Peoria Pundit

Ken Jennings, the winningest contestant ever on “Jeopardy,” made an appearance on “Are You Smarter than a 5th Grader?” last night. Watching this guy, it occurred to me that he looks awfully familiar. Then it hit me:

At left is Jennings. At right is Robert Manning, 3rd District member of the Peoria City Council. Jennings could be Manning’s younger but richer brother.

At Tuesday’s meeting of the Peoria City Council, 3rd District council member Robert Manning expressed some frustration at the state legislature for requiring municipalities to pay more into firefighter pension plans without giving cities any additional cash to cover the cost. Manning said that the state could at least let cities amortize the costs over a longer period time, and suggested that State Sen Dave Koehler should be able to get some action on this because he’s friends with the governor.

I have a confession to make: I have no friggin’ idea what “amortization” means. So, I thought I’d drop a line to Manning and ask what he was talking about. His reply:

Illinois Statutes address the financing of Fire pension funds as they relate to the municipality’s funding requirements. The Statutes state that the actuarial requirements of the pension fund are equal to (1) the normal cost of the pension fund, or 17.5% of the salaries and wages to be paid to firefighters involved, whichever is greater, plus (2) the annual amount necessary to amortize the funds unfunded accrued liabilities over a period of 40 years from July 1, 1993 as annually updated and determined by an enrolled actuary retained by the pension fund or the municipality.

The State has set a date certain for the Fire pension funds to be fully funded (July 1, 2033). When State legislators increased the Firefighter’s pension benefit, they did not increase the amortization period in which to fully fund the benefits. I think that it is reasonable to argue that any increase in benefits approved could or should be funded over 40 years from the time the benefit is established. By doing so, municipalities would not be burdened with funding increased benefits over a shorter amortization period but allowed to fund those benefits over a reasonable time. During last year’s budget process, staff estimated that the required contribution for the Fire pension fund would be reduced by approximately $514,000 if the funding period was extended to 40 years (compared to the 27 years over which it is currently being amortized). Similarly, the Police pension fund would be reduced by approximately $158,500.

It is frustrating when State legislators provide pension sweeteners (at no cost to the State) while not allowing some type of relief or remedy for the municipalities that actually have to pay for it. Sounds like an unfunded mandate, doesn’t it? I believe that in 2006, 2007 & 2008 we informed our area representatives (Leitch, Schock, Risinger, and Shadid/Koehler) that this is a high legislative priority for the City and asked them to introduce a bill. I did not think any legislator would be opposed to our proposed change since municipalities across the state would continue to adequately fund these pension plans, just over a longer period. However, it appears that Springfield politics as usual is holding the bill hostage and ultimately in the round file. The City Council and staff are working hard to provide a balanced budget. We sure would welcome some legislative assistance that would help the City’s budget by approximately $675,000 annually.

Hope this provides some clarification.

And I also emailed Sen. Koehler, and received this reply from a member of his staff:

In response to your question regarding the firefighter pension amortization, Senators Koehler and Risinger sponsored SB 1974 (see synopsis below). The issue is not up to the Governor as the bill currently sits in the rules committee. Senator Koehler filed the bill and agreed to hold it pending an agreement on the language between the Firefighters Association and the IL Municipal League.

Synopsis As Introduced

Amends the Downstate Firefighter Article of the Illinois Pension Code. In provisions concerning financing of funds through taxes, provides that the annual actuarial requirements of the pension fund are equal to (1) the normal cost of the pension fund, or 17.5% of the salaries and wages to be paid to firefighters for the year involved, whichever is greater, plus (2) the annual amount necessary to amortize the fund’s unfunded accrued liabilities over a period of 40 years from the date it is determined to be unfunded by the Division of Insurance of the Department of Financial and Professional Regulation, by an enrolled actuary employed by the Division of Insurance, or by an enrolled actuary retained by the pension fund or the municipality (was, from July 1, 1993). Effective immediately.

Please let me know if you have any more questions regarding this bill. Thank you.

Kyle Dooley
Office of State Senator Dave Koehler