* Sun-Times story about Sen. Rob Martwick’s SB2451…
It would remove the “birth date restriction” that has prohibited roughly 2,200 active and retired [Chicago] firefighters born after Jan. 1, 1966 from receiving a simple, 3% annual cost of living increase. Instead, they get half that amount — an annual increase of 1.5% that is not compounded.
On the eve of a committee hearing on the bill, Martwick noted that the “birth date restriction” has already been moved five times as a way of masking the true cost to a firefighters pension fund with roughly 25% of assets to meet its future liabilities.
“Remember, they have traditionally given that 3% simple COLA [Cost-of-living adjustments] to these firefighters. They’re going to get that. This just writes it into law. It’s really not adding cost. It’s making that cost transparent,” Martwick said.
Basically, the city has been agreeing to pay firefighters a pension higher than what the firefighters are legally entitled to. Since the state calculates the city’s pension contributions based in state law, the city doesn’t have to account for the difference, which artificially inflates the unfunded liability.
The city’s financial atrocities never cease to amaze me. I did not realize they were doing this. Unbelievable.
So, the city has three choices: 1) Only give retired firefighters a 1.5 percent annual increase and don’t ever increase it to 3 (which I’m not sure they can do for firefighters that already are receiving that 3 percent and doing so would invite a lawsuit); 2) Continue to give retired firefighters 3 percent increases, but pay into the system like they’re only getting 1.5 percent, thereby driving up the unfunded liability every month; 3) Continue giving retired firefighters 3 percent annual increases and pay into the pension fund accordingly.
The bill passed the House last April 72-40.
* The mayor’s office is opposed because of the short-term costs…
The mayor’s office argued that the bill would add “anywhere from $18 million to $30 million” in added costs to a pension liability imposed on Chicago taxpayers that is already scheduled to rise by $1 billion by 2023.
Better get that casino going soon.
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February 27, 2020 at 03:13AM
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Your Illinois News Radar » Fun with numbers - The Capitol Fax Blog
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