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East St. Louis closes fire house, lays off firefighters to help make pension payments

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Illinois

* BND…

One of the East St. Louis fire houses was closed by city leaders and nine firefighters were given notice of layoff letters on Tuesday. […]

The city had fallen more than $2.2 million behind in contributions to the firefighter’s pension fund. The Fire Pension Board voted in September to initiate the “intercept process,” which allows Illinois Comptroller Susana Mendoza’s office to take money that would otherwise have been spent on things such as payroll, public safety and sanitation, and deposit it directly toward the under-funded retirement benefits. […]

Its Police Pension Board also has applied for a revenue intercept to recover a $1.79 million shortfall in its benefits fund. […]

“Unfortunately, with 100 percent of the city’s revenues being redirected to the police and fire pensions, we are faced with the difficult task of strategically reducing some services in order to meet our financial obligations for the next few months,” [East St. Louis City Manager Brooke Smith] said.

* East St. Louis is a clear outlier, but it’s a prime example why local governments had to be forced by the state to stop ignoring their funding obligations…

The firefighters pension was only 9% funded at the end of 2018, with an unfunded liability of $65.2 million, according to data from the Illinois Department of Insurance. The police pension was healthier, but still had only 31% of its needed funds and a total pension debt of $39 million.

* Oy…

The firefighters’ union contract ended in 2015, and the union and city have not come to terms on a new one. However, the old agreement, which both the city and union still honor, says the city must maintain 58 firefighters.

A memorandum agreement passed in 2015 allowed the department to reduce staff by 25%, but that memorandum expired in 2016.

“Layoffs are not going to be financially beneficial to the city because either way they’ll have to pay the money back because of the contract,” said Gregory, who was one of 11 firefighters rehired from a layoff after the city received a federal grant in 2011. “If you’re going to pay us you might as well have a firefighter on duty.

posted by Rich Miller
Friday, Oct 18, 19 @ 1:46 pm

Comments

Easy solution. Just raise taxes on the citizens of East St. Louis. And the economic benefit of the Casino Queen will be realized any day now.
/s/

Comment by Downstate Friday, Oct 18, 19 @ 1:51 pm
Pritzker’s big suggestion on consolidation does nothing to address unfunded liabilities. If he were Captain of the Titanic he would be ordering the crew to polish the guardrails post iceberg

Comment by Sue Friday, Oct 18, 19 @ 1:55 pm
This is the blueprint for aging cities throughout Illinois, saddled with unfunded pension liabilities … those with economic growth may be able to come up with solutions, those without economic growth will begin sliding sideways with cuts to public safety, schools and infrastructure … not a winning formula for a better Illinois

Comment by west wing Friday, Oct 18, 19 @ 1:56 pm
Go take a look at their budget. The 2018 one is the most recent one on their website. 9 firefighters doesn’t come close to what is needed to close their budget gap. They had a $3.7 million general fund budget deficit, and they clearly state that this did not even include the $4.6 million in pension contributions owed. So really a $8.3 million budget deficit. Their total General Fund revenue is only $18.7 million. This is an insurmountable hole. https://www.cesl.us/DocumentCenter/View/286/2018-BUDGET

Comment by Smalls Friday, Oct 18, 19 @ 2:11 pm
If you can’t afford the pensions, you can’t afford the employees.

Comment by City Zen Friday, Oct 18, 19 @ 2:13 pm
===East St. Louis is a clear outlier, but it’s a prime example why local governments had to be forced by the state to stop ignoring their funding obligations…===

Also a prime example of “Do what I say, and not what I do.

Comment by PublicServant Friday, Oct 18, 19 @ 2:15 pm
===If you can’t afford the pensions, you can’t afford the employees.===

They certainly couldn’t afford to continue to, as Rich points out, “stop ignoring their funding obligations.” Absent that, the pensions were eminently affordable as well as the employees.

Comment by PublicServant Friday, Oct 18, 19 @ 2:20 pm
Obviously the old contract must be ended. Then, a combo paid/volunteer fire dept can be created. Or. Beg for bankruptcy.

Comment by Blue Dog Dem Friday, Oct 18, 19 @ 2:23 pm
It’s super sad because we have a lot of fires here. Earlier this year we had a car fire in our parking lot. I’ve seen several small restaurants burn down in my time here. East St. Louis is a ruins and these impoverished good people deserve more. These aren’t bad people at all. I have always felt perfectly safe here. Folks are just poor and have a lot, a lot of barriers to self sufficiency. Winter, fire season (space heaters and fireplaces) is coming on fast. I just hope no one dies this year because of the mismanagement.

Comment by Honeybear Friday, Oct 18, 19 @ 2:27 pm
As noted, East St Louis is an outlier. This is the same city that lost their City Hall to a citizen in order to settle a lawsuit.

Comment by RNUG Friday, Oct 18, 19 @ 2:28 pm
Not that much of an outlier. There are dozens of municipalities nearly in the same condition as East St. Louis. The next recession may well put them in the exact situation. BTW, when does the IL legislaure get intercepted for “ignoring its funding obligations”? #BK

Comment by Anon y mouse Friday, Oct 18, 19 @ 2:32 pm
==the pensions were eminently affordable==

If they were, they’d be 100% funded. From the SLD:

“The labor board found the city to have violated its contract by reducing the number of total staff and not offering the same wage increase as it did to the police bargaining unit.”

How can they afford wage increases if they cannot afford the pension payment?

Pay the pensions first. If you cannot afford the pension, you can not afford the employee’s raise.

Comment by City Zen Friday, Oct 18, 19 @ 2:33 pm
What a hypocrite. Mendoza took theyre $ and now 9 firefighters and their fam are shook. Find the money for both. If this were Rauner, she would be speaking at the firehouse & condemn this move and finding the $$. Stay strong Union bro’s & sis. We’ll fight with you.

Comment by SEIU from ESL Friday, Oct 18, 19 @ 2:35 pm
BND 09/17/2019:
“Since East St. Louis was freed of oversight from the Illinois Financial Authority in 2013, the city has fallen nearly $2.3 million short in mandated payments to the fund that supports firefighters and their families in retirement, according to an audit.” They have, or had, the money when under state oversight. Which raises the question where did those funds go?

Comment by Anyone Remember Friday, Oct 18, 19 @ 2:54 pm
Volunteer firefighters needed. Paid on-callout to a fire. This is what many Chicago suburbs had at one time.

Comment by DuPage Friday, Oct 18, 19 @ 3:16 pm
===…if they cannot afford the pension payment?===

That’s not the same as the pensions being affordable, and you know it. Stop playing fast and loose with the language, CZ. You seem like a smart guy. If the current payment is unaffordable due to your not making the required payments over time that has nothing to do with the pension’s affordability, and everything to do with what happens to every deadbeat that doesn’t pay it’s bills when they’re supposed to.

I’m trying to be clear because there’s a bunch of baloney floating around out there, purposefully, regarding the pensions and their affordability. IMRF proves that when payments are made on time, the pensions are more than affordable.

Comment by PublicServant Friday, Oct 18, 19 @ 3:29 pm
==Mendoza took theyre $ ==

She didn’t have a choice. She didn’t make the decision herself.

Comment by Demoralized Friday, Oct 18, 19 @ 3:58 pm
Oh brother. Here we go again with CZ’s salary discusions.

Comment by Demoralized Friday, Oct 18, 19 @ 3:59 pm
==If they were, they’d be 100% funded==

You just love to play these little games don’t you? It’s tiresome.

Comment by Demoralized Friday, Oct 18, 19 @ 4:00 pm
Pensions promise away the future of the unborn. The only defense against this unfair debt burden is to move to another city without pension debt. Or stand there and maybe watch your house burn down because you only pay for firefighters who are retired. Either way good luck. You’re gonna need it.

Comment by Realist Friday, Oct 18, 19 @ 4:18 pm
This is an extreme case as others have mentioned, but I wonder if the city petitions the state for municipal bankruptcy. It’s the only viable option at this point.

Comment by Dybalaton Friday, Oct 18, 19 @ 4:26 pm
==It’s tiresome==

Facts can indeed be tiresome.

Comment by City Zen Friday, Oct 18, 19 @ 4:39 pm
=== Facts can indeed be tiresome.===

LOL

=== If you can’t afford the pensions, you can’t afford the employees.===

Not a “fact”, but a belief.

You still are tiresome.

Comment by Oswego Willy Friday, Oct 18, 19 @ 4:42 pm