A pension board in East St. Louis has asked the state to redirect city money to the pension fund, the fourth time a a city in Illinois has faced the state's pension intercept law.
The city’s firefighter pension fund sent Illinois Comptroller Susana Mendoza’s office the request on Sept. 17. The pension board asked that $2,209,227 be diverted from revenue due to the city that’s collected by the state to the pension fund. The letter said that’s the amount the city should have contributed to the pension fund in 2017 and 2018.
“The city of East St. Louis has chronically underfunded the East St. Louis Firefighters Pension Fund,” the request said.
The city did not return messages seeking comment.
The pension fund had only 11 percent of the money needed to afford its future costs as of January 2018, according to an audit conducted by the Illinois Department of Insurance.
The pension intercept law, enacted as part of the 2011 pension reform law that was largely struck down by the Illinois Supreme Court, gives Mendoza’s office 60 days to certify the information in the complaint. If verified, the state must funnel all state-collected funding to the pension fund, something East St. Louis officials said could create public safety funding issues.
“If that does happen we are very concerned about the ability of the police in East St. Louis to be able to continue to do their job,” then St. Clair County State’s Attorney Brendan Kelly said in a letter obtained by the Belleville News-Democrat in late 2017. “They are already overworked, understaffed and overwhelmed on a day-to-day basis. If more cuts are made to the East St. Louis Police Department, that will make it all the more difficult for the police and people who are trying to help the police protect public safety.”
Kelly is now the director of the Illinois State Police.
“Those concerns clearly remain," Kelly said Friday. "The Illinois State Police have been informed about the potential impact this could have on public safety and our law enforcement partners. While we are focused on rebuilding out of our own manpower challenges, the ISP will do all we can to assist the city as the Department has done for over two decades. We are always preparing for a variety of contingencies."
The city joins Chicago, Harvey and North Chicago, which also have been referred to the state comptroller for shorting their actuarially required pension contributions. Chicago was referred by both its police and fire pension funds but the city challenged it in court.
Reform advocates have been warning that municipalities across the state are in danger of having funding withheld, especially if the national economy slips into a recession.
“You’re talking about more than 10 percent of their general fund that would have to go into pensions and away from paying current policemen and firemen,” said Ted Dabrowski, president of Wirepoints, a financial watchdog that has followed the state of Illinois’ local pensions. “It’s going to create chaos, much like we saw in Harvey when they had to fire forty public safety workers in order to be able to continue to operate and fund those pensions.”
Dabrowski said Kankakee, Danville and Alton face extraordinary financial stress from their pension funds after years of underfunding and could be among the next cities to be referred to the comptroller’s office for delinquent contributions if economic conditions deteriorate.
In East St. Louis’ case, Wirepoints estimated that the $2.2 million requested by the firefighters’ pension fund represented a 34 percent shorting of the pension fund over two years.
Short of bankruptcy, something Illinois does not allow, most local officials have resorted to putting as much tax revenue as possible into pension contributions, even creating new fees in an effort to shore up the funds.
The state was asked to intervene on East St. Louis’ behalf in 1990 using the state’s municipal emergency law, offering the city a low-interest loan and suggesting reforms, some of which the city sued to prevent. The city was able to eventually have the state oversight lifted in 2013. It was the only municipality to take advantage of the law.