Officials in East St. Louis, Illinois, have sued the local police and firefighter pension boards and the state comptroller to block the use of a law allowing the comptroller to intercept state funds going to the city and redirect them to pension payments.
According to the
The office of Mayor Charles Powell III did not respond to requests for comment. Neither did City Manager Robert Betts.
Dennis Orsey, deputy counsel for the Illinois Public Pension Fund Association, who represents both the local police and fire pension boards, did not respond to a message requesting comment by press time.
The law, which was passed in 2010, is essentially the only recourse for pension fund officials if cities halt the flow of pension payments.
East St. Louis stopped contributing to the pension funds in October, the News-Democrat reported, and fire and police pension fund officials aimed to secure $3.3 million and $3.7 million, respectively, by formally requesting that Comptroller Susana Mendoza intercept the funds.
The fire pension fund reportedly had $2.5 million in its reserve account as of Jan. 30, and the police fund had roughly $20 million in reserve as of Jan. 30.
As of January 2023, the East St. Louis police pension had a 36.4% funded ratio, according to an actuarial report published via the
"This law really only started being implemented when we took office seven years ago," said Abdon Pallasch, spokesperson for Mendoza. "It lets the pension funds petition us, and we can divert the state payments to the pension fund instead. We give the municipality a chance to contest that, and they usually do. It's generally worked out… It's often wound up in court. Oftentimes once it's in court, they reach a deal."
The first such attempted intercept, in the Chicago suburb of Harvey,
East St. Louis has seen the intercept law invoked before.
In that case, East St. Louis had stopped making the required payments and then argued the interception of state funds would force draconian service cuts and layoffs. It is making a similar argument now.
According to the News-Democrat, in 2019, the interception of funds ultimately disrupted some city services and prompted the police force to put off five new hires.
Like Harvey and North Chicago, East St. Louis has experienced population declines, pressuring its tax base.
East St. Louis has lost nearly 10,000 residents since 2010, plummeting from 27,006 people then to 18,462 in 2020 to 17,642 in 2023, according to
In East St. Louis, the pension boards named as defendants plan to contest the lawsuit, they told the News-Democrat.
The intercept law has a "disparate impact" on minority communities and "perpetuates systemic inequities," the city argues.
"This is a dispute between the city and the pension funds," said Pallasch. "The law was all designed toward coaxing the municipalities to meet their pension obligations. That's the easiest way to avoid having this law invoked. And for some economically distressed towns, it's harder than others.
"If we take all the money… that is obviously a hardship on the city," he added. "So the way to avoid that is for the city to get current with its pension payments."
