KANKAKEE — Kankakee’s police and fire pension funds have been in poor shape for many years, but the news got even worse Tuesday.
At the Kankakee City Council’s Budget Committee meeting, elected officials learned the two funds are now a combined $106.1 million behind schedule.
The fire department fund is $53.1 million underfunded, while the police fund is $52.9 million behind.
And while it might be hard to believe based on those staggering debts, the police fund actually is in a much better positions as it is 31.3 percent funded, as compared to the 18.5 percent funding level of the fire department.
While that comparison may ultimately be something akin to splitting hairs, the news of the funds desperate positions was not lost on the council members at the meeting.
“Thanks for the terribly depressing report,” Alderman Mike O’Brien, Budget Committee chairman, said to Robert Rietz, of the accounting firm, Lauterbach & Amen. “The burden is on us. What do we do?
There were no answers forthcoming.
At issue is a simple math equation. Pension payments are going out at an almost faster rate than taxpayer and investments are coming in.
It is at this point where the math problem shows the fire pension may be in grave danger. There are 47 firefighters contributing to the pension account, but 75 retired firefighters or their widows drawing a payment.
On the police side, there are 65 contributing and 61 collecting a pension.
While the city contributed $4.6 million to the fire fund in the budget year ending April 30, 2019, the department has $3.1 million in payments going out. The police fund had $4.8 million plug in this past year, but $3.2 million in benefit payments.
And, Rietz said, there are only two ways for a fund to gain resources: account contributions and asset return (investments).
Simply put, Rietz said, the money is going out at such a pace that it cannot work to grow the pension’s bottom line. The funds are simply treading water and if the markets take a downturn, the return on investments will slow and there is a likelihood the fire pension could not have enough money to support its members over the next decade or so.
“Basically every dollar coming in is going out. It’s pay as you go,” he said.
Late last year legislation was signed into law to combine the 649 municipal pension funds into two large groups — one for firefighters, the other for police. The combining, however, was only for investment purposes, meaning getting a greater return due to large funds.
This action did not address the problems of making pensions function better.
Much of this pension news is not entirely new to city officials. The city has been battling pension shortfalls for decades. Every time the city comes up with a plan to address funding issues, those resources are eaten by payments or losses in the market.