Harvey Fire Department news

Excerpts from the cookcounntyrecord.com:

A recent ruling by a state appeals court has forced the City of Harvey, a south suburban Illinois municipality, to confront its financial mismanagement, particularly in relation to its firefighters' pension fund. The court found that the city had failed to properly fund the pension plan for years, putting it on the brink of default and leaving it with a $23 million shortfall.

The Illinois First District Appellate Court ruled that the city’s mayor and council had abused their discretionary powers under state law, failing to make required contributions to the pension fund. This led to a severe depletion of the fund’s assets, which now stand at just $11 million—far below what actuaries deemed necessary. As a result, the court upheld a lower court’s decision that the city must pay nearly $11 million in unpaid and underpaid contributions to the pension fund.

The case began in 2010 when the Firefighters’ Pension Fund Board sued the city, claiming chronic underfunding had put the fund at risk of insolvency. Actuaries later determined that the city had deprived the fund of $8 million in actual contributions and another $2 million in investment gains between 2005 and 2013. By 2013, the fund was only able to cover about $157,000 a month in benefits, while active firefighters contributed just $25,000 monthly—a clear sign of mismanagement.

Cook County Circuit Judge Mary Mikva, who later joined the appellate court, ruled that the city violated the Illinois Pension Code by failing to meet its obligations. She stopped short of ordering a tax increase, stating that such decisions should be left to the city’s elected officials. However, the appellate court rejected the city’s argument that courts couldn’t compel cities to fund pensions, emphasizing that the Pension Code requires municipalities to levy taxes to meet actuarial requirements.

The justices also criticized the city’s broader financial practices, including misuse of funds intended for hotel development and questionable expense accounts for city officials. They noted that Harvey had no evidence to show it could manage its finances responsibly or fund the pension system adequately.

While the court affirmed the need for the city to fulfill its obligations, it did not dictate how much to tax. Instead, it emphasized that as long as Harvey levies enough to meet the required contributions, it would be in compliance with the law. Ultimately, the ruling highlights the growing pressure on local governments to prioritize pension obligations and avoid financial mismanagement that harms public workers.

Thanks, Dan

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