Worried about the potential cost, Evanston aldermen postponed action this week on a plan that would let city workers from out-of-state boost their pension benefits.

Under state law, if the city agrees, workers covered by the Illinois Municipal Retirement Fund could qualify for up to ten years worth of extra pension credits for work at municipalities in other states.

Worried about the potential cost, Evanston aldermen postponed action this week on a plan that would let city workers from out-of-state boost their pension benefits.

Under state law, if the city agrees, workers covered by the Illinois Municipal Retirement Fund could qualify for up to ten years worth of extra pension credits for work at municipalities in other states.

The employees would have to pay the employee contribution portion of the pension credits — but it would be up to the city to make up the city’s share of the cost for those extra years.

To qualify, the employees must have cashed out of their previous pension programs and no longer be eligible for benefits from the out-of-state plans.

A memo from the city’s director of administrative services, Joellen Daley, said the city contribution would be “made through future contribution rates” so no immediate additional payment by the city would be required.

Daley said approving the plan would help the city recruit new workers from out of state.

But Alderman Coleen Burrus, 9th Ward, in an interview with Evanston Now today, said she “doesn’t see an upside for the city.”

“We already attract workers from other states,” Burrus added, noting that Daley herself had been recruited from Catawba County, N.C.

Tim Schoolmaster, a trustee of the city’s Police Pension Board, said the proposal would amount to a giveaway to top-level city workers. He noted that police and firefighters, who are covered by separate pension systems, aren’t eligible for the out-of-state service credits.

Schoolmaster said that if the city is to seriously consider the proposal, it needs to hire an outside actuary to calculate the true long-range cost of the program.

He said the last time the city offered pension incentives, for its early retirement program two years ago, initial estimates were that it would cost $7 million, but it has ended up already costing $13 million, because more workers than anticipated took advantage of the deal.

Roughly half the city’s department heads and an unknown number of lower-level city employees might qualify for the pension buy-in plan, because they previously worked for municipalities out of state.

In addition to Daley and City Manager Wally Bobkiewicz, they include Parks Director Doug Gaynor, Library Director Mary Johns and Community Development Director Lehman Walker.

Assistant City Manager Marty Lyons today said that because the council has a pretty full agenda for its next couple of meetings, it may be a month or more before the staff comes back with more details about the pension proposal. He declined to offer any estimate of what the program might cost the city.

The department heads, but not other city workers, were required to take a five percent pay cut as one of the measures used to balance the city budget adopted last month.

Bill Smith is the editor and publisher of Evanston Now.

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9 Comments

  1. Our city government is NUTS!!!!
    The government union pension problems statewide is bankrupting Illinois and many towns, including Evanston.

    The state unemployment rate is now at 11.3 percent and growing. The Democrat governor just today said he is proposing to raise income taxes by 33 percent (no plan to solve the unsustainable pension mess).

    Meanwhile, for the past several years now our property tax rates have climbed as our property values plunged. There is a city budget deficit of $9 million, and for the past few years in this recession no union employees were laid off until last month. The president of the union employees sits on the budget advisory board, and city union employees still will get their annual merit pay raise. No Evanston fire union employees will lose their jobs and they will still get overtime pay.

    AND NOW EVANSTON CITY OFFICIALS ARE THINKING ABOUT PAYING OUT MORE MONEY TO GIVE UNION EMPLOYEES MORE PENSION BENEFITS!!!!!!

    Government union employees can retire at age 50. On average, retired government union employees receive 30 percent more than what they put into the system in their career. Just today, Mayor Daley said he wants to end double dipping – oh thanks, that’ll stop the hemorrhaging.

    The only way out of this fiscal nightmare that our city, county and state leaders have got us into is to vote for the Republican candidates because they are not in the union pockets.

  2. Keep the Money at Home
    If the city needs more money, our state rep. and senator should try to get the taxes the state collects reduced and keep the money in Evanston. Evanston can then raise its taxes to cover the cities needs.
    Likewise the State should get Federal taxes lowered and the State raise the taxes to fund roads, schools, etc..
    It makes no sense to send money to the State and Washington respectively where each legislator takes off his share and the bureaucrats strip off more and then send what is left to the state/city respectively. Everyone complains that we don’t get back as much as we send, then why not send less and pay for locally.
    Of course if citizens want to raise the issue of the government spreading the wealth around [education, health], then our taxes should go to the poorest of states or even poorer countries and Illinois/Evanston taxes should rise to give to those poor areas.

  3. Pension enhancement …now ?
    Quoting …”Under state law, if the city agrees, workers covered by the Illinois Municipal Retirement Fund could qualify for up to ten years worth of extra pension credits for work at municipalities in other states.

    The employees would have to pay the employee contribution portion of the pension credits — but it would be up to the city to make up the city’s share of the cost for those extra years.”

    Although Civil Servants will argue otherwise, the city (i.e., the TAXPAYERS) usually winds up paying 75+% of total pension costs. So, under this proposal, an instant UNFUNDED liability equal to 75+% of the pension cost of 10 years of service is created ….. (30-40% of the ENTIRE TYPICAL FULL CAREER)… i.e. a HUGE $ bill is handed to taxpayers … for not one ounce of services rendered to those being asked to pay for it.

    Approving this proposal this nothing more than a THEFT of taxpayer money. It would be a lousy idea even in the BEST economy, let alone now.

  4. Time for Serious changes (reductions)
    State & City Budgets are stressed all over the nation with supposed one-time “fixes”. Let me tell you something … this isn’t going to be a one-shot fix. Most States, cities, & towns have a FUNDAMENTAL structural problem which MUST be addressed.

    Long ago, Civil Servant “cash” pay was quite a bit less than Private Sector pay in incomparable jobs. This justified a better pension & benefit package.

    Per the US Gov’t BLS, cash pay alone is now higher in the Public Sector than in the private sector. This justifies AT MOST comparable (but certainly NOT better) pensions & benefits.

    More valuable Public Sector pensions comes from multiple sources: (1) higher formula per year of service, (2) basing pensionable compensation on the final 1 year instead of 3 or 5 years of service, (3) including post retirement COLAs, (4) arbitrary end-of-career promotions or excessive raises to “spike” the pensionable compensation, (5) allowing the soon-to-be retired to load up on overtime includable in pensionable compensation, (6) including payouts of unused vacation, unused sick days, uniform, parking, and other miscellaneous “allowances” in pensionable compensation, etc.

    In MOST Corporate Pension Plans NONE of the above are included. Why? Because the cost would have to be paid for by the employer, and none of these being really justified, employers are not foolish enough to waste THEIR money this way.

    In the Public Sector ALL, of the above are generally included/allowed. Why? Our Politicians aren’t spending THEIR money, their spending YOUR money (via your taxes) while they curry favor for campaign contributions and election support.

    Sometimes, Corporate Sector Pension Plan sponsors realize that the plan is no longer affordable, so they reduce cost via formula reductions, increases in the retirement age, etc., for NEW employees and for FUTURE years of service for CURRENT (yes CURRENT) employees. This is ROUTINE in the Private Sector and is allowed by ERISA (the Federal Law that governs Private Sector Plans).

    Just as in the Private Sector, CURRENTLY EMPLOYED workers in the Public Sector have already “accrued” pension benefits for PAST service. To this will be added benefits for FUTURE years of service. However, in the Public Sector (and there are variations from State to State) the ability to reduce the pension formula for FUTURE years of service for CURRNT employees is “questionable”.

    Of course, the employees and their Unions say it cannot be reduced for anyone already employed (even for those very recently hired). There are many variations, e.g., NJ’s Office of Legislative Service said that cannot be changed only for current employees who already have 5 years of service. In some States, the rules that govern such potential Plan changes are in the State Constitution. In others, in Laws/Regs., and in others via Court Case law.

    One important consideration in examining the DIFFICULTY in reducing pension for (FUTURE years of service ONLY) for CURRENT employees is that the legislators, judges, and staff (such as in the NJ example above) that “opine” that such reductions are not allowed are THEMSELVES participants in these same pension Plans and would be negatively impacted by such formula reductions.

    Hence, they are hardly disinterested parties, but come with a built-in conflict of interest. These persons should not be making decisions that favor THEM (as beneficiaries of their own decisions) but add to the taxpayers’ burden.

    The financial situation across the country is getting more dire, and the ROOT CAUSE must be addressed. Stated another way, we must once and for all, address the STRUCTURAL imbalance between income and expenses.

    Way too much focus has been placed on the government entity’s neglect to “fully fund” the Plans. This is certainly true (to varying degrees across the nation). What is often given short-shrift is the “expense” side of the income statement. No one ever says …gee … funding a VERY generous pension plan is VERY expensive, and then moves to the logical next questions, that being, is it too expensive BECAUSE it is too generous and perhaps we such make it less generous.

    But what exactly is “too generous”? Well, given that “cash” pay in the Public Sector now exceeds that of the Private Sector in comparable jobs, maybe a Public Pension Plan that is more than MARGINALLY higher is too expensive.

    Above, I enumerated 6 items which make Public Sector Plans more expensive. Few people not educated in pending funding understand just how VERY valuable (and hence EXPENSIVE) these differences are. One thing is certain, the Public employee Unions know. That’s why they fight tooth-and-nail to stop changes.

    Here is an accurate comparison of the costs of Public vs Private Sector retirement packages (pension plus retiree healthcare, if any) …. The value (i.e., cost to purchase the pension/benefit package) at the time of retirement of the employer-paid (i.e., Taxpayer) share of the typical (non-safety) worker’s retirement package is 2-4 times that of employer-paid share of the comparable (in pay, years of service, and age at retirement) Private Sector worker, and that multiple increases to 4-6 times for safety workers (policemen, firemen, corrections officers, etc.).

    I’ll bet you had no idea that this HUGE disparity exists. Given that it does, and given that Public Sector “cash” pay by itself is higher, is it surprising that States, cities, towns are being so squeezed to fund this? Not at all.

    So what is the solution? Of course Civil Servants deserve “fair” pay as well as “fair” pensions & benefits, but “fair” should mean COMPARABLE to what their Private Sector Taxpaying counterparts get. Right now, this is anything but true.

    The EXPENSE side of the income statement has been neglected far too long. To reach a “structural balance” we need to reduce current pensions (as well as retiree healthcare subsidies) in the Public Sector to a level comparable to that of the Private Sector. A few more progressive States & Cities (or perhaps, those in the greatest financial pain) know they must look at this and are beginning the baby steps.

    But the BIG problem is the conflict-of-interest conundrum that reducing pensions for CURRENT employees will (in many cases) reduce there own pensions. So, they ONLY propose plan reductions for NEW employees. To be fair, this may be happening not because they just “cave” on addressing such reduction, but because they really believe it is not possible.

    A disinterested party might look a bit harder. Perhaps we need to get opinions from outside this circle, e.g., from university scholars. Or perhaps challenges should be brought in the Federal Court system where the conflicted parties are no longer the decision-makers.

    Not addressing the huge cost of future accruals for current employees is wishing-away current financial reality. The dire financial problem is here NOW. Reducing pensions ONLY for NEW employees will have little impact for 20-30 years until they begin to retire. We will never make it. But also, given that most (objective) observers agree that current pensions & benefits are overly generous (compared to Private Sector plans … while appropriately taking into account compensation levels), why should we CONTINUE to layer on MORE excessive pension accruals?

    It’s been said that the first step in getting out of a big hole is to STOP DIGGING. Well, every day we allow the current plan to continue, the hole gets deeper.

    Somehow we need to find the way to reduce pensions (not for PAST) but for FUTURE years of service for CURRENT employees. That, along with a significant reduction in the retiree healthcare subsidy just MAY save us.

  5. who’s nuts?
    Al-
    Surely you jest. You seriously think that blindly voting Republican will magically solve all of our issues?

    Republicans may not have their hands in union pockets, but they most definitely have their hands in the pockets of many large corporate special interest groups that could not care less about the financial health of this state and it’s citizens.

    While I agree with your assessment of this proposal and how absolutely insane it is, your ending plea for a Republican savior shows a blind conviction to political dogma.

  6. End the arrogance of the one-party system
    RacerX,

    While it is true that some Republican candidates receive campaign support from corporations so do Democrats. The Republicans DO NOT have a monopoly on corporate support, far from it.

    BTW-corporations create jobs and wealth – unions DO NOT.

    Meanwhile, Democrats have absolute support – feet and finances – from every union out there on every level of government.

    And the kicker – unions actually FEED off the taxpayers through pensions, benefits, employment and special political perks from their constituents – Democrats. So far, NOT ONE STATE UNION EMPLOYEE HAS BEEN LAID OFF in a state with 11.3 unemployment.

    Care to guess why?

    Last I checked, corporations are downsizing but government is growing at the expense of the taxpayers.

    Democrats have an absolute political monopoly in Evanston, Cook County, Chicago, and have clear control of the state.

    The bottom line is if citizens want politicians to actually give us meaningful ethic and fiscal reforms there is only one way – end the arrogance of the one-party system that we have in Evanston, Cook County and Illinois.

    It’s just that simple.

    1. Democrats Stand and Salute
      Remember if the unions or lawyers want something, the Democrats will stand and salute [their owners]. It might just be best to replace the middle-men [Democrate politican] with the unions and lawyer lobby and get it over with.
      One has only to observe Evanston government.

  7. This is graft
    The proposal is incredibly irresponsible. The city is running deficits, pension plans are already in trouble and someone proposes to add unfunded liabilities to worsen the situation?

    Who put this nonsense forward? Joellen Daley, giving herself and her buddies a gift at the expense of tax payers? If that is not graft, I don’t how anyone would define it.

    Unbelievable.

  8. Kudos to “Tough Love” on “Time for Serious Changes”
    While I am not completely surprised that someone would be willing to bring this issue before City Council, i think this action clearly demonstrates how “out of touch” some people (not all) are in government. Personally, I am appalled that this action would be considered; we all know the the current economy remains very weak, the number of unemployed people, the struggles many are facing to pay their bills, the pathetic fiscal situation for our state, the fiscal challenges our city is confronting, and the underfunded situation of all public pension funds.
    Please take the time to read “Time for Serious Changes” by “Tough Love.” These comments clearly and appropriately address the pension issues. More people need to become educated about the inequities that exist in the public versus private sectors. Changes need to be made today, else all roads in Evanston will lead to Greece.

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