Seizing state money from the city of East St. Louis to help pay for police pensions is unconstitutional and would reduce local government’s ability to provide essential services to its citizens, the city says in a lawsuit against the Police Pension Board and Illinois Comptroller Susana A. Mendoza .
The city filed the lawsuit after the pension board voted unanimously June 11 to ask Mendoza’s office to ``intercept” $3.5 million the city owes the pension fund. Mendoza’s office has not made a decision on the board’s request.
``We are challenging the legitimacy of the law,” City Attorney John Baricevic told the BND.
The city is asking the court for a permanent injunction that would block the comptroller’s office from intercepting the state funds .
Police Pension Board members say the city has a record of ignoring the pension fund , despite its responsibility to make sure there’s money to pay retirees and their dependents each month.
Nick Mueller, president of the East St. Louis Police Pension Board, told the BND that city officials knew the board would be asking for the intercept. Some city officials were present when the board voted last month to proceed with the intercept request. They voiced no objections, Mueller said.
Nine days later, on June 20, the city filed its lawsuit in St. Clair County Circuit Court. The pension fund, the pension board and Mendoza are named as defendants.
The city government argues in its complaint that it did object to the pension board’s intention to ask for an intercept, but the board proceeded with its vote anyway.
None of the defendants in the city’s lawsuit have filed a response to the lawsuit, though they told the BND they do plan to contest it.
As of earlier this week, the defendants said they have yet to be served with the complaint. As a result, a scheduled Friday hearing on the city’s request for a preliminary injunction blocking the comptroller from withholding state funds is expected to be rescheduled.
The city’s complaint states the intercept law is “unconstitutional and contrary to public policy.”
“The enforcement of this statue exacerbates existing inequalities by reducing the City’s ability to provide essential services that these communities rely on,” the city’s lawsuit states. “The reduction in state funds due to the intercept will lead to decreased public safety, health services, and other vital municipal functions, disproportionately affecting minority residents.
“The statute’s enforcement without considering its disparate impact on minority communities perpetuates systemic inequities and contradicts the purpose of fair and equal application of the law across all municipalities in Illinois.”
Tensions between city and pension boards
The city and the East St. Louis Fire and Police Pension Boards have squabbled for months over the city’s failure to pay its obligations to the pension funds..
East St. Louis already had been behind in funding the pensions by millions of dollars when it stopped its monthly contributions after September 2023, officials said.
As a result, in January, both the Fire and Police Pension Boards said they would ask Mendoza to intercept state money allocated to the city and use it to help pay the contributions owed for police and fire pensions.
But the Fire Pension Board has since backed off its plan after negotiating a deal with the city in March. Under the deal, the city government agreed to put $4.5 million into the fire pension fund by the end of May, attorney Dennis Orsey said at the time. Orsey represents both the Fire and Police Pension Boards.
The fund that pays fire pensions to 95 families had been in jeopardy because so little money remained.
The infusion of money into the fire pension fund allows the board to start investing and building a reserve account.
“...It’s the investment account that will give us a return on the investments through the stock market, which in the long run helps the city. If we get returns on our investments, that’s less money the city has to put in in future years,” Orsey said earlier this year.
What’s next for the Police Pension Board?
The Police Pension Board formally decided to move ahead with its plans to ask the comptroller for the intercept, and now the city has taken the matter to court.
“We plan to vigorously defend against their complaint in court,” Mueller told the BND.
Charles Atwell, the intercept attorney for the Police Pension Board, said earlier this week he had not seen the complaint but plans to mount a vigorous defense.
Asked to comment on the lawsuit, a spokesman for the state comptroller’s office said the agency follows a 2010 law in dealing with intercept requests.
“ It requires the comptroller to divert state payments from municipalities to pension funds when those municipalities have failed to make payments to the funds” said spokesman Abdon Pallasch. ” Following the grievance period during which the municipality can contest the claim from the pension fund, the comptroller’s office follows that law unless a court orders the office not to or the parties work out a settlement plan.”
The Illinois Attorney General’s Office will serve as the comptroller’s lawyer in the lawsuit.
The East St. Louis Police Pension Board says the city owes $3.5 million to the fund, covering fiscal years 2016, 2019 and 2021. The city says it received less than that - about $3.3 million - from the state during the first quarter of this year.
Orsey, the Police Pension Board lawyer, said paperwork to request the intercept was sent to Mendoza’s office after the pension board voted to proceed.
“A copy of the transcript along with all of the exhibits have been sent to the state comptroller’s office for review,” he said. “ It takes them about 60 days to review everything. If they find everything to be in order and there are no objections by the city they will begin the intercept.”
That is, if the court allows the comptroller to proceed.
St. Clair County Chief Circuit Judge Andrew Gleason has issued a temporary restraining order that stops the intercept from proceeding, for now. An initial hearing is set for 10 a.m. Aug. 5 before Gleason.
In the meantime, East St. Louis City Manager Robert Betts hopes the city and pension board can come to some kind of agreement to avoid proceeding with the lawsuit.
“We’re hoping we can get the pension board members to sit down with the city to try to work this thing out,” Betts said. “We want to see how the city and board members can come to some kind of agreement instead of doing an intercept. “Nobody wins when you do that. Everybody loses.”
Mueller said the board is not interested in further discussions with the city. They want the city to take care of its financial obligation to the pension fund, he said.
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