Bill to boost pensions for retired CPD cops will cost city $60M

Chicago Fraternal Order of Police Lodge 7 President John Catanzara addresses police officers in a video after the passage of a bill to benefit retired police officers’ pensions.

Screenshot/FOP Chicago Lodge 7

Backed by the Fraternal Order of Police and Mayor Brandon Johnson, lawmakers plan to send Gov. J.B. Pritzker a measure ensuring all retired Chicago police officers receive the same cost-of-living bump in their pension checks.

Senior mayoral adviser Jason Lee pegged the 2024 cost of the police pension sweetener at roughly $60 million. It will be paid for by reducing the $306.6 million that Johnson has earmarked in his first budget to “pre-pay” Chicago’s pension debt, Lee said.

The pension bill — approved last week during the Legislature’s veto session — will grant 3% cost-of-living increases for all retired Chicago police officers, regardless of whether they were born before or after Jan. 1, 1966. Pritzker in 2021 signed into law a similar measure that boosted pensions for retired firefighters.

State Sen. Robert Martwick, the bill’s chief sponsor, has long maintained that Illinois’ two-tiered pension system created in 2011 violates the Social Security Administration’s so-called “Safe Harbor” provision, which requires that benefits for government employees who aren’t eligible for Social Security must at least match that same level of compensation.

“The pension bill was a necessary fix to stay ahead of Safe Harbor for that category of workers,” Lee told the Sun-Times. “We’ve already accounted for the cost in our budget for 2024. … The money was already accounted for in our advanced pension payments.”

The Policemen’s Annuity and Benefit Fund of Chicago granted a 1.5% cost-of-living increase for those born after Jan. 1, 1966. But for many years, the city’s practice has been to move that date forward, the last time being in 2017. That meant that retired officers still received the 3% to put them on par with other police unions, but the city did not calculate that amount in its total pension obligations.

“The city would come in every five years and just by agreement, boot the state forward, which is totally irresponsible,” said Martwick. “The whole idea of a pension system is calculate out what the benefits are going to be, and figure out what you have to pay for it now.

“This is one of the reasons why the police fund is so horribly funded and the firefighters fund so horribly funded, is because they gave benefits, 3% simple, when they didn’t pay for it,” Martwick said.

Asked how the city plans to pay for the increase going forward, Lee acknowledged it is part of its pension obligation, and the administration is looking at strategies “to figure out more sustainable funding mechanisms for our entire pension system.”

“We’ve got four pension funds at the city level. All of them have structural issues that need to be addressed,” Lee said. “The city has not kept up with the funding levels that are appropriate, even without structural fixes. There’s work to do. But, we all will be working diligently to find those solutions.”

Passage of the police pension bill marks yet another victory for Fraternal Order of Police President John Catanzara, who spent four years at loggerheads with former Mayor Lori Lightfoot, but has forged a dramatically different path with Johnson.

In a video posted to social media after the bill’s passage, Catanzara thanked Johnson for his support of the measure, which he said “Lightfoot just would have nothing to do with.”

“Where we’re at today is leaps and bounds above where this Lodge [7 of the Fraternal Order of Police] has ever been,” Catanzara said.

The new mayor recently agreed to sweeten the last two years of a police contract signed by Lightfoot and extend the deal for two more years in exchange for operational changes that could help solve murders and reduce CTA crime.

Johnson also invited Catanzara to be part of a pension working group to search for long-term solutions to Chicago’s $35.4 billion pension crisis.

Lawmakers have yet to tackle an even thornier issue for police officers hired after Jan. 1, 2011, when Illinois created a two-tiered pension system that reduced benefits for newly hired workers as a way to chip away at the state’s mountain of pension debt. 

It made the annual cost of living adjustment for the most junior Chicago police officers equal to the full annual increase in the consumer price index. That’s double the current cost of living adjustment, which is either half the consumer price index increase, or 3%, whichever is lower.

The Civic Federation has warned on its website that companion pension bills ending the two-tiered system for police officers and firefighters would “jeopardize the hard-won financial stability attained over the last several years” by the state and city and “could potentially result in the reversal of recent bond rating upgrades for both governments.”

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