DuPage mayors: Public safety pensions unsustainable, in need of reform
DOWNERS GROVE – Mayors from DuPage County are back after lobbying Springfield for public safety pension reform earlier this month, but they hope to keep the topic in the forefront until lawmakers enact change.
Itasca Mayor and DuPage County Mayors and Managers President Jeffery Pruyn and others in the organization say police and fire pensions have become unsustainable as the unfunded portions of the funds have ballooned in the past decade. The group is looking to increase employee contributions and increase the retirement age or years of work required to receive the pension. The mayors also wants to curb the yearly, compounded 3-percent cost of living adjustment, which they name as the biggest culprit.
"Basically policemen retire in their early 50s, and 20 years later their pensions double," Pruyn said.
The mayors say the compounded increase is exacerbated by sweeteners added over time by Illinois lawmakers and the fact that the number of retired workers are catching up with the number of current employees.
The result, they say, is that between 2004 and 2010, municipal contributions to public safety pensions more than doubled, from $247 to $511 million, but average funding levels have dropped from about 64 percent to 55 percent.
As the unfunded liability grows, larger percentages of municipal property taxes are going towards paying the annual pension contribution. For example, all of Burr Ridge's municipal property taxes now go towards paying public safety pensions, DMMC Executive Director Mark Baloga said.
Opponents to the reforms touted by the DMMC say floundering pension funds are not caused by workers who contributed their share, but by municipalities that underfunded the plans, poor investment returns, and inflated actuarial predictions for returns.
The mayors added that if the legislature does not immediately reform public safety pensions, they need to at least remove a penalty provision. The provision states that by 2015, municipalities must fund pensions to a level of 90 percent, amortized to 2040, or risk having local revenue garnished.
"We need to see a delay of the trigger date of that penalty provision," Baloga said. "If they're gonna kick (reform) down the road, they need to kick the whole thing down the road."
Pruyn, Baloga and Lisle Mayor Joseph Broda met Friday with Suburban Life Media's editorial staff to discuss pension reform and the group's opposition to a "minimum manning" bill that would make fire department manning levels a mandatory subject of firefighter contract arbitration proceedings. The DMMC names both issues as its 2014 legislative priorities.
They resist the "minimum manning" bill because requiring a municipality to maintain a certain number of firefighters could force it to hire more than they could afford, Pruyn and Broda said.
"We could end up having to cut equipment," Broda said. "You might have the personnel but not the equipment for them to use.
"We actually see it as damaging to public safety."
During the meeting with the editorial staff, Broda, Pruyn and Baloga mentioned another legislative issue – giving non home-rule municipalities more freedom in how they expend hotel-motel taxes. Currently, non home-rule communities can only spend their hotel-motel taxes on tourism-related expenses. The DMMC supports a bill that would allow non home-rule communities to place up to 50 percent of those revenues in the general fund, and the other 50 percent or more would remain in tourism.
"The village of Itasca, we have 8,700 people and 1,100 hotel rooms," Pruyn said. "We get over $1 million a year in hotel tax that right now, and I can't even use to fix the street in front of the hotel."
Broda and Pruyn said even if the law was changed, they would likely still devote the majority of the funds to tourism, but would benefit from the added flexibility for a portion of the funds.
"I'd be foolish if I used 50 percent ... for general revenue when I've got three hotels, I want to keep them turning," Broda said.