Posts Tagged village may privatize fire department

North Riverside Fire Department news

Excerpts from the

The Illinois Labor Relations Board last month ruled that the village had not engaged in surface bargaining with union firefighters before declaring an impasse, filing a lawsuit arguing the village had the right to void its union contract and issuing termination letters to all union firefighters in late 2014.

However, the labor board in a 4 to 1 vote on July 12 also ruled that the village had no right to unilaterally terminate its collectively bargained contract with firefighters.

“For us to decide the contract be terminated … brings us dangerously close to modifying the [Illinois Public Labor Relations Act], and that’s not our role,” said John Hartnett, chairman of the Illinois Labor Relations Board during the July 12 hearing in Springfield. “Our role is to interpret the act.”

Still, it was clear that there was some sympathy for the village’s position that it was acting as a result of precarious financial circumstances.

“When the employer is faced with a critical financial challenge, the village asks how it truly terminates a contract and a bargaining relationship that involved protected service employees so as to be able to pursue more cost-effective options for delivery of such services,” said Kathryn Zeldon-Nelson, attorney for the labor board.

Was the only alternative, Zeldon-Nelson wondered going through arbitration and “trusting the interest arbitrator to take cognizance of [the village’s] financial constraints”?

Just what it all means in terms of firefighters and the village coming to terms on a new contract is unclear, because not all of the loose ends remaining from the initial push to privatize firefighting services in the summer of 2014 have been tied up.

Both sides still await word from the Illinois Court of Appeals regarding Cook County Circuit Court Judge Diane Larsen’s October 2015 ruling that she didn’t have jurisdiction over the matter.

Also pending is contract arbitration that was demanded by the union and held in abeyance by the arbitrator until the circuit court case was disposed.

J. Dale Berry, the attorney for North Riverside Firefighters Local 2714, said he didn’t expect the appellate court to rule “for several months.”

Hermanek called the labor board’s decision that the village had not engaged in surface bargaining a major victory for the village.

Berry, however, said the labor board upheld the crux of the union’s argument – that the village could not unilaterally terminate the union contract or change the employment status of the firefighters.

“If he thinks that’s a major victory for the village, I’ll take the loss then,” Berry said.

thanks Dan

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Oak Lawn Fire Department news

Excerpts from the

As the Village of Oak Lawn and Oak Lawn firefighters continue to battle in court over issues such as minimum manning, negotiations have reportedly not moved either side from their position and Village Manager Larry Deetjen has reportedly told trustees that other villages facing minimum manning mandates in their contract have chosen to disband their fire departments and privatize the services.

Deetjen, who masterminded the outsourcing of Oak Lawn’s union 911 dispatchers to Noncom, a private company in 2013 has threatened similar action in the past with regard to firefighting services or paramedic services. Since that time, Deetjen has made references to transitioning other municipal services to private or regional organizations.  Norcomm recently donated $1,000 to Mayor Sandra Bury.

According to one source close to the village’s negotiations, he told trustees that a community in California that had reached an impasse over the minimum manning issue, “voted to disband its department in its entirety and contract the service.” There was no indication given which community was referenced, but last year the City of San Bernardino’s city council voted 4-3 to outsource its fire services as part of a bankruptcy plan. Fire services were outsourced to San Bernardino County.

There would be no comparable service available from Cook County, for Oak Lawn to outsource to. The closest regional fire service would be the North Palos Fire Protection District, which serves Palos Hills, Worth, Hickory Hills, and parts of the nearby Cook County Forest Preserve. Joining a fire protection district would add another taxing body to Oak Lawn’s property tax bills.

Another potential option would be a private company contracted to provide fire services. Communities have shied away from this option due to legal issues surrounding mutual aid agreements between municipalities. Private service providers may not be subject to these agreements.

No public discussion has been had about this issue and no resolution of the minimum manning negotiations is expected until 2017.

thanks Dan & Dennis

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North Riverside considers privatizing the fire department (more)

This from the

The village of North Riverside’s bid to privatize its fire department suffered a setback Thursday afternoon when a Cook County judge denied the village’s motion to delay contract arbitration with the firefighters union.

Judge Diane Larsen sided with North Riverside Firefighters Union 2714, saying the village had not proven it would suffer irreparable harm by allowing arbitration to proceed.

While acknowledging that the issues of pension obligations and the ability of the village to pay those costs were serious, those issues can be dealt with before a panel of arbitrators, which has already been chosen by the Illinois Labor Relations Board.

North Riverside’s attorney, Burt Odelson, said he would file an appeal with the Illinois Court of Appeals the first week of January to try to prevent arbitration from proceeding. The village filed a lawsuit in September asking for a judge to invalidate its contract with firefighters. The contract expired April 30 and the two sides engaged in several negotiating sessions before the village claimed the two sides had come to an impasse.

Odelson reasserted the village’s claim in court on Thursday that “the village is fighting for its financial life” in the face of pension obligations it can’t pay. North Riverside for several years during the past decade either underfunded its pension obligation or paid nothing into its fire pension fund. As a result, the Illinois Department of Insurance has ordered the village to either fully fund its pensions or risk having sales tax revenue seized to pay the pension obligation, beginning in 2016.

“[It will be] a disaster for the village if we go to interest arbitration,” Odelson told Larsen.

The two sides have an arbitration session scheduled for Jan. 22. That session will take place unless the appellate court overturns the circuit court’s decision.

J. Dale Berry, the local attorney for the firefighters union, successfully argued that the village had more than a year to work out the issues through the arbitration process. The village filed suit, he said, asking [the judge] for permission to breach that agreement.” State law, Berry argued, was clear that the firefighters contract could not be summarily invalidated by the village.

Larsen did not rule Thursday on the broader question of whether the village can summarily terminate its contract with the firefighters union. The two sides will appear again in Cook County Circuit Court on Jan. 14. At that time, Larsen is expected to rule on the union’s motion to compel the village to hand over records related to its discussions on privatizing the fire department with Paramedic Services of Illinois (PSI).

The village contends it is simply asking for the judge to determine a matter of law, which does not require extensive discovery. In any case, Odelson said, there are no records other than the ones it has provided to the union already.

The union argues that the village never bargained in good faith and had already begun negotiating with PSI about privatization before sitting down at the bargaining table with firefighters.

There is a separate complaint on that issue and the union’s contention that the village engaged in retaliation against firefighters, which is pending before the Illinois Labor Relations Board.

While Odelson said Thursday’s ruling gives no indication of how Larsen will rule, Berry was optimistic that things were breaking the union’s way.

thanks Dan

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North Riverside considers privatizing the fire department (more)

The RBLandmark has this article:

With an important court date looming, the village of North Riverside’s attempt to privatize its fire department got a bit more complicated last week when the Illinois Labor Relations Board (ILRB) issued a complaint against the village, charging that it failed or refused to bargain in good faith with the firefighters’ union and retaliated against union employees who engaged in protected union activities.

Melissa Mlynski, executive director of the Illinois Labor Relations Board notified the village on Dec. 8 that it had 15 days to file an answer to the complaint. The matter will be taken up at a hearing in the future.

In the meantime, both the village and firefighters’ union will appear in Cook County Circuit Court on Dec. 18. North Riverside officials hope that Judge Diane Larsen will rule that the village’s contract with the firefighters’ union, which expired April 30, has terminated.  The village filed a lawsuit seeking a ruling on the matter of the contract’s validity on Sept. 12.

A judge invalidating the contract, the village says, would clear the way for hiring Paramedic Services of Illinois (PSI) to take over fire operations for the village. The company has provided paramedic services for the village for nearly three decades. The village contends it needs to privatize the department in order to get out from under a large and growing pension burden. North Riverside says such a move would save the village $700,000 annually.

The union argues that the contract is still valid and that language in the contract clearly prohibits the village from laying off firefighters and privatizing the department while negotiations are still pending. The village claims that contract talks are at an impasse; the union denies that contention.

On Sept. 18, North Riverside Firefighters Union Local 2714 filed a demand for arbitration with the Illinois Labor Relations Board. The board approved that demand for arbitration and one brief session has already been held. The next arbitration date has been set for Jan. 22, though that could change depending on what the judge rules on Dec. 18.

The union believes that arbitration is the proper venue for hashing out differences between the village and firefighters.

J. Dale Berry, the local counsel for the firefighters’ union, said the ILRB complaint issued Monday bolsters hat contention.

The complaint, said Berry, also undercuts the village’s claims that there are no facts in dispute and that its lawsuit should be a simple administrative judgment. The village claims in its lawsuit that it had bargained in good faith and had participated in several negotiating sessions with the union before declaring an impasse.

But the complaint filed Monday states that the village failed to respond to union requests to negotiate a new contract until after the village announced publicly it would seek to have PSI take over fire operations.

On June 16, Mayor Hubert Hermanek Jr. issued a letter to residents announcing that proposed partnership with PSI “to include fire protection services and prevent layoffs.” The village and union didn’t sit down for their first negotiating session until June 24 and reportedly gave the union a take-it-or-leave-it proposal for firefighters to resign their positions with the village and become employees of PSI.

Firefighters refused to accept the proposal.

The complaint also alleges that Fire Chief Brian Basek denied personal and vacation day requests to union officials, including union President Rick Urbinati, Vice President Chris Kribales, Treasurer David Rajk and Union Steward Jason Williams in the wake of that negotiating session. In the past, the complaint states, such requests were granted routinely.

The complaint alleges that the chief’s actions were taken “to retaliate against public employees because they engaged in protected, concerted and union activity.”

thanks Dan

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North Riverside considers privatizing the fire department (more)

The SouthTownStar has an article on the continuing issue of the North Riverside politicians attempt to privatize the fire department.

The state’s largest firefighters union claims that a lawsuit filed by North Riverside to terminate the village’s fire union is motivated by politics, not financial problems.

“Over the last 10 years, North Riverside hasn’t made a single full payment into the union pension fund,” said Pat Devaney, president of the Associated Fire Fighters of Illinois. “In five of those 10 years, it made no payments at all. Zero!”

A lawsuit filed on behalf of North Riverside by Evergreen Park attorney Burton Odelson contends that the west suburb no longer can afford to make payments into the fire pension fund as required by law. The first-of-its-kind lawsuit in Illinois asks a Cook County judge to dissolve the firefighters union so the suburb can privatize its fire department.

“This isn’t about the suburb’s ability to fund the pension,” Devaney said. “It’s about politics.”

North Riverside’s mayor wants a private company, Paramedic Services of Illinois, to provide fire protection for the village. The company has provided the town’s ambulance service for 28 years.

Devaney contends that PSI has made $3,800 in donations in recent years to the Voters Improvement Party, a political party whose members include the mayor and a majority of village trustees. “This is a no-bid contract worth $9 million awarded to a company that has made campaign contributions to the mayor and his political party,” Devaney said, adding that those donations represent about 25 percent of the party’s campaign funds since 2005.

“It would be illegal under state law for the state to award a no-bid contract to a company that made campaign contributions to state officials,” he said. “But the law doesn’t apply to municipalities, so North Riverside does this to reward a company that makes campaign contributions and claims it is all about saving the taxpayers money.”

The village, with annual revenue of $14.4 million and expenses of about $15.1 million, claims that required contributions to its fire pension fund have increased by a whopping 340 percent (from $175,793 per year to $773,055) from 2003 to 2013.

Pension reform legislation passed by the General Assembly in 2011 requires that all municipal pension plans be at least 90 percent funded by 2040. The law also gives public-employee unions in 2016 the right to begin intercepting sales tax revenue from the state to towns if pension funds are not adequately financed according to a state schedule.

North Riverside argues that power could mean the village might lose millions of dollars in sales tax revenue, forcing it to slash government services.

Odelson said the village would save more than $745,000 next year and $4 million over the next four years by contracting with a private company to provide fire protection.

In addition, all of the village’s firefighters would have to be hired by the private company under the terms of the contract.

“All of the firefighters would be hired by the private company for 11 years, at which time 12 of the 14 full-time firefighters would be eligible to retire,” Odelson said. “Their benefits would remain the same, the pensions would be paid, and we even offered a salary increase if they accepted the deal but they turned us down.”

But Devaney believes village officials are not motivated by budget concerns but rather “political retribution against the union. The (union), in the last mayoral election, supported the mayor’s opponent. He’s getting back at the members by refusing to negotiate with the union in good faith. “We will document that in court, and this lawsuit will be thrown out because it violates the fair labor laws and the right of individuals to engage in the democratic election process.”

Odelson said the firefighters union contributed more money to the opponent of the mayor than the mayor received from Paramedic Services of Illinois.

If North Riverside should win this lawsuit, it’s likely that several Southland towns will file similar lawsuits seeking to terminate union contracts to preserve the towns’ financial solvency.

“They have real financial problems,” he said. “North Riverside does not. While failing to fund the firefighters pension, it was making payments on a regular basis into the IMRF (Illinois Municipal Retirement Fund), which covers village employees.” North Riverside made payments of $203,375 to the IMRF in 2003 but paid nothing into the fire pension fund in the same year, according to information provided by the firefighters union. It says that in 2006, the village again made zero payments into the fire pension fund, while contributing $216,000 to the IMRF. And in 2009, 2010 and 2011, the town again failed to pay anything to the firefighters fund, while making contributions of $231,474, $248,461 and $247,741, respectively to the IMRF, according to the union.

“What that tells me is the village made a deliberate decision to create a pension crisis so it could use that as an excuse to violate the rights of the union firemen,” Devaney said.

As for the south suburbs, he said the solution lies in consolidating municipal fire departments into fire protection districts. “When you eliminate duplicative costs, the huge salaries of fire chiefs and deputy fire chiefs and other administrative costs, the savings would provide the public with the same degree of safety they have now at a much lower cost,” Devaney said.

“What we’re saying is that when a contract expires on April 30, 2014, it ends,” Odelson said. “The village has the right to privatize when the contract expires. That’s it.”

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North Riverside considers privatizing FD (more)

A post on the village of North Riverside’s web site offers a rebuttal from the mayor to a recent article on the privatization of the North Riverside FD:

A recent article in the Landmark, which was focused on the firefighters’ union, left out some important facts that North Riverside residents should know about the Village’s proposal to continue providing safe and responsive fire protection services through a new model using a private company.

First of all, you all know this company very well. For the past 28 years, Paramedic Services of Illinois (PSI) has provided privatized ambulance and emergency response services to local residents and businesses, saving lives and working side-by-side with the Village’s firefighters.

PSI, whose paramedics are certified as firefighters as well, has been asked to develop a proposal that will offer employment to all 16 of the Village’s current firefighters. Firefighters will maintain their current base salaries, earned pension benefits, health insurance and a new 401(k) plan through PSI. All will get their earned pensions to date. The savings to the Village will come in the form of no future pension obligations and significant reductions in overtime.

To suggest that PSI firefighters will somehow be sub-par is a direct hit on your current firefighters as, again, all will be offered to stay on in North Riverside.  And, as new firefighters/paramedics are needed, all PSI employees are trained through the same programs, at the same fire academies, to pass the same state standards that your current firefighters meet.

Even if none of the firefighters decide to stay with North Riverside, PSI has experienced firefighters and paramedics on staff who will move to North Riverside, providing comparable and experienced protective services.  PSI firefighters, who are also paramedics, train at the same academies and are held to the same standards as every licensed firefighter in the state of Illinois.

It was raised that the North Riverside fire department will be a revolving door if privatized … that firefighters will leave seeking more lucrative future pensions in other communities. That does not bear out in fact.  Lincolnwood Fire Department, which PSI has run for 25 years, has terrific longevity, with the average length of service for its 10 officers at 23.8 years on the job, and more than 15 years on average for its firefighters.

Is North Riverside in bad financial shape, and being called before the state because of underfunding its pensions? Yes, and we currently project a FY 15 deficit of $1.9 million – $1.8 million of which results directly from public pension obligations. We have been drawing from our general reserves to continue providing vital services to the Village – clearly not a feasible long-term strategy. Unfortunately, even if the pensions were paid IN FULL each year, the Village would still be in arrears by more than $1 million and needing to look for ways to staunch the continuation of a growing pension obligation.

North Riverside firefighters put their lives on the line to protect our community, and deserve a good wage.  But, our firefighters make over $200,000 with salary and benefits, and our Lieutenants make even more. It is not sustainable.  Those salaries are higher than a lot of other firefighters —  more than Orland Park Fire Protection District employees earn who protect over 75,000 residents – and I daresay, a lot more than our average residents make.

As your elected Mayor, I will always put residents’ and businesses’ needs first. I can’t in good conscience continue to kick this problem down the road. Tough issues require thoughtful and bold action, and privatization is an excellent solution. I urge all residents to keep informed of the facts on this important topic through our website at

Thank you,

Mayor Hubert E. Hermanek, Jr.

thanks Dan

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North Riverside considers privatizing FD (more)

The Riverside-Brookfiled Landmark has an article about this week’s village board meeting in North Riverside;

North Riverside’s village board on Monday night was confronted with a sea of orange and a strong display of solidarity toward firefighters, who are battling against a plan to privatize the department and shift the village fire service to the company that now provides its paramedics.

For the second straight week, about 150 people packed the Village Commons council chamber to overflowing. The vast majority, many of them North Riverside firefighters and union [members] from other municipalities, wore orange T-shirts bearing the crest of North Riverside Firefighters Local 2714.

“Your radical idea to balance your budget [after] years of misappropriation and mismanagement of town funds, does not give you the right to bargain with our safety,” said Chris Kribales, a North Riverside firefighter and resident of the village for more than a decade. “This town deserves professional, sworn people to protect them.”

Monday’s meeting was the legally required public hearing for the village’s 2014-15 appropriations ordinance, which must be passed by the end of July. The village board is scheduled to meet at a special session on Thursday, July 24, to pass the ordinance, which guides spending for the current fiscal year, which began May 1.

The appropriations ordinance drafted by village officials calls for a savings in fire department spending of more than $700,000. Mayor Hubert Hermanek Jr. has proposed deriving that savings by contracting out fire protection services to Paramedic Services of Illinois (PSI), which has provided paramedics to North Riverside for 28 years.

Firefighters have been offered a chance to sign on with PSI at their current salaries, but they would lose benefits such as their pensions and health care in favor of benefits provided by PSI.

Hermanek has identified the steep cost of firefighter pensions as the reason the village needs to change the way the fire department operates. The village has failed over the past decade to fund its fire and police pensions adequately, and now faces sanctions from the state of Illinois unless it does so.

Firefighters and their supporters say the village is scapegoating firefighters for financial problems it built for itself over more than two decades, including a failure to raise the village’s property tax levy, village subsidies for water and waste hauling services, and generous salaries and benefits for village employees and elected officials.

North Riverside firefighters have been working without a contract since April 30. The village and the union have had two negotiating sessions so far. A third is scheduled for July 21, just prior to the vote on the fiscal-year appropriation.

Firefighter Rick Urbinati, who also made a public statement at Monday’s hearing, said he believed the two sides could negotiate an agreement that would save the union structure and find the savings the village is looking for. “This union’s been here since 1979 and it’ll stay here.”

The attorney for the firefighters union has said previously that the union would sue the village if it attempted to privatize the department.

Several supporters of the union who spoke Monday said they would be happy to pay more in taxes to ensure that the village’s fire department remained as is. Others cautioned that privatizing fire protection was risky and would be susceptible to constant turnover. Of the 18 speakers, Monday, 13 were strong supporters of the firefighters’ position. Only a handful warned that the village’s pension burden would drive North Riverside’s finances into the ground.

“Pension costs for village employees are eating us alive,” said Al Meyer, who supports the village’s proposed solution to the pension issue. “Our village leaders have stepped up with an innovative plan to address this problem. Continue negotiations with the fire union to cut expenses. And if that fails, privatize the fire department.”

thanks Dan

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North Riverside considers privatizing FD (more)

The has an op ed piece on the proposition in North Riverside about privatization of the fire department.

Pardon the residents of North Riverside if they’re feeling just a little embarrassed these days.

Known for their hard work and sense of fairness and accountability, North Riverside residents have been faithfully paying their tax bills each year with the understanding their elected officials have been taking care of village business.

Fact is, the politicians who decide how to spend the hard-earned tax dollars of North Riverside have been misappropriating village funds and diverting public workers’ funds for other purposes.

That’s exactly what this is: by rerouting revenues earmarked for police and firefighter pension payments for other purposes, the politicians who run the village of North Riverside have in fact been misappropriating public funds.

In five of the last 10 fiscal years, the village board has declined to pay even one dollar into the pension fund for its firefighters. Now, Mayor Hubert Hermanek Jr. is threatening to privatize the village fire department, not because the current firefighting corps is incapable but rather to siphon off additional dollars that should be earmarked for public safety.

In fact, members of the North Riverside Fire Department are among the most professional firefighters in the Midwest. No, Mayor Hermanek is flirting with privatization, because his own village board isn’t honest enough to pay its bills the same way its residents do.

This is not a new crisis, only one of cynical opportunity for Mayor Hermanek. Indeed, on July 5, 2011, the Landmark ran a story detailing warnings by then-Trustee Rocco DeSantis that the village faced lawsuits because of its refusal to comply with its legal obligation to police and firefighter pensions.

Interestingly, Trustee DeSantis also accused the board of hypocrisy because its own pensions were current and healthy under terms of the Illinois Municipal Retirement Fund.

Privatization of a professional public fire department raises all sorts of questions of political propriety. After all, no one makes a profit from public service — at least not legally.

But most importantly, this cynical display of irresponsibility by Mayor Hermanek represents a serious threat to the safety of all North Riverside citizens. The reason communities maintain public police and fire departments is because the safety and security of our families should be the top priority at all levels of government.

The performance of Mayor Hermanek and the village board is more than a source of embarrassment for the taxpayers of North Riverside.

It’s outrageous.

Pat Devaney, president

Associated Fire Fighters of Illinois

thanks Dan

And from the Chicago Sun-Times:

The union representing North Riverside firefighters promises to sue if the village hands over control of the fire department to a private company, as planned.

The villages’s mayor contends his proposal would ease a pension problem. But the company poised to get the contract also is a contributor to Mayor Hubert Hermanek Jr.’s political party. What’s more, the move could set the village up for a costly court battle. Officials had hoped it would rein in costs.

“We understand there’s a problem forcing their hand, but it shouldn’t be at the expense of the fire department,” said Rick Urbinati, president of the North Riverside Firefighters Union-Local 2714, who claims the move would break multiple state labor laws.

Since 2008, village officials have lowballed or skipped payments to police and fire pension funds, according to the Illinois Department of Insurance. As a result, both pension accounts are only about 40 percent funded. Complicating the matter is a change in law that allows the state to garnish tax revenues from towns that are delinquent on their payments.

“If we don’t totally fund the pension by 2016, they’re going to start intercepting our sales tax,” said Hermanek, who took office a year ago after serving as trustee.

Pat Devaney, president of the Associated Fire Fighters of Illinois, said newly created or redrawn fire districts have opted to use private companies. But this is the first time he has heard of a municipality trying to privatize an existing department.

And Hermanek thinks there are others, waiting to see how the situation in North Riverside plays out before considering similar plans of their own.

Hermanek said North Riverside faces a $1.9 million deficit and is reliant on sales tax revenue, which has been low since the recession hit. But the village of 6,700 also is not large enough to receive the “home rule” designation allowing officials to hike the sales tax within their borders. Property taxes are a non-starter, because raising the $700,000 yearly to fund the pension fund would be huge hike, Hermanek said.

To sidestep those issues, Hermanek wants to award a $9 million, five-year contract to the Paramedic Services of Illinois — a company that in recent years has made $3,800 in donations to the local “Voter’s Improvement Party” — a party that counts Hermanek and a majority of trustees as members. Donations made by the company, which did not respond to a request for comment, account for 26 percent of money raised by the party since 2005, according to state records.

Under Hermanek’s proposal, which is supported by a majority on the village board, the department’s 16 unionized firefighters would be offered jobs with Paramedic Services of Illinois. The company currently provides ambulance service for the village and would train firefighters to be paramedics as well, to eliminate overlap.

The firefighters could keep their current base pay, but would have reduced benefits and would be required to surrender their pensions in favor of a 401(k) program, according to a village memo. Former employees could still collect a pension, and current employees will get a pro-rated pension based on what they’ve paid in, according to the memo. The plan is scheduled for a final vote on July 14.

Urbinati said unionized firefighters will refuse to work for the company and hope to negotiate an alternative to privatization. And J. Dale Berry, an attorney representing the firefighters, said he’s willing to negotiate a contract that would cost the village the same as their proposed deal with Paramedic Services of Illinois.

Trustee H. Bob Demopoulos, the lone critic of the plan on the village board, says the deal stinks. “We subsidized water. We subsidized garbage. They never bid out any contracts until recently,” Demopoulos said. “Now we’re in such a financial rut that they are asking our firefighters to sacrifice.”

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North Riverside considers privatizing FD (much more …)

A bunch of articles about the situation in North Riverside where village officials have underfunded the firefighter pensions and are considering privatizing the fire department.

This article is from the Chicago Tribune:

North Riverside’s recent efforts to cure its pension-driven financial ills have little bearing on the question of whether the village violated state statutes by underfunding its police and fire pensions, a state Department of Insurance attorney said in a hearing Thursday.

The department summoned North Riverside officials to its Chicago office to explain why the village underfunded police and fire pensions by about $5 million from 2008 to 2012, paying nothing toward the funds in several of those years.

Village officials focused on the future in the hearing, presenting an unusual plan to save money by contracting with an outside company for firefighting services. A newly passed water rate increase will also help, officials said.

The village was one of at least six Illinois municipalities to receive letters from the Department of Insurance ordering the towns to pay more toward their pensions or face penalties. The letters include information about a new enforcement mechanism that will allow the state to force municipalities to pay more toward police and fire pensions starting in 2016. Department of Insurance officials said the hearing was held to determine whether the village violated state laws by underfunding the pensions. State law gives leeway for underpayment if municipalities can show “good and sufficient cause” for the underpayments.

“It seems they are taking many steps to move forward, but they haven’t explained why they didn’t take those steps earlier,” Department of Insurance attorney Amanda Kimble said in the hearing.

Kimble and the village argued their cases before a Department of Insurance hearing officer, who will make a recommendation to the department’s director about whether the village violated state statutes by underpaying its pensions. A recommendation is at least several weeks away, the hearing officer said.

North Riverside projects a budget deficit of $1.9 million for the coming fiscal year, $1.8 million of which is due to its pension obligations, village officials have said. Officials have said privatizing the fire department would save the village about $745,000 per year by reducing benefit costs and moving employees into 401k retirement plans. The North Riverside Firefighters Union Local 2714 has threatened to sue if village officials go through with the privatization plan, saying the union’s contractual agreements with the village would prevent privatization.

Village officials and firefighters union representatives both questioned the Department of Insurance’s focus on past underpayments instead of solutions for the future.

A 2013 letter from the department to the village noted the village paid nothing toward its fire pensions from 2009 to 2011 and paid only a fraction of what it should have in 2012, violating statutes requiring municipalities to meet payment schedules. The village underpaid its police pensions over the same period, the letter states.

Village officials have said they could not afford the pension payments because the economic recession reduced sales tax revenue, which makes up a large portion of the village’s revenues.

Kimble noted the village managed to make payments to the Illinois Municipal Retirement Fund — the pension fund for non-uniformed employees — during the years it failed to pay toward the police and fire funds.

The Illinois Municipal Retirement Fund already contains an enforcement mechanism like the one that will available for police and fire pensions in 2016, North Riverside Finance Director Sue Scarpiniti said at the hearing. For that reason, the village made payments to the municipal fund, she said.

Union officials also criticized the village for not making the required payments, but said the best solution for North Riverside residents is more likely to come from the negotiating table than from state enforcement actions.

The union’s latest contract with the village expired April 30. The two sides began a new round of negotiations June 24, union officials said.

This editorial is also from the Chicago Tribune:

North Riverside is a small town with a big problem: It can’t make its pension payments.

The west Cook County suburb of 6,700 people faces a $1.9 million budget deficit. One big reason for the gap is that it has to make a $1.8 million payment to its police and fire retirement funds. North Riverside doesn’t have the money.

The village can’t tax its way out of debt. It can’t borrow its way out of debt. It can’t wait for state lawmakers to fix the problem. It needs a solution, now.

In short, it is much like the city of Chicago and countless municipalities around the state. It is in trouble.

On Monday, the North Riverside Village Board voted 5-1 to contract with a private company to staff its fire department. It’s a creative answer — and not as risky as it might sound.

The city’s 12 firefighters and four lieutenants will keep their jobs at their current salaries with modest raises ahead, but they will work for Paramedic Services of Illinois, which already provides ambulance service for the village. The head of the fire department will still work for the village.

North Riverside officials say they will save more than $745,000 next year in lower costs for insurance, overtime, sick leave and pensions by shifting employees to the private company. The firefighters’ traditional pension plan will be frozen, and they won’t lose any accrued benefits. Going forward, they’ll have a 401(k) retirement plan, as so many private sector workers do.

North Riverside will save up to $4 million over the next five years through this deal, the village estimates. That will go a long way toward resolving the financial crisis.

Expect to see this kind of contract arrangement for essential services happen more often as local governments grapple with massive pension obligations and wait in vain for the Illinois legislature to provide them some relief. Cities and towns are suffocating under the pressure of those pension obligations. North Riverside’s firefighter pension fund has only 43 percent of the money needed to meet its obligations. The village didn’t make full payments in recent years as tax revenues lagged.

The village was prompted to act now by a state law that forces local governments to ramp up pension contributions under threat of having sales tax revenue and state funding diverted to the pension plans if they don’t comply. North Riverside received a warning last year from the state Department of Insurance.  Earlier this month, Moody’s Investors Service downgraded North Riverside’s credit rating.

So the village has its answer. It’s a creative one. And we expect you’ll hear a lot of towns making the same decision in coming years. Nobody else is giving them an answer for their financial woes. They have to find one on their own.

This article is from the Washington Times (IL):

One of a number of Illinois towns struggling with increasing pension costs wants to save money by shifting control of its fire department to a private company – a rare move village officials argue is the only option because they can’t make any more cuts or raise taxes.

The village of North Riverside pitched the cost-saving proposal before state regulators Thursday at a Chicago hearing after being summoned for repeatedly shirking payments into its firefighter and police retirement funds. Mayor Hubert Hermanek estimates the village could save $700,000 annually by privatizing its fire department – a solution that some say could be tried more and more in coming years.

In 2016, state law requires cities to make required contribution increases so they’ll reach 90 percent funding by 2040. If cities don’t, the state will begin doing it for them by diverting grant money now used elsewhere directly into pension funds. Many cities have pushed off payments, and the Department of Insurance is meeting with some of the worst offenders to create a funding plan. However, the department can’t approve a privatization plan.

“Considering the onerous labor mandates that have been approved by the state and imposed on local government, along with the heavy financial burden created by the pension obligations, I wouldn’t be surprised to see more communities exploring alternative service delivery options,” Joe McCoy, legislative director for the Illinois Municipal League, said.

Under North Riverside’s proposal, the fire department would be folded into the village’s contract with Paramedic Services of Illinois, the company that provides its ambulance service. Hermanek said all 16 current firefighters would be offered employment under the five-year contract with the company.

Privatized municipal fire departments are somewhat rare in Illinois. Lincolnwood, a village in Cook County, hired a private company to operate its fire department in 1990 after ending a contract with the city of Chicago.

But firefighter union officials say privatized fire departments provide lower service levels to residents because companies are more interesting in turning a profit. Pat Devaney, president of Associated Fire Fighters of Illinois, says North Riverside officials should be held accountable.

“Anybody who has done even just a small amount of research into the way the politicians in North Riverside have managed their finances would be outraged.” Devaney said. “Here’s the plan – let’s blame the firefighters for it. It’s disgusting.”

Records obtained by The Associated Press show North Riverside officials didn’t put any money into its firefighter or police pension funds in multiple recent years. Overall, it’s come up more than $5 million short between 2008 and 2012. But village officials contend the shortfall can be attributed to a loss in sales tax revenue from the North Riverside Park Mall during the economic downturn and an inability to raise property taxes.

Still, village officials have hailed their plan as a “bold and innovative” way to solve a problem facing many Illinois towns.

“The good news is that we have an excellent solution, one that allows us to keep the strongest emergency and fire protection services in place and avoid layoffs without having to sacrifice other village services,” North Riverside village attorney Burt Odelson said in a statement.

From the

The attorney representing North Riverside’s firefighters on Thursday said that if the village insists on moving ahead with its plan to privatize fire protection services, the union would fight the attempt in court.

“They can’t do this,” said J. Dale Berry, who represents North Riverside Firefighters Union Local 2714.

Berry said state law prohibits municipalities from hiring public safety officers who have not undergone rigorous civil service testing to which firefighters and police officers submit.

Firefighters at a June 24 contract negotiation session proposed saving money by beginning to train its firefighters as paramedics and eliminating the need for North Riverside to pay a private company for paramedic services. The plan came with a proposal to hire three firefighter/paramedics to get the ball rolling.

The village maintains that such a solution only increases its pension obligations. But firefighters also rejected the village’s privatization proposal, which was offered at the same meeting.

But if the village insists on moving forward with its plan to obtain firefighter services from Paramedic Services of Illinois (PSI), Berry said that matter will end up in court.

North Riverside firefighters are currently working without a contract. Their most recent deal with the village expired April 30.

Berry’s statements came following North Riverside’s hearing Thursday afternoon before the Illinois Department of Insurance. The village faces draconian sanctions for failing to fully fund its police and fire pension obligations over more than a decade.

Information entered into the record at the hearing showed that North Riverside failed to contribute anything to its pension funds in six of the past 14 years, and in six other years failed to contribute the 90 percent threshold the state requires.

A state law allows the Illinois comptroller, beginning in 2016, to deduct funds from other state revenues, such as sales taxes and other shared taxes, to force the village to comply with pension funding laws.

Since sales taxes and state shared taxes are the lifeblood that funds the majority of North Riverside’s general operations, such a move would have deep impacts on village services.

During the nearly two-hour hearing at the Department of Insurance’s office in downtown Chicago, North Riverside laid out its reasons for why it failed to fund pensions sufficiently as well as its plans to fund them in the future.

Among the bombshells dropped during the hearing was news that North Riverside would seek a property tax increase from voters in November in order for the village to make its required contributions for police pensions in the future.

According to North Riverside Village Attorney Burt Odelson, the referendum will essentially ask voters to approve tripling what local property owners pay in real estate taxes to the village.

Because the village has frozen its property tax levy for a quarter of a century, North Riverside’s take of homeowners’ property tax bills is a mere fraction of the total — on average about $250 per residence. A successful referendum would make that about $750, said Odelson.

In addition to the referendum, there will be cuts to services. North Riverside Finance Director Sue Scarpiniti, who testified at Thursday’s hearing, said the village board is looking to make cuts to the budgets of the police and other departments.

A schedule of those cuts provided to the Landmark on Friday indicates that the village board will seek to cut police overtime by $100,000. In addition, the board plans “salary reductions” for the code enforcement, administrative and public works departments totaling $90,000. On top of that, the village is asking departments to trim an additonal $192,000 from their combined budgets for the 2014-15 fiscal year.

On the revenue side, the village is projecting to collect $100,000 in fines related to the red light camera recently installed at Harlem Avenue and Cermak Road.

The cuts, water rate increases, the property tax increase and privatizing the fire department would save the village about $1.1 million in fiscal year 2014-15, which began May 1. But that’s still well short of the $1.9 million deficit the village projects in its operating fund during that period.

The difference would be made up by spending cash reserves, said Scarpiniti.

A second bombshell revealed at Thursday’s hearing was news that on June 20 Moody’s Investors Services, which rates the credit worthiness of municipalities, downgraded North Riverside three levels from A1 to Baa1 and assigned the village a negative outlook. Moody’s pointed specifically to the village’s pension situation, its unfunded post-employment benefits liability and its dependence on sales taxes for revenue as reasons for the downgrade.

Both Odelson and Berry urged the Department of Insurance not to impose a solution — in particular the deduction of sales taxes and state shared taxes for pension purposes — which would make it more difficult for North Riverside to deliver services to its residents.

Berry said that while North Riverside’s level of pension funding may not be much different than many municipalities in Illinois, “what they did that was provocative was that they didn’t make any payments” for six years.

Louis Butler, the Illinois Department of Insurance deputy general counsel who presided over Thursday’s hearing, indicated it would be at least two weeks before he submits a recommendation regarding possible sanctions to the director of the department.

thanks Dan


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North Riverside considers privatizing FD

Several contributors submitted the information here about a possible change for the North Riverside Fire Department.



From the Riverside – Brookfield Landmark:

Facing a pension-funding crisis, the North Riverside village board finds itself in a position where it may look to privatize some village services — potentially its fire department — in order to balance its budget.

No decisions have been made, but the village board’s finance committee is scheduled to meet June 30 at 6 p.m. in the council chambers at North Riverside Village Commons, 2401 Desplaines Ave., to come up with a path forward.

“We have to do something radical,” Mayor Hubert Hermanek Jr. told the Landmark during an interview on Saturday. “Nothing is off the table.”

The June 30 finance committee meeting will follow in the wake of a hearing before the Illinois Department of Insurance that village officials have been ordered to attend at the Department of Insurance, 122 S. Michigan, 19th floor, in Chicago on June 26. According to Kimberly Parker, communications manager for the Illinois Department of Insurance, the hearing is being convened to allow North Riverside to present a course of action for coming into compliance.

In February 2013, the Department of Insurance issued a notice of non-compliance to the village regarding North Riverside’s contributions to its police and fire pension funds. North Riverside was one of five municipalities to receive the notices last year. At the time, North Riverside was warned to “take immediate steps to bring itself into compliance” with the state pension code.

Since 2008, North Riverside has paid just a fraction of its pension obligations; for four years running, the village paid nothing into its pension funds. During the 2013-2014 fiscal year, which ended April 30, North Riverside contributed about $340,000 to its police pension fund and about $223,000 to its fire pension fund.

In order to fully fund its police and fire pensions for the 2014-15 fiscal year, North Riverside must contribute about $1.8 million.

On Saturday, Hermanek said that’s exactly what the village wants to do.

“My hope is that we will completely fund the pensions,” said Hermanek. “It’s going to be difficult.”

That’s because if the village is to fund both its pension obligations and maintain village services at their current levels, the village will see its general operating reserves cut by almost $2 million.

That would drop the village’s general operating reserves to just about $2.1 million, which represents about 13 percent of annual expenditures. And that reserve would disappear completely by 2015-16 if service levels remain unchanged and pensions are funded completely.

“We would have a balanced budget if it wasn’t for the pensions,” said Hermanek. “It’s imploding the village. We have to do something out of the box. It’s not fair to residents to cut services and lay off people to make our pension obligations.”

A 2011 state law requires municipalities to meet its fire pension obligations. If a municipality doesn’t meet those obligations, according to the law, the state comptroller in 2016 will deduct up to “one-third of the total amount of any grants of state funds to the municipality” to cover the shortfall.

In 2017, that amount jumps to one half of any grants of state funds; in 2018, the comptroller can deduct the total amount to meet the shortfall.

In 2014-15, the village’s fire pension obligation is almost $744,000 and is projected to rise to $950,000 by 2016-17. Officials project spending $4.74 million (including the pension obligation and a $612,000 line item for paramedic services) for fire protection in 2014-15.

The village board still hasn’t approved a budget for the present fiscal year, which began May 1. And the board hasn’t made any final decisions on service cuts or delays in capital expenditures.

The village in recent years has raised rates somewhat, but not nearly enough to keep up with substantial increases being passed along to the suburbs by the city of Chicago. As a result, the village’s water fund has been running annual deficits in excess of $350,000, leaving the general operating fund to make up the difference.

At a special village board meeting that’s been scheduled for June 23, North Riverside trustees are expected to increase water rates by $1.50 per 1,000 gallons of water and impose a $15 per month “water operations fee” on all residential and commercial water customers. The increases are expected to bring the village an additional $800,000 to its water fund.

A draft version of the 2014-15 budget shows the village is predicting sales tax revenue will recover after coming in substantially below expectations in 2013-14. During the last fiscal year, sales tax revenues fell short of expectations by almost $720,000.

But officials are hopeful that a full year of sales at Costco, a new Chick-fil-A, Red Robin and other new retail businesses at the Costco outlots will cause sales taxes to rebound.

From the TribLocal:

The Village of North Riverside is considering privatizing its fire department, saying rising pension costs and a state requirement that municipalities fully fund pensions have forced it to make drastic changes.

The village is publicizing the privatization proposal in advance of a June 26 hearing with the Illinois Department of Insurance, Mayor Hubert Hermanek Jr. said Wednesday. The department summoned the village to explain how the village plans to pay a $1.8 million public pension obligation by a 2016 deadline, Hermanek said.

At next week’s hearing, the village plans to propose cutting costs by shifting firefighters to a private provider of paramedic services the village already uses. The village could save $700,000 per year by expanding its 28-year agreement with Paramedic Services of Illinois to include the village’s 16 firefighters, Hermanek said. The savings would come from a reduction in overtime, vacation, workmen’s compensation, liability insurance and other costs, in addition to reducing the village’s pension obligations to the state, he said. The firemen would move to a 401(k) style retirement plan, he said.

Derek Zdenovec, secretary of North Riverside Firefighters Union Local 2714, said when reached Wednesday that the union had no comment. He said the union did not learn of the agreement until it was publicized Wednesday.

The union’s latest contract with the village expired at the end of April. Negotiations on a new contract had not yet begun as of this week, Hermanek said.

Under a new state law, municipalities must fully fund pension obligations by 2016, Hermanek said. If towns don’t make the payments, the state may take money from their sales tax revenues, according to a Village of North Riverside news release. The village recently reviewed budget figures showing it faces a $1.9 million budget deficit for fiscal year 2014-15, $1.8 million of which is from its pension obligations, according to the release.

thanks Dan, Joe, & Richard

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