This November, residents of the Village of Woodridge will find a referendum question regarding public pensions on their ballot. A copy of this question is below along with some background information appears below to help inform voters about this critical issue.
Shall the Illinois General Assembly and the Governor take immediate steps to implement meaningful pension reform which will relieve the extensive burden on local taxpayers?
November 2 Election Results: 84.27% Yes
15.73% No
.jpg "Pension Levies Increasing")
Above, the Police Pension is in red and the Illinois Municipal Retirement Fund (fund for all other Village employees) is in green. From 1999 to 2009, the Police Pension has grown by $1,165,000 or approximately 86%. IMRF pension has grown by $293,000 or 49%.
.jpg "Woodridge Pension")
The above graph shows the rate in which the Police Pension has been funded for the period 1999 – 2009. During this time, the funding percentage has decreased 45% as obligations have risen dramatically.
Why should I be concerned with public pensions?
The escalating cost of public employee pensions continues during a period when municipal budgets are facing severe reductions in revenues. Increases in the cost of public employee pensions means that increasing amounts of revenue (taxpayer dollars) are devoted to pensions; diverting much needed funds away from other efforts.
Pension funds are not unlike other investments. The unprecedented economic downturn has also caused unparalleled declines in pension fund reserves, loss of retirement fund values, and escalating costs which have driven up the cost of properly funding of public employee pensions.
Do taxpayers fund public employee pensions?
Yes, local property taxes pay for a portion with pension funding coming from three sources:
• Employee contributions—from the employees
• Employer contributions—from the Village via the property tax levy (local taxpayers)
• Investment earnings—from the performance of the fund’s investment portfolio
How will increasing pension costs impact the Village’s budget or me as a local taxpayer?
The aggregate required contribution from the Village of Woodridge to pension funds increased 15%, or $285,000, in 2009. Funding these increased pension costs may result in budget cuts, deferred infrastructure improvements, or an increased burden on local taxpayers.
Who determines the benefits and contributions for pension programs?
By law, the Village of Woodridge is mandated to fund the pension benefits of police and other municipal employees. The Illinois General Assembly determines the benefits and employee contributions for pension programs, not Woodridge’s Mayor or Village Trustees.
However, the General Assembly does not provide any resources to pay for these pensions. By law, the Village is mandated to fund pensions. Consequently, when the General Assembly votes to increase pension benefits for municipal employees, the Village must allocate or generate revenues (through taxation or raising fees) to finance these unfunded mandates.
Why don’t employees pay more?
Employee contributions are set by the General Assembly. Therefore, the fiscal burden falls upon the Village’s contributions (local taxpayers) to keep these funds financially viable. By law, Woodridge is mandated to fund the pension benefits of police and other municipal employees.
What pensions are available to public employees?
Municipal employees (police, fire and non-public safety personnel) are covered by three separate pension programs.
Police are covered by local pension funds. Police officers are eligible to receive a full pension (75% of their final base rate of pay) by reaching age 50 with 30 years of service. Police officers are eligible to receive a minimum pension of 50% of their final base rate of pay with at least 20 years of service and reaching age 50. These pension funds are governed by Illinois State statute and a board consisting of two active employees, one annuitant and two representatives of the municipality.
All other eligible municipal employees are covered by the Illinois Municipal Retirement Fund (IMRF), which is a statewide program that consolidates multiple municipal employers into a single fund. IMRF employees are eligible to receive up to a maximum of 75% (with 40 years of service), of the monthly average of their final rate of earnings averaged over the highest 48 months in the last 10 years of service. Currently, IMRF covered individuals are eligible to begin receiving a reduced pension benefit at age 55 with at least 8 years of service and an unreduced pension benefit with at least 35 years of service or by reaching age 60.
Beginning January 1, 2011, newly hired municipal employees will be enrolled in a Tier 2 plan. IMRF employees enrolled in a Tier 2 plan will be eligible receive a maximum of 75% (with 40 years of service), of the monthly average of their final rate of earnings averaged over the highest 96 months of the last 10 years of service. These employees will be eligible to begin receiving a reduced pension benefit at age 62 with at least 10 years of service and an unreduced pension benefit with at least 35 years of service or by reaching age 67. Decisions for these pension funds are made by a board consisting of three current employees, one annuitant and four representatives of employer local governments.
What has been done in Springfield on this issue?
In March of 2010, the General Assembly approved SB 1946, which created a two-tiered pension system and reduces certain pension benefit levels for new hires across 13 pension systems. Benefits were changed for new IMRF regular employees (but not for Sheriff Law Enforcement Employees). The reduced benefits will apply to new hires only and will not affect current public employees. The efforts of the upcoming veto session will be focused on establishing a similar modified pension benefit structure for public safety pension systems. (Source: Illinois Municipal League).
What has the Village of Woodridge done to address this issue?
The Mayor and Village Board have voted to include this important referendum question on the November ballot. In addition, the Village has worked to educate the public about this important issue. The Village has joined the Pension Fairness for Illinois Communities coalition. The group’s goal is to bring fairness to the public safety pension system in order to relieve the burden of escalating public safety pension costs on local taxpayers and ensure sustainable retirement benefits for our public safety employees.
What can I do about this important issue?
In addition to expressing your opinion by answering the referendum question, you can also contact your state legislators to voice your opinion. Contact information for Woodridge’s State Senators and State Representatives is listed below.
24th District
The Westmont Centre
One Cass Avenue
Suite 201
Westmont, IL 60559
(630) 969-0990
Fax: (630) 969-1007
309 C State House
Springfield, IL 62706
(217) 782-8148
(217) 782-7818 Fax
41st District
410 Main Street
Lemont, IL 60439
(630) 243-0800
Fax: (630) 243-0808
309 D State House
Springfield, IL 62706
(217) 782-8148
(217) 782-7818 Fax
43rd District
2200 Weber Road
Crest Hill, IL 60435
(815) 207-4445
Fax: (815) 207-4446
M108 State Capitol Bldg.
Springfield, IL 62706
(217) 782-8800
(217) 782-3213 Fax
47th District
One South Cass Avenue #205
Westmont, IL 60559
(630) 852-8633
Fax: (630) 852-6530
227 Stratton Bldg.
Springfield, IL 62706
(217) 782-1448
(217) 782-2289 Fax
25W380 Chicago Avenue
Suite 100
Naperville, IL 60540
(630) 579-4848
208 North Stratton Bld.
Springfield, IL 62706
(217) 782-8028
82nd District
6404 West Joliet Road
Suite 203
Countryside, IL 60525
(708) 352-7700
Fax: (708) 352-7702
220 State House
Springfield, IL 62706
(217) 782-0494
(217) 557-7208 Fax
16151 Weber Road
Suite 204
Crest Hill, IL 60403
(815) 588-0085
Fax: (815) 838-9460
252 W. Stratton Bld.
Springfield, IL 62706
(217) 782-4179
(217) 557-7204 Fax
Illinois Government Finance Officers Association (IGFOA)
Excerpts from the IGFOA Public Pensions Newsletter (182k - 8 pages) from Spring 2006 provides a comparison of public pensions in Illinois. (Note: The comparison was prepared by Chris Staron as a Graduate Intern with IGFOA when working on his Masters in Public Administration at Northern Illinois University.)
Illinois Municipal League
Information can also be obtained from the Illinois Municipal League (IML), with the most up to date pension information to be found here. Founded in 1914, the IML provides a formal voice for Illinois municipalities in matters involving common interests, particularly legislative issues, and promotes competence and integrity in administration of municipal government.
A historical summary of public safety pension changes since 1993 can be viewed in the IML website, as well as other police and fire pension-related data. (Please note that the term "Downstate" in the summary of pension changes refers to all Illinois municipalities except the City of Chicago.)
During this same time period, two changes were made to the IMRF pension plan for non-public safety employees. These changes have little impact on the Village of Woodridge's financial obligations and are as follows:
1997- employees who had military service prior to joining IMRF were allowed to buy up to two years of IMRF time; and
2004- pension costs were withheld from contributions to the employees' Retiree Health Savings Plan.
Video from the Illinois Channel Containing Information on the State’s Growing Pension Debt
http://www.illinoischannel.org/PensionDebt100112.htm