Ill. Fire Pension Board votes to seize $2.3M owed by city

The East St. Louis Fire Pension Board voted unanimously to recover nearly $2.3 million in mandated payments from the city through an “intercept procedure"


By Carolyn P Smith
Belleville News-Democrat

EAST ST. LOUIS — Since East St. Louis was freed of oversight from the Illinois Financial Authority in 2013, the city has fallen nearly $2.3 million short in mandated payments to the fund that supports firefighters and their families in retirement, according to an audit.

The East St. Louis Fire Pension Board on Monday voted unanimously to recover those contributions from the city through an “intercept procedure,” in which it would petition Illinois Comptroller Susana Mendoza’s office to seize state payments to the city and deposit them directly to the pension funds.

According to the 2018 audit by Alton accountant C. J. Schlosser, the city owed $3,358,997 to the fire pension fund, but paid just $2,029,232. The funding shortfall in 2017 was nearly $900,000, the audit states. (Photo/Pixabay)
According to the 2018 audit by Alton accountant C. J. Schlosser, the city owed $3,358,997 to the fire pension fund, but paid just $2,029,232. The funding shortfall in 2017 was nearly $900,000, the audit states. (Photo/Pixabay)

As a result, East St. Louis could see agencies like the police and fire departments without money for daily operation.

According to the 2018 audit by Alton accountant C. J. Schlosser, the city owed $3,358,997 to the fire pension fund, but paid just $2,029,232. The funding shortfall in 2017 was nearly $900,000, the audit states.

Audits from other years are not yet completed.

East St. Louis Fire Pension Board President Johnny Anthony, a retired firefighter, said the board and firefighters union “have exhausted all means of dealing with the city” to recover the funding shortfall and have been left with no choice but to petition the state for the intercept procedure.

“There are 89 people currently feeding off the fund — 41 of them are retirees, 10 are disabled, 36 are spouses of firemen, and two are minor dependents,” Anthony said. “It takes $3.5 million a year to fund the pension fund.”

As it stands, Anthony says the fund has enough money to sustain its retirees for between a year to 18 months, depending on how the money is invested and how those investments perform. Currently, the fund has about $5 million.

Once it is submitted, the Illinois Comptroller’s office will have 60 days to review the pension board’s intercept application, certify the funding shortfall and review any challenge that may come from the city.

Politics, turnover have contributed to the problem

Dennis Orsey, the attorney for the firefighter’s pension board, estimated the pension board could begin receiving intercepted state funding as soon as mid to late December.

Orsey said negotiations with the city to fully fund the pensions have been complicated by turnover at East St. Louis City Hall.

“We’ve had multiple meetings with multiple members of different administrations (including) six city managers in the last four years and three different mayors. We have been unable to reach an agreement to allow the funds to be properly funded,” he said. “For 25 years, when the state financial authority was in place, both the firemen’s and policemen’s pension funds were funded properly. When the State Financial Authority left in (2013), the city immediately started falling behind in payments to both funds.”

In the early 1980s and into the 90s, the firemen’s and police pension funds in East St. Louis were underfunded as the city confronted piles of debt. The Illinois Legislature appointed the Financial Advisory Authority to oversee the finances until it balanced its budget for 10 consecutive years. It maintained its oversight for 23 years before disbanding in December 2013.

In that time, records showed, the city kept up full and timely payments to its pension funds.

By 2015, it had fallen behind once again. Both fire and police pension boards filed lawsuits against the city in St. Clair County Court. Those never went to litigation.

East St. Louis Mayor Robert Eastern III said he understands the board’s decision to pursue the intercept, but would not comment on other possible funding solutions until the city completes its own audits.

“The problem wasn’t created overnight and it won’t be fixed overnight,” he said. “We are trying to get it rectified as soon as possible. … Once those audits are finished, it will give us deeper latitude to get into deeper negotiations with the people who want to help us.”

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©2019 the Belleville News-Democrat (Belleville, Ill.)

McClatchy-Tribune News Service

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