Illinois local government headlines

Palos Hills Mayor: ‘Cities and villages will go bankrupt if this does not change’ Despite all of the media focus on the state’s troubled pension systems, a Southtown Star column byPhil Kander details the problems many suburbs face with the mounting debt of public employee pensions. Intense lobbying by labor unions to pass costly pension sweeteners have caused...

Palos Hills Mayor: ‘Cities and villages will go bankrupt if this does not change’

Despite all of the media focus on the state’s troubled pension systems, a Southtown Star column byPhil Kander details the problems many suburbs face with the mounting debt of public employee pensions.

Intense lobbying by labor unions to pass costly pension sweeteners have caused retirement obligations to balloon.

• In 1993, legislators passed an automatic 3 percent cost-of-living adjustment for police pensions, later providing the same benefit to firefighters.

• In 2004, the state passed a law mandating that the surviving spouse of a firefighter is entitled to 100 percent of the employee’s pension benefits, matching a law passed in 2000 to cover spouses of police officers.

• In 2008, the state passed a law increasing the amount of pension money that children and adopted children of public safety employees were entitled to receive, as well as increasing the minimum pension benefit for retirees.

These changes added to the amount local municipalities have to contribute to pension funds. The amount has more than doubled to $511 million in 2010 from $247 million in 2004.

In response, a group of local leaders have formed Pension Fairness for Illinois Communities to draw public attention to the problem and get the Illinois Legislature to act.

Some of their proposed solutions include:

• Asking public safety employees to contribute more to their pensions.
• Elimination of the compounded cost-of-living adjustment.
• Extending the minimum retirement age to 55 from 50.
• They would also like to combine the 638 pension funds into one system, similar to the Illinois Municipal Retirement Fund.

It’s a good start, but those pension reforms would not come close to solving the problem. And they wouldn’t bring equity between public employee pensions and the private sector.

This group should consider including in a defined-contribution, 401(k) style, for all benefits accrued going forward in its proposal. Click here to view the reform supported by the Illinois Policy Institute.