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Tully, DuPage County officials lobby for pension reform

Published: Thursday, April 10, 2014 11:42 a.m. CST • Updated: Friday, July 25, 2014 4:42 a.m. CST

DOWNERS GROVE – Downers Grove Mayor Martin Tully and other mayors lobbied state officials in Springfield last week to reform municipal police and fire pension funds they say are unsustainable.

"The state legislature determines pension benefit levels, but the costs of those benefits are the responsibility of the municipal taxpayers," said Tully, who made the trip along with other members of the DuPage Mayors and Managers Conference.

The trip to Springfield piggybacks on a recent bill approved by lawmakers to overhaul pensions for some city of Chicago workers.

Tully and other municipal leaders laid the blame for the skyrocketing unfunded liabilities in police and fire pension funds on eight pension "sweeteners," added by Illinois legislators over the last 20 years, including increased cost-of-living adjustments which exceed inflation. Tully said the result is that the taxpayers' cost of a public safety employee's pension is nearly double the cost they pay for other municipal employee.

"The public safety pension systems must be fixed to ensure that the burden on our taxpayers is fair and to ensure the cost to taxpayers is affordable," Tully said. "We are open to negotiating changes that will bring about pension systems which are sustainable for the long-term"

From 2004 to 2010 in Illinois, municipal contributions increased from $247 million to $511 million, Tully said, but the average finding levels dropped from 64 percent to 55 percent.

Pat Devaney, president of the Associated Fire Fighters of Illinois, said comments from DuPage Mayors and Managers Conference attempt to shift the blame for the underfunded liability towards workers' benefits and away from the real causes – municipalities have not made adequate payments and losses in the stock market during the recession. He also pointed to a third cause – inflated actuarial assumptions for investment returns that lead municipalities to contribute less.

"We have some very healthy funds all operating under the same requirements as the funds that are very poorly funded," he said. "The only variable is how responsible the employer has been been in making their contributions.

"We're all in favor of reform, and I think we all need to take a look at the system and create some solutions. But they should be based on the causes of the problem."

Downers Grove has continued to pay more into the funds every year, yet it is still falling further behind as the liability grows, according to figures provided by the village.

In 2004, the village contributed $866,178 to the police pension fund, which at the time was funded at 73.5 percent, and had an unfunded liability of $9.8 million. This year, the village contributed $2.3 million, but the liability has grown to $34.65 million. It's now funded at 54.5 percent.

For the fire fund, the liability has grown from $13.48 million in 2004 to $30.06 million in 2013. In the 2004, the village contributed $1.4 million, and in 2014 it contributed $2.47 million. The funding percentage dropped slightly from 56.8 percent to 55.5 percent.

Those numbers nearly mirror the state-wide aggregate numbers, according to analysis provided by the Commission on Government Forecasting and Accountability.

The biggest drops in funding levels occurred following the recession when the economy and stock market collapsed.

Reforms supported by the DuPage Mayors and Managers Conference include revising the 3 percent compounded cost of living increase, which is currently added to benefits each year. Other reforms include increasing the employee contribution toward pensions and increasing the retirement age or the number of years of work required to attain the maximum pension payment.

As payments have increased, municipalities are having to use a larger chunk of property taxes to make the payments. Some municipalities have had to cut staff or services to make room for the expanding contributions. This year in Downers Grove, all of the $583,000 property tax levy increase went towards pensions.

"It hasn't been affecting us in terms of services we'd have to cut or reduce," Tully said. "But every year if we have to raise our property taxes even a little bit, at what point in time does the electorate say 'knock it off,' or 'we're not going to stand for it, we want you to cut something else.'"

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