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An editorial piece from PoliticsEarly&Often examines the state of municipal pension funds across Cook County:
There are 217 police and fire pension funds in suburban Cook County. These taxpayer-supported systems, with total assets nearing $5 billion, are meant to provide stable retirement incomes for public safety workers and their families. However, a report by the Better Government Association found that many of these pension funds are in serious financial trouble, putting retirees’ benefits—and the fiscal health of local governments—at risk.
Experts suggest that rescuing these underfunded systems could mean higher taxes, reduced services, or both. Some agencies are already considering privatization or merging with neighboring departments to cut costs and manage future pension obligations. Ultimately, taxpayers will likely bear the brunt of the financial burden due to the severe pension shortfalls. According to the BGA, unfunded liabilities for police and fire pension funds in suburban Cook County add up to $3.3 billion.
Fifty-eight, or about a quarter, of the systems were less than half-funded, meaning there was less than 50 cents for every dollar owed in long-term benefits. A healthy funding level is generally considered to be at least 80%, and a 2010 state law requires pension plans to reach 90% funding by 2040. At current levels, these systems are vulnerable to investment losses and may need to sell off assets just to meet obligations, increasing the risk of insolvency. If that happens, taxpayers could be left to cover any shortfall.
This crisis comes on top of similar problems in pension funds for state employees, the City of Chicago, and Cook County, all of which are struggling to find legislative solutions. While the larger pensions have unfunded liabilities exceeding $100 billion, the smaller municipal funds pose a more immediate threat to mid-sized and small towns that have fewer options to raise revenue or cut costs.
Blame for the situation varies depending on whom you ask. Critics point to chronic underfunding, poor investment returns, overly generous benefits, and in some cases, questionable pension incentives. State law requires municipalities with 5,000 or more residents and full-time police or firefighters to establish pension systems. In suburban Cook County alone, there are 121 police and 80 fire pension funds, plus 16 fire protection district funds, serving over 5,900 retirees and another 8,500 who could collect pensions in the future.
The BGA reviewed each system and found that 94% were below the 80% funding threshold. Notable cases include Blue Island, Cicero, and Melrose Park, where fire funds had just 32 cents for every dollar owed. On the police side, Blue Island, Burnham, Summit, and Willow Springs fared even worse, with less than 30 cents per dollar. Stone Park’s police fund had only seven cents per dollar before issuing a $2 million bond to pay off debts.
Other findings included examples of alleged pension sweetening in Alsip, Blue Island, and Pleasantview. For instance, two officers in Alsip received $20,000 longevity bonuses shortly before retiring, potentially adding $1.8 million to their lifetime pensions. Meanwhile, Harvey paid just $140 in required contributions for its police and fire funds between 2010 and 2013.
The Illinois Department of Insurance oversees pension funds but has limited power to intervene. However, a 2010 state law now allows pension funds to gradually intercept sales taxes and other state revenues if municipalities fail to meet their obligations. This provision takes effect in 2016, but its impact is already being felt.
North Riverside is considering privatizing its fire department due to concerns over pension obligations and potential revenue seizures. Other suburbs like Chicago Ridge, Forest View, and McCook are exploring similar options. McCook, for example, has decided to outsource its fire services to a private company, saving an estimated $600,000 annually.
As the pension crisis deepens, the pressure on local governments continues to grow, raising urgent questions about sustainability, accountability, and the future of public safety funding in the region.