October 7, 2007
City of Kankakee Police and Firefighter's Pension Funds Significantly Unfunded
The City of Kankakee Comprehensive Annual Financial Report for the Fiscal
Year Ended April 30, 2007 is out. OUTRAGE News has obtained a copy.
According to this report which was prepared by the City's Comptroller, both the
Police and Firefighter's Pension Funds are significantly unfunded and have
grown worst each year since 2000. This information can be found on page 79 and
80 of this report.
The Police Pension Fund is only 39.01% funded. It is unfunded by $18,386.022.
The Firefighter's Pension Fund is in even worst shape. It is only 35.18% funded
and is unfunded by $18,858,571.
Contrast this with the Illinois Municipal Retirement Fund which is 99.28% funded
and unfunded by $116,142. This information can be found on page 78 of this
report.
On page 44 of this report it says both the police and firefighters retirement
funds are funded by annual tax levy. OUTRAGE News believes this to be the
annual property tax levy. It also goes on to say this annual tax levy amount is
actuarially determined as the annual contribution necessary to fund the normal
cost, plus the amount to amortize the unfunded accrued liability and the city
has until 2033 to fully fund the past services costs for the Plans.
This would indicated the unfunded liabilities for both pension funds are suppose
to be going down each year. However the opposite is happening. The unfunded
liabilities are growing each year since 2000.
What does this mean for property taxpayers in the City of Kankakee? A new mayor
elected in little over a year will be left with this mess.
Here are the retirement benefits these funds provide for.*
Police Pension Fund: Covered employees attaining the age of 50 or more with 20 years of service are entitled to received an annual retirement of 2.5% of final salary for each year of service up to 30 years, to a maximum of 75% of such salary. This means at 20 years of service and age 50 you can retire at 50% of salary. Each year you work beyond 20 years you will get a 2.5% increase. At 30 years you can therefore retire at 75% of your final salary.
Employees with at least 8 years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit of 2.5% of final salary for each year of service.
Surviving spouses receive 100% of final salary for fatalities resulting from an act of duty, or otherwise the greater of 50% of final salary or the employee's retirement benefit.
Employees disabled in the line of duty receive 65% of final salary.
The monthly pension of a covered employee who retired with 20 or more years of service after January1, 1977, shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years by 3% of the originally granted pension. Beginning with increases granted on or after July 1, 1993, the second and subsequent automatic annual increases shall be calculated as 3% of the amount of the pension payable at the time of the increase.
Employees are required by ILCS to contribute 9.91% of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest.
Firefighter's Pension Plan: Covered employees attaining the age of 50 or more with 20 or more years of creditable service are entitled to receive an annual retirement benefit of one-half of the monthly salary attached to the rank held in the fire service at the date of retirement. The monthly pension shall be increased by one-twelfth of 2.5% of such monthly salary for each additional month of service over 20 years up to 30 years, to a maximum of 75% of such monthly salary.
Employees with at lease 10 years, but less than 20 years of credited service, may retire at or after age 60 and receive a reduced retirement benefit ranging from 15% of final salary for 10 years of service to 45.6% for 19 years of service.
Surviving spouses receive 100% of final salary for fatalities resulting from an act of duty, or otherwise the greater of 54% of final salary or the monthly retirement pension that the deceased firefighter was receiving at the time of death. Surviving children receive 12% of final salary. The maximum family survivor benefit is 75 % of final salary.
Employees disabled in the line of duty receive 65% of final salary. The monthly pension of a covered employee who retired with 20 or more years of service after January 1, 1977, shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55, by 3% of the amount of the pension payable at the time of the increase. (Note: State Senate Bill 1553 just became law after Gov. Blagojevich veto was overridden. The new law allows pension boards to vote on whether a firefighter is disabled instead of a doctor's determination as required by the old law. Further the new law guarantees attorney's fees if a firefighter sues the City for reinstatement, win or loose. Both State Reps. Lisa Dugan and Careen Gordon voted for this Bill. This will put even more pressure on the City of Kankakee Firefighters pension fund and therefore the City taxpayers now that retiring on disability requires a political vote instead of a Doctor's determination.)
Covered employees are required by ILCS to contribute 9.455% of their base salary to the Firefighters's Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest.
*Retirement Benefit Information is from the City of Kankakee Comprehensive Annual Financial Report for the Fiscal Year Ended April 30, 2007