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Many Illinois Cities Struggling To Fund Pension Obligations: Report

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Derek Cantù/ NPR Illinois
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More than half of Illinois’ largest cities have severely underfunded pension funds, according to a new report from libertarian-leaning group Wirepoints.

The organization analyzed local pension funding ratios, city debts as per household figures, and other factors in order to grade a municipality’s ability to handle pension funding obligations.

Between 2003 and 2019, nearly 100 additional cities in Illinois have earned an “F” score according to Wirepoints’ rubric.

In 2019, the General Assembly passed major legislation to combine every police pension fund and every firefighter pension fund in Illinois in order to give municipalities a chance to save money on their mandated pension contributions.

Of the 175 cities analyzed in the report (which did not include the city of Chicago), 99 had police, fire and municipal pension funds that were less than 60% funded — compared to 21 cities in 2003.

Republican lawmakers in a press conference on Wednesday said because of growing pension obligations, many Illinois cities must resort to raising property taxes in order to avoid cutting retiree benefits ( an action the Illinois Supreme Court deemed unconstitutional in 2015 ) or downsizing current employees.

“The challenge becomes...do we support those who we made promises to that have already served at the expense of those currently serving?” State Sen. Craig Wilcox (R-McHenry) asked. “How do you explain to your residents that I can't provide the services we've told you to, despite asking you for more and more of your hard earned dollars?”

Last month during the statewide consolidated elections, voters in Peoria — which earned the lowest score among the cities analyzed by Wirepoints — overwhelmingly rejected a property tax increase referendum question which would have been used to fund the city’s police and fire pensions.

State Sen. Win Stoller, whose district includes parts of Peoria, said almost 100% of property taxes in Peoria are now being dedicated to pensions.

“What we have to realize is when we do that, we're taking resources away from the things we ought to be spending money on — our infrastructure, our schools, our health care, our public safety,” Stoller said.

Stoller and other Republicans also claimed increased property taxes tied to pension obligations is a main reason Illinois was only one of three states to lose population over the last decade.

“That's why people are leaving, because we are neglecting those important services,” Stoller said.

In an effort to respond to growing pension debts, Republicans have offered a number of reform suggestions, including amending the state constitution or allowing municipalities to declare bankruptcy.

However, GOP members like State Rep. Joe Sosnowski (R-Rockford) said their efforts are being ignored by Democrats.

Multiple Republican constitutional amendment proposals that would allow lawmakers a pathway to alter future pension benefit accruals ( HJRCA 9 , HJRCA 17 , HJRCA 20 , SJRCA 10 ) have stalled in committee since March.

“Listen, this guaranteed 3% increase every single year, no matter what for eternity. I mean, that's B.S.,” Sosnowski said. “The average worker in Illinois isn't like [former Illinois House Speaker Michael Madigan] retiring at a $90,000 state figure and then getting $140,000 a year later. I mean, that is garbage.”

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