Excerpts from Pekintimes.com:
Illinois lawmakers have resumed discussions on a long-debated topic: merging the state’s 656 local downstate police and firefighter pension funds into one unified system. While the idea has been around for years, it's gaining momentum this year thanks to Democratic Governor JB Pritzker, who established a task force in February to explore the matter.
Outside of the task force, the Illinois Municipal League and a coalition of communities in the northwest suburbs of Chicago have taken the lead, presenting up to seven different proposals they believe could save taxpayers money and strengthen the financial health of these retirement systems.
Currently, there is a single pension fund for non-uniformed municipal workers in downstate Illinois called the Illinois Municipal Retirement Fund (IMRF). However, communities outside of Chicago that maintain full-time police and fire departments operate their own separate pension funds, each with its own board and administrative team.
Among all of Illinois’ public pension funds, IMRF is the most financially stable, with a 90% funding ratio. This is partly due to state law requiring local governments to make annual contributions, even if it means increasing property taxes or reducing other services.
Before recent changes, police and firefighter pension funds were often underfunded during tough economic times. Additionally, legal restrictions on investment types have limited their growth. As a result, these funds are currently only about 55% funded on average.
Supporters argue that consolidating the funds could save local governments as much as $21 million annually in administrative costs—roughly $1,000 per member—which could be redirected into the pension pools. A larger, unified fund like IMRF would also have more flexibility to diversify investments, helping protect against economic downturns.
If the 69 public safety funds managed by the Northwest Municipal Conference had achieved the same returns as IMRF did between 2003 and 2015, their assets could have grown by an additional $978 million. That would have reduced their unfunded liability from over $2 billion in 2016 to just over $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, including merging all funds into IMRF, creating a separate statewide system for downstate public safety pensions, or maintaining a single fund while allowing local boards to manage daily operations. Some local officials and members remain skeptical, citing concerns about the high cost of transition, which could reach up to $150 million—a burden that might take a decade to pay off.
With no immediate legislative action expected, lawmakers are waiting for the final report and recommendations from Gov. Pritzker’s task force, which is expected later this year.
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