IPPAC Newsletter
Governor Rauner Announces Plan to Reform Police, Firefighter Pensions
When Brucer Rauner was running for governor, the only specifics he
would give about his plans forpolice and firefighter pensions was that
they would get a “special deal,” different from the state’s other
retirement systems.
This summer, Rauner, a Republican, finally unveiled the details of his
this deal and it’s sure to leave many Illinois police and firefighters
feeling less than special.
The most drastic change in the 500-page bill championed by Rauner
would consolidate the investments of the approximately 650 downstate
police and fire pension funds into the well-funded Illinois Municipal
Retirement Fund.
See Rauner, page 2
The Illinois Public Pension Advisory Committee is an Illinois
Not for Profit Organization that was created in 1995 by
concerned Police and Fire Pension Fund Trustees who wanted
to know about issues affecting public pension funds in Illinois.
We work closely with The Illinois Department of Insurance to
ensure our members are receiving the most up-to-date
information available.
The Public Safety Employee Benefits Act
requires a municipality to pay the full health
insurance premiums of a police officer or
firefighter injured or killed in the line of duty
while responding to an emergency.
In Illinois, it has long been understood that this
requires municipalities to pay for health
insurance benefits for an individual granted a
line-of-duty disability pension.
Recent cases have both upheld this rule and
expanded on it, though with some caveats.
In September, in Village of Vernon Hills v.
Heelan, the Illinois Supreme Court struck down
the village’s attempt to interfere in a pension
board’s decision to grant a police officer a line
of duty disability, and thus PSEBA benefits,
finding that the board had final authority to
make such a determination.
Though cities and villages may continue to
fight the granting of such benefits, this case
indicates that courts will likely not accept these
arguments.
See PSEBA, page 2
VOLUME 1 ISSUE 6
PO Box 958939 Hoffman Estates, IL 60195 847.519.1648 office • 224.535.8525 fax www.realippac.com
ILLINOIS PUBLIC PENSION ADVISORY COMMITTEE
OCTOBER 2015
www.realippac.com
The Changing Law
of PSEBA Benefits By W. Christopher Freiberg
IPPAC Newsletter
VOLUME 1 ISSUE 6
OCTOBER 2015
Rauner: Plan would merge investments into IMRF
According to IMRF, individual pension fund boards would still remain
in place, though it’s unclear how their other functions would change
with IMRF handling their investments.
Under Rauner’s plan, newly hired public safety employees would
receive Tier 3 benefits, which is a hybrid defined-benefit and defined-
contribution plan with local control on defined contribution benefits.
The bill would also change the definition of "catastrophic injury" under
the PSEBA benefits law. The new definition would preclude the injured
employee from performing any gainful work in order to have his or her
health insurance premiums paid by the municipality.
The plan would require downstate police and fire pensions to be 90%
funded by 2055, rather than 2040 as set by current law.
Finally, local governments could file for Chapter 9 bankruptcy after an
evaluation process, or if there is a declaration of a “fiscal emergency.”
For other government workers, the plan would offer them the option of
getting raises, more vacation or overtime, but only if they agree to
switch to a less-generous pension plan.
Rauner’s plan was quickly criticized by Democratic and labor leaders
who questioned if it was constitutional under the Illinois constitution’s
pension protection clause.
Though Rauner claimed the plan incorporated suggestions from
Democrats, the Democratic-controlled General Assembly has not
embraced the plan and continues to review it.
A vote has not yet been called for on the legislation, and it is unlikely to
pass in Springfield’s current political climate. Still, it gives an indication
of how Rauner may attempt to tackle future problems with the state’s
unfunded pension liabilities.
PO Box 958939 Hoffman Estates, IL 60195 847.519.1648 office • 224.535.8525 fax www.realippac.com
ILLINOIS PUBLIC PENSION ADVISORY COMMITTEE
PSEBA: Benefits expanded by court
Another notable PSEBA case that came down
earlier this year was Bremer v. The City of
Rockford.
Bremer held that a firefighter can receive PSEBA
benefits not only if he receives of a line of duty
disability pension, but also if he receives an
occupational disability pension. The Court of
Appeals for the Second District equated an
occupational disability to a “catastrophic injury” as
it is called in the first part of the PSEBA statute.
However, Bremer did not receive PSEBA benefits
because the court found that though he suffered
from heart disease, he did not suffer this
catastrophic injury while responding to an
emergency, as required by the second half of the
PSEBA statute.
This leaves the state of the law in an interesting
place where a firefighter obtaining an occupational
disease disability could receive PSEBA benefits,
but conceivably only if his or her occupational
disability becomes apparent on an emergency call.
W. Christopher Freiberg is an associate with the
Hoffman Estates law firm of Collins & Radja PC.
IPPAC Newsletter
VOLUME 1 ISSUE 6
OCTOBER 2015
Should You ‘Pull Back’ From a Bull Market?
In early 2015, the current bull market hit a milestone when it became the fourth-longest run-up since World War II. Despite the
current correction and market volatility, this bull market is technically still intact. But such a long-running rally presents investors
with a dilemma: Should they stay invested in this highly volatile market and hope for more profits, or cash out to “lock in” gains?
That isn’t an easy question to answer — and it’s especially hard this time around, when the investment gains have been so
substantial. Consider this: The Standard & Poor’s 500 index has more than tripled since it bottomed out in early March of 2009,
which means that a $10,000 investment at that point would now be worth more than $25,000. So, if you owned an equity portfolio
that mimicked the S & P 500 during that period of time, or even just held a diverse group of stocks, you probably did pretty well
over the past six years.
Furthermore, the key factors that have contributed to this bull market — low interest rates, low inflation and generally strong
corporate earnings — are still at play. But change appears to be on the horizon as the Fed appears poised to raise interest rates later
this year or next. Uncertainty over the timing of this rate has been unsettling for both stocks and bonds over the past several
months. In general, expectations are for continued economic growth and slightly higher interest rates.
Given the sheer length of the bull market, it’s not surprising that some analysts think we were long overdue for a “correction” (a 10
percent decline in the market over a relatively short period of time). While it was a long time coming, the correction finally came
this past month. Now that the correction is upon us, it is quite normal to question whether you should pull back from the market to
consolidate your gains. Instead of trying to “time” the market, ask yourself some basic questions:
• Am I properly diversified? You can’t control the external events that affect investment prices — but you have total control over
your own portfolio. And the best way to position your portfolio for all markets is to ensure that it’s properly diversified. At any
given period, stocks may be moving up while bonds are down — or vice versa. If you only owned stocks, and the stock market
stumbles, you will likely face big losses. But if you spread your investment dollars among domestic and international stocks,
different types of mutual funds, corporate, municipal or government bonds and other vehicles, you can reduce the impact of
volatility on your holdings and give yourself more chance of success.
• Am I taking on too much risk — or too little? If you consistently become frustrated by short-term declines in the financial markets
— and the accompanying results on your investment statements — you might be taking on more risk than the amount with which
you’re comfortable. If that’s the case, it may make sense for you to shift part of your portfolio from growth-oriented stocks to other
vehicles, such as short-term bonds or high quality dividend-paying stocks. This move may provide you with some peace of mind
and perhaps lower portfolio volatility. Dividend-paying stocks, compounding over the long term, have provided approximately
40% of the total return of the stock market since 1926. Conversely, if you are unsatisfied with your portfolio’s performance, and
you know that you need more growth to achieve your long-term goals, you might need to shift some assets from more conservative
investments into more aggressive ones. Ultimately, you need to balance your risk tolerance with your hoped-for returns.
It’s a good idea to ask these two questions in any economic environment. In doing so, you keep your focus on the “basics,” such as
diversifying your holdings, being aware of your risk tolerance, owning quality investments, and so on. This way you can continue
making progress toward your long-term goals — in up, down and “sideways” markets.
This article is provided by David Klein, a Financial Advisor at RBC Wealth Management. The information included in this article
is not intended to be used as the primary basis for making investment decisions.
RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional
information and guidance.
RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC
PO Box 958939 Hoffman Estates, IL 60195 847.519.1648 office • 224.535.8525 fax www.realippac.com
ILLINOIS PUBLIC PENSION ADVISORY COMMITTEE
By David Klein
IPPAC Winter Seminar is Friday, December 4
This year’s Illinois Public Pension Advisory Committee Winter Seminar will be held Friday, December 4,
2015. Details are as follows: Seminar 9 a.m. – 4:00 p.m. Holiday Party at 4:00 p.m. The fee for the Holiday
Party is $50 for IPPAC Members $100 for Non-Members Location Bridges of Poplar Creek Country Club
1400 Poplar Creek Dr. Hoffman Estates, IL 60169 Phone: 847-781-3681
Attendees will receive a certificate for 8 hours of continuing education under 40 ILCS 5/1-109.3(b)
A Deeper Look at the New PSEBA case Heelan
An injured Illinois police officer who received a line-of-duty disability pension is entitled to health insurance benefits pursuant to the Public
Safety Employee Benefits Act, the state Supreme Court has ruled.
While responding to an emergency call in December 2009, William J. Heelan slipped on ice and fell on his right side. He was taken by
ambulance to the hospital where he was diagnosed with a spasm, shoulder sprain and hip bruise according to records. Later that month, an MRI
revealed preexisting, significant osteoarthritis.
Heelan filed a claim for workers compensation benefits, leading him and the village to settle for a lump sum. During the year following his
injury, the village paid Mr. Heelan his full salary pursuant to the Illinois Public Safety Employee Benefits Act. He underwent a right hip
replacement in April 2010 and a left hip replacement in September 2010, after which he didn't return to work
He applied in December 2010 for a line-of-duty disability pension, an award paid to police officers who, “as the result of sickness, accident or
injury incurred in or resulting from the performance of an act of duty, is found to be physically or mentally disabled for service in the police
department, so as to render necessary his or her suspension or retirement from the police service.”.
The board of trustees of the Vernon Hills Police Pension Fundthen granted Heelan the line-of-duty disability pension. The village didn't object
to the board's decision, but it filed a complaint the following month seeking a declaratory judgment that it was not responsible to pay the health
insurance premium for Heelan and his family as a result.
The village argued that Heelan didn't meet the statutory requirements of suffering a “catastrophic injury." However, the Circuit Court of Lake
County, Illinois, concluded that Heelan was entitled to the insurance benefits pursuant to the Public Safety Employee Benefits Act since he
“received a line-of-duty pension, and there's a stipulation that he was responding to an emergency.”
According to the act, to be eligible for insurance “the injury or death must have occurred as the result of the officer's response to fresh pursuit,
the officer or firefighter's response to what is reasonably believed to be an emergency, an unlawful act perpetrated by another, or during the
investigation of a criminal act.”
The village appealed, arguing that it was deprived of due process and denied the opportunity to “litigate the nature, extent, or causation of
Heelan's injuries,” records show.
A divided 2nd District Appellate Court of Illinois rejected this argument in July 2014, holding that a line of duty disability is a equivalent with
a "catastrophic injury" under the PSEBA statute. The dissenting justice stated that the village didn't have an opportunity to be heard regarding
the evidence of catastrophic injury.
In September, the Illinois Supreme Court affirmed the judgment of the appellate court, ruling that, under the act, employer-sponsored health
insurance should be continued for “public safety employees and the families of public safety employees who are either killed or
'catastrophically injured' in the line of duty.”
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