This budget year, Kankakee taxpayers contributed $5.5 million to the police and fire pension funds. Those funds remain dramatically underfunded, particularly the fire pension, the fund managers noted.
Basically, there are not enough taxpayers in the city to make up for the two funds. The police pension is at about 28 percent funded and the fire fund is at 19 percent. A well-funded pension is at 70 percent, noted city comptroller Elizabeth Kubal.
The pension payments represents about 20 percent of the city's approximate $25 million budget. The fire pension contains about $10 million while the police is at $21.1 million.
According to the most recent statement from the Illinois Department of Insurance, 71 pensions are issued to former Kankakee firefighters or beneficiaries. There are 65 pensions issued to former police officers or beneficiaries.
Those figures mean there are more former firefighters collecting pensions than contributing to the fund and nearly as many police collecting as contributing.
The city will never get anywhere close to adequately funding these accounts based on the current system.
At a Kankakee City Council budget committee meeting Monday, a consultant for the city's pension funds, Patrick Donnelly, of Gravestone Consulting, and Tony Brown, of Rockwood Capital Partners, the manager of the city funds, provided an overview of the pension system.
While much of the presentation was something of a "Pension 101" explanation, Brown seemed to indicate that without major changes in how money can be invested, the pension likely will not keep pace with the retirees who are collecting those benefits.
Brown explained that while the stock market has been performing at a strong rate during much of the past five years, the fire fund has not been able to capitalize on it because 35 percent of its account must be invested in the safe, but lower performing bond market with has a yield rate of 2 to 2.5 percent.
The stock market, on the other hand, has yield rates during this past half decade of greater than 7 percent. That means the city's funds have lost opportunities to generate a greater return. Brown, however, noted there is nothing that can be done with this because state law mandates how much of the public pension fund must be in the lower performing, but fiscally safer bond fund.
Brown said he would like to see the state Legislature lower the limit of the bond fund to 20 percent. That goal would take considerable persuading of the General Assembly and would seem unlikely, officials noted.
The city has been battling its underfunded pension for more than 25 years following shortfalls in the 1970s and 1980s. An agreement between the city and its pension boards reached in the Mayor Donald Green administration resulted in annual funding levels being met.
And with more retirements expected within both departments within the next few years as longtime officers are expected to retire, the funding could grow even more desperate.