Pension reform needed to sustain cities

By Audrey Wise

August 6, 2013 Updated Aug 6, 2013 at 10:11 PM CDT

PEORIA, Ill -- Across the nation, city and state governments are watching Detroit's bankruptcy proceedings.

Part of Detroit's problem is years of underfunded pensions.

Illinois remains the state with most underfunded pension liability.

Meanwhile, Peoria Mayor Jim Ardis and City Manager Patrick Urich say Peoria is in a decent position compared to other local governments.

Urich said, "We have been very diligent about making sure we meet our pension obligations and pay those."

The city is at the lowest employment level in decades, but officials said the costs associated with those employees have skyrocketed.

Mayor Ardis said, "Over the last 9 years the amount of money that the city has to contribute towards fire pensions has increased 165%. The amount that the city has increased in police is 125%. That's not sustainable. I'm sure that had a lot to do with why Detroit went bankrupt."

All the money headed toward pensions takes a hit on city services.

"That has crowded out funding that we could have had for officers on the street, both for police and fire, for code enforcement workers, for public works employees," said Urich.

He adds, the three pension groups, police, fire and IMRF, are funded at around 70%. Experts recommend funding at 80% or higher and change is on the horizon.

"We are mandated for our police and fire pensions that by the year 2040, they would be 90% funded," said Urich.

Mayor Ardis said that will be a stretch.

The mandates come from the state and that's why Mayor Ardis said it is hard to fix at a local level.

"They are mandating we pay them money, which is easy to do," said Mayor Ardis. "I make the correlation of it would be nice if I could go out and use your credit card that you have to pay."

Mayor Ardis said Peoria is not on a path like Detroit, but could be if there isn't change in Springfield.

"Why Springfield, not just this year, but for years and years has pushed this down the road, literally costing the state hundreds of millions of dollars a day, why it can't be addressed is hard to fathom," he said.

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