Business – Page 2 – CU-CitizenAccess.org

In order to understand why Champaign is doing so well with their pensions compared to
other Illinois cities and the state itself, we’re going to go through a little crash course about
pensions.
A pension is the benefits paid to employees after they retire, usually a predetermined
amount of money given out each month. The pension is paid out from a pension fund, which is
the pool of money that is used to pay out participating employees’ pensions. The amount of
money within the pension fund is sometimes referred to as the plan fiduciary net position.
Pension funds gain money through employee contributions (the money employees put
into the pension fund), employer contributions (the money employers put into the pension fund),
and investment returns (the money gained from the investing of pensions funds). They generally
lose money through finally paying out an employee’s pension, investment losses, and
administrative upkeep.

Two of the most important concepts when it comes to pensions are total liability and
unfunded liability. Total liability includes the previous costs associated with pensions, but also a
calculation of future costs the pension fund will have to pay for eventually, aka what they will
have to pay when all their employees retire. Employees’ average lifespans, disability rates,
spousal lifespans, etc. are used to calculate what is the most likely amount of money the pension
fund will need o have in order to pay all their employees pensions throughout their lifespan.
As employees pension benefits increase and new employees are hired, the total liability
may become larger than the amount of money the pension fund currently has. This difference
between total liability and available money in the pension fund is called unfunded liability.
Unfunded liability is not due to be paid at the time it is taken on, but there is also no
money to pay for it when it is taken on. Therefore, it is a future payment that is promised to be
paid for later or in parts over time, similar to a loan.
For example, a city establishes a fire department in 1990 with 10 firefighters that when
they retire will receive $10,000 annually. Originally, it was assumed they would collect pension
for 20 years, so the pension fund aimed to have $2,000,000 for the firefighters’ retirement. By
2000, they have the $2,000,000 in plan fiduciary net position, but at this time the state decides
that retired firefighters will receive $15,000 per year instead, and the average lifespan
assumption has increased by 5 years. The pension fund’s total liability has grown from
$2,000,000 to $3,750,000, nearly doubling their original total liability. On top of that,
investments have not returned as much as expected and the city only puts in enough money to
cover administrative costs, so the plan fiduciary net position remained unchanged. While its
$2,000,000 was originally enough to fully fund all the firefighters’ pensions, now it is only
enough to fund 53% of their pensions. There are always a lot more moving funds and

calculations involved in real life examples, but this simple example sums up what has been
happening with many Illinois city pensions.

The Kraft Heinz factory in Champaign. Screenshot taken from Google Street View, captured August 2023.

Toxins in the air: Central Illinois factories and plants release millions of pounds of risky chemicals

Post author:Vivian La / For CU-CitizenAccess
Post published:May 14, 2024
Post category:Business Environment Government

The Archer Daniels Midland (ADM) facility in Decatur, which processes grain products into food ingredients and ethanol, released 2.7 million pounds of toxic chemicals…

Read more about the article Champaign bars, liquor stores failed 25% of underage compliance checks by Illinois Liquor Control Commission last year

Police in a crowd at KAMS during Halloween weekend in 2023. Photo by Stephanie Wayda.

Champaign bars, liquor stores failed 25% of underage compliance checks by Illinois Liquor Control Commission last year

Post author:Stephanie Wayda / For CU-CitizenAccess and Farrah Anderson / For CU-CitizenAccess
Post published:February 13, 2024
Post category:Business Government Public Funds

The state of Illinois Liquor Control Commission has made enforcing and documenting underage drinking on its website a priority since 2021 — and enforcement…

Read more about the article Illinois sees exit of firearm dealers despite all-time high in gun ownership

Illinois State Police 2012

Photo from Illinois State Police website.

Illinois sees exit of firearm dealers despite all-time high in gun ownership

Post author:Melissa Kuhl / For CU-CitizenAccess
Post published:January 24, 2024
Post category:Business Government

Despite an all-time high in the number of Illinois residents possessing a firearm ownership card, the number of gun dealers and businesses registering guns…

Read more about the article Health inspectors failed about 80 restaurants and closed 10 last year in Champaign County; Some restaurants repeatedly failed for weeks

Ambar India on Nov. 13, 2023. Photo by Maggie Knutte.

Health inspectors failed about 80 restaurants and closed 10 last year in Champaign County; Some restaurants repeatedly failed for weeks

Post author:Maggie Knutte / For CU-CitizenAccess
Post published:January 10, 2024
Post category:Business Food Public Health

A moldy bell pepper. Bare hands touching ready-to-eat food. Food that expired over a week ago sitting in the fridge. These are just a…

Read more about the article Garden Hills residents question number of businesses selling liquor in and near neighborhood

Darrell Hoemann

Garden Hills looking east on Hedge Road from Mattis Avenue on Wednesday, December 15, 2021. Photo by Darrell Hoemann/CU-CitizenAccess

Garden Hills residents question number of businesses selling liquor in and near neighborhood

Post author:Stephanie Wayda / For CU-CitizenAccess
Post published:January 10, 2024
Post category:Business Neighborhoods

Some Champaign residents in Garden Hills have expressed concern over the number of businesses selling alcohol in close proximity to the neighborhood, saying those…

Read more about the article Accidents and emergency calls mount at Archer Daniels Midland plants in Decatur in past year; Employee dies in rail accident, multiple employees injured in explosions

ADM

Archer Daniels Midland regional headquarters in Decatur, Illinois. Photo from ADM's website.

Accidents and emergency calls mount at Archer Daniels Midland plants in Decatur in past year; Employee dies in rail accident, multiple employees injured in explosions

Post author:Nour Longi / For CU-CitizenAccess and Madison Holcomb / For CU-CitizenAccess
Post published:January 4, 2024
Post category:Agriculture Business Jobs Justice

Listen to WILL's coverage for interview audio and hear from the reporters on The 21st Show. Just months before he planned to retire, 66-year-old…

A half-lit sign illuminates the Latitude East building on 608 E University Ave. Nine residents have filed maintenance complaints with the city of Champaign in the past year. Photo by Gwyn Skiles.

Residents complain about housing conditions at Latitude apartments; Out-of-town owners exacerbate issues

Post author:Gwyn Skiles / For CU-CitizenAccess
Post published:January 4, 2024
Post category:Business Housing Jobs

Latitude, a five-story apartment complex in Champaign, has been the target of at least nine complaints to the city within the past year. Located…

Read more about the article Illini Union recovering from losing most of its restaurants

Noah Nelson

Vacant, gated spots where restaurants used to be in the Illini Union basement.

Illini Union recovering from losing most of its restaurants

Post author:Noah Nelson / For CU-CitizenAccess
Post published:January 3, 2024
Post category:Business CU-Covid19

The Illini Union in Urbana has been host to a wide variety of restaurants — many of which made a swift exit during the…

Read more about the article Downtown Urbana’s new businesses contribute to area revival, but boom yet to come

Darrell Hoemann

Urbana Landmark Hotel, to be renamed Hotel Royer, undergoing remodeling on Friday, December 24, 2021. photo by Darrell Hoemann/C-U Citizen Access

Downtown Urbana’s new businesses contribute to area revival, but boom yet to come

Post author:Rolando Mendez / For CU-CitizenAccess
Post published:December 22, 2023
Post category:Business Neighborhoods

The city of Urbana is once again trying to revitalize its downtown, but delays in business openings have left residents wondering when to expect…

Read more about the article One year, four accidents at Archer Daniels Midland’s Decatur, Ill. headquarters; company fined over $400,000 in past 10 years

ADM

Archer Daniels Midland regional headquarters in Decatur, Illinois. Photo from ADM's website.

One year, four accidents at Archer Daniels Midland’s Decatur, Ill. headquarters; company fined over $400,000 in past 10 years

Post author:Nathalie Murillo / For CU-CitizenAccess
Post published:December 6, 2023
Post category:Business Government Jobs

An explosion in September at the Archer Daniels Midland (ADM) plant in Decatur, Illinois injured eight workers, but federal work safety data shows it…