Public safety workers enjoy best pension deals

Wednesday, June 16, 2010

All pension funds are not created equal, but the most active unions bring home the best deals for retirees.
Although each government pension plan in Illinois has its own peculiarities, a GateHouse News Service analysis of statewide and locally funded pension plans shows that public safety workers — groups with high-risk jobs, not to mention statewide union representation — typically put in fewer years of service and get richer retirement checks than their fellow public workers.
“They draw a lot of sympathy,” said Joe McCoy, senior legislative advocate at the Illinois Municipal League. “The arguments are that firefighters and police can’t work as long in the profession, and they’re not going to live as long after they retire, so they need a richer retirement.”
They also get the benefit of the General Assembly’s generosity. Legislators are quick to pass pension sweeteners for police and firefighters, as well as themselves and state employees, with little thought to how they’ll be funded or the effects on municipal coffers.
“The state of Illinois grants pension benefits in the abstract,” said Laurence Msall, president of The Civic Federation, a nonpartisan government research organization. “There is no compelling force to say, ‘If you provide this, you have to reduce salaries or reduce municipal services.’ Every legislative session is full of examples of different individual interest groups seeking to change or increase the benefits of their fund.”
History of sweeteners
In the last 20 years, government pensions have become more generous for their beneficiaries and more expensive for their employers.
Between 2000 and 2005, police officers and firefighters received two increases in their benefits, according to an Illinois Municipal League analysis. Among the enhancements was allowing officers to reach their maximum pension amount, 75 percent of their salaries, in 30 years instead of 35 and allowing surviving spouses of police and firefighters the same pension payments for the rest of their lives that their spouses were receiving at the time of their deaths.
Over the same period, employee contribution rates for police officers increased by a two-tenths of a percentage point, while the costs to employers rose by almost 3 percent of payroll. Employee contribution rates for firefighters increased by 1.2 percent, while employer costs increased by 7.5 percent.
McCoy said it’s no surprise that public safety workers are treated well by the legislature.
“They’re very strong unions, particularly the firefighters,” he said. “They’re active in campaigns, they walk precincts, they hang signs, and they hold fundraisers.”
In the last decade, police unions across the state have donated more than $1.5 million to political campaigns; firefighter associations have donated more than $900,000.
Pat Devaney, president of Associated Fire Fighters of Illinois, the state labor association for firefighters, said the plans are the best way to ensure firefighters don’t stay on the job until they’re too old to do the work.
“We need to make sure we have people performing this vital job who can do it well,” Devaney said. “I think everyone agrees it’s a good idea to not have firefighters who are too old to do the job well. From a public policy question, where we have an employee who’s not able to perform a physically demanding job, we should have a retirement plan in place.”
Political pull varies
Police and firefighters aren’t alone in benefiting from routine changes in their pension plans. The Teachers’ Retirement System, which covers nearly 260,000 active and retired teachers in Illinois, has seen nearly annual changes. Some recent modifications include allowing disabled members to return to work for a state university under certain circumstances without penalty, and giving teachers credit for up to two years of unused and unpaid sick time when calculating their years of service.
Not all systems get such regular enhancements. The Illinois Municipal Retirement Fund, which serves 2,950 units of local government, hasn’t had a pension sweetener sponsored by the state legislature since the 1970s.
Executive director Louis Kosiba said the fund’s hodgepodge of municipal employees, from street workers to school support staff to librarians, doesn’t have a strong voice in Springfield.
“Invariably everyone wants a better retirement benefit,” he said. “But there’s a larger political element to this. There’s unions that represent some of our members, but not all of them. There’s no one union that has pursued benefit increases.”
Police, fire pensions hurt city finances, mayor says
Springfield Mayor Tim Davlin has blamed police and fire pension obligations for playing a significant role in the city’s financial woes.
He’s also been vocal about alerting the public to the impact additional benefits could have on municipalities throughout the state.
Davlin, who also is president of the Illinois Municipal League, has criticized legislation approved between 1999 and 2004 to boost the pensions of public safety employees statewide.
“These legislative actions can be summed up in a simple way: The legislature has a credit card with no cap on the spending limit. The billing address for the credit card is the Municipal Building, and the city has a legal obligation to demand payment for the balance due to the taxpayers,” Davlin said earlier this year. “This is not fun.”
Officials with Springfield’s police pension board say it’s the city’s failure to keep up with payments, not increased benefits, that’s to blame for the city’s mounting unfunded pension debt.
Instead of fully funding police pensions, the city chose to refinance the unfunded pension liability over a longer period of time at a reduced rate of contributions, the group has said.
“It is analogous to paying interest instead of principal on your mortgage,” the group says. “This is not responsible government. As a result of 27 years of disregard, the police pension fund is substantially underfunded.”
-- Deana Poole


Coming Wednesday: What is reform?
The road to pension reform is uncertain because the destination is different, depending on who is asked. Some are pushing for the state of Illinois to ditch its pension plans and move to a 401(k) system. Others want the state to keep its pension plans but achieve savings through later retirement ages and less generous payouts.