Illinois Appeals Court Says ‘No Excuse’ For Underfunding Pensions

The Illinois Court of Appeals on Dec. 19 affirmed a circuit court judge's ruling that the village of North Riverside had no excuse for not funding its police and fire pensions adequately over the course of a decade.

The village filed the appeal back in November 2015 after a County Circuit Court judge dismissed North Riverside's lawsuit against the Illinois Department of Insurance, which ordered the village to adequately fund its pension obligations or have its sales tax revenues forcibly reallocated for that purpose.

The decision cleared up one of two matters the village had filed with the Illinois Court of Appeals. The second matter involves a circuit court judge's decision that she did not have jurisdiction to rule whether the village had the right to unilaterally terminate its contract with union firefighters.

North Riverside's failure to fund its pension obligations was at the center of the village's attempt in 2014 to privatize its fire department. When the state's Department of Insurance called officials before it to explain why it had failed to adequately fund pensions between 2000 and 2011, local officials argued that the economic downturn of 2008-09 had devastated sales tax revenues.

The judge at the circuit court level didn't buy that reasoning and neither did the appellate court, which reasoned the village could have chosen to direct funds toward pensions but simply chose not to.

In addition, the appellate court noted, several years during which the village failed to adequately fund pensions came prior to the economic downturn.

"The village, as all government units, has to make choices where to spend money," the appellate court's ruling states. "And here there was evidence that the village spent its money on discretionary endeavors it prioritized more than contributing to the police and firefighter pensions. That is a violation of the Pension Code."

Contact:

Email: [email protected] Twitter: @RBLandmark