Dupage Policy Journal

A recent assessment by Wirepoints on the negative financial impact caused by local pensions gave Hinsdale and Clarendon Hills both a "D" based on the effect on Illinois' 175 largest cities from 2003-19.

According to the report, 650 local pension funds around the state are causing financial issues for cities, taxpayers and workers, but city officials have limited options due to state mandates.

"Local officials can do little about the crisis because city retirement costs are largely a consequence of the state’s top-down, one-size-fits-all mandates which prevent cities from actually solving their pension problems," the report said.

This has resulted in municipalities cutting services and jeopardizing the retirement of workers, leading to layoffs in places such as Springfield, where more than 40 police personnel have been laid off in the past decade.

Wirepoints evaluated 10 equally-weighted metrics to grade cities from A to F on a 100-point scale, based on factors such as pension fund health for police and firefighters, the share of pension debt for the community, contributions from taxpayers and employees, and the number of active workers paying in compared to beneficiaries drawing benefits, among others, according to Wirepoints.

The number of cities with "F" grades rose from seven in 2003 to 102 in 2019, the report said. Clarendon Hills and Hinsdale both received "C" grades in 2003, and both downgraded to "D" in 2019.

Hinsdale received a total score of 62, a 16-point decline from a score of 78 in 2003, and it was among 64 cities to receive a "D" grade. Hinsdale's pension fund shortfall was $8.6 million in 2003, meaning each household was responsible for $1,425 in future taxes. By 2019, the shortfall had surged to $31.3 million, making each household liable for $5,373 in debt on average.

Hinsdale's budget shortfall grew from 7.1% in 2003 to 9.7% in 2019, resulting in a decrease in spending on vital services such as public safety and roads. Despite residents paying significantly more into the system in 2019 (2.1 times more) than in 2003, city debts have ballooned to 3.6 times larger.

Clarendon Hills received a "D" grade in 2019, with a total score of 64, an 11-point decline from its score of 75 in 2003. The city's pension funds faced a shortfall of $3.1 million in 2003, which equated to each household owing $1,077 in future taxes. By 2019, the pension funds' shortfall had surged to $11.7 million, resulting in each household owing an average of $3,621 in debt, Wirepoints said.

Despite increased taxpayer contributions, Clarendon Hills' pension had just 55.7% of the necessary funding in 2019, compared to 71.9% in 2003. Pensions have nearly doubled in that time, to 10.3% of the city's budget, forcing the government to reduce spending on core services such as public safety and roads.