Page 32 - February 2016

Hall of a meeting
CPD Pension Fund Town Hall Meeting stirs emotion and some ideas to address fund deficit
n BY MITCHELL KRUGEL
n PHOTOS BY JAMES PINTO
The Town Hall Meeting to address Pension System Fund in Illi- nois, especially the CPD pension funding, on Jan. 21 attracted an inspired collection of retired and active Lodge 7 members, offi- cers in uniform and the general public with some connection to first responders. The tension in the room at the Chicago High School for Agricultural Sciences was palpable, enough to turn up the heat along with the stress level.
Now, you wouldn’t exactly call this an angry mob. Miffed, maybe.
Or confused, perhaps.
Demanding to be sure.
And the officers in the room have every right to be stressed over the state of their pension funding. Or so it seemed.
So before Retired Patrolman and past District 22 Unit Rep. Herb Hebein, who put together the Town Hall meeting for the second time since 2013, could introduce the elected officials and experts on hand to provide information about the pension situ- ation, the questions started flowing from the masses. In volume. And with volume. At one point Alderman Matt O’Shea, who rep- resents the 19th Ward that is home to as many first responders as any other part of the City, had to assert a charge to a retired member to simmer down.
It was that kind of night to address just how underfunded the pension fund is, why it is that way, what is being done about it and what can be done to achieve greater stability.
“Since the last time we talked two years ago, there have been no new identifiable revenue sources to fund the pension other than the City property tax increase,” said State Sen. Bill Cunning- ham, who represents the 18th District, which includes all or parts of Beverly, Mount Greenwood, Morgan Park and Auburn-Gre- sham. “Like everything else in Springfield, it’s tied up in a larger standoff. The governor will not sign any legislation that is bene- ficial to Chicago without Collective Bargaining reform. That’s why we’re in such a mess in Springfield.”
The FOP has been told that the Chicago Pension Fund has been selling off assets to fund the annual annuity needed to meet the payments to retired members each year. That practice has created a situation in which if no new revenue is injected into the fund that it would be depleted within seven to nine years.
In an effort to address the underfunding, Chicago Lodge 7 has retained the services of Vasyl Markus of the Center for Tax and Budget Accountability, a bipartisan nonprofit organization that focuses on research, analysis and policy development in pen- sions systems and economic development, among other core areas. Markus elaborated on the condition of CPD fund by reporting to the attendees that funding was at a low-point of 26 percent as of 2014.
Markus presented the chart that appears on page 33, which shows the unfunded liability is primarily due to contributions being less than normal – read: fewer officers on the job – plus the investment rate of return dipping from 7.75 percent to 7.5
percent. In terms of real dollars, in 2014 $655.3 million was paid out but just $465.4 million came in.
32 CHICAGO LODGE 7 n FEBRUARY 2016
With that
download,
eyebrows
collectively
raised,
shoulders
collectively
shrugged
and atten-
dees collectively whispered, “What the...?”
From left, State Sen. Bill Cunningham, Vasyl Markus of the Center for Tax and Budget accountability and Alder- man Matt O’Shea address members at the Pension Sys- tem Town Hall Meeting.
What does it all mean, plain and simple?
“When we met with the City, the City attorney told me this,” announced Lodge 7 President Dean Angelo, who joined the Town Hall presenters. “Your father is 90 and a retired cop; he is OK. You are 60 years old; we’re not too sure. Your son (Dean, Jr. is also a cop) is screwed.”
After which, the crowd collectively wondered how it got to this point.
“For years, the mentality was, ‘we’ll worry about it tomorrow,’” Sen. Cunningham explained. “Everybody knew it was a ticking time bomb. People who knew it was their job to pay attention to it didn’t do their jobs.”
Officers in the “OK” category will get their pension benefits covered by a $500 million injection resulting from a 2011 law passed requiring the City to put such money into the fund. When discussion began on this payment, the mood was quickly tem- pered when Markus reminded that the $500 million is coming from a property tax increase on City homeowners.
Still, for a moment a feeling of hope spread through the crowd. A $500 million injection would be the start to get the fund to 43-percent funded by 2024 and provide some stability for the “not sure” officers. If that $500 million payment is made.
As Sen. Cunningham explained that the money is collected for 2015 taxes that are paid in 2016. Word is that the payment might not be fully made until the end of 2016.
“We think the payment needs to be made monthly so the pen- sion fund can earn the interest,” Markus advised. “As long as the market is going up and the economy is not tanking, the fund can chug along.”
Clearly, the people in the room came with interest in moving faster than chugging. What about a plan with dedicated funding sources, a revenue-generating plan that keeps the fund doing better each year than the previous year?
Well, the Illinois State Senate thought it had one in the form Senate Bill 777. SB 777 would change the terms of what the City