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: No one wants real pension solutions more than union firefighters and police

Crain's Chicago Business

Tuesday, August 13, 2019  |  Article  |  Pat Devaney

Pensions (70)

In a recent op-ed, a former state lawmaker not only misses the mark on the challenges facing our pension systems, he’s just plain wrong about our willingness to be a part of the solution.

I read Jim Nowlan’s recent op-ed calling for police and fire pension reform with disbelief and disappointment. Not only does this former state lawmaker miss the mark on some of his assertions about the challenges facing our pension systems, he’s just plain wrong about our willingness to be a part of the solution.

 

The Associated Fire Fighters of Illinois is the statewide union representing more than 15,000 firefighters and paramedics in 225 locals around the state. Nearly all of our members outside the city of Chicago participate in the Downstate & Suburban Fire Pension Fund, or Article 4 plan, which has nearly 300 fire pension funds—all locally governed, including their funding and administration.

 

Nowlan is right that our members put their lives on the line every day and deserve a reasonable retirement for their public service. But he’s wrong about how our benefits have affected pension funding challenges in some funds across the state.

 

The only meaningful pension benefit change in the last 15 years was the Legislature’s decision to significantly cut benefits by creating Tier 2 for new police, firefighters and other public workers hired after Jan. 1, 2011. Police and firefighters do not participate in Social Security. And now, anyone hired from 2011 on will have a benefit that costs local government employers about 5 to 5.5 percent of employee pay—less than the 6.2 percent required under Social Security.

 

Nowlan echoes proposals by some conservative interests to address the pension funding shortfalls by simply cutting the benefits owed to and earned by our members in the Tier 1 system. Not only is that unconstitutional, as strongly affirmed by the Illinois Supreme Court, it doesn’t reflect reality. Social Security has applied compounded cost-of-living increases every year since 1975, averaging 3.73 percent—more than the 3 percent our members receive through their firefighter pension.

 

Most troubling is Nowlan’s claim that “nothing will happen until the police and fire unions first come to the bargaining table.” He calls for mayors to refuse to pay any more for pensions than they do today, to force the Legislature to improve pension funding and reduce pension benefits. 

 

Let me be clear: Illinois’ pension funding problem has been and will continue to be a funding priority problem. Our members and thousands of other public servants work for decades and live up to their end of the promise, setting aside a significant portion of every paycheck for their retirement. Illinois policymakers at the state and local levels have time and again not lived up to their pension funding obligations, and today, we face tremendous debt challenges because of it.

 

Mr. Nowlan, the AFFI is at the bargaining table right now and earnest in its desire to fix this problem.

 

I am a co-chair of the Governor’s Pension Consolidation Feasibility Task Force, created in February. We have put an incredible amount of work into examining the 653 downstate and suburban police and fire pension funds, and why their average funding level is just under 60 percent of full funding. We have looked extensively at how to reduce investment and administrative expenses and maximize investment performance and should have a comprehensive plan for release soon that we hope will be addressed in the fall legislative veto session.

 

The 1993 pension payment plan adopted by the state is flawed, significantly increasing funding requirements in later years through a payment ramp that has allowed politicians to defer adequate funding of the plans. The AFFI is working with municipal advocacy groups to reshape this ramp and create a responsible, sustainable contribution plan.

We look forward to showing that unions want real pension funding solutions, because firefighters deserve to know their retirement will be there and taxpayers should finally be confident it’s being funded in the most efficient manner.

 

Pat Devaney is president of the Associated Fire Fighters of Illinois in Springfield.