SPRINGFIELD – A day after the high-profile approval of Chicago pension overhaul, mayors from suburban DuPage County asked lawmakers Wednesday for help with their pension systems for police officers and firefighters, saying costs are spiraling out of control.
Officials from cities in Illinois’ second most-populous county want legislative approval for cost-saving measures in their financially shaky retirement accounts. Statewide, cities have just 55 percent of the money in their police and fire pensions needed to meet obligations to employees and retirees.
“More money is going in, but the pensions are actually being less and less well-funded,” Downers Grove Mayor Martin Tully said at a Statehouse news conference. “The payouts are increasing at a staggering rate.”
The officials were piggybacking on major legislative action Tuesday to give Mayor Rahm Emanuel authority to revamp Chicago pensions for municipal employees and laborers. The plan, hinging on a $750 million, five-year property tax increase, increased contributions from employees and reduced retirement benefits, is intended to address a $9.4 billion deficit in those accounts.
But Chicago has yet to address a $10 billion shortfall in its police and fire funds – the programs that are increasingly causing financial headaches for the rest of the state’s municipalities.
Fixing those systems will take similar action, the DuPage officials said. Pension programs are created by state law, so only the Legislature can approve change. The officials are asking for permission to lower annual cost-of-living adjustments, increase employee contributions, and raise the retirement age for police and fire employees in cities outside of Chicago.
Inevitably, changes will face opposition. Police and fire unions argue that employees have paid their contributions all along while cities have not paid what they’ve been obligated to pay.
Sean Smoot, director of the Police Benevolent and Protective Association, said cutting benefits to retirees won’t solve the problem. He said statewide changes in 2011 that reduced benefits for new employees are improving the situation. He and Pat Devaney, president of the Associated Firefighters of Illinois also said investment returns have been improving since the market crash of 2008.
Police and fire retirement funds for cities statewide have an average of just 55 percent of the money needed, a drop of about 20 percent the past two decades, according state statistics.
Local officials say a large problem has been legislatively approved benefit “sweeteners” with no money to pay for them.
In 2016, state law requires cities to make required contribution increases so they’ll reach 90 percent funding by 2040. If they don’t, the state will begin doing it for them, diverting state grant money to cities directly into the pension funds. Without help, city officials say they’ll be forced to make steep cuts in city services to meet their pension obligations.
Tully wants the penalty date pushed back until changes are made to the pensions systems, arguing that “even someone on death row is entitled to an appeal before retribution.”
Prospects for quick action are questionable. There’s uncertainty about the constitutionality of a fix signed into law last fall designed to deal with a $100 billion problem in state employees’ pensions. Some city officials don’t expect action on police and fire pension problems until a court ruling on the statewide plan.
And it’s an election year. It’s hard to vote against first responders such as police officers and firefighters or their unions, which have significant influence.
“Money talks,” Burr Ridge Mayor Mickey Straub said, “and the unions have had the influence.”