Police and fire pension reforms head to the governor

By Jamey Dunn

Police officers and firefighters hired after January 1 may get fewer benefits when they retire.

The Senate passed a bill today that would lower benefits for new hires and require local governments to consistently fund the pension system.

Retirees would have to spend 30 years on the job and work to age 55, instead of the current 50, to earn full benefits. They could receive partial benefits at age 50 if they have worked for 10 years. Pension benefits would be based on a retiree’s salary from the last eight years of service. Currently it is based on the final year, so a large raise near the end of a career can have a substantial impact on benefits. The top salary that benefits could be based on would be $106,800. Employee contribution levels would not increase.

Senate Bill 3538 also requires a ramped up schedule starting in 2015 that would make municipalities fund pensions at 90 percent by the end of their 2040 fiscal year.

The reforms come in the wake of changes to pensions for state employees, which passed on one day in the spring legislative session.

“Everybody hollers at the state and say[s] we haven’t been paying our pension funds, and we haven’t. We were violators for a lot of years. And we took that task on in the spring, and we altered our pension system,” Waukegan Sen. Terry Link, a sponsor of the police and firefighter pension bill.

Chicago Mayor Richard Daley has warned that the mandated pension payments would cost the city, which is facing its own budget crisis, $550 million a year after 2015.

Both Link and Senate President John Cullerton have vowed to make changes to address the city’s concerns with another bill they say will come up for a vote in January. But for some lawmakers, such assurances where not enough.

“I know we need this bill for reform…[but] as of right now, if we pass this bill and the governor signs it, the city of Chicago homeowners and businessmen are on the hook for over $500 million,” said Sen. Antonio Munoz, a Chicago Democrat.

Labor representatives for police officers and firefighters support the payment requirements. “We were very pleased with the contribution enforcement that was placed in the bill. … With the facts of pension underfunding, the need for pension reform is very clear,” said Pat Devaney, president of the Associated Firefighters of Illinois — which opposes the measure overall.

Devaney said the pensions are underfunded primarily because of the economic downturn and local governments failing to hold up their obligations. However, he said labor groups realized that cuts to benefits would be part of the equation. “That was our goal, to shore up this system and to make sure that these plans would remain solvent. … We understood that even though they weren’t warranted, that benefit reductions were going to take place.”

However, he said the reductions in the bill went too far, and the legislation was unclear in some areas.

There was confusion over whether overtime pay would be included when pensions were being calculated, Link said it was his intention that it would be.

Devaney said he hopes local governments use some of the savings from the cuts to equip police and fire departments with more resources to hire more first responders when the new benefits system would go into effect in January.

However, Joe McCoy, a lobbyist for the Illinois Municipal League, fears the changes could do just the opposite.

“The [Illinois Municipal League] is concerned that the compliance language will inadvertently result in service cuts, personnel reductions and fewer first responders in our communities. … The lack of local support for increased taxes, as well as the existence of tax caps and other revenue limitations in many communities, will place tremendous strains on local budgets in future years,” McCoy said in a written statement.

Veto Override
The Senate overrode Gov. Pat Quinn’s amendatory veto to House Bill 5206, which would have created a citizen’s initiative process to allow Illinoisans to bring ethics reform legislation before the General Assembly.

The original version of the bill, which allows county clerks to electronically clear dead voters from their rolls, becomes law.

Executive Appointees

State government appointees whose terms have expired may soon be tossed out of their positions.

The Senate approved HB5057, which would remove any holdover appointees 30 days after becoming law. Quinn would have the opportunity to reappoint whomever he chooses, but they his appointees would have to go through the Senate confirmation process. According the Senate President John Cullerton, the sponsor of the bill, the measure would apply to almost 700 positions at this time.

“We want to have these people who are in the governor’s cabinet, who we haven’t seen in four or five years, have them come back and have us consider their qualifications,” Cullerton said.

According to a written statement from Quinn’s office, he is reviewing the bill. “The governor will work with the Senate to build upon his efforts to increase transparency in the appointment process.”