When it comes to the growing costs of government, one thing particularly rankles Dean Rich, the finance director for O'Fallon, Illinois: two police officers claiming duty-related knee troubles, who were awarded 100 percent disability pensions and a lifetime's worth of free health insurance for themselves, their spouses and dependents.

"In my worst case, the guy dumped his wife and three kids and remarried a 29-year-old woman with two kids of her own," Rich says. "They had another kid and adopted his first three, so I'm taking care of six kids in all." What's more, according to Rich, the retired officer is now working as head of security for a large company in St. Louis.

And the other officer? "Within six months of retiring, we had photos of him re-roofing his barn," Rich says, "and I'm paying him a million-and-a-half dollars over the life of the claim."

Currently, the city is doling out about $40,000 per year in disability payments and insurance premiums for each of these retirees, payments that will no doubt rise as the cost of insurance continues to go up. Do the rough actuarial math for the two officers and their families over six decades, and the two cases are likely to cost the city close to $5 million.

While $80,000 per year might not seem significant to a city with an annual budget of $58 million, Rich worries what might happen if any more of the city's 55 police officers go the disability-retirement route. And the cumulative costs of such cases is hardly abstract: Under new state and local accounting rules, smaller cities such as O'Fallon will soon have to begin reporting total unfunded pension and retirement benefits liabilities as part of their comprehensive annual financial reports.

To anyone tuned into the politically charged world of police and fire disability benefits, the O'Fallon story has a very familiar ring to it. Across the country, hundreds of local governments and several states are wrestling with what some view as out-of-control disability pension and health insurance systems hard-wired to allow police and fire personnel to retire early and with very generous benefits. At the same time, they may pursue other full-time careers, often in fields similar to the one that they abandoned when they left public service.

More galling to some local government officials, though, is that such benefits are often bestowed on police officers and firefighters by state legislatures eager to curry favor with the uniformed services, while the tab for the benefits is passed on to municipal governments.


The root of O'Fallon's fiscal concerns is a bill passed by the Illinois General Assembly in 1997: the Public Employee Benefits Act, which states that municipal public safety employees who sustain a "catastrophic injury" are entitled to municipally funded health insurance for themselves, their spouses and dependents for life.

Illinois was one of many states that passed such legislation in the wake of an incident in Florida where two police officers were badly burned in the line of duty and summarily dropped from insurance coverage after just two months in the hospital. The Florida legislature quickly passed what have come to be known as "Alu-O'Hara" laws -- named for the two injured police officers -- which require that all localities in the state offer lifetime health insurance coverage for police officers and firefighters injured in the line of duty, as well as their spouses and dependents.

The problem with the Illinois law is that the key terms are not clearly defined. "It was terribly written," Rich says. "It did not identify what was meant by 'catastrophic injury,' and so now we've got police officers going out on full disability because they got their thumb caught in a door" -- a reference to a female police officer in Champagne who injured her thumb during a physical training exercise and then reinjured it subduing a suspect. She was granted a 100 percent disability because she could no longer shoot a pistol.

Stories about the abuse of disability benefits in the uniformed services have become staple fare in newspapers from coast to coast. The Washington Post recently chronicled instances of police officers going on leave with stress-related disabilities for years at a time, collecting full pay tax-free. In Lexington, Kentucky, the Herald-Leader did a series on alleged abuses, including an article highlighting the fact that a quick and lucrative exit for police officers facing disciplinary proceedings is simply to retire on a disability claim, which automatically ends any formal disciplinary action. The Oregonian, in Portland, ran several articles about questionable cases, including that of a firefighter who went out on full disability with a back injury and then turned up as a medic with the National Guard in Iraq.

While such anecdotes are easy to come by, it's harder to decipher the extent to which such claims are impacting state and local governments' fiscal health more broadly. But spot studies indicate the problem is significant.

A recent study by the Illinois Municipal League, for example, pegged the overall unfunded liability for downstate firefighters at $1.4 billion and for police officers at $2.3 billion. "Downstate police and fire pensions may not have sufficient dollars to cover the promises made to police officers, firefighters and their families," notes the report's executive summary. It doesn't break out costs related specifically to disability retirements, but Joe McCoy, who tracks the issue for the IML, thinks they're a large part of the reason why the two funds are so actuarially out of whack when compared with other public employee retirement funds in the state.

According to the study, the unfunded liability per active employee for police and fire is $179,958 and $176,845, respectively. The unfunded liability per active employee for the state teachers pension is $122,969. For state employees, it is $119,687. For all other municipal employees, it is a mere $6,578.

In California, the state's retirement system does an annual report breaking down disability retirement costs agency by agency. Public safety personnel, including corrections officers, are off the charts when compared with the rest of state government employees.

Don Borut, president of the National League of Cities, says he's not debating whether disability benefits for public-safety officers are deserved. But he notes that municipal officials nationwide see the costs associated with disability claims as a real concern. "You see people who are out with medical injuries, and you see medical costs increasing and the amount of money being paid out getting higher," Borut says. "That's not a judgment, that's fiscal reality."


It's impossible to say, of course, how many of those in the uniformed services now collecting disability pensions don't actually deserve them. But it's clear that the work police officers and firefighters do is distinguished from that of most other public employees by long periods of inaction -- even boredom -- punctuated by moments of adrenalin-pumping and potentially very dangerous action, during which it's easy to get hurt. Moreover, the nature and extent of reported injuries can be tough to gauge or verify, often involving emotional stress on the one hand; and back, neck and joint trouble on the other.

Statutes related to disability claims are often convoluted and complex, and the terms and definitions around determining "disability" vague and hard to administer. Add to that the fact that local pension boards are frequently dominated by potential beneficiaries -- namely, police and fire personnel -- and that claimants are often represented by a seasoned corps of doctors and attorneys experienced in winning benefits, and the deck does often seem seriously stacked in the petitioner's favor.

For example, until recently, the panel reviewing police and fire disability claims in Portland, Oregon, was made up of a majority of individuals from the uniformed services. According to some Portland officials, that's part of the reason why the city's police and fire pension system is currently $1.6 billion in the red.

"I didn't see a lot of flagrant abuse of the system," says Gary Blackmer, Portland's elected auditor who used to serve as an ex-officio member of the panel reviewing police and fire disability claims. "There were people who stretched it and stretched it further. We kept examining the cases and also how we handled them to figure out what we could do better. But it's hard to make these determinations, and we were limited in what we could do by the language in our statute."

At the same time, changing anything about how disability is defined and determined -- or scaling back benefits -- can be very hard to do; the politics of disability pensions for police officers and firefighters are fierce.

Anyone who has ever gone up against police and fire either locally or in state legislatures will tell you that it isn't easy. Police officers and firefighters are popular with the public -- especially since 9/11 -- so politicians who push back on disability benefits are often tarred as unsympathetic to local heroes. Also, the uniformed services tend to be very well organized when it comes to politics and lobbying. For example, a bill introduced into the Kentucky legislature earlier this year would have created a sliding scale for disability coverage for public safety employees in Lexington/Fayette County and authorized the metro government to hire private investigators to follow up on claims. It wound up on the fast track to nowhere once police and fire unions caught wind of it.

"It's easier to oppose 10 local elected officials in Lexington than it is to oppose 3,000 retired firefighters," says Kentucky state Senator Tom Buford. "I don't like to anger local elected officials, but they're not the ones running around putting up the lawn signs for Tom Buford, Governor Ernie Fletcher and George Bush. They're not the ones writing the $25 and $50 checks to campaigns, and who let you know they have a block of support to throw your way."


Officials such as Rich in O'Fallon aren't unsympathetic to the perils of police work and firefighting. "Not a single public official or citizen in this town would want to deny a police officer or firefighter who got badly hurt on the job those benefits," he says. The problem, he argues, is that the whole system of benefits -- along with the mechanisms for screening who deserves them -- has created a situation where it is very tempting to claim a disability as a lucrative buyout from public service even when an individual is perfectly capable of making a good living doing something else.

That is one reason why the Illinois Municipal League is once again asking the state legislature for a tighter definition of "catastrophic injury" in the Public Employee Benefits Act, a change that local officials hope will help rein in health insurance costs for police officers and firefighters.

Specifically, the league is supporting Senate Bill 1475, which describes "catastrophic injury" as "a grievous or serious injury or impairment of a nature that is sufficient to permanently preclude the injured employee from performing any gainful work." The bill also adds additional medical reviews in the case of disability claims.

Ask Sean Smoot, chief counsel for the Illinois Police Benevolent and Protective Association's labor committee, where his association stands, and he is unequivocal: "We're against it." Smoot doesn't see any problem with the law as it is, and he rejects claims that the system is being abused or is creating fiscal problems.

While police in Illinois may be foursquare against the bill, McCoy at the Illinois Municipal League reports some progress in negotiations with the Illinois Firefighters Association. The league and firefighters are talking about creating a sliding scale to determine the extent of a public safety employee's injuries and how much insurance coverage he or she might receive.

Indeed, to the extent that jurisdictions have made any substantial progress reforming disability pension and benefits systems, it is very clear that it can be done only by negotiating with the uniformed services.

In Portland, voters approved a ballot measure last November that shakes up the city's police and fire pension system substantially. But the initiative went ahead only after city officials and the police and fire unions held long discussions over the wording of the new law.

The law removes newly hired police and firefighters from the city-administered police and fire pension fund entirely, diverting them into the state's retirement system. Meanwhile, the city board that had previously both administered the public safety pension fund and made disability determinations was winnowed from 11 members -- with a majority of them coming from the police and fire services -- to five. Of those, a majority are now non-public safety personnel. What's more, the board has been stripped of its disability-review responsibilities and now administers only the pension fund. A neutral hearings officer handles disability determinations.

"We had a board that was controlled by beneficiaries of the system and that also handled investments," says Shannon Callahan, a staffer for city commissioner Dan Saltzman, who was a chief architect of the Portland reform package. "We think what we've come up with is a much more financially sound system."

Other efforts at reform are percolating around the country. The California Public Employee Retirement System, for instance, is supporting a package of bills in Sacramento that would improve the ability of the retirement system to review disability claims and also prosecute fraud. "Basically, it's the same legislation that we sponsored in previous sessions that would give us a few more tools to use when we hear about alleged abuses," says CalPERS spokesman Ed Fong.

The chances of the reform package passing this session aren't very good, though. While there may be some evidence in places like Portland or Illinois that public safety personnel are willing to compromise on reform efforts, it is still a very tough sell nationally.

And in fighting reforms, police officers and firefighters will continue to play the most powerful card they've got: "These are people who run into situations that everyone else is running away from," says Smoot. "So no price is too high to protect someone who risks life and limb for everyone else."

Officials such as Rich aren't so sure about Smoot's cost-benefit analysis, however. "The scary part is that this lays such a high tax burden on the residents in some communities that some of them may just default on payments," Rich says, "and then the guys who really need the benefits won't even get them."