State forces funding of East St. Louis pensions. What will that mean for city services?

An emergency meeting was convened in East St. Louis council chambers Tuesday so city officials could discuss how they’ll be able to continue to provide essential services now that the state comptroller has begun redirecting revenues to pay for the pensions of retired first responders.

The city has fallen more than $2.2 million behind in contributions to the firefighter’s pension fund and $1.79 million to the retired police officers and their families, according to audits.

The boards of both pension funds have voted to initiate the “intercept process,” which allows Illinois Comptroller Susana Mendoza’s office to take money that would otherwise have been spent on things such as payroll, public safety and sanitation, and deposit it directly toward the under-funded retirement benefits.

Last Thursday, Mendoza’s office intercepted $21,000 owed for city sewer fees for the benefit of the fire pension fund. Those and other revenues will continue to be redirected until all the money owed is collected and the city is able to make its contributions.

“I am glad they are moving forward with the intercept,” said retired East St. Louis police officer Allen McClinton, 84. “If I don’t get my pension money, I could lose everything — my car, house, and truck. It means I can’t pay my health insurance. What am I supposed to do? Go to Walmart and get a job as a greeter?

“I spent 34 years here and for the city to stop paying into my pension fund is ridiculous. I am too old to get a job.”

East St. Louis Mayor Robert Eastern III said in September that he understood the fire pension board’s decision to pursue the intercept.

But the fallout, said City Manager Brooke Smith, could include layoffs. The hiring of five new police officers, who she said were to have been certified next week, already has been delayed.

City officials will revisit contracts the city has with 911 dispatchers, the city attorney, financial consultants and information technology services, Smith said. She also said they will approach St. Clair County officials to see if they will be lenient on payments that are coming due.

“This will create extreme changes in the city’s budget and likely result in reduction of some services,” Smith said. “City Council, Mayor Robert Eastern and I are working diligently to finalize our plan for the city’s financial recovery.”

Since it was her impression that the intercept wouldn’t start until 60 days after the vote, Smith said the diversion of sewer fees last Thursday came as a surprise. She and Eastern convened an emergency meeting of the city council Wednesday to discuss the city’s response.

They met for nearly two hours in closed session.

”We are trying to figure out a plan. We are going to have to look at some of our larger contracts to see where we can make some cuts,” Smith said. “We will continue to be transparent with our citizens and employees about any budget cuts or layoffs that will occur due to the intercept.”

Pension Fund Attorney Dennis Orsey confirmed that the city had been paying $100,000 each month toward each the police and fire pension funds, but stopped making those contributions in June.

Smith said it was her decision to stop the pension contributions because pension board members made it clear to her they were not willing to negotiate. She said she needed to reserve those funds to meet the city’s current payroll.

Orsey said the retired officers and firefighters were left with few choices.

“All of them have negotiated, but none have resolved the matter of the under funded funds to the pension funds,”Orsey said. “The only way to do that is through intercept.”

Eastern said in September that he understands the action taken by the pension boards. Smith also said she empathizes, adding that she has relatives who rely on the pension funds.

In the early 1980s and into the 90s, the firemen’s and police pension funds in East St. Louis were underfunded as the city confronted piles of debt. The Illinois Legislature appointed the Financial Advisory Authority to oversee the finances until it balanced its budget for 10 consecutive years.

It maintained its oversight for 23 years before disbanding in December 2013. In that time, records showed, the city kept up full and timely payments to its pension funds.

By 2015, it had fallen behind once again. Both fire and police pension boards filed lawsuits against the city in St. Clair County Court. Those never went to litigation.

This story was originally published October 3, 2019 at 11:52 AM.