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MAYORS REPORT 03/04/2008 PROCLAMA TION WELCOME CONSUL GENERAL OF FRANCE JEAN-BAPTISTE de BOISSIERE WHEREAS, the Village of Mount Prospect is honored to welcome Jean-Baptiste de Boissiere to our community; and WHEREAS, Mr. de Boissiere is a career diplomat who has held several posts dedicated to public policy and foreign and economic affairs; and WHEREAS, Mr. de Boissiere is an accomplished writer who authored "La Nouvelle Frontiere de la Technologie Europeene" (The New Frontier of European Technology); and WHEREAS, since February 9, 2007, Mr. de Boissiere has served as the Consul General of France to Chicago, Illinois; and WHEREAS, the Mount Prospect Public Library joins the Mount Prospect Sister Cities Commission in hosting an evening with Mr. de Boissiere, to share his cultural and political insights of France, one of America's oldest allies; and WHEREAS, since 2000, the Village of Mount Prospect has greatly enjoyed and benefited from a Sister City relationship with Sevres, France; and WHEREAS, the cultural exchanges between the City of Sevres and the Village of Mount Prospect have enriched both communities and it is our mutual goal to offer community events to further strengthen the bond of friendship and understanding between our cities and nations; NOW, THEREFORE, I, Irvana K. Wilks, Mayor of the Village of Mount Prospect, do hereby proclaim Tuesday, March 4, 2008 as "JEAN-BAPTISTE DE BOISSIERE DA Y" in the Village of Mount Prospect, and on behalf of all residents thank Mr. de Boissiere for generously sharing his knowledge and insights of his beautiful homeland with our community. Irvana K. Wilks Mayor ATTEST: M. Lisa Angell Dated this 4th day of March 2008. , l\10111lt Prospect INTEROFFICE MEMORANDUM Village of Mount Prospect Mount Prospect, Illinois TO: VILLAGE MANAGER MICHAEL E. JANONIS -Sb. ~1'l 3/~1 FROM: ASSISTANT VILLAGE MANAGER Purpose: DATE: FEBRUARY 14,2008 SUBJECT: PUBLIC SAFETY PENSION REFORM RESOLUTION To secure approval of a resolution by the Village Board endorsing the efforts of the Illinois Municipal League and Northwest Municipal Conference to recognize and address the continuing escalation of public safety pension expenses. Discussion: In the Village Board meeting packet is a resolution proposed by the Illinois Municipal League (IML). IML and several Councils of Government, including the Northwest Municipal Conference (NWMC) have undertaken public safety pension reform as part of their respective legislative initiatives for the 2008 General Assembly legislative session. This initiative was undertaken in response to unrelenting benefit enhancements to the public safety pensions through mandates imposed upon the municipalities by the Illinois General Assembly. Many municipalities are under significant financial strain due to the increase in pension costs attributable to the decline in the percentage of pension funding levels. For example, it has been shown in the pension study undertaken by the IML that the decrease in funding levels are due to the financial impact of the pension enhancements and the limited amount on the return on investment. Police and fire pensions as well as the Illinois Municipal Retirement Fund (IMRF) pensions are defined benefit programs in which retiring employees are guaranteed a specific pension at the time of their retirement. Defined benefit pensions are uniquely expensive without the repeated enhancements and the enhancements have been limited to the police and fire pensions. The General Assembly has yet another set of pension enhancement bills already introduced in the upcoming legislative session that will further strain municipal budgets. The overwhelming majority of the additional funding for these enhancements as well as all the past enhancements fall to the municipalities and not to the employees. Employees should in fact have increased contribution amounts to assist in the additional funding demanded. j;:J PUBLIC SAFETY PENSION REFORM RESOLUTION February 14, 2008 Page 2 Mount Prospect has not been immune from these financial burdens; however, the Village has retained its actuarial pension contribution sometimes at the expense of other general fund obligations so that it will not fall behind the necessary funding levels, other communities have not been able to retain that level due to financial circumstances. Mount Prospect continues to contribute more and more as a percentage of the property tax levy toward public safety pensions which has grown 25% in the last 5 years. Attached are the following items for your information: 1. Press release drafted to accompany the resolution. 2. Historical Mount Prospect police and fire pension cost summaries provided to the IML. 3. Reform initiatives packet from IML outlining the components of the proposed legislation. 4. Recommended talking points on the pension crisis. 5. Summary of the current number of pension enhancement legislation that has been introduced in the General Assembly to date. 6. Copy of the IML pension study. 7. Copy of the NWMC pension study. Recommendation: Staff is recommending the approval of the public safety pension reform resolution and is encouraging elected officials to utilize the attached information in discussions with constituents and the press. -: I:> ......-.J 'StLP David Strahl C: Finance Director David Erb H:\HUMR\Pensions\VB Cover Memo Public Safety Pension Reform.doc ~' .' RESOLUTION NO. A RESOLUTION URGING THE GENERAL ASSEMBLY TO: 1) STOP MAKING COSTLY BENEFIT IMPROVEMENTS; and 2) ADOPT REFORMS THAT PROTECT POLICE AND FIRE PENSIONS WHEREAS, the Illinois police and firefighter pension funds are facing uncertainty and financial crisis is developing; and WHEREAS, generous retirement and disability benefits have caused the funds to incur escalating debt that threatens their long-term sustainability; and WHEREAS, the Illinois General Assembly has continued to add to the growing costs of these pension funds through increasing benefits without providing additional revenues; and WHEREAS, benefit increases in recent years have contributed to a doubling of the debt carried by police pension funds from 1999-2004; and WHEREAS, the amount of debt carried by police pension funds as of 2004 reached $179,958 per active police officer and the amount of debt carried by firefighter pension funds reached $176,845 per active firefighter; and WH~REAS, there is no certainty that the current benefit levels are sustainable by municipalities for the existing and improved benefits; and WHEREAS, local taxpayers are ultimately financially responsible for the growing pension obligations and will invariably be expected to pay those costs; and WHEREAS, the General Assembly embraces sensible pension reforms in the areas of ethics reform, professionalization of fund management, public sunshine and disclosure of pension board activity, conflict- of-interest restrictions, accountability measures, improve cost impact analysis, meaningful regulation and enhanced local government funding authority. NOW, THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS: SECTION ONE: The President and Board of Trustees urge the General Assembly to stop approving new and increased pension benefits for the police and fire pension funds. SECTION TWO: That this Resolution shall be in full force and effect from and after its passage and approval in the manner provided by law. AYES: NAYS: ABSENT: PASSED AND APPROVED this 19th day of February 2008. Irvana K. Wilks Mayor ATTEST: M. Lisa Angell Village Clerk U.\r'" Vr'\\&:I...._\\^II...I\Dr::C'\_....__..._I_____Io.I~.&_.......,nnD ........... Summary of Mount Prospect Police and Fire Pension Funds Municipality Contact Name Contact Phone Mount Prospect David Erb 847-818-5276 Do tax caps prevent you from extending entire pension levy? INO I If so, denote which pension funds are impacted: NIA I TABLE 1: Total Municipal Police and Fire Pension Levies Fiscal Total Tax Total Police % of Total Levy Total Fire % of Total Levy Total of Public Safety % Public Safety Year Levy (1) Pension Levy for Police Pension Levy for Fire Pension Levies Levies 1999 $9,803,695 $594,698 6.07% $586,687 5.98% $ 1,181,385 12.05% 2000 $10,146,824 $723,084 7.13% $575,184 5.67% $ 1,298,268 12.79% 2001 $10,621,831 $744,090 7.01% $818,657 7.71% $ 1,562,747 14.71% 2002 $11,010,747 $874,653 7.94% $919,676 8.35% $ 1,794,329 16.30% 2003 $11,539,756 $918,385 7.96% $965,660 8.37% $ 1,884,045 16.33% 2004 $12,093,913 $964,304 7.97% $1,013,943 8.38% $ 1,978,247 16.36% 2005 $13,175,689 $1,284,363 9.75% $1,194,264 9.06% $ 2,478,627 18.81% 2006 $13,506,574 $1,359,949 10.07% $1,328,051 9.83% $ 2,688,000 19.90% 2007 $14,014,838 $1,436,591 10.25% $1,417,630 10.12% $ 2,854,221 20.37% (1) Entire levy including debt service and pensions Note: If you do not collect a separate levy for anylall of these funds, please leave blank and note here I I TABLE 2: Total Pension Contribution per Eligible Employee (2) Total Police # Police Total Contribution Total Fire # Fire Total Contribution Fiscal Pension Pension Eligible per Eligible Police Pension Pension Eligible per Eligible Fire Year Contribution Employees Employee Contribution Employees Employee 1999 $432,016 77 $ 5,611 $313,560 66 $ 4,751 2000 $428,509 77 $ 5,565 $345,558 64 $ 5,399 2001 $483,648 81 $ 5,971 $374,177 66 $ 5,669 2002 $522,165 81 $ 6,446 $392,160 70 $ 5,602 2003 $561,374 81 $ 6,931 $398,710 68 $ 5,863 2004 $564,435 82 $ 6,883 $443,945 69 $ 6,434 2005 $592,553 81 $ 7,315 $487,357 68 $ 7,167 2006 $679,066 83 $ 8,182 $531,320 68 $ 7,814 2007 $643,372 84 $ 7,659 $542,348 69 $ 7,860 (2) Use pension contribution amounts listed in CAFR TABLE 3: Pension Systems Funded Ratios (3) Police Pension Plan Fire Pension Plan Fiscal Actuarial Value Actuarial Accrued Unfunded Funded Actuarial Value Actuarial Accrued Unfunded Funded Year of Assets Liability Liability Ratio of Assets Liability Liability Ratio 1999 $28,560,329 $31,000,360 $2,440,031 92% $30,780,183 $32,607,061 $1,826,878 94% 2000 $28,700,234 $33,235,857 $4,535,623 86% $30,091,010 $34,633,217 $4,542,207 87% 2001 $31,121,189 $35,835,766 $4,714,577 87% $32,486,604 $37,613,473 $5,126,869 86% 2002 $31,396,220 $38,213,704 $6,817,484 82% $33,085,014 $39,140,700 $6,055,686 85% 2003 $30,916,536 $41,058,866 $10,142,330 75% $33,182,657 $41,445,957 $8,263,300 80% 2004 $33,520,535 $43,278,648 $9,758,113 77% $35,111,866 $44,537,550 $9,425,684 79% 2005 $35,616,429 $47,837,706 $12,221,277 74% $36,729,420 $46,613,979 $9,884,559 79% 2006 $37,284,535 $50,333,889 $13,049,354 74% $38,091,422 $49,825,274 $11,733,852 76% 2007 $40,084,648 $53,166,244 $13,081,596 75% $40,166,884 $52,357,613 $12,190,729 77% (3) Utilize data from CAFR: Required Supplementary Information - Schedule of Fudning Progress for both plans Table 4: Historical Rate of Return on Investments 5 Year 8 Year Goal 8.00% 8.00% Police 8.80% 7.00% Fire 7.70% 6.80% IMRF 9.80% 8.20% 10.50% 10.00% 9.50% 9.00% 8.50% 8.00% 7.50% 7.00% 6.50% 6.00% 5.50% 5.00% Note: Goal for Police & Fire Pensions only Note: Actuarial Assumption for IMRF is 7.5% Historical Rate of Return on Investments 5 Year 8 Year DGoal . Police . Fire DIMRF 12.00% 10.00% >- > j 8.00% iU - o l- e 6.00% - c Ql lJ .. ~ 4.00% Summary of Mount Prospect Police and Fire Pension Funds Change in Annual Police and Fire Pension Tax Levy as Percent of Total Tax Levy 2.00% 0.00% 1999 2000 2001 2002 2003 Year 2004 2005 2006 2007 -+- Police --- Fire Summary of Mount Prospect Police and Fire Pension Funds Annual Municipal Pension Contribution per Eligible Employee $9,000 Gl $8,000 Gl >- 0 $7,000 C. E W $6,000 Gl :c .~ $5,000 jjj ... $4,000 Gl Q. >- $3,000 > Gl ...J IV $2,000 - 0 I- $1,000 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year -+- Police -Fire Summary of Mount Prospect Police and Fire Pension Funds "C ell "C C :::::I u.. - C ell (J ... ell a.. III "C C :::::I u.. C o "iij C ell a.. 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 1999 2000 Change in Pension System Funded Ratios 2001 2002 2003 Year 2004 -+- Police -Fire 2005 2006 2007 REFORM INITIATIVES Downstate and Suburban Police and Fire Pension Plan Approved By: IML Board of Directors MEMORANDUM PENSION REFORM INITIATIVES RAISING AWARENESS The Illinois Municipal League, working under the guidance of its Managers Committee, published a first-of-its-kind pension study in February of 2007 entitled "Fiscal Analysis of the Downstate Police, Fire and IMRF Pension Systems." Prior to formally releasing the study, the League presented drafts to other interested municipal parties, including the various Councils of Government (COGS) and Statewide Regional Municipal Associations (SRMA). These organizations were asked to review the draft and issue suggestions that might enhance the final product. Some of those recommendations were included within the final draft. With the final, published product in hand, League staff began a campaign to unveil the study to a mass audience. The first formal presentation was given at the February meeting of the Illinois City/County Management Association (lCMA). Subsequently, the League was jointly hosted by the Northwest Municipal Conference and the DuPage Mayors and Managers Association for a presentation. The Will County Governmental League, Southwest Conference of Mayors and Northwest Municipal Association also invited League staff to present the findings of the study. Besides presenting to these various groups, League staff was also invited by the cities of Rock Island, Moline and East Moline to present the findings to the local chamber of commerce as well as the editorial board of the Moline Dispatch. This led to the first article written about the declining condition of police and fire pension funds. The Springfield State Journal-Register, a major newspaper covering state government in Illinois, followed with an article about the problems attendant upon these pension funds, particularly the condition of the Springfield funds. In May of 2007, the League was contacted by a contributor to Governing Magazine, a national magazine written for government professionals. This contributor had read "Fiscal Analysis" and incorporated the study into a May 2007 article about the high cost of runaway disability benefits among public safety employees. League staff also attended a community dialogue hosted by City Manager Bob Kiely in Lake Forest during which the state of the pensions systems was discussed. In addition to responding to invitations and meetings set-up by COGs, SRMAs and individual municipalities, the League issued copies of the study to each state legislator shortly after publication. Studies were also mailed to news outlets throughout the state and made available in electronic form on the IML website. PROPOSALS FOR REFORM One of the questions often asked as the study was unveiled regarded what particular solutions should be proposed to begin rectifying the pension funding dilemma. There developed a growing intent to formulate these solutions. The IML Board of Directors and the IML Managers Committee believe the time has come to begin proposing some reasonable solutions in a co-operative manner. The nine reform proposals included with this memorandum are the result of IML Managers Committee deliberations on strategies for reforming the Article 3 (police) and Article 4 ( fire) pension funds. In deciding upon these proposals, the Managers Committee was guided by two overriding questions: I) what proposals would bring about meaningful change; and 2) what proposals are realistic in a political sense. The managers decided upon a legislative package that seeks to accomplish the following goals: ethics reform, greater public awareness, improved information quality, meaningful regulation, verification and greater funding authority. The proposals have been drafted into legislation in the form of one, comprehensive package. MOVING FORWARD TOGETHER Joined by the Chairman of the IML Managers Committee, League staff has had occasion to take the nine proposals before the IML Board of Directors. The Board has approved these reforms. Any success in incorporating all or some of the reforms into law will involve the maximum effort and attention by the wider membership. The intention is for the pension reform package to become a priority for all municipalities with police and/or fire pension funds. Municipal officials will be asked to persuade their legislators to sign up as sponsors of the reforms. Obtaining grassroots support for the package will be essential to successful passage. 1. 2. 3. 4. 5. 6. 7. 8. 9. Require state-funded fiscal impact assessments on 25-50 selected municipalities before any proposed pension legislation can move beyond the committee stage. Additionally, fiscal notes should be enhanced to provide more specific data regarding fiscal Impact. Exempt the pension levies for publiC safety pensions from PTELL. Restrict the ability of a fiduciary to knowingly cause or advise the fund to engage in an investment transaction when the fiduciary has any direct Interest In the Income, gains or profits of the Investment advisor through which the Investment transaction Is made or has a business relationship with the Investment advisor that would result in a pecuniary benefit to the fiduciary as a result of the Investment transaction. Establish minimum standards for investment, actuarial and other professional services utilized by the pension funds. Reform the Illinois Department of Financial and Professional Regulation by adding additional staff to provide improved service to pension funds and municipalities. Improved services could Include additional and more frequent fund audits and an analysis of fund Investment performance. Anti-fraud disability measures to ensure that disability benefits are only received by those deserving of them. Municipal right-of-interventlon in all pension decisions - both retirement and disability awards. All benefit awards must be referred to the city and await calculation verification before the award can be disbursed. Require pension boards to fund an annual publication In local newspapers making public the financial status and benefit awards of the municipal police and fire pension funds. A state agency should be assigned the task of publishing a comprehensive and detailed biennial report on the financial health of the Article 3 and Article 4 pension funds. ?nnJl ILLINOIS MUNICIPAL LEAGUE RECOMMENDED TALKING POINTS Statements on Pension Funding Prohkm .:. Express a sincere concern about current pension benefits for police officers and firefighters. .:. Mention that funding levels are declining for police and fire funds around the state- particularly over the last several years. If nothing is done, there could be a full-blown crisis. .:. Point out that the police and firefighter funds are carrying more debt when adjusted for fund size than the State Employees Retirement System or the Teachers Retirement System. .:. Discuss the funding level of your municipal police and fire pension funds and how it is impacting your municipal budget. Talk about those programs being affected. Note any percentage increase in funding. Convey the percent of your property tax levy that goes to fund police and fire pensions. Note the cost per active employee. .:. Express concern that the taxpaying public is unaware of the funding problems among the police and firefighter pension funds. Add that the public is entitled to full disclosure about the problem and how it impacts each community. .:. State that the General Assembly needs to stop passing new and increased pension benefits that further strain municipal budgets and increase taxes on residents. Police and firefighters are eligible for a maximum pension of75% of salary after 30 years of service. This is better than either the Illinois Municipal Retirement Fund (IMRF) or the State Employees Retirement System (SERS). Illinois has the 7th most generous 30-year annual pension benefit when compared among 50 comparable police and fire pension plans throughout the nation. Statements Supporting P('nsion Reform Legislation .:. Municipal officials, police and fire employees and taxpayers should fully support basic, common sense efforts to begin improving the fiscal health of the police and firefighter pension funds. .:. There needs to be an improvemetlt in the accountability of the police and fire pension funds. There is no intention to take away or reduce any benefits. More accountability will protect current benefit levels. .:. Financial information about the pension funds should be made available to the general public each year through newspaper publication. .:. Conflicts-of-interest between pension service providers and each pension fund should be eliminated. Service providers should also meet minimum credentialing standards. .:. Better services are needed from the Illinois Department of Financial and Professional Regulation. Pension fees paid by municipalities to the state have quadrupled in recent years. Instead of going toward better services and regulation, they have been used to help balance the state budget. The staff regulating the police and fire funds has been cut severely. Each fund is not being formally audited on a timely basis. The state is not overseeing or regulating investments made by each police and fire fund. The state needs more pension staff and each fund needs a formal audit every three years. .:. Police and firefighter pension funds have no statutory anti-fraud protections. The same anti-fraud provisions used for workers compensation claims need to be applied to disability pension claims. .:. The General Assembly controls the pension benefit levels which effect how much municipalities must contribute to keep the funds solvent. It is only reasonable that the General Assembly should therefore exempt pensions from tax caps to give non-home rule municipalities a better chance at keeping up with the funding requirements. .:. Municipalities used to have the right to appear before police and firefighter pension boards to provide evidence that might contradict a disability claim. The right was taken away by the courts. It needs to be restored by the General Assembly. .:. Municipalities should be allowed to double-check the pension benefit calculation made by police and firefighter pension funds before any benefits are paid. Basic mathematical errors need to be identified and fixed. .:. The General Assembly needs actual data on how a pension bill will financially impact several individual municipalities before voting on any pension legislation. Right now legislators only look at statewide cost averages. Cost averages don't tell the true story. 2008 Public Safety Pension and Disability Legislation House Bills House Bill 4609 (Sacia) Police Dispatchers Transfer to Police Pension Amends the Downstate Police Article of the Illinois Pension Code. Provides that, beginning on the effective date of this amendatory Act, "police officer" or "officer" includes any person who is employed as a police dispatcher. Allows a police dispatcher to transfer creditable service under the Illinois Municipal Retirement Fund Article to his or her pension fund under the Downstate Police Article. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately. House Bill 4627 (Leitch) Firefighter Pension Contribution Amends the Downstate Firefighter Article of the Illinois Pension Code. Increases the percentage of salary each firefighter shall contribute to the pension fund towards the cost of his or her pension from 6.955% of salary to 9.91% of salary. House Bill 4644 (Moffitt) Firefighter Pension Increase Amends the Downstate Firefighter Article of the Illinois Pension Code. Provides that, in January 2009, the monthly pension of a firefighter who retired before July 1, 1971 shall be recalculated and increased to reflect the amount that the firefighter would have received in January 2009 had the firefighter been receiving a 3% increase for each year he or she received pension payme,nts. In each January thereafter, provides that he or she shall receive an additional increase of 3% of the amount of the pension then being paid. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately. House Bill 4652 (Leitch) 40- Year Firefighter Pension Recalculation Amends the Downstate Firefighter Article of the Illinois Pension Code. In provisions concerning the financing, provides that the annual actuarial requirements of the pension fund are equal to (1) the normal cost of the pension fund, or 17.5% of the salaries and wages to be paid to firefighters for the year involved, whichever is greater, plus (2) the annual amount necessary to amortize the fund's unfunded accrued liabilities over a period of 40 years from July 1, 2008 (was, from July 1; 1993), as annually updated and determined by an enrolled actuary employed by the Department of Financial and Professional Regulation (was, the Illinois Department of Insurance) or by an enrolled actuary retained by the pension fund or the municipality. Effective immediately. House Bill 4682 (Moffitt) Pension Levy Exempt from PTELL Amends the Property Tax Extension Limitation Law in the Property Tax Code. Exempts, from the definition of "aggregate extension", all contributions to a pension fund created under Article 3, Article 4, or Article 7 of the Illinois Pension Code. Effective immediately. House Bill 4689 (Moffitt) On-Call Firefighter Service Credit Amends the Downstate Firefighter Article of the Illinois Pension Code. Allows a firefighter to establish creditable service for up to 3 years of service as an on-call firefighter at the rate of one year of creditable service for each 5 years of time spent as an on-call firefighter for a municipality, township, fire district, or volunteer firefighter association. Requires the employing municipality to consent to the establishment ofthe creditable service and the payment of employee contributions. Provides that "on-call firefighter" includes any firefighter, whether or n~~~ 1 ~+' c:. 2008 Public Safety Pension and Disability Legislation not he or she is compensated, who is not qualified to participate in a pension fund established under the Code in that capacity. Amends the State Mandates Act to require implementation without reimbursement. House Bill 4690 (Moffitt) Catastrophic Injury Definition Amends the Public Safety Employee Benefits Act. Defines "catastrophic injury" as consequences of an injury that permanently prevent an individual from performing any gainful work. Effective immediately. House Bill 4855 (Saviano) Retroactive Firefighter Pension Increases Amends the Downstate Firefighter Article of the Illinois Pension Code. Provides that a firefighter age 48 or older with 30 or more years of creditable service who is no longer in service as a firefighter shall receive a monthly pension of75% of the monthly salary attached to the rank held by him or her in the fire service at the date of retirement. Amends the State Mandates Act to require implementation without reimbursement. House Bill 4891 (Dugan) Firefighter Pension Fund Investments Amends the Illinois Pension Code. Gives downstate firefighter pension funds the same investment authority as all of the other retirement systems and pension funds (excluding downstate police pension funds) under the Code. Removes references to downstate firefighter pension funds in various provisions regarding investment authority that were formerly applicable only to downstate police and downstate firefighter pension funds. Requires the board of trustees of a downstate firefighter pension fund to appoint investment advisers (was discretionary). Amends the State Mandates Act to require implementation without reimbursement. House Bill 4897 (Smith) Firefighter Pensions to 80% Amends the Downstate Firefighter Article of the Illinois Pension Code. Provides that the monthly pension shall be increased by 1/12 of2.5% of the monthly salary attached to the rank held by him or her in the fire service at the date of retirement for each additional month over 20 years of service through 32 (was, 30) years of service, to a maximum of 80% (was, 75%) of such monthly salary. Amends the State Mandates Act to require implementation without reimbursement. House Bill 4904 (Beaubien) Public Safety Pension Reform Amends the Pension Impact Note Act. Requires that a pension impact note for legislation affecting downstate police and downstate firefighter pension funds must demonstrate the fiscal impact of the legislation on at least 25 municipalities with the pension funds. Amends the Illinois Pension Code. Makes changes concerning prohibited transactions by fiduciaries of a pension fund established under the Downstate Police or Downstate Firefighter Article (Article 3 or 4), examinations of pension funds, and witnesses and adds provisions concerning consulting services, prohibitions on gifts for members of a board of trustees of a pension fund established under Article 3 or 4, fraudulent claims for disability pensions by police officers and firefighters, award of benefits, publication of a notice regarding the fiscal status of a pension fund established under Article 3 or 4, and a report by the Commission on Government Forecasting and Accountability on pension funds established under Article 3 or 4. Makes other changes. Amends the State Mandates Act to require implementation without reimbursement. Page 2 of5 2008 Public Safety Pension and Disability Legislation House Bill 4905 (Beaubien) Public Safety Pension Reform Same as House Bill 4904, only without PTELL exemption. House Bill 4957 (May) Public Safety Pension Investments Amends the Illinois Pension Code. In provisions concerning permitted investments for pension funds with net assets of $5,000,000 or more, (i) removes provisions requiring that securities are of a corporation created or existing under the laws of the United States or any state, district, or territory thereof and that the issuer of the stocks has been subject to the requirements of Section 12 of the federal Securities Exchange Act of 1934 and has been current with the filing requirements of specified Sections of that Act during the preceding 3 years and (ii) increases the maximum percentage of the market value of the pension fund's net present assets in certain investments from 35% to 50% if the fund utilizes an investment management consultant or an investment manager. Effective immediately. House Bill 4991 (Hannig) Firefighter DROP Amends the Downstate Firefighter Article of the Illinois Pension Code. Allows a firefighter to elect to receive either a lump sum payment or an actuarially equivalent annuity for up to 5 years of service as part of a deferred retirement option plan. Amends the State Mandates Act to require implementation without reimbursement. Effective July 1, 2008. House Bill 5118 (Ryg) Public Employee Disability Limited to 2 years Amends the Public Employee Disability Act. Provides that an eligible public employee's disability benefit shall not extend more than 2 years (now, one year) in relation to the same InJury. House Bill 5124 (Lang) Firefighter Insurance Enrollment Amends the Illinois Insurance Code. Changes the definition of "retirement or disability period" to include the period when the disabled or retired fireman, if not currently enrolled in the municipal group insurance plan at the time of disability or retirement, may elect to enroll in the municipal group insurance plan during an open enrollment period. Makes corresponding changes in the provision. Effective immediately. House Bill 5140 (McAuliffe) Duty Disability Pension Increases Amends the Downstate Police Article of the Illinois Pension Code. Provides that certain disabled police officers who are receiving a disability pension on the effective date of the amendatory Act and who apply within 30 days after that effective date and annually thereafter while the pension remains payable shall be eligible to receive an annual noncompounded increase in his or her line of duty disability pension equal to 3% of the original pension. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately. House Bill 5692 (Hoffman) Police Pension Credit Transfer Amends the Downstate Police Article of the Illinois Pension Code. Allows a police officer that is transferring creditable service from one downstate police pension fund to another to elect to have his or her creditable service reduced rather than paying the difference between the amount Pl'lOP ':l nf" 2008 Public Safety Pension and Disability Legislation transferred and the true cost of allowing that creditable service to be established. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately. House Bill 5774 (Kosel) Police / IMRF Pension Credit Transfers Amends the Illinois Pension Code. In the Downstate Police Article, provides that, until January 1,2009, an active member of the Illinois Municipal Retirement Fund that has less than 8 years of creditable service in a police pension fund under the Article may apply for a transfer of his or her creditable service accumulated in that fund to the Illinois Municipal Retirement Fund. In the Illinois Municipal Retirement Fund Article, provides that, until January 1,2009, a person who has less than 8 years of creditable service under the IMRF Article who has become an active participant in a police pension fund may apply for a transfer of his or her IMRF creditable service to that police pension fund. Effective immediately. Senate Bills Senate Bill 1974 (Koehler) 40-Year Firefighter Pension Recalculation Amends the Downstate Firefighter Article of the Illinois Pension Code. In provisions concerning financing of funds through taxes, provides that the annual actuarial requirements of the pension fund are equal to (1) the normal cost of the pension fund, or 17.5% of the salaries and wages to be paid to firefighters for the year involved, whichever is greater, plus (2) the annual amount necessary to amortize the fund's unfunded accrued liabilities over a period of 40 years from the date it is determined to be unfunded by the Division of Insurance of the Department of Financial and Professional Regulation, by an enrolled actuary employed by the Division of Insurance, or by an enrolled actuary retained by the pension fund or the municipality (was, from July 1, 1993). Effective immediately. Senate Bill 2057 (Lightford) PSEBA shell bill Amends the Public Safety Employee Benefits Act. Makes a technical change in a Section concerning the short title of the Act. Senate Bill 2090 (Garrett) Public Safety Pension Reform Amends the Pension Impact Note Act. Requires that a pension impact note for legislation affecting downstate police and downstate firefighter pension funds must demonstrate the fiscal impact of the legislation on at least 25 municipalities with the pension funds. Amends the Illinois Pension Code. Makes changes concerning prohibited transactions by fiduciaries of a pension fund established under the Downstate Police or Downstate Firefighter Article (Article 3 or 4), examinations of pension funds, and witnesses and adds provisions concerning consulting services, prohibitions on gifts for members of a board of trustees of a pension fund established under Article 3 or 4, fraudulent claims for disability pensions by police officers and firefighters, award of benefits, publication of a notice regarding the fiscal status of a pension fund established under Article 3 or 4, and a report by the Commission on Government Forecasting and Accountability on pension funds established under Article 3 or 4. Makes other changes. Amends the State Mandates Act to require implementation without reimbursement. Page 4 of5 2008 Public Safety Pension and Disability Legislation Senate Bill 2209 (Hultgren) Right of Intervention in Disability Pension Hearings Amends the Downstate Police and Downstate Firefighter Articles of the Illinois Pension Code to provide that an employing municipality shall have the right to participate in any board hearing related to the granting of line of duty disability pension benefits. Effective immediately. Senate Bill 2362 (Cronin) Firefighter Pension Credit for Previous Military Service Amends the Downstate Firefighter Article of the Illinois Pension Code. Provides that the governing body of a municipality may elect to allow creditable service for up to 24 months of military service served prior to employment by a municipality, but no credible service shall be allowed for such person for any period that can be used in the computation of a pension or any other payor benefit, other than pay for active duty. Requires contributions to the fund equal to (i) the employee contributions that would have been required had the service been rendered as a member, plus (ii) an amount determined by the fund to be equal to the employer's normal cost of the benefits accrued for that military service, plus (iii) interest. Provides that the changes apply only to participating employees in service on or after the effective date of the amendatory Act. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately. Senate Bill 2778 (Cronin) Firefighter Pension Fund Report Amends the Downstate Firefighter Article of the Illinois Pension Code. Requires the Board of Trustees of the Firefighters' Pension Fund to send a copy ofthe report on the condition of the pension fund to each active, retired, or disabled firefighter who is a member of the pension fund and to each deferred pensioner and beneficiary of the pension fund. Amends the State Mandates Act to require implementation without reimbursement. P",o<> " "f''' I JtJrI']:t (J; -[J.c-~rcc--.- ~ J T '. ...> , "'l .,., ". ;'.. t 1'-./ i 1.. :~;"j .:\ ()'~lE,I{\lIE.\\l C'F :P-OLr(~E, F]]?~ j:J~D DVJ}{F BE,l~E,lqT~~ )~;Jl) FIJJ.JJ)n':~G The Municipal Retirement Systems Despite the cantinued facus an the five state-funded pensian plans (discussed in the next sectian af the study), state palicymakers have paid little attentian to. the three dawns tate municipal emplayee retirement systems. The purpase af this study is to fill this vaid by canducting an analysis af the downstate palice and fire systems, and to. a lesser extent, the Illinais Municipal Retirement Fund (IMRF) defined benefit fund. Included in the study will be a briefhistary af each plan inclusive afmajar benefit levels, an analysis af each plan's fiscal health in the aggregate and, far same, the particular, and fmally an examinatian af haw the dawnstate palice and frre funds camp are with systemically camp arable plans in ather states. The Downstate Police and Fire Pension Plans The Article 3 (police) and A...rticle 4 (fire) defined benefit plans, commonly kno\vn as the dO\VJlstate police and fire pension plans, \vere established decades ago to provide pension, disability and survivor benefits to eligible municipal public safety emplo.yees in municipalities with fewer than 500,000 citizens (exclusive of the City of Chicago.). The statutes require all municipalities with a police and/ar fire department to establish ane ar bath af the funds after a census reveals that the municipality has reached the 5,000 papulation threshald. Municipalities are permitted to. adapt either article thraugh a frant-doar referendum if there are fewer than 5,000 citizens and the carparate autharities suppart the funds' adoptian. Presently there are approximately 343 dawnstate palice funds and 278 downstate frre funds.' The difference between the number afmunicipal palice and frre ftmds is attributable to the cansalidatian affire service into frre protectian districts in certain areas afthe state. BENEFITS Althaugh each plan evalved samewhat differently, bath the dawnstate pal ice and fire plans have arrived at a state af general benefit parity. The dawnstate palice and fire benefit levels are established by the Illinais General Assembly. A comparisan af the majar plan features can be viewed in Table 1: TABLE 1 Features Downstate Police Downstate Fire Full Retirement A2e 50 with 20 Years Service Al!e 50 with 20 Years Service Final Rate of Earnings (FRE) Salary for Final Day ofSeIVice Salary at Final Day of Service for Pension Calculation Pension Formula 2.5% x FRE x Years of Service 2.5% x FRE x Years of Service Maximum Pension 75% ofFRE at 30 vears 75% ofFRE at 30 vears Annual Increases 3% Comoounded 3% COmDounded Dutv Disabilitv 65% ofFRE 65% ofFRE Non-Duty Disability 50% ofFRE 50% ofFRE Duty Death Survivor Benefit 100% ofFRE 100% ofFRE Non-Duty Death Survivor 20+ Years SeIVice = 100% of Pension 20+ Years Service = 100% of Pension Earned Benefit Earned Less than 20 Years = 54% of Salary 10-19 Years Service = 50% Salary Death When Retired Survivor Benefit Full Pension Earned Greater of 54% FRE or Pension Earned c.. . >"~., I --8- -_. .1 _. 1 FUND ING Employer contributions for the downstate police and fire pension plans come primarily from a tax on real property but can also come from other local revenue sources. Both the downstate police (40 ILCS 5/3-125) and do\vnstate fire (40 ILCS 5/4-118) statutes contain the following language with regard to financing pension obligations: "The city councilor the board oftrustees of the municipality shall annually levy a tax upon all the taxable property of the municipality at the rate on the dollar which will produce an amount which, when added to the deductions from the salaries or wages of police officers, and revenues available from other sources, will equal a sum sufficient to meet the annual requirements of the (police/fire) pension funds." Employer contIibutions fluctuate based upon changing benefit levels, demographics and investment returns. Employee contributions are much more straightfoI\vard. Participants in a downstate police or fire fund contribute a statutorily fixed percentage of their pay. Fire fighters contribute 9.455% of pay while police officers are required to contribute 9.91 % of pay. These contributions can only be altered by the Illinois General Assembly. The employee contribution rates in both systems are significantly less than the employer contribution rates. l-,JON -PENSION BENEFITS Downstate police and fire plan participants are also entitled to additional statutory benefits that are not paid out of either pension plan yet are funded by the municipality or state: · Public Employee Disability Act (5 IICS 345/0.01) Police officers and fire fighters who sustain a duty-disability are entitled to 100% of salary for one full year. One hundred percent of this benefit is paid by the municipality. If the disability exceeds one year, the 65% duty-disability benefit established in the pension systems is applicable. · Public Safety Employee Benefits Act [820 ILCS 320/10(a)] Municipal public safety employees who have sustained a catastrophic injury or are killed in the line of duty are entitled to health insurance that is 100% funded by the municipality for themselves, their spouse and children until majority age is reached or later if the child is a dependent, part-time or full-time student. Upon the death of the public safety employee receiving the health insurance coverage, the surviving spouse continues to receive the health insurance benefit until remalTiage. "Catastrophic injury" means the employee can no longer serve as a firefighter or police officer, but can still seek other gainful employment. · Health Care Continuance Privilege Downstate police officers (215 ILCS 5/367 g) and fire fighters (215 ILCS 5/367j) are eligible upon retirement to continued membership within the municipal health care plan. Municipalities have the option of coveling all, a percentage or none of the premium benefit. Regardless, membership in the plan amounts to some degree of employer-subsidized health insurance. Use i of this plan by retirees increases the average cost of a municipality's covered personnel and i consequently raises the municipal cost to provide health insurance for active employees. 0==""=~'._~"~~.='==='---~-"-~=~ · Federal and State Lump Swn Death Benefit The surviving spouse of a downstate police officer or dO\Vl1state fire fighter killed in the line of duty is entitled to receive a lump-sum payment effective October 1, 2006 of $295, 194 from the federal government based upon the federal Public Safety Officers Benefits Program. In addition, the surviving spouse is entitled to receive a lump-sum from the State of Illinois (820 ILCS 315) of $293,888.83 for a death in 2007. Each year this hnnp-sum benefit increases with inflation for newly eligible survivors. This combined death benefit is $589,082.83. This is in addition to the 100% of salary annual duty-death benefit provided under the downstate police and fire plans. The Illinois Municipal Retil'ement Fund (IAJRF) The IMRF defmed benefit pension fund was established decades ago to provide pension, disability and survivor benefits to eligible general municipal employees in municipalities with fewer than 500,000 citizens. The statutes require that all municipalities establish the fund after a census reveals that the municipality has reached the 5,000 population threshold. Municipalities are permitted to adopt IMRF through a front-door referendum ifthere are fewer than 5,000 citizens and the corporate authorities support the funds' adopt.ion. Unlike the hundreds of individual police and fITe funds, IMRF is a consolidated statewide fund. IMRF presently has a funding ratio of95.6%. BEl~EFITS IMRF benefit levels are established by the Illinois General Assembly. The major benefit features for IMRF can be viewed in Table 2: TABLE 2 Features IMRF Full Retirement N;e 60 with 8 Years Service or Age 55 with 35 Years Service Final Rate of Earnings (FRE) for Pension Calculation Average of 48 Consecutive Months Within Last 120 Months First 15 Years (1.67% x FRE x Years of Service) 16+ Years (2% x Pension Formula FRE x Years of Service) Maximum Pension 75% ofFRE at 40 Years Annual Increases 3% Non-Compounded Plus Supplemental Check Each Year Duty Disability 50% ofFRE Non-Duty Disability 50% ofFRE Duty Death Survivor Benefit (8 Years Or Less)l Year's Earnings + Member Account Balance (More Than 8 Years) Same Benefit With Option for Spouse to Instead Elect 50% ofFRE Non-Duty Death Survivor Benefit Less than One Year: Employee Contribution 1-8 Years: 1 Year's Eamings + Member Account Balance More than 8 Years: $3,000 Plus Surviving Spouse Pension or Lump Sum = 1 Year's Earnings + Member Account Balance Death \Vhen Retired Survivor Benefit 50% ofFRE + $3,000 '- ~._.~.. '_....,.H.......-..... .' -".',",..----. .... ~ . ~ E ~ ~ , I i , I '~"T~J F1JND IN G As with the downstate police and fire systems, the principal method of tinancing the Article 7 employer contribution is through the levy of a property tax but other local revenue sources can also be used. Article 7 (40 ILCS 5/7-171) contains the following language with regard to financing pension obligations: "(a) Each municipality other than a school district shall appropriate an amount sufficient to provide for the current municipality contributions required by Section 7-172 of this Article, for the fiscal year for which the appropriation is made and all amounts due for municipal contributions for previous years. Those municipalities which have been assessed an annual amount to amortize its unfunded obligation, as provided in subparagraph 5 of paragraph (a) of Section 7-172 of this Article, shall include in the appropriation an amount sufficient to pay the amount assessed. The appropriation shall be based upon an estimate of assets available for municipality contributions and liabilities therefor for the fiscal year for which appropriations are to be made, including funds available from levies for this purpose in prior years." A distinction must be made benveen the llvfRF employer contribution versus that for the downstate police and fire funds. Unlike the police and fue funds that allow municipalities the option to seek their own actuarial services, Article 7 requires that each municipality contribute an annual actuarial amount calculated by IMRF based upon statutOlY guidelines. The amount oftms required employer contribution may fluctuate from year to year, but the employer contribution is actuarially detennined and set by IMRF nonetheless. The employee contribution rate is fixed by statute at 4.5% of sal3.1Y and is therefore significantly less than the employer contribution rate. N01'.J-PENSION BENEFITS llvIRF participants are also entitled to additional statutory benefits not attributable to the pension plan but still partially funded by the municipality: · Social Security Participation Unlike the vast majority of participants within the downstate police and fire funds, IMRF employees pay into the Social Security system and are therefore entitled to receive those benefits upon obtaining the Social Security eligibility age. $ I ! ! i i ! , ! f' 1"'~4'"-'r~-""-'~'._~'~_."'~""='.'-~_"E~'~'~-'~--~","~~=-~.~~. · Health Care Continuation Privilege IMRF participants (215 ILCS 5/367i) are eligible upon retirement to continued membership within the municipal health care plan. Municipalities have the option of covering all, a percentage or none of the premium benefit. Regardless, membership in the plan amounts to some degree of employer-subsidized health insurance. Use of this plan by retirees increases the average age of the municipality's covered personnel and consequently raises the municipal cost to provide health insurance for active employees. KEY FINDINGS from ~ "Fiscal Analysis of the Downstate Police, Fire and IMRF Pension Systems" > "rj'l - ('< 1" n'U']'j'f ,......, l~ ,~ l' "'C'. '-"'u 1~ 1 L 1.\ i;:; j /1; .'" ~ L ~ }-'A L lu ~ A t.~ ( H~> n 37 1'i' '. ,~ ,"'-~ 1: g.1\ ,: j _ ....-<:", /1. -a, "I.",. '. . ': t: "L '-.;~ J1J'vA -.J;;" )I'v Springfield., 62705-51 gO .,.., " ,",," ,~. =2' ~'. 2'" " ,.-, ,.... PO '"'~.. ~ '7 ,.~ F> fJ" '1" 'J. )' I / Ie .,. , . n ,. .i.;, <'""P i ,. 7 '-, . '" I' .,: '.f ,:.. i'tl:~l\.;e lM/l.. -_j ...J-..t ,.(..!IV .. r. r:i....\..'" .k",i. -J~J"'" '""t....JO VVVi''vV.l HIL () rg February, 2007 " 7',-''''/ ,:-'Y'1', 'T';'C-I" T."'" ('I .., . ," ". ' . ,', '" '., '~ L'~_~1. i. 1.. '\ iiJ E. "\ ~J-G j?"f~~'~) l\/}, b( )?i S C:/\.L /-,".l'~/~L.I\/St S () I~ r-Cri E '1JO \;VI\JS"'fj~~f;€ PC) L R CJ~~ FfR E A.i\iD iMRF PENSION SYSTEMS" A,:;C;REC;;\TE DEBT \\fOR 'TI1/\r~ [vjO~';T STATE-FUND,ED SYSTCj\llS v. The non-Chicago municipal police and fire pension funds are carrying more debt (in the form of unfunded liability) per active employee than the widely reported debt within the Teachers Retirement System (TRS) and State Employees Retirement System (SERS). $180,000 $110,000 $160.000 $150.000 $140.000 $130,000 $120.000 $110,000 $100.000 III Police 1$119.9581 Q Fire 1$116,8451 o TRS 1$122,9691 o SERS 1$119,6811 The non-Chicago municipal police pension debt grew six-times between 1987 -2004, from $400 million to $2.3 billion, This represents a debt growth of 500%. DG\l'/I\iST!~.TE POLiCt: (AI::tTlCLE 3) UNFUt./OED L1ft.8iLlTY - (1987'-2.004) 2.50 200 150 '" " ~ a:i 100 0.50 0,00 "'" F ,.:. ,-:. "'" iIf I- ~~~~~~~~~~~~~~-~-~ ;;." The non-Chicago municipal fire pension debt grew four and-a-half times between 1987-2004, from $310 million to $1.4 billion. This represents a debt growth of352%. DOWNSTATE Fir~E (l\RTICLE 4) Ui\JFUNDED LIABILITY - (1987-2004) 16 14 12 '" p ~ 0.8 P5 06 04 0.2 0 ::;; ::;; ::;; ::;; ::;; ::;; - ::;; - - - - ::;; '" '" '" '" '" "" "" "" "" "" 0 0 0 0 0 00 00 00 "" ::: "" "" "" "" "" "" "" "" 0 := 0 0 0 ....; 00 "" 0 '" '-' .... '-" "" ....; 00 "" 0 '" '-' .... r~' 1=1""L",'~'~~~'~""-~~'--~"""-'.'~-'~-~"'-'<-~'=- ;\ RFC3ATF: FL]l'-iDED LEVELS DROPPING The non-Chicago municipal police pension funded levels have declined from 72.7% funded in 1987 to 62.4% funded in 2004. t'\..... f"" C: ~ 'r'-: !:'~:1,-". r-.:;: (-;~, - r- "':'{\ ;-- r- .i....)- ("'11 QF;-/ ,ry.t\,11-, /;\ _.U\'!f\!"lA,t. f .~,,_k,~ \/o..RlICLc ~J ,UNDcD r\.Jl.TIO ~ l__o -,::..'..}lY.:-) 80% .c. .c. .c. .c. - - - - The non-Chicago municipal fire pension funded levels have declined from 73.33% in 1987 to 65.90% in 2004. 75% 70% 65% 60% 55% 50% _ _ N N N N N ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 0 0 0 0 00 ~ 00 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 0 0 0 0 ~ 00 ~ 0 N w ~ ~ ~ ~ 00 ~ 0 _ N W ~ C!O\iJi'ISTATE FiRE (J\,RTiCLE 4) FUNDED RATIO - (1987 80% 75% 70% 65% 60% 55% 50% - \0 \0 \0 \0 00 00 00 \0 --..JOO\OO _ _ N N N N N \0 \0 \0 \0 \0 \0 \0 \0 \0 0 0 0 0 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ g 8 ~ 8 ~ ._~...._.___.n_''''_'---'-''~-'''-=''l~~J L, QYER u)r~ T' i< U3LFf! ON S FRQJ\!IT A.XES I NeB [~c\SI NG Thirty-Four Non-Chicago Police Pension Funds The suggested employer contribution, or the tax levy for pensions as a percentage of the overall police personnel budget, increased from 19% to 28% over the last 5 years alone. POLICE - TAX LEVY AS A % OF PAYROLL 35.00% 3000% 25.00% -- /'" / ...........\ ~/ ~ / /---"""------- --- ---"" /'" "'" /' ...........- A.mortlzlUon perIod for unfunded Ilablllly r.sello 40 yurt 2000 PoUc. Pension BIII- Est. Cost 2.22% of Payroll -- / - -Police - -IMRF &. 55 20.00% 1500% 10,00% 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1999 2000 2001 2002 2003 2004 Twenty-Five Non-Chicago Fire Pension Funds The suggested employer contribution, or the tax levy for pensions as a percentage ofthe overall fire per- sonnel budget, increased from 24.24% to 33.67% over the last 4 years alone. FIRE ~ TAX LEVY AS A % OF PAYROLL 35,00% 3000% - -Fire IMRF &. SS 1993 fife Pension BIII- Esl, Cost 1.535% of 1999 FWI P.nslon Bill - Est. Cosll.51% of Peyron 25.00% AmortlzaUon period for unfunded liabIlity res.llo 40 y.ars 20,00% 1500% 1000% 1987 1988 19B9 1990 1991 1992 1993 1994 1995 1996 1997 1999 2000 2001 2002 2003 2004 r"'-3~T==~<--" .<-~~._-~~~~ - 2D N. Wacker Drive. Sle IGGD Chicago. Illinois GOGoG- 2903 T 312 984 G4DO F 312 984 G444 15010 S. Ravinia Avenue. Ste 10 Orland Park. Illinois G04G2-5353 T 708 349 3888 F 708 349 150G DO 312 984 G420 emhilll@!ktjlaw.com www.ktjlaw.com MEMORANDUM "'B 1) M-tt..., z ,q f06 TO: Mayor Irvana Wilks Village Manager Michael E. Janonis FROM: Everette M. Hill, Jr. DATE: February 7, 2008 RE: Board of Fire and Police Commissioners, Police and Fire Organization Regulations You have asked that I redraft the Village's regulations with respect to the operation of the Board of Fire and Police Commissioners and the organization of the Police and Fire Department. Those changes were requested in order to make the existing rules more consistent with the Village's needs. I have attached the existing Article III of Chapter 5, the existing Article VIII of Chapter 4 and existing Article IX of Chapter 4. I have attempted to point out the language that has been changed or eliminated in the new draft. I have also attached the new draft on which I have attempted to indicate new substantive concepts. The following are the major changes, along with the Section in which they are found in the new draft: Article III Board of Fire and Police Commissioners 1. The number of members is now flexible, so that the Mayor, in her or his discretion, may appoint either 3 or 5. (It is not 3 to 5, but 3 or 5 to maintain an odd number of commissioners). (Section 5.301) 2. The Mayor may appoint members for a lesser term than 3 years, if the Mayor deems it to be in the Village's best interest. (Section 5.302) 3. The Mayor appoints the chair, on an annual basis, rather than the chair being elected by the membership. At the Mayor's discretion, the outgoing chair may remain as a member when the new chair is appointed. (Section 5.302) ~ Mayor I rvana Wilks Village Manager Michael E. Janonis February 7, 2008 Page 3 4. The Board of Fire and Police Commissioners derives its authority solely from the home rule authority of the Village Board. It is no longer, even colorably, a statutory Board. (Sections 5.303 and 5.304) 5. The Board of Fire and Police Commissioners Rules and Regulations and all amendments are subject to the approval of the Village Board. This is consistent with the changes in 5.303 and 5.304. (Section 5.305) 6. The new draft eliminates certain prohibitive qualifications for commission members. These no longer seem applicable in Mount Prospect in the year 2007. (Deleted from existing 5.301) 7. The new draft also deletes the requirement that Board of Fire and Police Commission members may be removed only after a hearing before the Village Board. I am recommending that the hearing requirement be deleted and that removal be effective by members of the Village Board, including the Mayor, both in favor of removal. (Change in existing 5.302) 8. The new draft also eliminates the provisions for the subject matter of permissible Board of Fire and Police Commissioners rule making. If the Village Board decides that it does not want approval jurisdiction over the Board of Fire and Police Commissioners rules and regulations, we can reinsert these provisions. However, they will become unnecessary if the Board does wish to have such approval authority. (Deleted from existing 5.304) Article VIII - Police 1. The number of sworn members of the police department is no longer addressed in this Article. (Section 4.8018) 2. Even though it is not a substantive change from past practice, it is now specific in the Article that the Chief has the power to suspend officers for five days or less without going before the Board of Fire and Police Commissioners. (Section 4.801 B) 3. The requirement that a police officer be a U.S. citizen is now in this Article rather than the Board of Fire and Police Commissioners Article. (Section 4.8010) 4. The regulations with respect to Community Service Officers have been removed. It seems to me that these rules are better left to the police administration. We don't have codified rules governing civilian employees in other Village departments. (Removed from existing 4.804.1- 4.804.11) iManage:204438_' ,. Mayor Irvana Wilks Village Manager Michael E. Janonis February 7, 2008 Page 3 Article IX - Fire The same changes have been made to this Article as have been made in Article VIII. The removal of Community Service Officer is not applicable to the Fire Service. I have also added a provision allowing the. Fire Chief to enter into mutual aid agreements. This mirrors an existing power of the Police Chief. ;1IA"'""'n...?C14438 1 ORDINANCE NO. AN ORDINANCE AMENDING CHAPTER 4 ENTITLED "APPOINTIVE VILLAGE OFFICERS" AND CHAPTER 5 ENTITLED "BOARDS AND COMMISSIONS" OF THE VILLAGE CODE OF MOUNT PROSPECT, ILLINOIS BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS, ACTING IN THE EXERCISE OF THEIR HOME RULE POWER: SECTION ONE: Chapter 4 entitled "Appointive Village Officers" of the Village Code as amended shall be further amended by deleting Article VIII entitled "Police Department" in its entirety and inserting in lieu thereof a new Article VIII, which shall be and read as follows: ARTICLE VIII POLICE DEPARTMENT SECTION: 4.801 Creation of Department; Appointment 4.802 Chief of Police 4.803 Supervisory Ranks 4.804 Mutual Aid And Intergovernmental Police Agreements 4.805 Disposition Of Abandoned Property 4.801: CREATION OF DEPARTMENT; APPOINTMENT: A. The Village of Mount Prospect Police Department is a department of the Village and shall be under the jurisdiction and control of the Village Manager. B. Other than for the Chief and those supervisory ranks set forth in 4.803 below, the power of appointment, suspension of greater than five (5) days, demotion or discharge of an officer of the Police Department, shall be vested in the Board of Fire and Police Commissioners acting pursuant to the provisions of Chapter 5 of this Code. Discipline involving suspensions of five (5) or fewer days shall be within the sole discretion of the Chief of Police as set forth in the BOFPC Rules and Regulations. C. No person shall be appointed to the position of sworn police officer unless that person is a citizen of the United States of America. 4.802: CHIEF OF POLICE. A. The head of the Police Department shall be the Chief of Police who shall be appointed by the Village Manager for an indefinite period of time. B. The authority to suspend, discharge or otherwise discipline the Chief of Police is vested with the Village Manager. C. The Chief of Police shall have such duties and responsibilities as are, from time to time, imposed by law or assigned by the village manager pursuant to subsections 4.103K and L of this Chapter. 4.803: SUPERVISORY RANKS A. The Chief of Police may appoint from within or outside of the Mount Prospect Police Department, with the written consent of the Village Manager, two (2) deputy chiefs of police, five (5) commanders. Such appointments shall be made from the rank of sergeant and above. The duties for such positions shall be as determined from time to time by the Chief of Police, upon consultation with the Village Manager. B. The Chief of Police is authorized to suspend, demote, discharge or otherwise discipline any or all of the persons holding the positions of Deputy Chief of Police or any Commander. Such actions shall be immediately reported to the Village Manager. C. If a member of the Police Department is appointed as Deputy Police Chief, Commander or Operations Commander and then resigns or is demoted from that supervisory rank prior to attaining eligibility to retire on pension he or she shall revert to such prior rank and be entitled to all the benefits and emoluments of such prior rank, without regard as to whether a vacancy then exists in such rank. 4.804: MUTUAL AID AND INTERGOVERNMENTAL POLICE AGREEMENTS: The Chief of Police is authorized and empowered to enter into contracts and agreements with other police departments regarding mutual police assistance, and to enter into intergovernmental police service agreements with park districts having areas within the corporate boundaries of the Village. Where any such mutual aid or intergovernmental police service agreement provides for or otherwise involves an appropriation or expenditure of public funds, such agreement shall be first submitted to the President and Board of Trustees for approval. 4.805: DISPOSITION OF ABANDONED PROPERTY: A. Office Of Property Custodian Created: This section creates the office of property custodian for the Mount Prospect Police Department. The property custodian may be an officer of the Police Department or a civilian. The property custodian shall be appointed by and serve at the pleasure of the Chief of Police. Any further reference to the Chief of Police in this Section 4.805 shall also mean a designee of the Chief. B. Duties Of Property Custodian: The property custodian shall be the custodian of all personal property seized, taken or otherwise transferred to the possession of the Police Department. All officers and members of the Police Department who, in the course of duty, come into possession of any personal property shall deliver it promptly to the property custodian, unless it is needed for immediate use as evidence. If it is needed immediately as evidence, that fact shall be reported, in writing, promptly to the property custodian. Nothing in this section shall require the property custodian to take possession or dispose of any lost or 2 stolen property, if the possession or disposition of it is otherwise provided for by this Village Code. C. Custody And Disposition Of Personal Property: The property custodian shall maintain a complete and accurate record of all personal property seized or transferred to the possession of the Police Department. In the case of property which is not contraband or needed as evidence, the property custodian shall make a reasonable effort to identify and notify the owner or any other person entitled to possession, and shall return the property after the person provides satisfactory proof of ownership or right to possession. The person claiming a right to the property shall reimburse the Police Department for reasonable expenses and costs of the custodianship. If the identity or location of the owner or other person entitled to possession has not been ascertained within sixty (60) days after the Police Department obtains possession, the property custodian shall proceed to dispose of the personal property. If the property is amenable to sale, the property custodian shall use such forum as may be approved by the Chief of Police to give notice of the sale, describe the property in general terms and specify the Village's intent to sell it to the public for cash. The property will then be sold to the public. Property offered, but not sold, may be offered and sold at a subsequent public sale without further notice. If any personal property is deemed to be of use to any Village Department, the property may be retained for use of the Department upon approval of the Chief of Police. Any personal property specified as not amenable to sale for any reason by the property custodian shall be confiscated or destroyed. The proceeds of any sale, after deducting the cost of storage, advertising, and other expenses incident to the handling and sale of the property, shall be paid by the property custodian to the Village of Mount Prospect Finance Director who shall deposit the proceeds into the General Fund of the Village. D. Exception; Weapons: The preceding provision of this Section shall not apply to pistols, revolvers, knives, dirks, slingshots, metallic knuckles, or other deadly or injurious weapons. All such weapons, except those that the Chief of Police shall order retained for the use of the Police Department, shall be presented to the Chief of Police for destruction within one year after receipt. E. Perishable Property: If perishable property is seized or transferred to the possession of the Police Department, the property custodian, upon certifying to the Chief of Police the perishable nature of the property. Upon the approval of the Chief of Police, the property custodian shall cause the property, if amenable to sale, to be advertised for sale by posting at three (3) public places within the Village and shall sell such personal property to the public at any time after three (3) days have elapsed from its seizure or taking possession. Any personal property deemed to be not amenable to sale or dangerous shall be disposed of as refuse as the Chief of Police may direct. F. Property Held For Evidence: Any property held for evidence shall be disposed of according to this Section not less than thirty five (35) days from the date when all appeals have been exhausted or longer if so required by law. 3 SECTION TWO: Chapter 4 entitled "Appointive Village Officers" of the Village Code as amended shall be further amended by deleting Article IX entitled "Fire Department" in its entirety and inserting in lieu thereof a new Article IX, which shall be and read as follows: ARTICLE IX FIRE DEPARTMENT SECTION: 4.901 Creation of Department; Appointment 4.902 Fire Chief 4.903 Supervisory Ranks 4.904 Mutual Aid And Intergovernmental Fire Agreements: 4.905 Fire Prevention Bureau 4.906 Police Power of Members 4.907 Use of Apparatus 4.908 Penalty 4.901: CREATION OF DEPARTMENT; APPOINTMENT: A. The Village of Mount Prospect Fire Department is a department of the Village and shall be under the jurisdiction and control of the Village Manager. B. Other than for the Chief and the supervisory ranks set forth in 4.903 below, the power of appointment, suspension of greater than five (5) days demotion or discharge of any officer of the Fire Department shall lie with the Board of Fire and Police Commissioners acting pursuant to the provisions of Chapter 5 of this Code. Discipline involving suspension of five (5) or fewer days shall be within the sole discretion of the Fire Chief as set forth in the BOFPC Rules and Regulations. C. No person shall be appointed to the position of sworn firefighter unless that person is a citizen of the United States of America. 4.902: FIRE CHIEF: A. The head of the Fire Department shall be the Fire Chief who shall be appointed by the Village Manager for an indefinite period of time. B. The authority to suspend, discharge or otherwise discipline the Fire Chief shall be vested in the Village Manager. C. The Fire Chief shall have such duties and responsibilities as are, from time to time, imposed by law or assigned by the Village Manager pursuant to subsections 4.103K and L of this Chapter. 4 4.903: SUPERVISORY RANKS: A. The Fire Chief may appoint, from within or outside of the Mount Prospect Fire Department, with the written consent of the Village Manager, one deputy fire chief, three (3) battalion chief-shift commanders and one battalion chief-training officer. The duties of such supervisory ranks shall be as determined from time to time by the Fire Chief, upon consultation with the Village Manager. B. The Fire Chief is authorized to suspend, demote, discharge or otherwise discipline any or all of the persons holding the positions of deputy fire chief, battalion chief-shift commander and/or battalion Chief in Training officer. Such actions shall be immediately reported to the Village Manager. C. If a member of the Fire Department is appointed as Deputy Fire Chief, and/or Battalion Chief-Shift Commander and then resigns or is demoted from that supervisory rank or Battalion Chief Training Officer prior to attaining eligibility to retire on pension he or she shall revert to such prior rank and be entitled to all the benefits and emoluments of such prior rank, without regard as to whether a vacancy then exists in such rank. 4.904: MUTUAL AID AND INTERGOVERNMENTAL FIRE AGREEMENTS: The Fire Chief is authorized and empowered to enter into contracts and agreements with other fire departments regarding mutual fire assistance, and to enter into intergovernmental fire service agreements with park districts having areas within the corporate boundaries of the Village. Where any such mutual aid or intergovernmental fire service agreement provides for or otherwise involves an appropriation or expenditure of public funds, such agreement shall be first submitted to the President and Board of Trustees for approval. 4.905: FIRE PREVENTION BUREAU: A. The Fire Chief shall serve ex officio as the Chief of the Fire Prevention Bureau of the Fire Department. B. The Fire Prevention Bureau may consist of civilian members and/or such sworn Fire Department personnel as may be appointed by the Fire Chief for the purpose of administering and enforcing the regulations of the Village Code relating to building, fire prevention, fire safety and public education relative to fire safety. 4.906: POLICE POWER OF MEMBERS: All members of the Fire Department are empowered to and shall have authority to arrest any person for any interference with the Fire Department in the performance of its duties or for the violation of any provisions of this Code or state law in connection with a fire. 4.907: USE OF APPARATUS: Only persons authorized by the Fire Chief or officer in charge may use any fire engine, hose or any other fire apparatus. 5 4.908: PENAL TV: Any person violating any of the provisions of this Chapter shall be fined for each offense as set forth in Appendix A, Division III of this Code. A separate offense shall be deemed committed on each and every day during or on which a violation occurs or continues. SECTION THREE: Chapter 5 entitled "Boards and Commissions" of the Village Code as amended shall be further amended by deleting Article III entitled "Board of Fire and Police Commissioners" in its entirety, and inserting in lieu thereof a new Article III which shall be and read as follows: ARTICLE III BOARD OF FIRE AND POLICE COMMISSIONERS SECTION: 5.301 Membership, Appointment, Qualifications 5.302 Term, Vacancies, Removal, Chair 5.303 Authority 5.304 General Duties of the Board 5.305 Quorum, Regulations 5.306 Reports of the Board 5.307 Secretary of the Board 5.301: MEMBERSHIP, APPOINTMENT, QUALIFICATIONS: The Board of Fire and Police Commissioners ("BOFPC") shall consist of either three (3) or five (5) members as the Village President may from time to time deem appropriate. Members must be residents of the Village. The members shall be appointed by the President of the Village with the consent of the Board of Trustees. The members shall be officers of the Village, and as such, shall be sworn in by the Village Clerk and file an oath of office and such other documents as may be required by law. 5.302: TERM, VACANCIES, REMOVAL, CHAIR: The term of office of the members of this BOFPC shall be three (3) years, or until their respective successors are appointed and have qualified. However, the Village President may appoint a person for a lesser term if that lesser term will be in the best interest of the Village. No appointment of any member of the BOFPC shall be made by the President within thirty (30) days before the expiration of the President's term of office. Vacancies on the BOFPC shall be filled in the same manner as the original appointment. Members shall be subject to removal, upon the affirmative vote of five (5) members of the President and Board of Trustees. The Chair shall be appointed by the Village President for a term of twelve (12) months. At the discretion of the Village President, the chair may continue to serve as a member upon the appointment of a new chair. 6 5.303: AUTHORITY: The BOFPC derives its authority from this Article pursuant to the home rule power of the President and Board of Trustees of the Village. 5.304: GENERAL DUTIES OF THE BOARD: The BOFPC shall have only those duties as set forth in this Article or as otherwise may be provided in this Village Code and as may be required by the terms of a valid collective bargaining agreement of the Police and/or Fire Department. 5.305: QUORUM AND REGULATIONS: A majority of the BOFPC members shall constitute a quorum for the conduct of business. The BOFPC shall make rules to carry out the purpose of this Article as pertaining to the discipline of police officers or firefighters. Such rules shall be subject to the approval of the Village Board. 5.306: REPORTS OF THE BOFPC: The BOFPC shall, on or before March 15 of each year, submit to the Village President a report of its activities and any suggestions which the BOFPC believes would result in greater efficiency in the Fire or Police Department. The President shall transmit the report to the Village Board. 5.307: SECRETARY OF THE BOFPC: The BOFPC shall elect one of its own members as official secretary. The secretary shall keep the minutes of the BOFPC's proceedings; shall be the custodian of all papers relating to the business of the BOFPC and shall perform such other duties as the BOFPC may from time to time prescribe. The Village Manager may appoint a Village employee to act as the BOFPC's recording secretary. SECTION FOUR: That this Ordinance shall be in full force and effect from and after its passage, approval and publication in pamphlet form in the manner provided by law. AYES: NAYS: ABSENT: PASSED and APPROVED this day of February, 2008 Irvana K. Wilks, Mayor ATTEST: M. Lisa Angell, Village Clerk H:\CLKO\files\WIN\ORDINANC\MP Ord Amd Ch 4AND5FEB2008.doc 7