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Chicago Police and Fire Pension Trustees Seek to Intercept Funds

For years, local governments in Illinois have had trouble balancing their budgets. Several struggling local governments have either failed to make public pension fund contributions, or paid far less than what they owe. The shortfall creates financial problems for the police and firefighter pension funds, and may threaten the livelihoods of retirees. Until recently, police and firefighter pension funds had little recourse, because Illinois’ collection law does not typically allow the seizure of government assets to satisfy debts.

Changes to Illinois’ Pension Code in 2015 let police and firefighter pension fund trustees intercept monies otherwise due from the State to the delinquent government body, and to force the State Comptroller to pay those monies to the pension funds. Fund trustees from the cities of Harvey and North Chicago have already pursued payment under the pension-intercept law. More recently, Chicago’s police and firefighter funds have also initiated claims. Though Chicago’s tax revenues far exceed what is collected by smaller cities, shortfalls of several million dollars occurred in 2016 and 2017.

Following a similar 2018 action by the fireman’s fund, the Policemen’s Annuity and Benefit Fund of Chicago brought an intercept claim in January 2019. Trustees and beneficiaries of other Illinois public pension funds considering such claims should be aware of these key elements:

  • Mandamus actions —Under the new law, the Chicago police and fire pension funds can file lawsuits in the Circuit Court of Cook County to compel government officials to perform required duties.
  • Chicago contributions — Other legislation specifically requires Chicago to make contributions to the pension funds of the city’s public safety funds.
  • Reduced tax revenue — City authorities and attorneys for the police fund disagree over whether they must make the additional payments to the pension fund because tax revenues fell short of the amount levied.

We expect the number of pension-intercept proceedings to increase dramatically over the next few years. Many Illinois Municipal governments have tried to paper over budget gaps by diverting tax revenues owed to retired pensioners and their families. Now, trustees have the necessary tools to protect the retirements of current and former police officers, firefighters and other municipal workers.

Schwartz & Kanyock, LLC advises trustees of Illinois public pension funds on intercept claims and related litigation. To schedule an appointment at our office in Chicago, please call 312-436-1442 or contact us online.

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