Illinois & Chicago Fire Fighters The Fight for Funding Presented by: Richard Martin, AFFI Southern District Legislative Representative Eddy Crews, AFFI Northern District Legislative Representative Dan Fabrizio, Director of Political Action, Chicago Fire Fighters Union, Local 2
Crisis Creates Opportunity Factors: • Economic Downturn • New Governor • New Mayor
History of Pensions in Illinois Chicago Fire • 25 year return 9.25% • Average Retirement Age 57.4 • Average Service Years 30.5 • 4,808 Active Participants • 4,107 Benefit Recipients – 2,977 Service (63%) – 329 Disabilities – 1,315 Widows (20%) – 83 Children /Parent • Average Benefit $70,000 (2014) • The fund currently uses a multiplier formula to fund: participant 9 1/8%; City 2.26%; approximately
Fire Fighters outside Chicago • Over 600 local police & fire funds • Benefits in State Statute • Funded at the local level, no state dollars
COGFA Study • Commission on Government Forecasting & Accountability • Causes of underfunding and increases in unfunded liability • Mayors commission to strengthen Chicago Pensions, benefits are not the problem
State of Illinois Passed Tier II Pension Plan • Police & Fire were exempt • We held out for contribution enforcement • ARC • New Chicago Police & Fire funding formula
Governor Rauner’s Turnaround Agenda • Repeal prevailing wage • Repeal project labor agreements • Repeal bargaining for public employees • Causation standards for Work Comp. • Change benefits for Tier I • Eliminate PSEBA benefits
SB 777 • Passed by the Illinois General Assembly • Vetoed by Governor Rauner • Veto was overridden by supermajorities in both chambers
Any proceeds received by the city in relation to the operation of a casino or casinos within the city shall be expended by the city for payment to the Firemen’s Annuity and Benefit Fund of Chicago. If the city fails to transmit to the fund contributions required of it under this Article for more than 90 days. The fund shall give notice to the city, certified to the State Comptroller the amounts of delinquent payments. The controller must, beginning in fiscal 2016, deduct and deposit into the fund proportions of grants of state funds to the city. 2016 – 1/3 of the total amount of grants 2017 – 2/3 of the total amount of grants 2018 – Total amount each fiscal year thereafter.
Beginning January 1, 2016, the city shall be obligated to contribute to the fund in each fiscal year an amount not less than the amount determined annually. If the city fails to pay the amount guaranteed under this section, the fund may bring a mandamus action in the Circuit Court of Cook County to comply the city to make required payments Minimum Widows currently $1,000 a month/ no COLA; new – 125% of poverty‐$1250 COLA CPI Minimum Firefighter – currently $1,000 a month/ no COLA; 125% of poverty ‐$1250 COLA ‐ CPI
PA 1495 SB777 Difference 2015 $246,132 $199,000 ($47,132) 2016 $284,086 $208,000 ($76,086) 201 7 $292,439 $227,000 ($65,439) 2018 $301,752 $235,000 ($66,752) 2019 $311,205 $245,000 ($66,025) Total 1,435,614 1,114,000 (321,614) The years shown are the year the City budgets the amount, the funds are received the following year. e.g 2016 ‐ $199,000
Funded Status by Decade (in millions) Year Assets Liabilities Deficit Funded Ratio 1931 $1.9 $41.6 $39.7 4.6% 1941 $9.3 $49.1 $39.8 18.9% 1951 $15.7 $68.3 $52.6 23.0% 1961 $53.0 $126.7 $73.8 41.8% 1971 $142.7 $313.2 $170.4 45.6% 1981 $310.1 $608.1 $297.9 51.0% 1991 $572.5 $1,232.4 $659.9 46.5% 2001 $1,245.1 $2,068.7 $823.6 60.2% 2011 $1,101.7 $3,898.9 $2,797.2 28.3% Between 1887 and 1930, the pension fund had its assets depleted due to chronic underfunding on four separate occasions (1887, 1895, 1917, 1926)
SB1495 Statutory Contribution Year Ending Actuarial Value Funded Ratio Statutory Contribution 2014 23.31% 112,169 2015 25.10% 246,132 2025 37.52% 336,114 2035 65.60% 415,213 2040 90.00% 438,072 2041 90.00% 34,296
HB 3088 Statutory Contribution Year Ending Actuarial Value Funded Ratio Statutory Contribution 2014 21.29% 109,532 2015 19.75% 113,915 2025 3.25% 354,664 2035 10.26% 430,351 2045 26.32% 478,827 2055 58.05% 550,021 2060 83.75% 592,529 2061 90.00% 601,417 2062 90.00% 40,341
SB777 Statutory Contribution Year Ending Actuarial Value Funded Ratio Statutory Contribution 2014 22.75% $109,813 2015 23.15% 199,000 2025 30.12% 356,818 2035 43.15% 425,140 2045 61.09% 469,888 2055 90.00% 539,487
Illinois Constitution of 1970 Illinois Supreme Court Cases • Article 13, section 5 (inserted at the Constitutional Convention in 1970 on behalf of police & fire fighters • McNamee Supreme Court case regarding funding in 1993 • Supreme Court on SB 1 in 2014 (protected benefits)
Illinois State Constitution of 1970 Article XIII‐ General Provisions Section 5 . Pension and Retirement Rights Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentally thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
McNamee vs. State of Illinois, 173 Ill.2d 433 (1996) Ruling The Circuit Court of Cook County granted the plaintiffs summary judgment, and the Illinois Supreme Court reversed on appeal. Holding . In reversing the ruling of the circuit court, the justices held that the framers of the constitution did not intent to regulate funding, and that Article XIII, Section 5 creates an enforceable contractual relationship that protects only the pensioner’s right to receive benefits. Funding was not guaranteed by the Illinois Supreme Court
Summary • Fight for Funding • Crisis created opportunity • We now have an ARC • Chicago has new funding formula and future dedicated revenue stream • Questions
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