Progress Illinois

School custodian Rahmaan Williams is your typical working-class investor. One portion of his paycheck goes directly into his pension fund and another to cover his union dues. Between the two, Williams figures, his financial future is a little more secure.

But it turns out that his investment strategy isn't as harmonious as he thought.

Like 5,000 other state employees here in Illinois who are members of the Service Employees International Union (SEIU), a fraction of Williams' pension contribution is invested in Atria Senior Living -- a nationwide assisted living chain that's come under scrutiny for making big profits off its low-income, elderly residents and union busting. Williams, along with fellow union members, is now calling on his pension fund manager, the Illinois Municipal Retirement Fund (IMRF), to confront the company about its business strategy, which he says is becoming a financial liability.

"If they're here to protect our money, then they should look at how the company is run," Williams said.

Overall, IMRF's investment in Lazard Freres Strategic Realty Investors Fund II -- which now holds Atria as its sole asset -- has lost value since 1998 (see page 26 of their 2008 market manager summary). Williams argues that if Atria employees had the benefits of union protection, such as better wages and affordable health care, the company would perform better and be more prosperous.

"This anti-worker campaign is not only costly and risky for the company, it's an insult to AFSCME [American Federation of State, County and Municipal Employees Union] workers, both active and retired, whose pensions are funding it," wrote Hank Scheff of AFSCME Council 31 in his own appeal for the IMRF board to intervene on behalf of his union's 25,000 active pension contributors.

Officials who oversee the Illinois municipal employee's retirement fund say that they don't have any pull with Lazard. "We are a limited partner in the real estate fund," spokeswoman Linda Horrell said of IMRF's 3 percent stake, which amounts to roughly $31 million. "As a limited partner we have no influence."

"When it comes to our investments, we try to get the maximum returns with the minimum risks," Horrell said of IMRF's responsibility to its 177,000 current contributors.

By 2009, Lazard is set to dissolve the real estate fund that holds Atria. And SEIU's Edgar Hernandez projects that poor management is going to catch up with the firm and make it a less attractive investment for potential buyers. "There are a lot of things that are going to unwind when the partnership goes to sell," he said, adding that it is IMRF's "fiduciary responsibility to intervene."

(Full disclosure: Progress Illinois is sponsored by the SEIU Illinois State Council.)