Fire, police pension cutback bill expected to move to House floor

By CHRIS WETTERICH

THE STATE JOURNAL-REGISTER

Lawmakers are finalizing the details of a bill that would reduce pension benefits for future police officers and firefighters and are expected to move it to the House floor Tuesday.

“I believe this bill is about as agreed (to by both sides) as we’re going to get to,” said Rep. Kevin McCarthy, D-Orland Park, the legislation’s chief sponsor. “This isn’t going to be the panacea … I think both sides received some things they were very happy about.”

The bill was being drafted by the Legislative Reference Bureau Monday morning and wasn’t immediately available, but McCarthy described its contents to the committee.

Rockford Mayor Larry Morrissey said while it is time for the General Assembly to act on the issue, benefits for existing employees and retirees also will have to be changed. He wants to see everyone put into a 401(k)-style defined contribution plan.

“We’re debating about what’s going to happen with future employees when we’re not doing any hiring,” Morrissey said. “What about all the existing employees and existing retirees?

Morrissey said there is warfare between citizens who don’t want a tax increase to fund oversized benefits and existing employees and retirees.

“We’re not doing the job we need to do as trustees … for them if we’re suggesting that somehow this bill, if it passes, is going to deal with all of our problems. It’s not,” Morrissey said. “We’re going to have to deal with the fact that we have a system for the existing employees and the existing retirees that’s not sustainable.”

Morrissey told the committee the legislature should realize that barring a vast improvement in the economy, some of the systems will go bankrupt and cities will end up in court. Public officials need to have a plan to reorganize those funds, he said.

“This is a problem nationwide,” Morrissey said.

Pat Devaney, president of the Associated Fire Fighters of Illinois, said most of the fiscal problems in the state’s 636 police and fire pension funds stem from cities underfunding them. Devaney said his group is waiting until the bill’s final language is drafted before taking a position. Who’s to blame for the shortfall in some of the systems is a major flashpoint, with the mayors blaming overly generous benefits passed by the General Assembly.

Devaney said he was “incredulous” that Morrissey did not think the bill went far enough.

“They’re solving it (pension problems) on the backs of benefits for future police officers and firefighters,” Devaney said. “Without question, it’s (changing benefits for current employees and retirees) unconstitutional.”

Springfield Mayor Tim Davlin said there probably are “things in there both sides feel are despicable” but said the bill is “a good start where we’re at today.”

Davlin said the coalition of cities seeking the changes would not seek to change benefits for existing police and firefighters. But he hoped the General Assembly would consider legislation aimed at finding more efficiencies in the systems in the spring.

Although no specific figures were available, the city of Springfield could realize savings quickly because the number of police and fire it employs is so low, it will have to hire new employees who would fall under the new system, Davlin said.

“We’re going to reap the benefits faster than any other community,” Davlin said. “We’re going to be doing more hiring than anybody else.”

Chris Wetterich can be reached at 788-1523.

What Senate Bill 3538 does:

-- Changes the standard retirement age for police and firefighters from age 50 to age 55

-- Allows police and firefighters to retire early at age 50, with a 6 percent reduction in their pension for each year they retire before age 55.

-- Leaves intact current provisions allowing firefighters and police to retire with maximum pension benefits of 75 percent of their salaries after 30 years of service. Police will continue to contribute 9.91 percent of their salaries and firefighters will continue to contribute 9.45 percent of their salaries.

-- Caps the maximum salary upon which a pension can be based at $106,800. That number will increase annually at half the urban consumer-price index.

-- Seeks to end the “spiking” of salaries through late-career raises and promotions by basing pensions on the employee’s final average salary, which will be calculated by using an employee’s highest paying eight years out of the last 10 years they worked. Today, police and fire pensions are based on the employee’s salary on their last day of work.

-- Cost of living increases will be based on 3 percent or half the urban consumer-price index, whichever is less. Today, COLAs are an automatic 3 percent.

-- Requires cities to have the systems 90 percent funded by 2041.

-- Starting in 2015, it allows the pension funds to petition the state comptroller to subtract funds from tax money owed to the cities by the state if a city does not make complete payments to the system.

-- Requires the Commission on Government Forecasting and Accountability to assess the status of the 636 police and fire pension funds. It will also study the feasibility and desirability of pooling those funds together. Mayors believe that the pension funds would be more solvent if they were combined into one or two funds, similar to the Illinois Municipal Retirement Fund, which provides pensions for non-public safety workers in local governments. COGFA’s report is due Jan. 1, 2013.