Illinois’ municipal public safety pensions remain drastically underfunded, according to recent studies. The disparity shows no sign of abating, as municipal tax revenues that finance the pensions have fallen during the COVID-19 pandemic. Threatened with insolvency, pension trustees throughout the state may need to use the state’s powerful “pension intercept” law to obtain the needed revenue. The law lets trustees compel the Illinois comptroller to garnish a municipality’s state-based tax receipts and divert them to the pension fund.
An analysis by the Tax Foundation, a not-for-profit research group, compared the market value of Illinois’ pension fund assets to their accrued liabilities in fiscal year 2019 and arrived at a funding ratio of 39 percent — the second lowest in the nation. In addition, Illinois Department of Insurance pension data shows that 351 of the state’s 643 municipal pension funds did not receive their full contributions in that fiscal year.
Fiscal year 2019 was pre-COVID, and the release of newer data will likely darken the picture. The economic downturn that many localities experienced during the pandemic resulted in lower tax revenues, pushing underfunded pensions into even worse positions as local leaders directed available funds to other uses.
As the effects of the pandemic put further strain on municipal pension funds already depleted by decades of neglect, pension trustees may have no choice but to pursue intercept claims. Since 2015, pension funds in Chicago, East St. Louis, Harvey and North Chicago have used the intercept law to pursue payments. If you are a trustee of a public pension for firefighters, police or other municipal employees, it may seem surprising that you can demand that the state comptroller divert money into your fund. But the Illinois Pension Code grants that right, and with the right legal representation on your side, a successful claim is possible.
Our attorneys are prepared to help, having successfully handled the Harvey Firefighters’ Pension Fund lawsuit a few years ago. We are one of the few Illinois firms to maintain a specific focus on litigating pension intercept cases.
Based in Chicago, the lawyers of Schwartz & Kanyock, LLC have decades of experience representing municipal public safety pension funds. We are ready to advise your fund on what courses of action are available to help you obtain the funds your retirees need and deserve. We offer a no-obligation consultation, which you can obtain by calling 312-436-1442 or contacting us online.