Excerpts from Pekintimes.com:
Illinois lawmakers are once again revisiting a long-standing debate: the consolidation of the state’s 656 local downstate police and firefighter pension funds into a single system. While the idea has been discussed for years, it's gaining renewed attention this year thanks to Governor JB Pritzker, a Democrat who formed a task force in February to examine the issue more closely.
Beyond the task force, the Illinois Municipal League and a group of communities in the northwest suburbs of Chicago have been pushing for change. They’ve proposed up to seven different models they believe could reduce costs for taxpayers and strengthen the financial health of these retirement systems.
Currently, there is one pension fund for non-uniformed municipal workers in downstate Illinois called the Illinois Municipal Retirement Fund (IMRF). However, municipalities outside of Chicago that employ full-time, paid police and fire departments maintain separate pension funds for those employees, each with its own board and administrative team.
IMRF is currently in the strongest financial position among Illinois’ public pension funds, with a funding ratio of about 90%. This is due to state law requiring local governments to make annual contributions, even if it means increasing property taxes or cutting other services.
Before recent changes, police and firefighter pension funds were often underfunded during tough economic times. Additionally, strict investment rules limit how these funds can grow. As a result, downstate public safety pension funds are only about 55% funded on average.
Supporters argue that consolidating the funds could save local governments $21 million annually in administrative costs—roughly $1,000 per member. That money could be redirected into the pension pools. A larger, unified fund like IMRF would also have greater flexibility to diversify investments, helping protect against economic downturns.
If the 69 public safety funds managed by the Northwest Municipal Conference had achieved returns similar to IMRF’s over a 12-year period from 2003 to 2015, their assets could have grown by an additional $978 million. This would have reduced their unfunded liabilities from $2 billion to around $1 billion, without raising taxes, and improved their funding level from 61% to 80%.
The Northwest Municipal Conference and the Illinois Municipal League have proposed several consolidation options. These include merging all funds into IMRF, creating a new statewide system for downstate public safety pensions, maintaining local control while using a centralized investment manager, or splitting into two separate plans—one for police and one for firefighters.
Despite the potential benefits, many local pension fund officials and members remain skeptical. One major concern is the high transition cost, estimated at up to $150 million, which could take as long as 10 years to repay.
Until the governor’s task force releases its findings later this year, it seems unlikely that any legislative action will be taken. For now, the debate continues, with both supporters and critics weighing the long-term implications of such a significant shift in pension management.
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