But one of my very smart readers did go through it and reached out to me yesterday…
Long time follower, first time writer. In full disclosure, I recently retired from the [redacted] after more than [redacted] years. I just read the COGFA article today and was encouraged about the State’s finances yet again.
Another report that came out in late December that received no coverage was the State Actuary Report (see link below). The unheralded news in this report was that there were several State pension systems that passed the “Tread Water” point in FY21; meaning we are now paying in more than we owe and reducing the liability for those systems.
House Bill 2451 eliminates a formula based on birth date that provided lower pension COLAs to certain retired firefighters. As a result of the new law, all retirees that are considered “Tier 1” members of the FABF will now receive a 3% COLA annually on their pension, with no cumulative cap. Before House Bill 2451, retired firefighters in Tier 1 would have received a 1.5% COLA, subject to a 30% cumulative cap, if born on or after January 1, 1966. Members of the FABF receive Tier 1 benefits if hired before January 1, 2011, while those hired on or after January 1, 2011 receive less generous Tier 2 pension benefits.
One potentially advantageous effect of House Bill 2451 is that it forces immediate recognition of 3% COLAs for Tier 1 members. The state law governing Chicago firefighter pension COLAs has been amended on several occasions in the past to alter the birth date that would determine eligibility of a Tier 1 retiree for a 3% COLA versus a 1.5% COLA. The most recent such change occurred in 2016, when the law was updated to provide a 3% COLA to all Tier 1 firefighters born before January 1, 1966, compared to January 1, 1955, before the change. That change, in addition to several other provisions, triggered a roughly $227 million (4.5%) increase to the actuarial accrued liability reported by the FABF as of the December 2016 actuarial snapshot.
There’s really nothing to strongly disagree with. The city has routinely moved the birth date restriction, but it’s been done in a way that the costs are not funded, which pushes the fund closer to insolvency. This bill would essentially take that routine practice, make it official and force the city to finally pay for it.