Peotone police fund struggling
PEOTONE — The village of Peotone’s police pension fund is in dire shape, similar to what other towns around the state are facing.
Peotone officials are considering shoring up the pension fund by tapping into the $12 million the village recently received from the privatization of its water and sewer utilities.
The pension account only is 21 percent funded, according to the village’s most recent annual financial report. Kankakee also is struggling with its police pension account, which is about 30 percent funded.
In 2016, eight Peotone police officers contributed to the village’s pension fund, benefiting four retired officers.
For the five years until 2016, the pension system’s costs rose by more than 50 percent, to $168,589 — a trend that is expected to continue.
In 2016, the total assets of the police pension fund stood at $1.3 million, according to Peotone’s most recently filed report with the state. That number has since increased to $1.4 million, officials say.
At recent village board meetings, officials have been discussing the possibility of raising the fund’s assets to $2.5 million.
Upping the fund to that amount, police Chief Bill Mort said, would let it diversify.
“It’ll give the pension board more flexibility on investments, so the fund can reach a better return,” he said in an interview.
The problems with the police officers’ pension fund might have been avoided if officers had stayed in the old pension system.
In 2007, Peotone voters approved the creation of the local police pension fund. Before that, the village’s police officers were covered by the same pension system as other village employees — the Illinois Municipal Retirement Fund, or IMRF.
IMRF mandates municipalities make pension payments. The system sues those who do not. In Peotone, the village’s IMRF pension account is more than 100 percent funded.
By contrast, no one is forcing towns such as Peotone to make sufficient payments to their police and fire pension funds, so they often fail to keep up. The result is underfunded pension systems.
In 2008, those advocating for a separate police pension fund in Peotone said the village would have to form one in the not-so-distant future anyway. They noted a state law that mandates a town create such a fund once its population reaches 5,000.
At the rates of growth in Peotone and Will County in the 1990s and 2000s, the village was bound to exceed 5,000 in a decade or two. But the recession in 2008 slowed down the growth. In 2016, the village’s population was estimated at 4,134, only slightly above what it was six years before.
Before the village board decided to put the pension issue to voters in 2007, Chief Mort, who had been at the helm for a year at that point, said he would leave as chief if voters rejected the new fund.
When the village figured it would cost $13,000 to start the pension fund the first year, the chief chipped in $10,000 of his own salary to help with that.
Before taking the chief’s job, Mort had been with the Will County Sheriff’s Office for nearly three decades. He could have started collecting his sheriff’s pension through the Illinois Municipal Retirement Fund had he not been with Peotone, also an IMRF employer.
Under that pension system, a person cannot retire and work for another IMRF-participating employer. So, Mort could not start receiving his pension while still working for Peotone, even if he decided against receiving a pension with the village.
Shortly after voters approved the creation of a police pension fund, Mort started collecting his sheriff’s pension.
Mort’s pension is about $90,000 per year, while he makes a $75,000 salary as chief, down from $85,000 in his first year at the helm. With those two sources of income, Mort pulls in $165,000 per year.
The way IRMF works, Mort said, his wife would get lesser benefits if he happened to die before he started collecting IMRF, thus, the reason for his warning that he would leave the village government.
“I wanted to make sure my wife was taken care of,” said Mort, a Peotone native.
He noted he does not belong to the local pension fund, saying he is the only chief he knows of who has made that decision.
Mort also said the police pension fund is better for officer recruitment. With higher member contributions, officers end up getting more in retirement, he said. Current pensioners, he said, are making 10 to 15 percent more than they would have if the police officers had remained in IMRF.
Village administrator Aimee Ingalls, who started recently, said the police pension fund is not in good shape. But she said no decisions have been made about whether to tap into the $12 million to help the fund.
Peotone Mayor Steve Cross didn’t return messages for comment.