When you get down to cases, two of the primary issues in our accelerating public pension crisis are how early can an employee retire and start collecting a pension and when is that employee likely to die and stop collecting a pension.
Well governments at all levels have screwed up the first part by allowing, even encouraging, teachers, cops, firefighters and public works employees to retire at absurdly young ages. Early retirement incentives were created by local school boards to lop off a layer of better paid teachers in their mid-50s. The districts didn’t care because school boards were not paying the pension costs, the state teacher retirement system was on the hook. Sure it is tougher to argue that cops and firefighters need to work longer but, in reality, they do. We can’t be paying pensions for people who retire in their early 50s. And, in the case of municipal employees, it is local taxpayers who are responsible for the payments.
And, yes, public employee unions have actively pushed for these lush benefits. That’s what a union does in representing its members. But all of these pension deals were signed off on by the men and women we elected to local and state offices. They were the ones in charge of representing taxpayers. They failed and now we’re all in the soup.
The other end of the pension spectrum is death. Using solid data to predict the average life spans of retiring public employees is why the hundreds of local pension boards littered around the state hire actuaries. They pay an actuary an annual fee to assess likely costs going forward. That allows, theoretically, proper planning to make sure that funding is adequate now and well into the future.
Remember that local pensions are funded from three sources. The employees pay into their own pension at fixed percentages. Accumulated funds are invested for growth. And taxpayers ante up to cover the municipal portion and to make up shortfalls.
This year, Forest Park taxpayers got hit for an extra $200,000 in property taxes required to make up the difference created when Forest Park’s hired actuary, Timothy W. Sharpe, finally and under intense pressure, updated the mortality table he has been using for decades. This fellow, who gets paid $3,500 a year by Forest Park and similar amounts by some 160 other Illinois public safety funds, had been calculating anticipated life spans based on a mortality table created in 1971. You remember 1971. Nixon. Hippies. Vietnam.
Clobbered over the past two years by formal complaints to the Actuarial Board of Counselling and Discipline in D.C., Sharpe updated to the 2000 version. And that change resulted in the $200,000 spike to cover the obvious reality that people are living longer. Four years longer according to the data. Four more years of pension payments to our retired cops and firemen.
The pension mess is harried enough. We should at least be able to count on accurate information from a professional actuary. The nearby towns of River Forest, LaGrange and Western Springs have replaced Sharpe. Forest Park’s pension boards should do the same.