Jim Dey | State, local pension news getting worse

Jim Dey | State, local pension news getting worse

When the public pension contagion finally has consumed all 102 counties in Illinois, few public officials will be able to credibly ask the following questions: How and why?

That's because they will have been warned well in advance and chose to do nothing in the hope the problem would disappear.

Just a week or so ago, researchers from Wirepoints.com released a report documenting how increasingly unaffordable promises are wreaking financial havoc on public pensions systems and communities from coast to coast.

This week, the Illinois Policy Institute, a free-market think tank with offices in Chicago and Springfield, released a study documenting how the problem of public pension costs in Illinois is driving up property taxes while reducing property values.

"Families across Illinois have felt the pain of these (property tax) increases. But what many Illinoisans may not realize is that much of the rise in their property taxes can be attributed to spending on government-worker pensions far outpacing spending on state and local services," states the IPI study written by Orphe Divounguy, Bryce Hill and Joe Tabor.

Researchers examined state and local tax records and concluded that "most of the property tax increases between 1996 and 2016" were caused by:

— "state education funds being diverted to teachers' pensions."

— "growth in local government employee pensions and benefits"

— "expanded local government spending — which includes additional payroll, increased salaries and added services."

How do high pension costs play out in the real world of dollars and sense?

An examination of local recipients of Illinois Municipal Retirement System beneficiaries revealed that well-known and not-so-well-known retired local government employees are drawing generous pension benefits.

Further, four former employees at one particular local entity — the Champaign-Urbana Mass Transit District — are among the top eight for the largest pensions.

The top two pension recipients are former MTD Managing Director William Volk, who receives an annual pension of $237,474: and former MTD Assistant Managing Director Thomas Costello, who receives an annual pension of $133,641.

Two other retired MTD administrators, Rena Lenz and Rob Patton, receive annual pensions of $129,968 and $112,206, respectively.

Ex-Champaign City Manager Steve Carter took the No. 3 spot with a pension of $130,901, while former Champaign Police Chief R.T. Finney captured the No. 5 spot with a $127,604 pension.

Pensioners also receive annual 3 percent cost-of-living increases thanks to a decision by the Illinois General Assembly during the late 1980s. Emblematic of the Legislature's haphazard approach to pension spending is that legislators granted the 3 percent annual increases — compounded — while taking no action on how to pay for it.

The study reports that since 1996, "less than 50 cents of every additional dollar paid in property taxes went to pay for services."

At the state level, there is a similar phenomenon involving state education dollars. State legislators routinely brag, particularly in election years, about how much they have increased education appropriations for K-12 schools.

The IPI said the General Assembly increased K-12 appropriations by more than $5.4 billion between 1996 and 2017, an 87 percent hike. But of that $5.4 billion increase, $3.6 billion went to the Teachers Retirement System — that's 66 percent — with the balance going to supporting public schools.

Because of the diversion of state dollars to pension systems, school boards have been forced to increase their property taxes to make up the shortfall.

In its report, the IPI produced numbers for individual counties.

For Champaign County, the IPI said 95 cents of every new property tax dollar went for police pensions.

Municipal property taxes grew by $3,591,995 in 20 years, virtually all of it going to police pensions. Property taxes used for traditional police services accounts for $195,017 of the total.

Property tax levies for municipal fire service in Champaign County grew by $2.4 million, all but $104,000 going for pensions.

The IPI said "in total, Champaign County property taxes for pensions (excluding teacher pensions) grew by $8 million in 20 years or by 64 percent."

In Vermilion County, the IPI reported, "99 cents of every new property tax dollar" for police and fire went to pensions.

In Dewitt County, 99 cents of every new property tax dollar levied for police and fire went to pensions.

In Piatt County, "43 cents of every new property tax dollar for police departments went to police pensions." IPI reported "no information on fire departments.'

In Ford County, "100 cents of every new property tax dollar for police departments went to police safety, none went to pensions." IPI reports "no information on fire departments."

The two reports, Wirepoints and IPI, document financial bad news all the way across the board — pensions spending crowding out funding of other core services and accrued pensions liabilities that are so high they can never be erased.

Jim Dey, a member of TheNews-Gazette staff, can be reached by email at jdey@news-gazette.com or by phone at 217-351-5369.

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