Suburbs from wealthy to working-class have combined to dig a $5 billion hole for taxpayers on the hook to pay for the pensions of police officers and firefighters.
A Tribune analysis of the Depression-era pension system found that suburban leaders' failures and missteps have collectively helped create another staggering layer of crisis beyond the better-known problems that have the state and city of Chicago in a stranglehold.
Some communities are now slashing budgets or even laying off workers as they try to reconcile the promises they made to cops and firefighters with the amount of money actually set aside for them.
Of the 300-plus pension funds across the region, only about 20 are rated by the state as fully funded.
"I feel at the moment as if I'm lying to every new hire to the police and fire departments by promising them a pension I'm not sure I can deliver," said Evanston Mayor Elizabeth Tisdahl.
Some towns did not put nearly enough into their pension funds. Some padded pensions of workers by boosting salaries just before they retired. Some boards overseeing the funds violated basic management rules.
And state regulators have little power to police excesses, allowing problems to fester from suburb to suburb.
The Tribune documented problems that alone might not seem large, but add up to a big burden for taxpayers:
In Niles, officials failed for years to pay their pension funds what actuaries said was needed, and crawling out of the hole has led to a fivefold jump in payments as police and fire jobs go unfilled.
In Barrington, officials jacked up pensions for top brass to entice retirements and agreed to a pension-inflating perk in the union contract. Then town leaders joined a PR campaign to push state lawmakers to ease the "unsustainable burden" of such pensions on towns.
And in St. Charles, the board overseeing pension cash has used some to pay the board president's wife for clerical work and to send board members, all expenses paid, to out-of-state conferences while the pension fund's health worsened.
The flaws and excesses were long masked by a strong economy, when big investment returns pushed average funding levels to nearly 80 percent a decade ago — which many experts consider to be healthy. The latest figures from 2009 show suburban public-safety pension funds, on average, have just 52 percent of the assets needed to be fully funded.
Though the true cost will vary from place to place, the unpaid tab averages nearly $2,700 for every suburban household. A strong economy could boost investment returns and lessen the liability, but experts say the financial sins of the past are too great for pension systems to merely invest their way out of them.
As lawmakers consider reforms, town leaders and unions point fingers. Unions complain towns haven't saved enough and lawmakers failed to force them. Suburban leaders complain lawmakers required them to offer lucrative benefits without the cash to pay for them. The one thing they agree on: The recession made the problems far worse.
The looming crisis frustrates residents such as Jim Young, who joined an Evanston panel studying that city's pension woes. He said government needs to pay for its promises, or stop promising so much.
"Don't kick the can down the road, because that's a debt you're giving my kids and my grandkids, and they're going to have to run the marathon of life with a 5-pound weight on their back," Young said. "How in the hell are they going to compete when they have all this debt?"
Passing the buck
Given their dangerous jobs, police and firefighters have long been promised more generous pensions than rank-and-file government workers. Towns are supposed to collect enough property taxes each year so that, if combined with employee contributions and prudently invested, it would over time cover the benefits already earned by current and future retirees.
But the law doesn't say how much towns must put in, often leading to fights over the math.