Illinois lawmakers return to the state capital today for the start of fall veto session and Gov. J.B. Pritzker wants them to act on legislation to consolidate suburban and downstate police and firefighter pension funds.
The average funding ratio for the nearly 650 funds is about 55 percent funded. The total unfunded liabilities for those funds was a combined $12.3 billion. Pritzker is proposing consolidating the funds into two funds to maximize investment returns.
“This will do really measurably significant change to our financial position of the pensions across our state,” Pritzker said.
The consolidation proposal is from the governor’s Pension Consolidation Feasibility Task Force, which he formed after taking office earlier this year. The proposal calls for combining the state’s 649 suburban and downstate police and firefighter pension funds into two funds.
It does not address the city of Chicago’s pension funds for police, firefighters or teachers. It also does not do anything to the state’s five pension funds for teachers outside of Chicago, state employees, university employees, lawmakers or judges pension funds. Those all combined eclipse $200 billion in unfunded liabilities when healthcare costs are included.
The consolidation effort does not include any kind of benefit changes to lower pension payments, something protected by the state constitution’s pension protection clause. Lowering benefits would require voters to approve a constitutional amendment, something not expected to advance in the legislature.
There’s bipartisan support for consolidating the suburban and downstate police and fire pension funds even though some have questioned how much it will help alleviate the state’s pension problems. As of late last week, no bill had been filed to consolidate the funds.
State Rep. Brad Halbrook, R-Shelbyville, said he wants more details.
“Without a bill, I don’t know how you can stake a position yet,” Halbrook said. “I am for meaningful reform, whatever that is, I don’t think it will be included in this.”
Pritzker said he hopes to get the proposal passed during the veto session.
“I know that there will be a significant improvement for our pensions if we get this through,” the governor said. “We’re going to work on it doing that during the legislative veto session. I hope that we’ll be able to get that done.”
State Rep. Sue Scherer, D-Decatur, said consolidation is a big issue. She said she’s not sure it can get done in six days.
“I don’t know,” Scherer said. “I think that’s a very heavy lift to try to do that in that short amount of time. But anything is possible, so.”
Other lawmakers have said they expect thorough hearings on the proposal during the veto session.
The Illinois Municipal League is on board with the plan. A state firefighters association supports the idea. A statewide police organization has raised questions.
Lawmakers return Monday for the first of six days scheduled between October and November.