By: Ted Dabrowski
After trustees of Illinois’ nearly 650 downstate police and fire pension funds learned they could force cities to properly fund their pension obligations, you’d think they would be jumping to put the law to work in favor of the pensioners they represent. Just last month, Harvey, Illinois, was the first municipality to have its tax revenues garnished by the state comptroller for failing to fund its local pensions. North Chicago’s taxes were intercepted shortly after. The garnishments were the result of a law passed in 2011 but only recently implemented.
Illinois’ public safety trustees certainly appear to have plenty of reason to act with urgency – from their pensions’ perspective. Wirepoints research of Illinois Department of Insurance data found that nearly 400 public safety funds were shorted their required payments in 2016 alone. Collectively, Illinois’ 650 downstate public safety pension funds are underfunded by more than $10 billion and many are headed toward insolvency. Nearly 30 percent of downstate public safety pension funds have less than half the money they need on hand today to pay out future benefits.
But after trustees from the Harvey police pension fund paved the way on how to use the law – and trustees from the city of North Chicago followed suit – it’s been virtual crickets. State comptroller spokesman Abdon Pallasch confirmed to me yesterday that no trustees from any other pension fund have stepped forward to ask for enforcement of the new law.
Why aren’t the pension trustees busting down the comptroller’s doors? Why aren’t public safety pensioners demanding action from their trustees? And where are the unions, the media and the politicians? Why aren’t they pushing its implementation?
Proponents of the current pension scheme have been fighting for decades to ensure some form of guaranteed funding, and now that they have it, nobody is acting on it.
That’s amazing given the fact that 202 municipalities shorted their police funds in 2016, the latest, statewide, full-year data on how much downstate pension funds were owed and what they actually received. The list of the police pension funds and how much they were shorted is provided below.
Take Granite City, for example. There the police pension fund was just 33 percent funded in 2016. It’s effectively bankrupt. In any private sector setting, that fund would have been closed and dissolved long ago. In 2016, Granite City shorted its police pension fund by nearly $1.2 million, or nearly 50 percent of what it should have paid that year.
Or Skokie, Illinois, where the police pension plan was just 62 percent funded in 2016. The city was supposed to contribute $4.0 million to the plan in 2016. Instead, the pension fund received just $2.2 million, or 55 percent of the total.
Or East St. Louis. That city and its pension plans are running out of options to stay afloat. It too, underfunded its police pension by 66 percent. Of the $2 million the fund was supposed to receive, it got just $700,000.
So where are the trustees and all the other supporters of guaranteed funding for pensions?
As usual, you’ll find the answer in math.
Many of these cities are running out of money and their ability to tax their residents has reached its limit. Illinoisans already pay the highest property taxes in the nation and those taxes continue to go up. Cities simply can’t fund both their operating costs and the pension promises that have been made.
And if cities are forced to pay their statutorily required amounts to the local pension funds, they’ll cut into spending for core items like roads, public health or government worker jobs. Like firefighters or police officers.
That became obvious when the state comptroller garnished Harvey’s tax revenues for the city’s failure to fund its police pensions. As a result of the garnishment, the city was forced to layoff more than 40 public safety workers.
The new law has exposed the ugly reality in Illinois. These pension plans are simply too expensive and too onerous for the cities that have to pay them and the residents that are forced to fund them.
That fact is not being lost on Illinois politicians. They are worried by the mess the new law has exposed and are already looking to roll it back. Politicians can’t afford to have hundreds of pension funds asking for state intervention. Nor can they politically afford police and firemen layoffs in cities like East St. Louis, Kankakee or Chicago Heights. So they are reportedly looking at a new bill to scale back those intercepts.
Rather than reform the underlying problems, politicians will just look to paper over them. That’s nothing new.
Expect things to get worse. We recently reported – and testified to the Cities and Villages Committee of the House – how much city and resident finances have deteriorated in the past 15 years because of booming pension costs and unaffordable benefits. The trend will continue and at the testimony we called for a bankruptcy option for Illinois’ worst off communities.
It’s a sad mess politicians have made of Illinois. What will become of Illinois communities when they have to fire active public safety workers so they can pay for retired ones?
The list below shows the 202 Illinois cities that could face garnishment by the state comptroller for failing to properly pay their statutorily required amounts to their respective police pension funds in 2016.