A bill has been filed at the Illinois statehouse to consolidate the state’s 649 local police and fire pension funds into two funds, which are on average 55 percent funded with over $12 billion in unfunded liability.
A police group has already raised concerns about the proposal.
An example of the growing unfunded pension problem and its impact on taxpayers on a local level can be summed up by Springfield Alderman Joe McMenamin highlighting what it means when local property taxes will only fund 94 percent of the city’s public safety pensions.
“In other words, the real estate taxes don’t meet what we need for police and fire, so we’ll have to draw from other funds,” McMenamin said.
Other municipalities throughout the state face similar problems paying for pensions.
State Sen. Robert Martwick, D-Chicago, said Senate Bill 616 will consolidate the 649 police and firefighter pension funds into two separate funds.
“By combining the assets you have efficiencies in terms of the administrative expense of investing that money and that because you have a larger size funds you will leverage for better returns,” Martwick said.
A statewide firefighters association supports the plan. A police group has raised concerns.
Before the bill was filed, the Illinois Police Benevolent and Protective Association said in a statement that the proposal would “require municipalities to spend a massive amount of money up front in the hopes they will recover their cash outlay over a period of at least a decade.”
“Over the long term, it might reduce some costs and it could potentially allow some funds to achieve higher returns, but it will take years,” the group said on its website.
Before the bill was filed, Senate President John Cullerton, D-Chicago, said some compromises might be needed to get it passed.
“I think that we would like to pass a bill that covers both [police and fire] but we may have to compromise in order to get the police on board,” Cullerton said.
State Rep. Mark Batinick, R-Plainfield, said he hoped to find a compromise to get the police on board.
“I wouldn’t say they don’t like it at all,” Batinick said. “Their biggest thing is the governance in terms of who’s going to be on that board that’s going to manage it for the whole group and that’s actually what potentially one of these bills, a draft that I’m going to be reading this weekend, does.”
Martwick said Senate Bill 616 would allow for local pension boards to determine health benefits and other issues, but the management of pension investments would be consolidated across the state.
Gov. J.B. Pritzker has said he wants to get the measure through the General Assembly by the end of the fall session that wraps up Nov. 14.