William "Bill" Volk, the longtime managing director of the Champaign-Urbana Mass Transit District, is scheduled to retire on June 30, 2014, but he won't be walking out the door empty-handed.
In his 40-1/2 years with the district, Volk has managed to stuff his personal bus with a pension that will pay him roughly $210,000 a year, or $17,500 per month.
The final figure remains undetermined because Volk's salaries for 2013 and 2014 have not been entered into the formula. But according to the Illinois Municipal Retirement Fund formula, Volk's pension will be 75 percent of the last four years of his salary, $280,075 for 2011, $286,734 for 2012 and the same or higher figures for 2013 and 2014. He was identified as among the "big dogs" in municipal pay and pensions in a report issued this week by openthebooks.com. If Volk collects his pension for 15 years, he will receive more than $3 million in payments.
"Are they public servants or an elite bureaucracy? You decide," openthebooks.com stated.
A generous pension?
"It is," Volk responded.
But the 64-year-old noted that he started at the C-U MTD when he was 25 and built a small district into a large one.
"We were operating 13 buses at peak hours (when I started). Now, we're operating about 90," he said.
"The district has performed at a much higher level than other comparable districts," Volk said.
MTD board members announced this week that Volk will be succeeded on July 1, 2014, by longtime MTD employee Karl Gnadt, the current director of market development.
Ron Peters, the past chairman of the MTD board, said the district is still "fine-tuning" its contract arrangements with the 46-year-old Gnadt and that his compensation will be "announced" when negotiations are complete. But he said board members have already decided one issue related to Gnadt's salary.
"It will not be near what Bill Volk is making, I'll tell you that," Peters said.
Volk said, and past MTD board member George Friedman confirmed, that his generous compensation was driven by board members' desire to retain Volk rather than see him leave to take another job. That's why his contracts included retention bonuses that drove his salary ever higher.
"If I stayed, I got the money. If I didn't stay, I didn't get the money," Volk said, characterizing the retention payments as a quid pro quo. In the business world, those arrangements are called "golden handcuffs."
Friedman, who served two separate stints on the MTD board, said he can't recall all the details of the Volk contract negotiations.
"I'm getting to be an old man. I don't have that good of a memory any more," he said.
But Friedman characterized Volk as an outstanding manager he felt must be retained.
"I think Bill Volk was a godsend. When I was on the board, I felt like we had to work very hard to keep Bill Volk in Champaign-Urbana," he said.
The board's effort to retain Volk is reflected in the steady series of raises and retention bonuses he's received just since 2000.
In that year, Volk was paid $103,269. By 2012, it had nearly tripled to $286,734.
His movement upward included giant increases that Volk said were simple pay raises — from $107,813 in 2002 to $145,901 in 2003 — and retention bonuses — from $216,501 in 2010 to $280,075 in 2011.
Those pay hikes dramatically increased Volk's pension, which is based on the average salary of his final 48 months of employment, and Volk said that was part of his plan for retirement.
"I obviously knew what I was doing in attempting to maximize my pension," he said.
But Volk distinguished the raises he negotiated to increase his pension from "salary spiking," the practice of many government agencies to increase employee compensation in their final years to increase their pensions.
"I don't believe that it rises to the level of the padding of pensions that you see in other places," he said.
Volk said his contracts were negotiated "to encourage me to work past (age) 60," the IMRF's retirement age.
Volk's pension prospects are notable not just because of his scheduled departure, but also because of the financial crisis surrounding five of Illinois' public pension funds.
But the IMRF represents an exception to Illinois' disastrous pension finances. Unlike the Teachers' Retirement Fund or the State Universities Retirement Fund, which are dangerously underfunded, the IMRF is flush.
That's because taxpayers are billed by local government agencies and make pension contributions on IMRF members' behalf through their property taxes. Indeed, property taxes are going steadily up because of the ever-rising costs of paying for employee pensions.
In Volk's case, his pension will be based on contributions he made to the IMRF and contributions taxpayers made on his behalf. Financial figures show that Volk paid $4,647 to IMRF in 2000, when he was paid $103,269, and larger amounts every year since then. In 2012, Volk paid $12,903 into IMRF, when he was paid $286,734.
Volk's payments represent less than 5 percent of his salary.
At the same time, however, taxpayers made substantially larger contributions to IMRF on Volk's behalf, forking over roughly eight to 10 times what Volk paid.
The total contributions taxpayers made to Volk's IMRF pension are not available. But an examination of other MTD retiree pensions shows the one-sided relationship between an employee's contribution to IMRF and taxpayers' contribution on an employee's behalf.
One MTD employee, who received a monthly pension of $5,194, contributed $57,181 to IMRF over the course of his nearly 29-year career. At the same time, taxpayers contributed nearly $516,815 on his behalf, nine times as much as the employee. That employee received all of his personal contributions back in less than a year.
Another MTD retiree is collecting a $5,165 monthly pension based on 26-1/2 years of employment. That employee contributed $54,979 to IMRF while taxpayers contributed $474,602 on his behalf, 8.5 times as much as the employee. That employee also recovered all his contributions in less than a year.
Former MTD board chairman Peters, a retired labor relations professor at the University of Illinois, said Volk's generous contract terms were negotiated before he joined the MTD board in 2006. He indicated the contract terms went back as far as the mid-1990s and that its terms caused "eyebrow-raising" among new board members.
"It is very generous in terms of comparison with other public leaders of government," he said.
Still, Peters said, "I do think the district and the community got its money's worth. Bill was very forward-looking, in terms of thinking beyond just having buses run down the street."
Jim Dey, a member of The News-Gazette staff, can be reached by email at email@example.com or at 351-5369.