Thursday, August 7, 2014 || By Michael Romain
According to a recent analysis by the Better Government Association, dozens of suburban Cook County police and fire pension funds are “are in financial peril, putting retirement incomes at risk, as well as the fiscal health of numerous municipalities”–Maywood included.
The BGA’s analysis, based on the latest available municipal pension fund data, found that total unfunded liabilities for suburban Cook County police and fire pension funds amounted to about $3.3 billion.
“Fifty-eight or roughly a quarter of the systems are less than half-funded, meaning there is fewer than 50 cents for every dollar owed in long-term benefits, according to the analysis. Generally, a minimum 80 percent funding is considered healthy. A state law approved in 2010 requires such pension plans to be 90 percent funded – by 2040,” the BGA reported.
Based on the latest data, Maywood’s fire pension had a 36 percent funding ratio, meaning that it doesn’t have money to pay the remaining 64 percent of the pension it owes to that department’s retirees. Maywood’s total fire pension liabilities amount to $36,540,072 million, its pension assets amount to $13,321,7620 million and its unfunded liabilities amount to $23,218,310. Maywood’s police pension fund had a 33 percent funding ratio, with liabilities of $46,608,061, assets of $15,596234 and unfunded liabilities amounting to $31,011,827.
But Maywood is far from the only suburb in Cook County facing a pension problem. Many suburbs’ pension liabilities have become so overwhelming that they’ve been forced to adopt measures that may have been considered extreme when times weren’t quite as hard.
Roger Huebner, a deputy executive director of the Illinois Municipal League, believes that the pension crisis has mushroomed into a terrifying threat for many municipalities.
“Some of the funds are in such bad shape I don’t know how they recover,” Huebner said.
“Rescuing the troubled funds may require tax hikes, service cuts or both, say experts,” the BGA reports. “Already, some public safety agencies are looking to privatize or merge with neighboring departments in an effort to cut personnel and ease future pension payouts. Whatever the method, taxpayers can expect to bear a heavier financial burden because of the severe local pension shortfall.”
North Riverside has even considered privatizing its fire department “in part because of concerns that the village would go broke if it can’t afford its pension obligations and state revenues were intercepted, North Riverside Village Attorney Burt Odelson says.”
The BGA’s analysis concluded that reasons for the chronic underfunding of municipal pension funds range the gamut and that there’s plenty of blame to go around.
“Observers say reasons include chronic underfunding, sluggish investment returns, overly generous benefits and, in some cases, potentially improper pension sweeteners,” the report says. VFP