K-12 Tax & Spending Climate: Harvey, the first domino in Illinois: Data shows 400 other pension funds could trigger garnishment

Ted Dabrowski and John Klingner:

You’d be mistaken to think Harvey, Illinois has a unique pension crisis. It may be the first, and its problems may be the most severe, but the reality is the mess is everywhere, from East St. Louis to Rockford and from Quincy to Danville. A review of Illinois Department of Insurance pension data shows that Harvey could be just the start of a flood of garnishments across the state (click here to see the list).

Harvey made the news last year when an Illinois court ordered the municipality to hike its property taxes to properly fund the Harvey firefighter pension fund, which is just 22 percent funded.

Now, the state has stepped in on behalf of Harvey’s police pension fund. The state comptroller has begun garnishing the city’s tax revenues to make up what the municipality failed to contribute. In response, the city has announced that 40 public safety employees will be laid off.

Under state law, pensions that don’t receive required funding may demand the Illinois Comptroller intercept their municipality’s tax revenues. More than 400 police and fire pension funds, or 63 percent of Illinois’ 651 total downstate public safety funds, received less funding than what was required from their cities in 2016 – the most recent year for which statewide data is available.

Two-thirds of Illinois’ 355 police pension funds failed to receive their full required contribution in 2016. And 60 percent of Illinois’ 296 firefighter pension funds suffered the same fate.

If those same numbers continue to hold true, all those cities face the risk of having their revenues intercepted by the comptroller.

“Unsustainable”; Madison spent 25% of its K-12 budget on benefits in 2014-2015. Spending has continued to grow since, now approaching $20,000 per student.