Mayors say municipalities need pension reform
BY MAUDLYNE IHEJIRIKA Staff Reporter April 21, 2014 2:38PM
Updated: April 21, 2014 7:14PM
The city of Chicago isn’t the only municipality that needs pension reform help from the Illinois Legislature, a couple dozen mayors and village presidents argued at a news conference Monday, pushing for relief from soaring police and fire pension costs.
“If the Illinois legislature had shown even a modicum of restraint over the past 20 years, we wouldn’t be here,” said Aurora Mayor Tom Weisner at the Thompson Center.
“But over those years, it passed expensive sweetners for the police and fire pension forumulas that pushed them well beyond reason and control. Reduced retirement age? Sure, why not. A 3 percent annual increase? No problem. And let’s give the spouse 100 percent of the retirees’ benefits, even though no other pension plan in the world does that.” The officials, of suburbs from Northbrook to Lynwood, and downstate towns from Carpentersville to Peoria, complained deficits to those pensions have continued to widen — most now are only 55 percent funded — leaving just about every town facing crisis.
Currently in talks with legislators and police and firefighter unions, the officials are seeking legislative approval for such solutions as lowering annual 3 percent compounded cost of living increases; consolidating pension boards; and increasing retirement ages.
Blame for the crisis lies with the legislature for granting what mayors called overly generous benefit sweeteners over the years that created a severe imbalance between employee and town/taxpayer contributions.
Mayor Rahm Emanuel last month sought help from the Legislature to fix pension plans for 57,000 Chicago municipal workers and laborers to help reduce a $9 billion shortfall. Legislators approved an overhaul of the two pensions, now with Gov. Pat Quinn, that hinged on a plan by Emanuel to raise property taxes by $750 million over five years.
Emanuel is expected to also seek help with Chicago’s heavily indebted police and fire pensions, funded as of 2012, at 31 percent and 24 percent, respectively, and the suburban and downstate mayors say the Legislature should not leave them out.
“We’re facing a fiscal cliff,” said Palos Heights Mayor Gerald Bennett. “Previous benefit enhancements have amounted to unfunded mandates, which have compounded the problem, and now the pension boards can intercept state revenue that rightfully belongs to municipalities.”
He was referring to a component of the Legislature’s landmark pension reform of five public-retirement systems last December, requiring municipalities to begin meeting annual required contributions or face interception of state funds by pension systems.
Currently being contested in court by unions, the pension reform law was aimed at eliminating a worst-in-the-nation pension shortfall, then standing at $100 billion.
Similarly, mayors said, unfunded liabilities of their police and fire pensions have continued to grow, even as lawmakers have ballooned required municipal contributions.
“What we do not want is for Springfield to spike the ball on the 15-yard line,” said Downers Grove Mayor Martin Tully. “In the last 10 years, municipal contributions into public safety employee pension funds went from $247 million to $511 million. In that same period, average funding levels decreased from 64 percent to 55 percent. We have two lines on the graph that are going in unsustainably wrong directions.”