East Alton eyes $35K in savings, but pension woes loom much larger

By Vincent Caruso, Illinois Policy Institute | Jul 10, 2018

Severely underwater public safety pensions have already derailed the finances of other municipalities, such as Harvey and North Chicago.


As municipalities across Illinois are plagued by tax hikes and wasteful spending, the village of East Alton is rolling out a measure that might find warm reception among village taxpayers.

In the coming weeks, according to the Alton Telegraph, the village plans to introduce changes to its garbage collection schedule designed to generate savings. East Alton Mayor Joe Silkwood estimates the rearranged pickup schedule will save the village $35,000 without diminishing services, according to the Telegraph.

While East Alton residents should welcome officials’ efforts to control costs, the village’s public safety pensions pose an enormous risk to taxpayers, casting a shadow over modest savings.

Take East Alton’s police pension fund, for which the village has less than 35 cents on hand for every dollar owed in benefits. According the two latest biennial reports by the Illinois Department of Insurance, or DOI, funding levels for the village’s police pensions fell to roughly 34 percent from 55 percent between 2005 and 2016. Taxpayer contributions to the fund, meanwhile, ballooned by more than 151 percent during that period. That funding levels have fallen in spite of increased commitment from taxpayers should be a particular cause for concern.

The village’s fire pensions are in even worse shape: As of 2016, East Alton’s fire pension fund had less than 27 cents for every dollar of benefits owed. This represents a dramatic decline from 2006, when the pension fund had roughly 52 cents on hand for every dollar. In keeping with the village’s police pensions, taxpayers’ obligations to the fund have grown by more than 153 percent – despite continually diminishing funding levels.

Silkwood, according to the Telegraph, expects savings from the revised garbage collections program to largely come by assigning the work to the village’s part-time workers, and relegating full-time staff to other duties. While this could hardly be considered a drastic arrangement, other municipalities may serve as an example of the extreme fiscal bind that can be induced by persistently underwater pension funds.

The Chicago suburb of Harvey laid off 40 police and fire workers in order to comply with court-ordered payments to its pension funds. Harvey’s police and fire pension funds are 51 and 22 percent funded, respectively, according to DOI. North Chicago has also seen revenues garnished to pay for its police and fire pensions, which are 34 percent and 35 percent funded, respectively.

Harvey and North Chicago’s funding levels are dire, to be sure. But the condition of East Alton’s public safety pensions is not dissimilar. Continued failure to stabilize East Alton’s pensions may inevitably push local officials to make an uncomfortable choice between hiking taxes or slashing services – or both.

State lawmakers could allow municipalities to find their fiscal footing by introducing reforms that disentangle local governments from unsustainable mandates and the outsized collective bargaining power held by government worker unions. Some of these reforms would require changes to the Illinois Constitution. But by pressuring policymakers in Springfield to address those challenges, taxpayers can begin the push toward growth and certainty.

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