Excerpts from Pekintimes.com:
Illinois lawmakers resumed discussion Thursday of a topic that has come up numerous times before — consolidating the state’s 656 local downstate police and firefighter pension funds into a single system. Although the idea has floated around the Capitol for some time, it is getting help this year from Democratic Gov. JB Pritzker, who appointed a task force in February to study the issue.
Outside the task force, the Illinois Municipal League and a coalition of communities in the northwest suburbs of Chicago have been leading the charge, offering as many as seven different alternatives they argue would save their taxpayers money and improve the financial condition of those retirement systems.
Currently, there is one pension fund for downstate nonuniformed municipal workers called the Illinois Municipal Retirement Fund, or IMRF. But the communities outside of Chicago that operate full-time, paid police and fire departments all have separate retirement funds for those employees, each with its own board of trustees and administrative staff.
Of all the public pension funds in Illinois, IMRF is in the best financial shape, with a 90 percent-funded ratio. That, however, is because state law requires local governments to make their required contributions each year, even if that means raising property taxes or cutting funding for other public services.
Until a few years ago, that was not the case with police and firefighter pension funds, which have often gone underfunded during lean years for local governments. In addition, officials said, public safety pension funds have been further limited because of statutory restrictions on the types of investments they are allowed to make. As a result, officials said, the downstate police and firefighter pension funds are, on average, only about 55-percent funded.
Proponents claim that consolidating the funds would save local governments a combined $21 million a year in administrative costs alone, or about $1,000 per-member, money that could be added to the pension pool instead. In addition, a single, large pension fund like IMRF would have more flexibility to diversify its investments and thus help protect the fund from losses due to a downturn in any one segment of the economy.
If the 69 public safety funds operated by communities in the Northwest Municipal Conference had earned the same kind of returns that IMRF saw over a 12-year period from 2003 to 2015, those assets might have grown by an additional $978 million.
That means the unfunded liability of those funds, estimated at $2 billion in 2016, would have been cut roughly in half, from a little over $2 billion to just over $1 billion, without raising local taxes, she said. And those funds would have gone from being 61-percent funded to being 80-percent funded.
The Northwest Municipal Conference and Illinois Municipal League put forth several options for consolidation. Those include merging all the funds into the IMRF and allowing the IMRF board to manage investments as well as day-to-day administrative duties; setting up a separate statewide system to manage only downstate police and fire pensions; having a single fund and allowing the existing local trustees or local governing bodies to make day-to-day administrative decisions; and setting up two separate statewide plans – one for police and one for firefighters. Officials in charge of those local pension funds, as well as many of their members, said they remain skeptical to the idea of consolidating.
Among the concerns that the local funds and their members have is the cost of transitioning from 656 funds into a single fund, estimated to be as high as $150 million. The president of the Illinois Public Pension Fund Association, said that would be a cost that could take as long as 10 years to pay off.
Lawmakers are unlikely to take any action, at least until Gov. Pritzker’s task force issues its report and recommendations later this year.
#1 by Bill on March 28, 2019 - 7:31 PM
Matt, I see your perspective on this. BUT there are Many More employees of municipalities who are the everyday non-union (seemingly not well paid- I know that I wasn’t) workers that are in this fund & must have to outnumber the actual elected officials & direct administrative staff specifically, I believe that may be the biggest reason they have left this fund alone. At least for now !
#2 by Matt on March 26, 2019 - 10:24 AM
Bill, I think a better way to put it is it’s the pension fund the managers are in as opposed to specifically for them. That being said, they won’t do anything to hurt their retirement fund. Everyone else is expendable. Easier to point fingers and blame fd and pd. I’ve said it’s like buying a new home, never making a payment, then blaming the bank when they come to repossess it. The Springfield bunch are just waiting to get their hands on this cash. We can see waht a great job they’ve done with the TRS.
#3 by John Antkowski on March 25, 2019 - 9:14 PM
Thank God that our pension in Milwaukee is doing well! Our’s is fully solvant and managed well. The Mayor has tried to shift the balance of power to his side. He has also tried to add another person to the board with no luck. There were rumors that our staffing cuts were a result of the city not being able to replace the borrowed contributions of years back. No one knows, but my father is a retired Milwaukee firefighter and he’s been on pension since ‘93 and with cola adjustments which follows the ups and downs of the economy. He is doing good. Combining all the plans is not a great idea because it will cost money to get the fund up to date. Good luck with that. John
#4 by Big Moe on March 25, 2019 - 6:59 PM
They can leave my pension fund alone. We are financially sound, even after we had to get the Dept. of Insurance on the Village. Our fund even made a profit during the 2008 crash. Co-mingling weaker funds that have a host of issues with responsible well managed funds will only weaken the entirety. It will make my fund weaker and not do much to improve the failing funds. Politicians and weak fund board members created these issues. Don’t try to prop up failing funds at the expense of the well managed ones.
#5 by Bill on March 25, 2019 - 5:55 PM
The IMRF is NOT A Downstate Pension fund NOR Is it specifically FOR the elected officials & administrative staff !!!! Clearly, some are forgetting every grunt doing the jobs to keep places open & accessible to education( public elementary, high school and community colleges) ! I PERSONALLY KNOW for a FACT that there are MANY non-union employees of school districts AND Municipalities IN COOK County that ARE & have been contributors to this fund for their pension . I make this statement based on personal experience !
#6 by Jim S on March 25, 2019 - 12:56 PM
The law says IMRF pension contributions have to be paid 100% by the city. If the same law required cities to make 100% pension contributions to fire/police pensions there wouldn’t be pension problems.
#7 by Mike L on March 25, 2019 - 12:47 PM
Annnnnnnnnd, they forgot to mention that IMRF is fully funded because it is for them: The elected officials, administrative staff, etc. THAT is why they have maintained a nearly fully funded pension. Much easier to under-fund police and fire and then say PD and FD are the problem. Remember the pension problem in Illinois is well into its 5th decade and is a result of politicians making sure THEY were taken care of first and then kicking the PD and FD pension payments down the road.