Since 1894, the United States has celebrated the labor movement with a federal holiday called “Labor Day”. For most people, it means a day off of work to spend with the family or friends. Some will take to the backyard for a barbecue realizing it has historically marked the end of summer. For college football fans it marks the first weekend of the season. NFL fantasy football fans use the weekend to draft their fantasy football teams for next week’s season opener.
For the fashionistas of the world, it is the last day of the year that one is supposed to wear white. If you didn’t know that, you’ve been warned.
Most people may not recognize the US labor movement as they celebrate the day off. However, few will use the day to bash labor or their own employees. Unless, your name is Larry Deetjen and your employees are firefighters, paramedics and other public servants.
Deetjen issued a scathing “Trustee Information Letter” to the Village Trustees on the eve of the weekend with various “issues” reported therein. The first item of importance for Deetjen to report was entitled “Oak Lawn Firefighter Retirement Data”. It states as follows:
The inevitable has occurred due to firefighters being able to retire at age 50 with 20 years of service at a minimum and the automatic compounded COLA of 3%. Please find enclosed a spreadsheet illustrating that Oak Lawn taxpayers are now annually financing through their property taxes “two fire departments” of which one works and one does not. We now have more retirees receiving pensions “averaging 90%” of their salary at retirement than we have active firefighters. In the last 10 years 25 sworn firefighters have retired and their average pension exceeds the median Oak Lawn household income. If most resided in Oak Lawn (most do not) at this relatively young age, that would be okay but the vast majority do not so in economic terms this is an “outflow of capital” from our community where most of this disposable income gets spent elsewhere. Most alarming data from the pension board report is “how little firefighters in Oak Lawn” contribute to their own pensions. The firefighter contributions (before investment growth) account for less than two years of retirement pension income.
While Deetjen’s attack sounds ominous, it provides only half the story while omitting facts that don’t support his position. His chart below compares the retiree’s salary at retirement, the original benefit and the current benefit to then provide the figure that he calls the “percentage of salary at retirement”.
While Deetjen adds the 3% Cost of Living Adjustment to the benefit, as mandated by Illinois State law, he fails to adjust the salary of the firefighters for inflation. When adjusted for inflation, the table does not show that the village has more retirees receiving pensions averaging 90% of their salary than the village has active firefighters. In fact, the table below–a sample of fifteen retirees from 1977 through 2012–shows that when inflation is added into the salary number, there are no firefighters receiving 90 percent of their adjusted salary in retirement.
Deetjen argues that there are less firefighters working now than retirees receiving 90% of their last salary amount. The statement is blatantly false. While Deetjen has led the way in decimating the workforce in the fire department, his list only contains 51 names that would qualify even under his chart. According to the village’s own arguments in court, there are 72 firemen, paramedics and other sworn personnel. That is a significant difference.
Deetjen’s rant, which was intended for the Village Trustees and not the media or the public, has other factual discrepancies. He bemoans the fact that the retirees’ income is spent elsewhere without providing any documentation. He also attacks the amount that firefighters contribute to the pension. According to state law, the firefighters do contribute 9.4% of their salary to the pension fund. For years the current employees, which are dwindling under Deetjen, pay into the fund to support the current retirees. But under Deetjen’s reductions in workforce there are now less employees paying into the fund.
All Illinois pension funds are based on contributions from the employer, the employee and then the interest earnings on the contributions. All of the state and local pension funds, with the exception of the Illinois Municipal Retirement Fund, are “under funded” due to the employer failing to contribute the required amount over the years.
Deetjen, himself is a member of the Illinois Municipal Retirement Fund after having served in other funds in Florida and Michigan. He currently makes $150,000 a year and based on the formula provided by the IMRF, Deetjen would receive a nice pension with cost of living adjustments every year.
The maximum pension that Deetjen or any IMRF retiree could receive is 75% of their final salary plus a 3% cost of living increase every year thereafter. Yes, the IMRF has the same 3% COLA that Deetjen complains about for firefighters and police officers.
Some day, taxpayers may be funding two village managers. One doing the job and one receiving a hefty pension. The question is will anyone write a memo complaining about that occurrence.