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dir="ltr">A police group that was the major hold out on a proposal to consolidate the state’s 649 local police and fire pension funds into two funds said it will support the legislation after a proposed change to the structure of the board that would oversee investment decisions for the consolidated funds.
Senate Bill 616 would consolidate the state’s 649 suburban and downstate police and fire pension funds into two. Gov. J.B. Pritzker made the issue a top priority for the fall legislative session. The bill, filed last month, doesn’t address Chicago’s pensions or the state’s five pension funds.
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State Rep. Mark Batinick, R-Plainfield, said local pension fund consolidation was needed.
“Setting up 650 small pension funds, having municipalities that have just a few thousand people have their own pension funds is an inefficient, bad system that was set up poorly in the first place,” he said. “The only way to do this right is to build a time machine and go back in time and fix it. It’s always hard unwinding something like this, but it needs to be done.”
When the proposal was first announced, a state firefighters group supported the measure, as did the Illinois Municipal League. The Illinois Fraternal Order of Police initially raised concerns.
“[As the bill is now] it would allow the local pension boards to administer benefits, so dealing with disability benefits and whatever the local administration is in terms of that benefit,” state Sen. Robert Martwick, D-Chicago, said. “But it would just transfer that investment authority so it would eliminate their ability to weigh in on how that money is invested.”
The Illinois Fraternal Order of Police said a coming amendment would assuage its concerns.
“The revised legislation would give active and retired municipal police officers a majority on the board that will control the consolidated investments,” the group said. “We agree in principle with these proposed amendments, but want to make sure they make it into the final language of the bill.”
Lawmakers return Tuesday for the final three days of the scheduled legislative session for the year. Senate Bill 616 is up for final passage in the Senate, but could be amended before it’s called for a vote in the House.
The 649 suburban and downstate police and fire pension funds would have $12 billion in combined unfunded pension liabilities. The consolidation proposal is an effort to maximize investment returns. Batinick said there could be between $250 million to $500 million of potential savings through consolidation.
Martwick said that it wouldn't address the $12 billion in unfunded liabilities.
“To be fair, it does not solve the underfunding question, but better returns is always a step in the right direction,n so it’s a good idea, a good initiative,” Martwick said.
Municipal governments across the state have reported the bulk of their share of property taxes are used to pay for public safety pensions and that they still don't have enough to cover the required payments needed to address unfunded liabilities.