Local Governments Urge Springfield to Overhaul Public Safety Pensions

As local governments struggle to balance their budgets in the midst of skyrocketing public safety pension costs, municipalities across Illinois are urging Springfield lawmakers to vote in favor of reforms for police officer and firefighter pension systems before the end of the current legislative session.

Across the State, these rising costs have created staggering structural deficits that threaten future benefits and could render local police and fire retirement benefit systems financially insolvent.

Failing to address these widening unfunded liabilities will translate to higher local property taxes, cuts in essential services or public safety layoffs for local residents across the state.

“The rising pension costs are essentially unfunded mandates that have placed an unsustainable burden on municipalities, our budgets and our taxpayers who have to fund them,” said Woodridge Mayor William F. Murphy.

In Woodridge, the municipality's police fund was 78% percent funded in 2000, while it was only funded at 57% percent in 2010. This is despite taxpayer contributions of $1,069,703 in 2010 as compared to $172,026 in 2000.

Woodridge and scores of municipalities across the state have united in the Pension Fairness for Illinois Communities Coalition (PFICC), which is seeking to address dramatic increases in police and fire pension obligations that local communities must cover through property taxes.

While most of the discussion surrounding pension reform this year has involved state employees, the PFICC, which held a press conference recently with Chicago Mayor Rahm Emanuel, is highlighting the fact that soaring pension costs are not confined to state government.

Benefit enhancements were approved at the state level throughout the years without providing a funding mechanism or calculating taxpayers' ability to pay. Though the economic recession had a significant impact on pension investments recently, a severe imbalance between employee contributions and what was required from local taxpayers has been created by these enhancements. Municipalities have been struggling for years with the structural deficits and unfunded liabilities created by the pension systems.

The PFICC has outlined some long-term solutions aimed at reforming public pensions that would provide relief for taxpayers, including:

• Requiring public safety employees to contribute more toward the cost of their pensions. Currently, employees only contribute about one-third while taxpayers pay the remainder

• Adjusting cost-of-living-increases from the current 3 percent so they are “right sized” and not compounded annually

• Increasing the retirement age for public safety employees, who can now retire with full benefits at the age of 50, and – in many cases – receive benefits for longer than they worked for the municipality

• Consolidating the 638 individual public safety pension funds into a multiple employer pension system similar to the Illinois Municipal Retirement Fund to increase investment returns and lower overall operational expenses.