By: Nancy Mathieson*
Among the many reasons Chicago’s police and fire pensions are grossly underfunded are inadequate long-term planning, legislated benefit increases, pension holidays and overall kicking-the-can-down-the-road. Another factor working against Chicago is the imbalance between active and retired public safety officers. The New York City police pension received some unwelcome attention recently because the number of retirees it supports exceeds the number of active police on the streets.
Little known fact: Chicago has the same upside-down relationship between its active and retired public safety departments.
Policemen’s Annuity and Benefit Fund reports for 2013 show participants in the pension plan include 12,161 active police versus 13,159 police retirees/survivors. In addition, a large portion of the active force is nearing or eligible for retirement, with 34% aged 45-54 and 25% having 20 or more years of service. Total retiree count increased by 1.8% in 2013, while total expenditures for retiree benefits increased by 4.56%.
In 2013, the number of active and retired/survivor firefighters was almost identical, 4,685 versus 4,642, according to Firemen’s Annuity and Benefit Fund reports. Expenditures for retiree benefits rose a full 8% during 2013, while the number receiving benefits rose only .6%.
The average age of active police and active firefighters is about the same, 43 years old for police versus 46 years old for firefighters.
Chicago’s 2014 police budget looked toward a $40 million hike from $1.25 billion to $1.29 billion, with no additional hiring. (The 2014 budget included $71 million for overtime compared to $32 million in 2013). With no additional actives and the number of retired police officers continuing to grow, this inverse relationship will continue.
The upside-down relationship between active participants and retirees/beneficiaries did not cause the pension underfunding problem and upside-down plans can be properly funded, but it will make fixing those pensions more challenging. The firefighters’ fund has just 24 cents for every dollar it owes pensioners; the policemen’s fund just 30 cents. Fixing them will be exceptionally difficult.
*Nancy Mathieson is Contributing Editor of WirePoints Illinois News.