Mayors blast pension fix for cops, firefighters

May 23, 2014

Flickr/Matt Turner
File: State capitol in Springfield.

A group of mayors and municipal groups from across Illinois is deriding an influential lawmakers’ blueprint for stabilizing their police and fire pension funds, some of which are teetering on the brink of insolvency.

The Pension Fairness for Illinois Communities Coalition, which comprises nearly 100 mayors and municipal groups, released a statement Thursday night claiming the package from State Sen. Terry Link risks leaving their pension funds in even worse financial shape.

“This proposal is not an ‘agreement’ that brings comprehensive and long-term solutions, but merely window dressing that covers up the real impact on taxpayers and allows the unsustainable public safety pension crisis to continue to spiral out of control,” the statement reads.

Link, a Waukegan Democrat, outlined several proposals to municipal leaders and police and fire lobbyists this week that he said would provide stability to more than 600 public safety pension funds outside of Chicago. Altogether, those funds are projected to be underfunded by at least $8.4 billion.

Link has not yet introduced his proposals in bill form, and it’s unclear whether he will before lawmakers head home for the summer at the end of next week. But the blueprint he outlined during a closed-door meeting, first reported by WBEZ, would ease restrictions on how and where pension funds can invest their money, with the goal of allowing them to earn more in the stock market.

Link also wants to rejigger the makeup of the hundreds of five-member boards that govern public safety pension funds, and he aims to give smaller funds more investment power by allowing them to pool their money.

But it’s Link’s call for a five-year moratorium on further pension changes that would spell doom for the grander hopes of suburban and downstate mayors.  They’ve been calling for a cut to the three percent compounding annual pension benefit increases given to cops and firefighters, higher retirement ages, more contributions from workers and scaled back “pension sweeteners” - their term for benefit enhancements that state lawmakers have approved over the years.

To that end, Link’s blueprint merely “nibbles around the edges,” said Mark Fowler, executive director of the Northwest Municipal Conference, which lobbies for dozens of northwest suburbs.

“If you put a moratorium in on addressing any pension sweeteners or pension changes, you’re five years down the road...[and] the problem continues to spiral out of control and you’ve got pensions in Illinois that will not be able to pay out benefits,” Fowler said.

Mayors around Illinois have been lobbying for years to have police and fire pension benefits reduced, but their efforts seemed to be gaining some traction this year, after state lawmakers overhauled pensions for state workers and for some in Chicago. Towns across Illinois complain that ever-rising state-mandated pension contributions are crowding core services out of their budgets, while they watch the health of many pension funds continue to decline.

While the coalition blames benefit enhancements for their skyrocketing pension costs, unions and some actuaries claim the spike comes courtesy of a decades-old funding mechanism that backloads pension contributions.

Link has suggested he won’t go for the type of benefit cuts included in other recent pension laws because he believes they violate a clause in the state’s constitution that says pension benefits “shall not be diminished.” The controversial new state pension law is now on hold, pending the outcome of several court challenges.

But Fowler said that shouldn’t stop pension reform for downstate police and fire funds.

“I don’t quite understand why those were constitutional decisions or those were proposals that passed the muster of the General Assembly, yet we’re not allowed to even present those proposals,” Fowler said.

Representatives for downstate police and fire pension funds did not immediately respond to requests for comment. Senator Link has not returned several phone calls from WBEZ.

But earlier this week, Link said he may officially introduce his pension changes “fairly soon.”

“And I think that this is something that everybody agrees on,” he said.

Alex Keefe is political reporter at WBEZ. You can follow him on Twitter and Google+.