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Fun with numbers

Wednesday, Feb 26, 2020

* Sun-Times story about Sen. Rob Martwick’s HB2451

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.

- Posted by Rich Miller        

  1. - LOL - Wednesday, Feb 26, 20 @ 2:48 pm:

    Wow I hope someone pays me a higher pension that is not based on law with no consequences

  2. - Merica - Wednesday, Feb 26, 20 @ 2:49 pm:

    I’ve never understood why Illinois, New York, NJ, MA, CT, and RI pay firefighters so much. High salaries and high pensions. Many ff’s have second jobs. Thanks to technology and ordinances, structure fires are a rarity, but those improvements see no savings to the public. Instead the costs in these states for fire protection only increase. At the same time, Illinois sees roughly the same results as states with cheaper fire protection. It takes a lot of courage to serve as a firefighter. I just wonder whether it would be a better idea to shift some of that funding to schools.

  3. - 16th Floor - Wednesday, Feb 26, 20 @ 3:02 pm:

    Taxes will have to go higher to pay for these pensions. It’s much easier to raise taxes than cut pensions.

  4. - May soon be required - Wednesday, Feb 26, 20 @ 3:23 pm:

    I don’t believe they the Chicago Fire Pension Fund is paying a benefit greater than legally allowed (if they are then the taxpayer groups should sue the trustees). I think they keep changing the law every few years to increase the COLA which perhaps they need to stop.

  5. - Blake - Wednesday, Feb 26, 20 @ 3:29 pm:

    To perhaps piggyback on Merica’s comment, I remember seeing an article, perhaps in the SJ-R, about how fire calls are less common nowadays & too much of firefighters’ work nowadays is work that is done cheaper by other first responders. I think I’ve also seen a state mandate on number of firefighters for municipalities over 5,000 in Illinois that can afford to be revisited.

  6. - Precinct Captain - Wednesday, Feb 26, 20 @ 3:33 pm:

    ==- Merica - Wednesday, Feb 26, 20 @ 2:49 pm:==

    Many firefighters have other jobs? What evidence is there for that statement?

  7. - Lucky Pierre - Wednesday, Feb 26, 20 @ 3:46 pm:

    Typical schedule is 24 hours on duty followed by 48 hours off duty

    Common knowledge many firefighters have second jobs,

  8. - Sue - Wednesday, Feb 26, 20 @ 3:54 pm:

    Another example of Springfield mandates paid by municipal taxpayers. The Dems routinely argue that at least for TRS since the teachers work in local districts with CBA’s negotiated by school boards- the State should shift the pension costs paid by the State onto the local govt’s. Problem is that all pension legislation is imposed by Springfield. If you want to get control of pension obligations - call your local state reps and senators and tell them to stop bending to the public unions when it comes to retirement programs. BTW good luck with that fools errand

  9. - Father Ted - Wednesday, Feb 26, 20 @ 4:00 pm:

    I’m baffled by the comments about firefighter pay. Sure- let’s take away the financial incentive for someone to willingly enter what might be your home that’s on fire and rescue you and/or your family. The amount of training, knowledge, personal risk and statistically proven higher rates of contracting cancer are but a few of many reasons why they are worth every penny. Everybody wants to save a few bucks on their property taxes, but it shouldn’t come from those willing to put their lives on the line every time they go to work.

  10. - Notthatdarien - Wednesday, Feb 26, 20 @ 4:01 pm:

    Fires are rare, 2 to 6 a month is normal for my fire district and those are usually in neighboring towns. However there are at least 180 EMT calls a month. Firefighters are paramedics now.

  11. - TR - Wednesday, Feb 26, 20 @ 4:06 pm:

    Keep in mind, Chicago firefighters (and cops) don’t get compounding COLA’s when they retire, unlike almost every other public employee in the state. So moving them from a 1.5 percent flat COLA to 3 percent flat is still less burdensome to Chicago than the legacy costs other municipalities are facing with public safety pensions.

  12. - Demoralized - Wednesday, Feb 26, 20 @ 4:16 pm:

    ==Many ff’s have second jobs.==

    Volunteers maybe, but not career firefighters.

    ==structure fires are a rarity==

    Huh? Where did you get that stat from. There are plenty of places where you can see the number of structure fires and the dollar losses of those fires.

    I think you need an education on the fire servide Merica because nothing you said is true.

  13. - Demoralized - Wednesday, Feb 26, 20 @ 4:23 pm:

    ==pay firefighters so much==

    I also like to ask people who complain about what others make what they think the salaries should look like. If you think it’s too much you must have a number in mind.

  14. - McK - Wednesday, Feb 26, 20 @ 4:27 pm:

    The birthdate restriction in the Chicago fire pension code is an accounting gimmick that allows the city to mask the true longterm debt of the pension system. When the pension fund actuaries calculate liabilities they can pretend like some of the firefighters (those born after 1966) will get a 1.5 percent simple COLA, instead of the 3 percent simple COLA everyone else gets.

    The birthday restriction has been In the pension code for decades. Every once and a while the General Assembly votes to move the birthday date forward. (I think it was at 1960 until a couple of years ago.) The city and the firefighters’ union used to cooperate on this slight-of-hand in Springfield. Now the city wants to stop the practice and book the savings in their budget. That’s fine, but the mayor should at least be willing to level with the public and say she wants to restrict firefighter pension benefits.

  15. - Upon Further Review - Wednesday, Feb 26, 20 @ 4:38 pm:

    =”This City’s financial atrocities never cease to amaze me’.=

    That cuts right to the heart of the matter Rich.

    It is this type of fiscal sleight of hand that will make the Progressive Income Tax dynamic even more difficult. Trust is LOW among the electorate in governments ability to be a responsible steward with precious dollars.

    For many, THIS type of unfathomable discussion is the underpinning of exacerbating their lack of trust.

  16. - Hieronymus - Wednesday, Feb 26, 20 @ 4:43 pm:

    @Sue “BTW good luck with that fools errand”

    So, you admit that trying to get the legislators to make unconstitutional changes to pension law in attempt to “get control (i.e. default on) of pension obligations “, is a fool’s errand?

    And at risk of being so exposed, we won’t hear any more from you about it?

  17. - Big Ted - Wednesday, Feb 26, 20 @ 4:43 pm:

    Thank you Upon Further Review. Well said.

  18. - Chicago J - Wednesday, Feb 26, 20 @ 5:08 pm:

    ==Many firefighters have other jobs? What evidence is there for that statement?==

    Have you tried Googling “firefighters second job”
    Plenty of evidence there including this forum for firefighters:

    This is why firefighters are so wedded to the 24-hour shift schedule — they get a couple days off to work their side job.

  19. - City Zen - Wednesday, Feb 26, 20 @ 5:09 pm:

    According to Firemen’s Annuity and Benefit Fund of Chicago, firefighters pay 9.125% towards their pension, which includes “3/8 of 1% for the Increment after Retirement (Annuity Increment)”

    Not sure how this stacks against most fire districts, but my hometown firefighters have a higher employee contribution rate. And .375% for AAI is less than what other pension participants pay.

  20. - Thomas Paine - Wednesday, Feb 26, 20 @ 5:22 pm:

    This seems like a good government “truth in accounting@ bill.

    Kudos for Martwick for pushing for greater transparency.

    Where are we on an elected school board?

  21. - Boone's is Back - Wednesday, Feb 26, 20 @ 6:04 pm:

    It’s like the guy who already knows he’s going to need to file for bankruptcy. What’s one more charge on the card that won’t get paid anyways?

  22. - Touré's Latte - Thursday, Feb 27, 20 @ 8:06 am:

    So the solution to underfunded Firefighter Pensions is to double the annual increase.

    Okey dokey.

  23. - Candy Dogood - Thursday, Feb 27, 20 @ 8:50 am:

    The more I find out about municipal pensions, the more appealing the argument is to consolidate them and have the state take them over while imposing very specific rules for the localities to adequately fund the pension.

  24. - First time caller - Friday, Feb 28, 20 @ 5:47 am:

    I’m a long-time listener, first-time caller. I had a subscription for 5ish years. Work has taken my focus elsewhere and am not a regular reader anymore but still a fan… thus the delay.
    Ok here goes, Rich this is an “unclear concept “. The PABF gives out benefits, not the City. The board is made up of 4 elected members representing the union and for ex-officious City representatives, 2 appointed by the Mayor and 2 separate elected officials; City Clerk and Treasurer. So the City can’t be “..agreeing to pay firefighters a pension higher than what the firefighters are legally entitled to.”
    Additionally, these funds are audited annually, and results posted, not sure anyone could give more than required anyway.

    This isn’t a “city’s financial atrocities” this is a growth in pension liabilities, period.

    Now you can argue the justice of having an arbitrary birthdate decides benefits, but that is the law. The rest is just spin, by Marwick and the Fire Fighter’s Union, and you owe a duty to report it as such.
    Check out page 1 and 10 of the summary of benefits.

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