Madison County owes more than $4 million in unfunded pension liabilities, according to Treasurer Chris Slusser. But what may be worse, he said, is that $3.8 million in tax payer dollars has been spent on interest payments over the last 10 years because of the county’s underfunding of two programs.
Slusser said that he recently learned that since 2007, both the Sheriff’s Law Enforcement Personnel (SLEP) and Elected County Officials (ECO) pension plans have been substantially underfunded.
The SLEP plan funds retirement benefits for sheriff’s department employees, such as deputies and jailers.
The ECO plan, which stopped accepting new beneficiaries in August 2011, was an alternative retirement benefit plan for elected county officials, and one that has been widely criticized as a boondoggle for politicians at the expense of taxpayers.
“We’ve wasted $3.8 million dollars in the past 10 years when we could have paid off the balances in each plan and saved the taxpayers money,” Slusser said. “It’s ridiculous that we keep paying 7.5 percent interest on balances that should be paid off. We can’t even get that rate of return on our own investments.”
The balance sheet problems did not come to light until the county’s payroll manager Craig Edwards, who also serves as the authorized agent for the county’s Illinois Municipal Retirement Fund, informed him about it, he said.
Slusser was appointed Treasurer following the election of former treasurer Kurt Prenzler as county board chairman over long time chairman Alan Dunstan in November.
According to Slusser, as of Dec, 31, 2016 there was a negative balance of more than $3.625 million in the SLEP plan and $601,000 in the ECO plan, with an additional $964,904 in unfunded actuarial accrued liabilities.
Slusser said the annual employer contributions by the county to the retirement plans, which is set by IMRF, are less than the amount of interest being charged.
The SLEP plan was created in response to legislation passed in 2005, Slusser said. The legislation enhanced SLEP plan benefits, but created unfunded liabilities for SLEP employers.
He also said that separate SLEP enhancement reserve accounts were created for every SLEP employer that had unfunded liabilities resulting from the new law. It also required IMRF to amortize these unfunded liabilities over a 30 year period.
“Every year IMRF charges us 7.5 percent interest on the opening balance,” Slusser said. “IMRF sets our annual employer contributions, but we’ve been paying less than the amount of interest being charged, resulting in a higher balance.”
In 2007, Slusser said, the county started with a $3 million balance in the SLEP plan and paid just over $80,000 toward the balance.
“We paid 1 percent interest toward the balance that year and currently we are paying 2.56 percent interest on it,” Slusser said.
He said the ECO plan is similar in that it’s been underfunded as well. He said in 2012 the county transferred $4 million toward the balance when it could have paid it off for $4.6 million.
He is recommending that the county board pay the current balances in both the SLEP and ECO plans.
County Board member Tom McRae (R-Bethalto) calls the ECO plan “the biggest scam perpetrated in the state of Illinois.”
Around 750 people in 62 Illinois counties joined the ECO plan after its creation in 1997, according to a press release from the county. Instead of working 40 years for a pension of 75 percent of their pay, elected officials could work only 20 — and get 80 percent of regular pay.
The 80 percent calculation would be based on the last paycheck, not an average of the last four years, like most government workers, the release states, opening the door to late-career pay hikes that would spike pension checks even higher.
Elected officials didn't have to stay in office 20 years either — just work in government for that time.
“We have people who retired and started collecting their ECO pension, then went to work in another government job or elected position and will receive a second pension,” McRae said. “It’s unconscionable for people to have participated in it.”
County Board members requested a list of those who are eligible to collect ECO pensions, which Slusser said was around six individuals, plus those who are currently receiving one.
Slusser said for just a small number of pensioners, the county has been forced to contribute $6.53 million during the past 10 years to keep the ECO plan afloat.
The Finance Committee will discuss the proposal to pay off the pension fund balances at its meeting at 9 a.m. Wednesday, the release states.