Mayor Koos: Fire Pension Changes Erase Previous Savings
Normal Mayor Chris Koos said lawmakers helped with fire and police pension funding a couple years ago, but it now appears, they neutralized part of the benefit from the action.
Koos said a pension sweetener for firefighters will increase what cities and towns must contribute to pensions.
“What happened is the legislature took firefighters who are in what's called a Tier-II pension system and moved them into the old Tier-I pension system," Koos said on WGLT's Sound Ideas.
Koos said this is not a knock on the value of firefighters at all, but it does present a challenge for cities and towns to adequately fund pension plans. Those mandated contributions are ramping up for many municipalities as a 2040 deadline approaches to achieve 90% adequacy of funding.
Municipalities had looked to earlier legislative action that combined all fire and police pension funds in the state to provide some relief from the ramp-up in payments. Experts predicted that move would increase investment returns and administrative efficiency when it takes effect in 2022.
Koos said that benefit is now not likely to become a reality because of the Tier-II to Tier-I transfer.
"Early indications are that it pretty effectively wipes out any savings we would have gained from doing that consolidation," said Koos, adding lawmakers can do what they want, and cities have to pay for it.
Koos said the state is considering extending the deadline to reach 90% funding adequacy by 10 years — until 2050 to give cities some breathing room.
He also said improvement in rates of return on investments help. He said adequacy models are predicated on 7.5% annual returns and in recent years averages have been more like 5.5%
If you have more than 2,000 workers at an auto plant, some of them are going to need rides to work. Koos said that's why Rivian is talking with Connect Transit about extending bus service out to the plant.
"Connect Transit realizes there is an interest and a demand at Rivian, so they are now going through the exercise of what that looks like. What kind of service can they realistically support going out there with that population," said Koos.
Koos said having a regular fixed route service to the plant is complicated by the fact that workers at the plant might need to be there before or after regular Connect Transit service hours. Some workers need to get to the plant about 6 a.m., about the same time Connect Transit starts running. And some workers leave after the buses stop running for the night.
Koos said one of the options under discussion is a special shuttle.
"I think they're going to look at both options. There has been talk of a shuttle that is tied to shift changes," said Koos.
Rivian's plans call for up to double the current workforce by the end of 2022.
Editor's note: This story has been changed to reflect an error by Mayor Koos. The Tier II to Tier I transfer affected only firefighters, not police, Another change reflects that the impact of the transfer in 2019 is only now becoming clear, not that the General Assembly acted this year.