Naperville considers joining push for statewide pension reform

Naperville plans to join the push for statewide pension reform, saying the current system is not sustainable. Councilmen held a workshop Monday to discuss the issue - their sole legislative priority.

"I'm really concerned if we don't do something different going forward ... somebody is going to be here 20 or 30 years from now talking about the same thing," Councilman Kenn Miller said.

The current system is one of guaranteed benefits. If the stock market goes down as it has in recent years, taxpayers are on the hook to come up with the additional money.

In the upcoming fiscal year, Naperville plans to contribute $12.2 million to employee pensions - $2.4 million more than the current year, according to Dan DiSanto, assistant to the city manager. A majority of that is police and fire pensions. The city currently has $126 million in unfunded pension liabilities.

Naperville police and firefighters contribute just less than 10 percent of their salary to their pension, and are eligible for a maximum of 75 percent of their salary if they reach 30 years of service.

The state Constitution outlaws diminishing employee benefits, but DiSanto said one option would be for the state to create a second tier of benefits for new hires.

Councilman Grant Wehrli said nothing should be off the table and suggested the state look at a variety of options - defined contributions, a 401(k)-type system, and amending the state Constitution.

But police and firefighter representatives attending the workshop said the state needs to look at funding, not benefits.

Jim McNamee, president of the Illinois Public Pension Fund Association that represents both police and firefighters, used a mortgage as an analogy. He said cities need to refinance and make level annual payments. He added that defined contribution plans cost more in the first 11 years than defined benefit plans.

Wehrli argued that defined contributions could be a headache in the short-term, but may be worthwhile in the long run. Refinancing, he said, would merely push the problem to future generations.

Eddy Crews, a representative of the Associated Fire Fighters of Illinois, said because police and firefighters are exempt from Social Security and are in dangerous jobs, they need to know they and their families are taken care of.

Councilman Jim Boyajian called the city's police officers and firefighters "top notch," but said their pensions can't be an emotional issue.

"We're running out of options," Boyajian said. "Pushing the ball down the road is not an acceptable solution."

Councilmen did not reach an agreement on how to reform pensions, but said they would like to join a coalition pushing state lawmakers for a change. They will vote March 2 on joining a group.