News & Politics » Ben Joravsky on Politics

As he attacks teacher pensions, Rauner also makes money from them

The governor is part owner of a company that advises the Chicago teachers pension fund.



For better and for worse, Governor Bruce Rauner has never made a secret of his deep contempt­—bordering on hatred—for the Chicago Teachers Union.

One of the first times I caught his union-bashing act was almost three years ago, when he went on Channel 11's Chicago Tonight to blast CTU for, among other things, "routinely bribing our politicians with their union dues to get themselves outrageously generous pensions."

Within a few months of appearing on that show, Rauner was officially running for governor on an antiunion platform.

Since taking office, he's refused to cut a budget deal with Democrats unless they concede to his demand to gut collective bargaining rights throughout the state.

So imagine my surprise when I got a call from a source I'll call Cockburn—because he doesn't want to be identified—informing me that Rauner's old private equity firm was a paid consultant to the Chicago Teachers Pension Fund.

No way, I said—no politician can be that hypocritical.

I was wrong. Just when I think the bar on political hypocrisy can get no lower, along comes someone to prove otherwise.

Here's what I learned.

On April 1, 2011, the Townsend Group—a real estate consulting firm based in Ohio—signed a five-year contract with the Chicago Teachers Pension Fund. Ever since then, Townsend has received $160,000 a year to serve as the fund's chief adviser on real estate investments.

In September 2011, just a few months after inking its deal with the teachers' fund, Townsend was purchased by GTCR, the private equity firm that Rauner used to help lead. In fact, the R in GTCR stands for—you guessed it—Rauner.

Townsend advises the pension fund on about $1.2 billion of real estate investments, which is more than 11 percent of the fund's portfolio, according to a performance letter a Townsend official wrote the pension fund last year.

"We thank you for the opportunity to serve CTPF and look forward to working collectively with the Board and your investment team to meet the challenges ahead," the letter concluded.

It's hard to say just how valuable the contract really is to GTCR.

On the one hand, the $800,000 it will get from the pension fund over the five years of the deal seems like good money to most of us, but it's chump change for a high-rolling investment operation like GTCR that has billions of dollars to play with.

On the other hand, Townsend—and GTCR—can make friends in the real estate world by advising the pension fund on where to park its money.

Any way you look at it, Rauner was making money off the Chicago Teachers Pension Fund even as he went on Chicago Tonight to bash the union's pension benefits as "outrageously" and "ridiculously" generous.

I can't help but be impressed by Rauner's performance on that show, in which he debated Jesse Sharkey, CTU's vice president.

It's not often you see such shamelessness. I mean, he might have at least mentioned his firm's connection to the pension fund.

In fact, the issue of disclosure came up when the host, Carol Marin, pointed out that Rauner was part of the group of investors that owns the Sun-Times, for whom she writes a column. (Since we're on the subject, I should note that the same group also owns the Reader, though Rauner has since sold his shares in the papers.)

It would have been a natural cue for Rauner to say something like, "Well, as long as we're talking full disclosure: yo, Jesse, I'm making money off your pension. Now let me go back to ripping the shit out of it."

A spokeswoman for Rauner now stresses he retired from day-to-day control of GTCR­ before running for office—so stop bugging him about this stuff.

But he hadn't retired when he made those comments three years ago, and he still has an ownership stake in the firm.

By the way, this is not the first time that Rauner has impressed me with his chutzpah. A few weeks ago he was bashing house speaker Michael Madigan for running a lucrative property tax appeal law practice.

Somehow, Rauner never mentioned that GTCR benefited from Madigan's clout. The firm is housed in a downtown building whose taxes were lowered after an appeal handled by Madigan's firm.

Obviously, nerve like that will get you far in the corporate world—and in politics, for that matter.

Still, I had to wonder about the Chicago Teachers Pension Fund. Why would it seek advice from a firm owned by a guy dedicated to destroying teacher pensions?

So I called Charles Burbridge, executive director of the fund, to ask basically, WTF?

In his defense, Burbridge pointed out that he wasn't with the fund when it cut the deal with Townsend back in 2011. And Townsend wasn't owned by GTCR then either.

In addition, the teachers had no way of knowing Rauner's antiunion views until he geared up for running for governor.

More to the point, Burbridge said that no one with Townsend had ever expressed anything remotely like Rauner's views on teacher pensions. With Townsend, the talk had always been about business.

"Their comments have been related to asset management," Burbridge says. "They've not strayed to political views."

Burbridge also noted that Townsend's contract expires next year. "We'll be doing a five-year review of consultants and we'll be reviewing proposals," he says.

Well, teachers, not that you should take fiduciary advice from a broke journalist like me, but—

In the future you may want to at least look into the political views of the companies you hire.

Giving your business to a guy like Rauner is a little like a capitalist selling the rope that a communist will use to hang him, as Lenin once put it.

That's Vladimir Ilyich Ulyanov—you know, the Russian dude. Not the Lennon who sings "Norwegian Wood."  v

Comments (9)

Showing 1-9 of 9

Add a comment

Add a comment