Glen Ellyn Leaders Wait on Pension Reform Impact

Glen Ellyn leaders do not know how legislative reforms of police and fire pensions will impact the village, however they believe it will be positive for the taxpayers.

"We don't know exactly what this will mean financially for the village," said Larry Noller, village assistant financial director. "We will have to conduct an actuarial study before we can know any specifics."

Village Manager Steve Jones said the actuarial study will be contracted out. He said the actuary the village contracts with also performs actuarial studies for several other municipalities, and he expects they will also seek his expertise to see how the pension reforms impact their budgets.

"Each pension is different due to the number of people involved, their ages and other factors, so there's no way we can compare ours with another pension to see what might be a typical result," Jones said.

Responding to an outcry of municipalities around the state struggling to meet their pension obligations, the legislature passed a reform measure to contribute greater amounts to the pensions. The new legislation would make local police and firefighter pensions less generous for future hires around the state. Then new rules kick in Jan. 1. The bill would require municipalities to increase funding of the pensions in order to bring them to 90 percent solvency in the next 30 years. The measure will not affect current city employees. The legislation passed in the Illinois House of Representatives on Nov. 30 and the Senate on Dec. 1 by wide margins. It has not been signed by the governor.

The provisions of the bill include:

-          Caps pensionable salaries at $106,800

-          Raises the normal retirement age from 50 to 55

-          Allows early retirement at age 50, but with a six percent reduction in pension for each year prior to age 55

-          Spreads the final average salary over eight years to prevent last-minute pension spikes

-          Starts cost-of-living adjustments at age 60 for retirees and survivors.

Noller said if the bill goes forward, his department expects to see some lowered costs in the village's police pension. Glen Ellyn has a volunteer fire department, so there is no pension plan for that organization. The police pension is funded at 66 percent, Noller said.

Both Jones and Noller said the pension reforms should lower pension costs and create a positive benefit for the unfunded portions of the pension.

Several municipalities around DuPage County included a referendum on the November ballot asking voters if the governor and general assembly should take steps to reform pensions. In DuPage County, the referendums were overwhelmingly supported. Glen Ellyn voters however did not have such a referendum on the ballot. Despite the lack of a ballot referendum, Jones said the Glen Ellyn Village Board strongly believes that pension reform was a necessity. Several times over 2010, Jones said Glen Ellyn leaders went to Springfield to talk with legislators about the importance of pension reforms.

Not all municipalities are happy with the new legislation. Chicago Mayor Richard Daley said the legislation will cause a spike in property taxes. Public employee unions, incliding the Illinois Fraternal Order of Police, also opposed the reform measure.

The Illinois Municipal League called the legislative action a, "Positive first step," but said additional reforms are needed.

"These additional reforms need to address the existing pension debt as well as protect municipalities that make a good-faith effort to fulfill their pension funding obligations," the IML said on its website.

If the legislation is not signed by the governor, or is amended, Jones said it may take even longer to see what the impacts on Glen Ellyn will be.