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Excerpts from the cookcounntyrecord.com:
The state appeals court has ruled that the city of Harvey is failing to properly fund its firefighters' pension system, putting it on the verge of default. The decision allows the pension board to legally demand nearly $11 million in unpaid contributions from the city, despite claims that it lacks the funds.
On August 4, a panel of three Illinois Appellate Court justices determined that the mayor and city council had misused their discretion for years, leading to chronic underfunding of the pension fund. This, they said, made the previous legal precedent—where courts typically don’t intervene in pension funding—irrelevant in this case.
The court emphasized that the pension fund’s assets were rapidly dwindling, and that the city had been paying current retirees using money contributed by active firefighters and investment gains. This practice was causing the fund to deplete faster than it could recover, leaving it unable to meet future obligations.
The case began in 2010 when the Firefighters’ Pension Fund Board sued the city, claiming it had failed to make proper contributions from 2005 to 2013. Actuaries estimated the city had deprived the fund of $8 million in direct contributions and $2 million in investment gains, reducing its assets to about $11 million—a shortfall of $23 million.
In a concurring opinion, Judge Lampkin noted that in 2014, the pension fund paid out about $157,000 monthly to retirees, while active firefighters only contributed $25,000. She warned that this imbalance threatened the long-term stability of the fund.
Cook County Circuit Judge Mary Mikva, now an appellate court justice, ruled that the city’s failure to fund the pension violated the Illinois Pension Code. She ordered the city to pay nearly $11 million in damages but stopped short of telling it how to raise the money.
The city appealed, arguing that courts shouldn’t force cities to set specific funding levels. However, the appeals court rejected this, stating that the state law requires municipalities to levy taxes annually to cover pension obligations. While the city has some discretion, it cannot ignore its legal duty to fund the pension system.
The justices also criticized the city’s broader financial mismanagement, including scandals where public funds were diverted for unrelated expenses. They found no evidence that Harvey officials could manage their finances responsibly or fund the pension properly.
Despite the ruling, the court did not dictate how the city should raise the necessary taxes, leaving the final decision to the mayor and city council.
Thanks Dan
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