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Pensions for risky jobs pinch municipal budgets

Published: Friday, July 26, 2013 5:30 a.m. CDT • Updated: Tuesday, July 30, 2013 7:46 a.m. CDT
Caption
(H. Rick Bamman file photo – hbamman@shawmedia.com)
A Cary Fire Protection District firefighter rolls up a hose. Police and fire departments across McHenry County and the surrounding area pay out millions each year in pensions. “We have to have an adequate benefit program to attract people who want to do the job given the risks involved,” said Patrick Mullen, chief of the Algonquin-Lake in the Hills Fire Protection District.

A career as a firefighter, paramedic or police officer can be risky.

The men and women who choose those professions are put in harm’s way on a regular basis – apprehending criminals, treating the severely injured or extinguishing burning buildings, among other duties.

The demands of each job can be taxing, and combined with the unpredictability of when they may be called into service, workers must be mentally and physically prepared at a moment’s notice.

Besides recognition, a promotion or a bump in pay, those who put in their time also have something else to look forward to – a pension.

Police and fire departments across McHenry County and the surrounding area pay out millions each year in pensions as defined by state statute, either as a municipality left with the task of budgeting the fund or separate entities dependent on tax dollars.

“We have to have an adequate benefit program to attract people who want to do the job given the risks involved,” said Patrick Mullen, chief of the Algonquin-Lake in the Hills Fire Protection District. “The demands of this job wear you down, and pensions recognize that we are in a different risk pool.”

Others participate in the Illinois Municipal Retirement Fund, which provides benefits and handles the payouts for employees of local governments and school districts. The program also is defined by state statute.

All McHenry County employees who work at least 1,000 hours a year are required to participate in the IMRF, said Bob Ivetic, the county’s director of human resources.

Firefighters and police officers are eligible to receive a monthly pension when they reach 50 years old and have at least 20 years of service, according to state statute. The monthly pension will be half the monthly salary attached to the rank of the employee at the time of his or her retirement.

The monthly pension for firefighters increases by one-twelfth of 2.5 percent for each additional month over 20 years of service to the 30-year mark, up to a maximum of 75 percent of the monthly salary.

Law enforcement officers have similar eligibility, but the pension increases by 2.5 percent for each additional year of service after 20 years of service, up to 30 years.

As of 2011, the maximum pension amount has been capped at $106,800. Amounts also vary based on other factors, and penalties can be assessed depending on when a person retires.

The most common pension comes from retirement, but several others exist, including disability and surviving family, to name a few. Pensions are funded through property taxes, tax levies, other revenue streams and contributions taken out of each employee’s paycheck.

The city of Crystal Lake paid out approximately $557,305.65 in police salaries and $435,844.78 in firefighter salaries for the month of June. That compares with approximately $148,120.38 and $82,002.44 doled out in pensions in the same month.

The yearly pensions for the 30 former police personnel vary from $12,000 at the low end to more than $110,000 at the high end, data show. The 17 former firefighters receiving pensions earn between $2,200 and more than $73,000, respectively.

“We have funded our obligation each year,” said Mark Nannini, finance director in Crystal Lake. “It’s always difficult when you are using budget dollars. It’s a pie that is only so big, and what matters is how you slice it up.”

Not including benefits and other items, the Carpentersville Fire Department paid out close to $3 million each of the past two years in salaries. The department has 14 former employees receiving either a retirement, disability or surviving pension, totaling more than $60,000 monthly and more than $722,000 annually.

A pension board, which handles investments and proper following of state statutes, oversees the fund, Battalion Chief Kieran Stout said. The board also handles any hearings that may arise.

The fund is 77 percent vested, meaning if they had to pay the pensions out today, that is the amount they could dole out.

The Algonquin-Lake in the Hills Fire Protection District pension is 76 percent funded, Mullen said. The majority of that money comes from property taxes and other fees, as well as contributions from employee paychecks.

“Dependent on property taxes, our pension funding is going to look different compared to a city fire department where they are funded through other sources like a general fund,” Mullen said. “In an organization like ours, that has a divergence between full-time, part-time and civilian workers, not everyone is participating in the pension fund.”

The McHenry Police Department has 29 employees receiving a pension – ranging from more than $1,400 to more than $7,200 monthly. In total, the department spends close to $1.6 million annually on pensions.

The Huntley Police Department pension fund was formed in 2001. Before that time, officers were part of the IMRF.

The village currently has three former employees receiving pensions, totaling almost $11,000 monthly and more than $131,000 this year.

The Huntley Fire Protection District has three former workers receiving disability, two retirement and one surviving spouse pensions. Those payouts equal more than $23,000 in the month of June, and more than $280,000 this year.

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