If you’ve been paying any attention at all to the state’s financial condition lately, you know that the biggest threat to Illinois’ fiscal well-being is the money it eventually will owe to retirees of its five public employee pension systems.

We’re on pace to be short $100 billion by 2045, when Illinois law dictates that all state pension systems be 90 percent funded. The systems now average 40 percent funding — half of the generally 80 percent “safe” funding level. A pension reform law passed in December 2013 would ease the pension pressure, but it’s now the subject of a lawsuit. Likewise, Gov. Pat Quinn in June signed into a law a bill to reform two pension systems covering municipal employees in Chicago.

Chicago’s fire and police pension systems alone will require an extra $590 million in fiscal year 2015 because of law passed in 2010. That’s why Chicago Mayor Rahm Emanuel has aggressively pursued broader pension reform in Springfield for city pension systems similar to what Quinn and state lawmakers passed for the state.

Those stories have grabbed headlines in Illinois and nationally for months. Less publicized but arguably more dangerous to taxpayers, employees and retirees is the woeful condition of dozens of police and firefighter pension funds throughout the state.


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Aurora Mayor Tom Weisner described the dire situation many Illinois municipalities face their police and firefiighter pensions in a Reboot Illinois op-ed in April:

Public Safety Pensions for police and firemen differ greatly from the teacher pensions in two important ways. First, the benefits (and thus the costs) of police and fire pensions are much higher than teacher pensions for the typical retiree.  Second, whereas teacher pension benefits are determined by the State and paid for by the State, police and fire pension benefits are determined by the State, but paid for by the taxpayers of local cities and villages – normally through property taxes.

Why are police and fire pensions so high?  One reason is that the general public feels strongly that our first responders who risk their lives in our service deserve to have reasonable, but generous wages and pensions.

The other reason police and fire pensions are so high is that our state legislators have “enhanced” these already generous pensions on a regular basis over the past twenty years.  Two enhancements awarded by the General Assembly deserve particular attention.  First, the General Assembly reduced the years of service required for a fireman to achieve the maximum allowable pension.  As a result, firemen can retire at 75 percent of salary as early as age 50.

Second, the General Assembly greatly enhanced the already generous 3 percent annual cost-of-living adjustment by letting them be compounded annually.  When taken together, these benefit enhancements have become devastating cost-drivers for the municipalities obligated to fund the police and fire pension systems.  These are just two of the many pension “enhancements” the state legislature has handed to the well-heeled and influential police and fire unions.

As a result, police and fire pensions have gone from being appropriately generous to becoming totally unsustainable.

Beginning with Cook County and its suburbs

Out of 217 police and fire pension funds in the Cook County suburbs, 94 percent are funded below the minimum 80 percent threshold that is considered “healthy,” according to a recent study by the Better Government Association (BGA).

“Without a doubt, the collective unfunded liabilities of those bigger pensions (in excess of $100 billon [sic]) are far greater than the combined suburban pension shortfall,” the BGA study noted. “However, the fire and police pension woes threaten to have a far greater financial impact on mid-sized and small municipalities because they have fewer viable options to raise revenues or cut costs to plug a pension hole.”

Here are the 10 largest police and fire pensions outside of Chicago, along with total assets, unfunded liability and funding ratio in FY 2010, according to a Commission on Government Forecasting and Accountability (COGFA) report from January 2013.


COGFA REPORT: 2013 Financial Condition of Downstate Police and Fire Pension Funds


Courtesy of the BGA, these are the 10 worst-funded Cook County police and fire pension funds with at least $1 million in assets.

Suburban Fire Pensions

Surbarban police pensions

Combined assets for suburban police and fire pensions is roughly $5 billion; unfunded liabilities account for more than two-thirds of that, totaling $3.3 billion, according to the BGA’s analysis.


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Worst-funded throughout the state

Police and fire pension debt isn’t strictly limited to Chicago and its suburbs. Small Illinois towns across the state are faced with a similar dilemma, not to mention many have fewer members paying into the systems as well as taxpayers supporting them.

With the 80 percent funded benchmark in mind, the following 70 Illinois towns were less than 40 percent funded in FY 2010, according to the COGFA report. While this four-year old data is the latest available, the fiscal condition of these pension funds is likely either worse or not much better today.

*Both charts below contain the same data; one is sorted by rate of funding and the other by pension fund name. Value of assets and liabilities are rounded up.

Figure 1. Police and fire pensions funds sorted by rate of funding

Pension Fund Name Rate of Funding Actuarial Value of Assets Total Actuarial Liabilities
Stone Park Police 6.69% $848,895 $12.68 million
Willow Springs Police 15.07% $766,816 $5.09 million
Willow Springs Fire 16.51% $110,602 $669,848
Park City Police 18.10% $624,390 $3.45 million
Kankakee Fire 18.80% $8.08 million $42.95 million
Glencoe Fire 19.75% $173,249 877,125
Round Lake Park Police 20.83% $924,379 $4.44 million
Burlington Community FPD Fire 21.24% $717,325 $2.95 million
Pinckneyville Police 22.22% $465,940 $2.10 million
Cherry Valley Police 22.24% $23.12 million $79.98 million
Fox River Grove Police 23.92% $1.29 million $5.39 million
Cairo Fire 24.31% $1.44 million $4.33 million
Madison Police 24.34% $1.55 million $6.38 million
Danville Fire 25.15% $16.57 million $47.03 million
City of Genoa Police 26.40% $1.01 million $3.43 million
East St. Louis Fire 26.74% $12.17 million $45.50 million
Peotone Police 27.54% $656,015 $2.38 million
Kankakee Police 27.70% $13.44 million $48.50 million
Blue Island Police 27.94% $215,418.00 539,718.78
Crestwood Police 28.19% $11.82 million $46.99 million
Washington Park Fire 28.59% $230,943 $807,702
Cicero Fire 28.90% $528,630 $2 million
Berwyn Fire 28.96% $6.02 million $15.67 million
Alton Police 29.30% $5.28 million $15.13 million
Coal City Police 29.56% $231,139 $819,730.58
Summit Police 30.07% $7.37 million $24.52 million
Watseka Police 30.10% $1.88 million $6.23 million
Alton Fire 30.23% $16.42 million $56.03 million
Posen Fire 31.58% $357,504 $1.13 million
Maywood Police 32.33% $13.80 million $42.67 million
Lake Zurich Police 32.35% $8.70 million $26.87 million
Granite City Police 32.41% $14.02 million $43.26 million
Lake Villa Police 32.82% $2.48 million $7.56 million
Melrose Park Fire 33.17% $21.46 million $64.71 million
South Chicago Heights Fire 33.24% $95,002 $285,753
Cairo Police 33.25% $1.56 million $7.03 million
Staunton Police 34.51% $440,797 $1.28 million
Herrin Police 34.61% $3.12 million $9.02 million
Wauconda FPD Fire 34.68% $7.80 million $22.49 million
Antioch Police 34.88% $17.88 million $45.02 million
Alsip Police 35.22% $16.27 million $53.81 million
Danville Police 35.23% $17.63 million $49.41 million
Elmwood Park Police 35.27% $11.60 million $32.90 million
Manhattan Police 35.31% $653,170 $1.85 million
Stickney Police 35.41% $4.61 million $13.01 million
Dekalb Fire 35.67% $1.87 million $4.68 million
Pekin Fire 36.27% $15.96 million $44.01 million
Granite City Fire C/O Gail VA 36.41% $16.64 million $45.69 million
Fairfield Police 36.65% $1.88 million $5.14 million
Jerseyville Police 36.72% $2.90 million $7.91 million
Yorkville Police 36.72% $3.64 million $9.92 million
Moline Fire 37.02% $26.32 million $71.10 million
Maywood Fire 37.22% $13.12 million $35.25 million
Melrose Park Police 37.76% $21.29 million $56.39 million
Elmwood Park Fire 37.92% $9.05 million $23.86 million
River Grove Police 38.02% $6.30 million $16.58 million
Quincy Fire 38.19% $20.07 million $52.56 million
Bement FPD Fire 38.38% $19.16 million $66.14 million
Blue Island Fire 38.42% $7.90 million $28.29 million
Rock Island Police 38.78% $25.32 million $65.29 million
Olympia Fields Police 38.99% $5.22 million $13.39 million
Wayne Police 38.99% $948,531 $2.43 million
South Beloit Fire 39.32% $588,909 $1.50 million
Riverside Police 39.34% $7.74 million $19.68 million
Elgin Police 39.43% $58.17 million $147.53 million
Belleville Fire 39.71% $238,386 620,985
East Alton 39.84% $13.90 million $39.45 million
Waukegan Police 39.90% $52.00 million $130.30 million
Bradley Fire 39.91% $45,436 $213,837


Figure 2. Police and fire pensions funds sorted by name

Pension Fund Name Rate of Funding Actuarial Value of Assets Total Actuarial Liabilities
East Alton 39.84% $13.90 million $39.45 million
Alsip Police 35.22% $16.27 million $53.81 million
Alton Fire 30.23% $16.42 million $56.03 million
Alton Police 29.30% $5.28 million $15.13 million
Antioch Police 34.88% $17.88 million $45.02 million
Belleville Fire 39.71% $238,386 620,985
Bement FPD Fire 38.38% $19.16 million $66.14 million
Berwyn Fire 28.96% $6.02 million $15.67 million
Blue Island Fire 38.42% $7.90 million $28.29 million
Blue Island Police 27.94% $215,418.00 539,718.78
Bradley Fire 39.91% $45,436 213,837
Burlington Community FPD Fire 21.24% $717,325 $2.95 million
Cairo Fire 24.31% $1.44 million $4.33 million
Cairo Police 33.25% $1.56 million $7.03 million
Cherry Valley Police 22.24% $23.12 million $79.98 million
Cicero Fire 28.90% $528,630 $2 million
City of Genoa Police 26.40% $1.01 million $3.43 million
Coal City Police 29.56% $231,139 $819,730.58
Crestwood Police 28.19% $11.82 million $46.99 million
Danville Fire 25.15% $16.57 million $47.03 million
Danville Police 35.23% $17.63 million $49.41 million
Dekalb Fire 35.67% $1.87 million $4.68 million
East St. Louis Fire 26.74% $12.17 million $45.50 million
Elgin Police 39.43% $58.17 million $147.53 million
Elmwood Park Fire 37.92% $9.05 million $23.86 million
Elmwood Park Police 35.27% $11.60 million $32.90 million
Fairfield Police 36.65% $1.88 million $5.14 million
Fox River Grove Police 23.92% $1.29 million $5.39 million
Glencoe Fire 19.75% $173,249 877,125
Granite City Fire C/O Gail VA 36.41% $16.64 million $45.69 million
Granite City Police 32.41% $14.02 million $43.26 million
Herrin Police 34.61% $3.12 million $9.02 million
Jerseyville Police 36.72% $2.90 million $7.91 million
Kankakee Fire 18.80% $8.08 million $42.95 million
Kankakee Police 27.70% $13.44 million $48.50 million
Lake Villa Police 32.82% $2.48 million $7.56 million
Lake Zurich Police 32.35% $8.70 million $26.87 million
Madison Police 24.34% $1.55 million $6.38 million
Manhattan Police 35.31% $653,170 $1.85 million
Maywood Fire 37.22% $13.12 million $35.25 million
Maywood Police 32.33% $13.80 million $42.67 million
Melrose Park Fire 33.17% $21.46 million $64.71 million
Melrose Park Police 37.76% $21.29 million $56.39 million
Moline Fire 37.02% $26.32 million $71.10 million
Olympia Fields Police 38.99% $5.22 million $13.39 million
Park City Police 18.10% $624,390 $3.45 million
Pekin Fire 36.27% $15.96 million $44.01 million
Peotone Police 27.54% $656,015 $2.38 million
Pinckneyville Police 22.22% $465,940 $2.10 million
Posen Fire 31.58% $357,504 $1.13 million
Quincy Fire 38.19% $20.07 million $52.56 million
River Grove Police 38.02% $6.30 million $16.58 million
Riverside Police 39.34% $7.74 million $19.68 million
Rock Island Police 38.78% $25.32 million $65.29 million
Round Lake Park Police 20.83% $924,379 $4.44 million
South Beloit Fire 39.32% $588,909 $1.50 million
South Chicago Heights Fire 33.24% $95,002 $285,753
Staunton Police 34.51% $440,797 $1.28 million
Stickney Police 35.41% $4.61 million $13.01 million
Stone Park Police 6.69% $848,895 $12.68 million
Summit Police 30.07% $7.37 million $24.52 million
Washington Park Fire 28.59% $230,943 $807,702
Watseka Police 30.10% $1.88 million $6.23 million
Wauconda FPD Fire 34.68% $7.80 million $22.49 million
Waukegan Police 39.90% $52.00 million $130.30 million
Wayne Police 38.99% $948,531 $2.43 million
Willow Springs Fire 16.51% $110,602 $669,848
Willow Springs Police 15.07% $766,816 $5.09 million
Yorkville Police 36.72% $3.64 million $9.92 million

 

It’s important to note that police officers and firefighters who have paid their fair share should not be faulted for the spiraling pension crisis. The blame rests on the shoulders of Illinois’ government — both Democrats and Republicans — dating back to the enactment of the 1970 Illinois Constitution, and especially the addition of the pension protection clause in Article 13, Section 5.

A recent ruling and signals sent by the Illinois Supreme Court might foreshadow that the pension reform law passed last December will be deemed unconstitutional as the state Constitution clearly states benefits cannot be cut.

NEXT ARTICLE: Why the Illinois race for governor isn’t remotely ready to call

 

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