Jump over the site's section navigation.

Illinois Cities Struggle With Pensions

Mon, 12 May 2014 04:20:11 CDT
By: IPR's Alex Keefe

Illinois Cities Struggle With Pensions
     Towns across Illinois are paying more and more money into their local pension funds for cops and firefighters, but many are still seeing the financial health of those pensions get worse and worse. Unions and municipalities fiercely disagree on what caused the crisis - and how state lawmakers should fix it.
    IPR's Alex Keefe reports:

JURACEK: Okay, why don't you sit in the front and I'll get in the back...
I'm riding in an official Village of Mount Prospect S-U-V with Mayor Arlene Juracek on a drizzly weekday afternoon.
And we're going to see the impact of her local pension crisis. Juracek says the village recently fell about two years behind in repaving its streets because it couldn't afford the construction. We slalom around potholes on a crumbling sidestreet.
KEEFE: So as we're driving over this bumpy road in Mt. Prospect - Can you connect this back to the pension problem?
JURACEK: Well, again, we fell behind in our street maintenance. ... So as your revenue sources are limited and your costs are escalating, you start to make the tradeoffs. ... One of the most escalating costs is the pension cost.

     Now, Even Juracek admits you can't directly blame pensions for potholes. But mayors around Illinois complain that pensions are eating up bigger and bigger portions of local budgets. Mount Prospect's required police and fire pension payments have nearly quintupled since 1997. Nonetheless - a state study from last year says the UNFUNDED LIABILITY for downstate and suburban public safety pensions - think of that as future pension debt - it's grown about eight-fold since the early 90s. This is the problem facing mayors like Gayle Smolinski, of suburban Roselle.
SMOLINSKI: That doesn't make any sense. If we're increasing the amount of money we're putting in, why are our funding levels going down? And we've been able to track it back to what we call pension sweeteners.

These so-called "pension sweeteners" are retirement benefit increases...increases the mayors say powerful police and fire unions lobbied for in the state legislature - where pension changes must be approved.

SMOLINSKI: How can I pay for these increases? But the state legislature hasn't concerned themselves with that because they're happy to be the purveyors of largesse at our backs.

That's why a coalition of nearly a-hundred towns and municipal groups wants the General Assembly to scale back those retirement benefits. They also want to raise the retirement age for cops and firefighters outside of Chicago - and have them pay more toward their own pensions. Otherwise - they warn of more tax hikes, more service cuts - maybe more potholes.

SMOOT: It's definitely not about potholes.

Sean Smoot is with the Police Benevolent and Protective Association of Illinois - which lobbies for police pensions in Springfield. Smoot says the choice these mayors present - cutting basic services or paying public safety pensions - is a false one. And as for those benefit increases...

SMOOT: These pensions sweeteners that they like to point to. Those didn't happen without their agreement. So for them to turn around and say...General Assembly, you put these unfunded mandates on us - it's just simply not true.

An analysis by the non-profit Urban Institute, based on Washington D-C - found downstate Illinois police and fire pensions are actually LESS generous than similar plans across the country - largely because cops and firefighters here do NOT get Social Security.Police and fire interest groups say towns are now just trying to wriggle out of higher pension costs - that they should have seen coming decades ago.

TEPFER: This is the way that Illinois retains it's No. 1 ranking has having the worst-funded pension funds in the country.

Art Tepfer has been a public pension actuary for Illinois police and fire funds for nearly three decades. And he says these skyrocketing pension costs were actually by design. In 1993, state lawmakers approved a pension funding scheme that worked kinda like an adjustable-rate mortgage - low payments at first, but rapidly rising payments in the future.

TEPFER: Well, we're in the future now. This is what's happened. And that's why we have a pension crisis. We saw it coming.
STRAHL: Well, you'll notice this piece of the street here has gone to complete gravel. ... So that's a bad thing.

Back on the tour of Mount Prospect, Assistant Village Manager Dave Strahl points out a whopper of a pothole that's eaten the road to its foundation. The longer it goes un-fixed, the worse it gets. Mayor Arlene Juracek leans in from the back seat to say that's the same reason state lawmakers need to change downstate police and fire pensions - soon.

JURACEK: If not now, when? You need to start because the problem gets worse every single year.

Mayors, union reps and state lawmakers are working on a solution - but nobody seems to think it'll get done before the General Assembly adjourns for the summer.

Support Your Public Radio Station