for Chicago and many of the suburbs.

The policy changes were announced in the fall. Between Oct. 1 and Dec. 31, the district saw 78 employees leave rather than lose the benefits if they stayed past Jan. 1, officials at the agency said. The annual salaries of the 78 employees amounted to $8.1 million, with almost a third of the employees who left making six-figure salaries, the records show.

The highest paid was longtime Executive Director Richard Lanyon, who was making $254,797 a year when he left. He received a severance package totaling $97,277, the records show.

The lowest salary belonged to a 22-year “senior office support specialist” who was making $52,163 when she left. Her severance earnings amounted to $5,259.

Commissioner Gloria Majewski left her elected post in November after more than 20 years on the board. She received a payout of $8,654.

The exodus also cost the district 2,209 years of experience. Eleven of the employees who left had 40 or more years of experience at the agency.

“That is not something you can discount,” said Savvas Koktzoglou, a 13-year engineering veteran of the district who lives in Arlington Heights. “It is a loss, all these years of experience, and that's not good for the taxpayer because you can't replace these people easily.”

Meanwhile, some employees have sued the district to keep their jobs and those benefits as well. O'Brien said about 20 to 30 employees still with the district are part of the suit.

O'Brien said he expected more employees to leave due to the policy changes. The district employs more than 2,000 people.

Sick-time accrual cost the district the most at $1.2 million. The policy that allowed employees to earn a day's pay for every year they worked at the agency, up to 30 years, cost the district more than $860,000 in payouts.

“The district was maintaining an unreasonable and economically illogical severance program,” said Laurence Msall, president of the Civic Federation, a nonpartisan government finance watchdog organization. “We think what they did was appropriate. This is a straightforward way to go about it, even though it was a significant charge.”

Sam Passalacqua of Arlington Heights worked in the water reclamation district's printing center for 36 years. At 61, he was years away from retiring, he said.

“They should have given employees the chance to stay instead of giving them no option,” Passalacqua said.

Employees are vested for pensions after 10 years of working. The percentage of their salaries they can collect upon leaving grows by 2.2 percentage points per year up to their 20-year mark — they'd get 44 percent of their salaries at that point — then grows by 2.4 percentage points per year, up to the maximum 80 percent of their salaries after 35 years.

Employees hired before 1997 can begin collecting pensions once they turn 50. Employees hired after 1997 have to wait until they're 55.

O'Brien said the policy change was necessary to confront financial constraints at the district, even though he acknowledged most private industries and government agencies eliminated such perks long ago.

“When things are good you don't look at things that closely, but when things are tight you do,” he said.

Water district payouts

<b>78:</b> Employees who quit jobs at the Metropolitan Water Reclamation District of Greater Chicago rather than lose accumulated benefits

<b>$ 2,384,901:</b> Total benefit amount paid to departing employees

<b>$ 103,509:</b> Highest severance payout

<b>$ 357:</b> Lowest severance payout

<b>$ 30,575:</b> Average severance payout

<b>$ 27,878:</b> Median severance payout

<b>2,209:</b> Number of years the 78 employees worked for the district

<i>Source: Metropolitan Water Reclamation District of Greater Chicago</i>