Illinois should divert money from East St. Louis to fund police, pensions boards say
Editor's note: This story was originally published in the Belleville News-Democrat.
The East St. Louis Police and Fire Pension Boards plan to ask the Illinois comptrollerto seize state money allocated to the city government and use it to help fund their pensions.
The city government has not contributed to the pension funds since September. East St. Louis already had been behind in funding the pensions by millions of dollars when it stopped its contributions, officials said.
City Manager Robert Betts said intercepting roughly $7 million in state money and shifting it to the pension funds would be devastating for the city, triggering layoffs and cuts in services. “The city is bracing itself for the intercept,” he told the Belleville News-Democrat.
Pension board presidents said board members are tired of the city showing a lack of respect for the people who depend on pensions to live.
“It’s like they don’t care about our fiduciary duty to the recipients of the pension money,” said Nick Mueller, president of the Police Pension Board.
Johnny Anthony, president of the Firemen’s Pension Board, said his board recognizes the hardship the intercept would bring to the city, but they had no choice.
“We have an obligation to collect what is owed to the pension fund so we can take care of the beneficiaries who depend on us. The city knows this,” Anthony said.
East St. Louis Mayor Charles Powell III could not be reached for comment for this article.
The pension boards voted for the intercept at meetings last week.
The decision means they will formally ask Illinois Comptroller Susana Mendoza’s office to take money that would otherwise have been spent on payroll and city services in East St. Louis and use the money to fund retirement benefits.
This isn’t the first time the boards asked Mendoza to intervene.
In 2019, her office agreed to intercept state revenues and redirect them to fund the two pension funds. At the time, the city had fallen more than $2.2 million behind in contributions to the firefighter’s pension fund and $1.79 million to the retired police officers and their families, according to audits.
The intercept caused interruptions to city services, delayed the budgeted hiring of at least five new police officers and threatened the jobs of firefighters and operation of one of the department’s engine houses.
Issues withfunding the pensions continued even after the 2019 intercept.
Fire pension fund officials hope to collect $3.3 million in the new intercept, while the police pension fund would collect about $3.7 million, according to attorney Dennis Orsey, who represents both boards. The exact, certified amount of money the city owes to two pension funds for this intercept still has to be compiled by intercept attorneys who will represent each board separately.
Pension board officials said they have tried to work out the financial issues in talks with city officials, but the city has a track record of not keeping its word.
“Every time they make us promises, they don’t stand by their word,” Mueller said. `”Everybody on that board has a fiduciary duty to do what’s best for the retirees, widows, dependent children and everybody who is collecting a pension. If we don’t, we can be sued individually,”Mueller said. “What are we supposed to say to them?”
Orsey, the lawyer for both boards, said separate lawyers will represent each board for the intercepts. Rick Reemer will serve as the intercept attorney for the fire pension fund and Charles Atwell is the intercept attorney for the police pension fund.
As of Jan. 30, the fire pension fund had about $2.5 million in its account, he said.
“It pays out about $350,000 each month to 92 families who are counting on the pension,” Orsey said.
At that rate, the fire pension fund would run out of money in about seven months, without the intercept, Orsey said.
As of January, the police pension fund had about $20 million in its reserve account. The city’s failure to make contributions in October, November, December and January is “what triggered them to say they want to move forward with the intercept,” Orsey said.
Pension fund officials said the city has spent money on furniture and paid some substantial raises, yet have stopped contributing to the pension funds.
Betts said buying a desk or chair “here and there were no major expenses.” He also said employees were given across the board 3% raises for 2024, but in response to a BND reporter’s question, acknowledged that some received higher increases ``where they were warranted. There may be a few increases here and there as earned,” he said.
Regardless, Betts says the city simply cannot afford fully funding the pensions.
“We could spend a whole day discussing the who’s, the what’s, the why’s, the where’s, and the when’s. At the end of the day, this is where we are,” Betts said. “The city cannot afford to continue to pay in excess of $8 million a year in pension obligations. The city doesn’t have the revenue.”
Betts said the good news is that in 2025 the state of Illinois will start managing the pension funds. “Hopefully they can make some good investments so we won’t have this problem going forward,” Betts said.
In the meantime, Betts said the intercept will mean cuts across all departments in the city. The Police Department is one of those departments, and it already doesn’t have enough officers. But public safety will remain paramount, he said.
“Illinois State Police may be asked to step up and do more. The St.Clair County Sheriff’s Department may be asked to help, too,” Betts said.
Now that the pension boards have voted to move ahead, the city will receive an official notice from the intercept attorneys. Then a hearing date will be set, with the intercept attorneys, each board and city representatives, plus a court reporter present.
The purpose of the hearing will be to certify the underfunded amounts in each pension fund. The transcripts of the hearing and other documentation will be sent to the state comptroller for her review.
The comptroller will then notify the city the official dollar amounts due and when the intercept will begin.
This means any state dollars that flow through the comptroller’s office for the municipality during this intercept will be redirected into the pension funds.
Asked for a guesstimate of when the intercept would probably start, Orsey was not sure, but said possibly May or sooner.
Carolyn P. Smith is a reporter with the Belleville News-Democrat, a news partner of St. Louis Public Radio.