If state legislators want some inspiration in how to cooperate when it comes to addressing the growing pension liability, they should look down the street from the Capitol to Springfield City Hall for some inspiration.
The city of Springfield and the firefighters union came together to craft a new 5-year contract that provides raises to the firefighters while also keeping an eye on the future pension benefits the city will have to pay – costs that increasingly are taking up a larger share of the city’s budget. The city council unanimously approved the contract Tuesday, while a majority of members of the International Association of Fire Fighters Local 37 voted in January to ratify the contract.
The only downside we see in the contract is how long it took to get it: the contract covers March 2016 through February 2021. The city is going to owe some back pay to firefighters; officials say details will be worked out in the coming weeks.
But the end result is an impressive lesson in compromise and problem-solving. The union members agreed to take the first year’s 2 percent raise as a bonus. That means the firefighters will get the money they are owed, but it won’t be factored toward firefighters’ base salaries. Doing so lowers the city’s pension burden. After the first year, firefighters will get raises of 1.5, 1.25, 1.5 and 1.75 percent, all of which will increase their wages.
We agree with Ward 7 Alderman Joe McMenamin’s take: It absolutely reflected “incredible leadership to accept that kind of agreement.” And it’s the type of leadership needed from all sides in the pension discussions that must happen.
Municipalities throughout Illinois are struggling to pay their pension costs for retired firefighters and police officers. A host of factors have increased costs, but local officials are often handcuffed in how they can address the problem. Even though the state does not pay police and fire pensions, the General Assembly dictates how much benefits are paid and how much money municipalities should have on hand to pay the pensions. As of last year, the firefighters’ pension fund in Springfield was 44 percent funded, leaving a 56 percent unfunded liability.
That leaves municipalities to figure out how to pay the retirement benefits retired police and firefighters are rightly owed. Taxpayers and employees should share the costs of the solution, and the contract approved by the firefighters union and the city council does that in an innovative way.
That is the type of compromise that needs to be involved in any pension discussion – especially at the state level, which has an unfunded pension liability of more than $133 billion. The problem gets worse the longer it takes for lawmakers to address it. Too often, though, that conversation becomes an us vs. them situation, with lawmakers, retired employees, unions, special interests groups and taxpayers pitted against each other, when they should instead be working together on a fair compromise that benefits everyone.
It can be done, as expertly demonstrated by Local 37 and the city. And Springfield isn’t done with trying to find new ways to address its pension problems. Mayor Jim Langfelder has suggested an ordinance that would see the city contribute more toward police and fire pensions if the city’s rainy day fund and the utility’s revenues hit a certain threshold. McMenamin introduced an ordinance to lower the pension fund’s estimated rate of return, which will trigger the city to make higher payments toward pensions. Both are ideas that deserve consideration.
Retired public employees deserve the pensions they earned. The problems with pensions do not go away if officials ignore them. Local 37 and the city are leading the way, and we hope to see the results borne from their cooperative attitudes replicated throughout Illinois.