I posted this on Downers Grove Patch this morning. It marks the comeback of the DGreport brand. Initially, there will be a weekly column on Patch. Eventually, I may return to blogging, although perhaps in a slightly different format. Feel free to share your ideas.

Hello again.

It’s been well over a year since I ended my column, shuttered my newsblog and signed on as the first editor of Downers Grove Patch. What I’ve missed the most since then is the chance to share my views on local government and politics.

Some of you may remember my former Downers Grove Sun column, “View from Downers Grove,” or my blog, “DGreport.” Others, however, know me only as the neutral former editor of Patch. I hope it doesn’t come as a surprise that I’ve got opinions about the town I’ve called home for 15 years.

Now, thanks to Patch, I’m back where I belong—sharing my perspectives and opinions and inviting you to do the same.

As long as I’ve been writing about Downers Grove, I’ve made it a point to acknowledge that mine is just one opinion among many. You are more than welcome to disagree and to make your opinion known in the comments section.

I have a couple of rules I’ve always tried to follow and I hope you’ll consider embracing them as well. It’s okay to disagree, even vehemently. It’s not okay to get personal. This is Downers Grove. There are plenty of issues to debate today without making it uncomfortable to greet your adversary on the street tomorrow.

So let’s discuss: liquor code amendments, the 2012 village budget, last month’s recycling extravaganza, the District 99 nepotism policy, the upcoming District 58 superintendent search, the board and commission appointment process, turf battles, campaigns, the local use of social media, local business initiatives and so much more.

See you back here next week with the new “DG Report.”

downersgrove.patch.com

EJ’s newest venture is up and running!  All of you to head over and kick the tires.  Hyperlocal is still the watchword for this AOL backed effort, but EJ finally has some access to resources that, frankly, are beyond a blogger.

Registration is simple.  You can read, comment, suggest, even contribute stories or upcoming events.

This site will stay up as an archive resource.  EJ spent a lot of time putting topical information up about happenings as they went down.  Consider the stove turned back from boil to slow simmer.

But for now, bookmark downersgrove.patch.com so you can stay informed on all things Downers Grove.

The report quotes Deputy Police Chief Kurt Bluder as saying,”We do not tolerate misconduct or inappropriate behavior.” The DGPD participated in the investigation, which was spearheaded by DuPage County Sheriff John Zaruba, the Herald reports.

Plenty of civic groups and several political candidates turned out.

If you have any pics from the fourth pass them on to EJ.  The trusty cell phone camera is getting wobbly.  I’m positive the icy cold beers had nothing to do with it.  Click on any image for a larger version.

North and South bands combined and wore green.

Village council.

According to one parade attendee, Proviso East marching band has been in our parade for over 35 years without fail.

A somber note that drew respectful applause.

Full report by Dave Owens is here.

That gives Illinois the infamous distinction of having the nation’s worst pension problem.  Only it’s not the state’s problem.  In a classic example of effluvium flowing downhill, it’s our problem.

There’s plenty of blame for both political parties; you can’t pin this tail on just a donkey.  “Big Jim” Thompson got the whole ball rolling with his idea of using next year’s revenue receipts to pay for this years spending deficits.  It’s one thing to use future revenues to pay for present day expenses, but you have to have the money now to pay for now.  Talk is cheap, whiskey costs money.  So where did the cash for now come from?  You guessed it, from the pension funds.  It worked great; an untapped, seemingly endless supply of money that could be refilled later so there wouldn’t be any problems.

Except one; once the General Assembly got a taste of endless money, they could not stop spending, and the funds never really got refilled.  Something for this, something for that; money for this voting group, money for that constituency; entitlements here, there, and everywhere.  Edgar slowed the spending frenzy, Ryan kicked it back into gear, Blagojavich put entitlement spending onto a crack-addled overdrive, and wham!  The state is now borrowing money to pay current pension obligations, making taxpayers pay $1.40 for each $1 dollar in pension funding, and state crack-head politicians are asking taxpayers for even more money than that.  For 30 years Illinois has ignored its’ pension obligations.  While municipalities every taxing body with qualifying personnel have been required to make the contributions, state politicians have frittered it away.

Illinois’ unfunded pension liability owed to the state’s five public employee retirement systems (through end of FY2009):

• The State Employee Retirement System (SERS) is 46.1% funded
• The Teachers’ Retirement Systems (TRS) is 56% funded
• The State Universities Retirement System (SURS) is 58.5%
• The Judges Retirement System (JRS) is 42%
• The General Assembly Retirement System (GARS) is 32%
• The Illinois Municipal Retirement Find (IMRF) is 100% funded.*

* The IMRF is managed independent from the state.

These total an unfunded liability of 65 cents on the dollar and is the worst of any state in the nation.  Now the state has delayed paying in for 2010 until 2011, when they will probably borrow the money to make the payment.

The problem isn’t that the pensions are too generous.  Yes, there has been abuse of the system.  D99′s excessive raises to former Superintendent David Eblen resulted in him being ridiculously overpaid making his pension payout spectacular.  Just for that the D99 board should have their budget keys taken away, they obviously don’t value a dollar, and don’t understand the concept of no free lunch.  Or worse, they understand and don’t give a rat’s ass.  At any rate, it’s a sad fact this was not an isolated or unique incident; it happened all over the state and it happened right here.

The reality is most pensions are not over inflated but the state never made the required contributions.  When faced with not enough money to provide services and fund pensions, the state cheaped out on pensions, and kept expanding way past the core services required of a state government.  Politicians get ahead in their world by solving problems, and in their world solving problems requires spending money.

Although Illinois has more government agencies than any other state, we rank 48th in total headcount of state employees, so it’s not the size of state government that is dragging us down.  Now, there’s also township government that is a popular target for waste, but to off that layer of government, it would require a referendum process of huge scope, being fought every inch of the way by those township governments themselves.

Neither are the costs of the system itself too high.  The weighted average of all five Illinois pension systems is about 9.1%.  The national average for state and local  government is 12.5%.  We’re below the national average.

I’ve talked about switching to defined contribution pensions, a 401K type plan for new hires.  Even that has higher costs to administer than defined benefit plans, according to the Center for Tax and Budget Accountability.

According to the Investment Management Institute, the operating expense ratio for defined benefit plans averages 31 basis points (31 cents per $100 of assets); the average for defined contribution plans is three to six times higher, at 96 to 175 basis points. To put that in context of the Illinois pension systems, the administrative costs of a defined contribution system would in all likelihood cost taxpayers anywhere from $275 to $610 million more annually than the state’s current defined benefit systems.

Despite some beginning rumblings of accountability and the need to do something, currently there no solution in sight.  No one from either party in a position of power to do something about it is discussing it as a problem that must be solved, only pushed away for later.  Costs are increasing during down economic times due to bi-partisan cooperation for pension sweeteners authorized by the Illinois General Assembly; that means both sides are to blame, both party’s leadership has failed, and neither is doing anything about it except voting to delay doomsday, increase legalized vice, and blame each other while they sleep in the same bed.

So they want to raise our taxes so much to fix the pensions, right?  Wrong. Pensions are an un-addressed ticking time bomb, and the GA has left that bomb sitting squarely in the lap of every city and village, and every school district in Illinois.  Illinois public pension fund reserves have cratered due to budget raids, and also due to severe losses in market investments, ridiculously high management fees to those politically connected, and the escalating costs imposed by unfunded mandates authorized by the Illinois General  Assembly.

Those sweeteners and mandates have almost doubled the Village’s contributions for employee pensions over the last decade. Public employee contributions are capped at around 10% of their pay by the General Assembly (another sweetener), so the burden to make up the difference falls upon local taxpayers and utility rate-payers (to capture tax exempt property owners).  All the investment losses will start being replenished with the 2009 tax levy, which is collected on your 2010 property tax bill.  And yeah, they’re taking that money, but not paying it into the pensions.

Right from the start, it’s cold comfort but it could be worse for the village.  The State Universities Retirement System saw its assets decline nearly 28 percent in 2008.  The Teachers’ Retirement System, the state’s biggest pension, saw its portfolio drop 30 percent.  That’s a 58 and 99 problem that intrudes hugely into their budget picture over the next 5 years and more.  Let’s just say Martin and Eblen weren’t harbingers of the bad news; neither said word one of understanding a problem existed, as near as the records show.

Back to the village.  As required by State law, all municipal employees (police, fire, and all other personnel) are covered by three separate pension programs: Police pension, Fire Fighters pension, and the Illinois Municipal Retirement Fund (IMRF)

Police. In 2007, the actual contribution to the pension fund was $1,680,424.  At that time it was expected to climb to $2,048,000 in 2010, and up to $2,565,000 in 2013.

The 2010 budget this year revises the Police pension contribution upwards to $2,365,508, 15.5% higher than the estimate made two years ago, and up almost 41% from 2007.  2013 contributions within the 2010 budget are projected to be $2,555,783, lower than the 2013 projections within the 2007 budget.

Are pension obligations declining that the projected contributions are being revised downward?  No they are not, so the projection should likewise be raised upward.

Fire. In 2007, the actual contribution to the pension fund was $2,146,148.  At that time it was expected to climb to $2,437,682 in 2010, and up to $2,789,405 in 2013.

The 2010 budget this year revises the Fire pension contribution upwards to $2,559,952, 5% higher than the estimate made two years ago, and up over 19% from 2007.  2013 contributions within the 2010 budget are projected to be $ 2,728,950, lower than the 2013 projections within the 2007 budget.

Are pension obligations declining that the projected contributions are being revised downward?  No they are not, so the projection should likewise be raised upward.

Expecting pension contributions to drop for both Police and Fire means they expect pension payout demand to drop?  That doesn’t follow; if payroll bodies and/or dollars increase, what does follow is pension payout demands being higher, not lower.

What has changed is the state has lowered required contributions to those pension funds.  It eases some budgeting pinch, but not enough, and simply adds to the underfunding problem.

The mantra used to be that government and public sector workers get good benefits and job security in lieu of high salaries, but since 2004 at the latest that gap between public and private employee paychecks disappeared.  It’s hard to come by perfect comparisons, since government numbers for the private sector include lower-wage industries like retailing, which pull down the averages, but overall, public-sector workers get a pretty good deal. In 2004 average salary for a public worker was $49,275 compared with $34,461 for everyone else, according to the Employee Benefit Research Institute (EBRI). Since then, both pay and benefits have risen without pause, widening that gap.

Readers here at DGreport have been studying the budget.  Outsourcing alone won’t get it done because the three budget busters are personnel salaries, personnel pensions, and payments on bond debt.

We can’t change  pensions, and we’re locked in on paying back money we borrowed, so that leaves payroll.  Can the village cut salaries and take out some of the raise steps?  If we don’t at least reduce the raise steps by 10% minimum we are back at square one in two years of not having enough money to pay for everything.  Did this all happen because every public body went on a protracted effort to raise pay without sacrificing benefits or pensions?  That they had to stay competitive?  I attended plenty of meetings of most taxing bodies where that was exactly the point made, by a revolving cast of presenters over many years.  Well, now we’re competitive, and we’re broke, and not one public taxing body is talking about reducing that pay so we’re not broke.

The village has $8 million a year in debt payments for the next three years, then it drops to $5 million a year in debt payments-unless the village borrows more for contracts to engineering and construction firms for stormwater. For now, that’s the plan.

The village has $77 million in debt and we still haven’t addressed the causes of stormwater flooding; we’re still just fixing the resulting problems.

Fire and Police, and even the Library may have to reduce their budgets.  If it takes one, or two, or ten cycles of zero base line budgeting to accomplish that goal then it’s time to start.  As it is, those three government unit budgets have gone up each year, every year.

Taxes went up last year, and they may increase next year too.  Do local taxing bodies have any other choice?  Not unless they are willing to address payroll, pensions and debt…and they can’t address existing pensions and debt.

So far, the angst is palpable.  Council can raise every tax and fee, and hit the property tax bill, and next year lowered assessments start kicking back.  As assessments go down, tax bills will go up again, and everyone will wonder why.  Schools may be asking for PTELL exemptions to keep up with increases in personnel costs, or start playing the shell game of sloshing funds around and then moving what’s left (like new roofs and building repairs) into backdoor referendums so they can borrow the money now without asking taxpayers for an okay.  Nevermind there’s no sound way to repay $1.40 for every dollar borrowed at some later date.

This is not a problem that will get fixed this year.  Whatever budget gets approved by all local taxing bodies next cycle, it must not be the end of a continuing, continuous budget discussion.  The village comes closest to getting that type of continuous process, but both school boards have been forced to focus on money because of the state late-paying.

The surface has just been scratched  So far Band-Aids have been applied, but the patient needs major surgery, and the doctors still have no suitable set of tools to use.

The 55-gallon barrels are made of recycled food-grade plastic and come equipped with a spigot, garden hose threaded overflow, a screen in the top to help keep out bugs and debris, and a screw-off lid. They are available in terra cotta, gray or black and also may be painted.

The cost for each barrel is $70 and is payable on pick-up day, May 8, between 9 a.m. and 1 p.m. in the Village Hall parking lot near the police station. Note that the pick-up site has changed, due to popular response.  The village has sold 450 barrels, which is more than double the original goal for the program.

More good news: the village has determined that water collected in rain barrels isn’t subject to its water restriction and conservation policies.

But with all those barrels to be loaded next Saturday, volunteer help is needed to direct traffic, explain the procedure to waiting residents and load the barrels into vehicles. If you’re able to help, call Mary Scalzetti at (630)434-5559 or e-mail her at mscalzetti@downers.us.

For more reasons to purchase a rain barrel, click here.

The projections don’t see a turnaround until 2013, when existing EAV is predicted to rise by three percent following dips of two percent in 2010 and 2012 and four percent in 2011.

The assumptions reflect a housing market that is a far cry from its heyday of double-digit appreciation. Of course, it remains to be seen whether the predictions will materialize and also whether local property tax bills will reflect the decline.

District administrators furnished EAV and other assumptions to PMA Financial Network, which presented the information February 8. The district’s Financial Advisory Committee also provide input into the numbers.

On the plus side, the district will benefit from about $20 million in new property EAV this levy, Controller Jim Popernick said. “The new growth is a very  nice feature, but the reality is that even though EAVS have slowed and the consensus is they will go down in 2010, it doesn’t mean revenues will go down.

“The tax cap protects school districts. I’m not going to provide a gloom-and-doom scenario when our past history says that never happens,” Popernick said.

“Moving forward, basically the district can run a balanced budget based on normal revenue streams and normal expenditure patterns,” he said. “When building the budget, we have some flexibility. We can react to outside forces. We can make cuts, evaluate programs and reduce program, supply and equipment budgets.”

While the EAV numbers may be of particular interest to homeowners, D58 like other school districts, is keeping a close eye on how much state aid is forthcoming.

D58 receives $3 million to $4 million in categorical aid and $1 million to $2 million in general aid. If Springfield can’t solve its financial problems, categorically aid is likely to be cut, Popernick said. Categorical aid is earmarked for special education and other mandated programs, which means proportional cuts aren’t possible.

“For all school districts, 2010-11 will be a tough year,” he said, noting that districts are also dealing with the effects of last year’s historically low 0.1 Urban Consumer Price Index . The 2010 CPI-U is back up to average at 2.7 percent, he said.

Fortunately, the district has a cushion in its Medical Reserve Fund as a result of savings realized when it changed health plans and revamped its benefit schedule. Following two years in which expenses were reduced by five percent, the district is projecting 15 percent reduction resulting in $900,000 in savings next year.

D58 also aims to maintain  an overall fund balance of eight to 12 percent, or $4.4 million minimum, he said.