Editorial | The search for savings

Editorial | The search for savings

Illinois' public pensions have received so much attention in the news media over the past few years that this staggering problem borders on old news.

But that's mostly related to the state's public pensions, entities like the Teachers Retirement System and the State Universities Retirement Systems.

Local fire and police pensions also are in desperate shape, the result of many years of overpromising benefits and underpaying contributions to the more than 600 funds spread across Illinois' 102 counties.

The pensions, collectively, are funded at an average of 55 percent. A few are well funded — Champaign and Urbana — while many others are not — Danville. The day of reckoning will soon be on the doorstep if public officials at all levels of government in Illinois do not address this serious, growing problem.

Gov. J.B. Pritzker has appointed a task force to study the problems surrounding fire and police pensions, including one specific proposal to consolidate all of these pensions under one umbrella at the Illinois Municipal Retirement Fund. Task force recommendations are due July 1, and they will be interesting to see.

The thinking behind this idea is that administrative efficiencies — eliminating about 3,300 pension board trustees and all that goes with them — investment and business managers, lawyers, actuaries and accountants — would generate substantial savings.

One estimate ranges from an annual savings of $35 million to $50 million.

On one hand, that's a stunning amount of money. But in terms of the overall underfunding problem, it's a drop in the bucket. Nonetheless, there's no reason not to move forward if — an awfully big small word — the proposed consolidation would work as planned.

Predictions, of course, are inherently risky. Who's really to say that the consolidation would be a financial blessing some suggest? The definitive answer to that question could only be answered in time.

A police pension representative contends that there are substantial up-front costs associated with the plan that "could take 15 to 20 years to recover." That, too, may or may not be true.

There's also a challenge with change — people hate it, and there are many changes associated with consolidating 600-plus fire and police pensions into one massive bureaucratic entity.

If people were starting from scratch, establishing hundreds of fire and police pension funds when one big one — like the teachers' system — could do the same thing would be ridiculous. But they are here now, and the question is what, if anything, is to be done with them in the interests of serving the greater good.

Anticipating a favorable report on the issue, House Republican Leader Jim Durkin has introduced legislation — H.B. 1567 — to legislate the change. It remains buried in a committee awaiting possible action while Pritzker's task force members contemplate the proposal to consolidate fire and police pensions into the Illinois Municipal Retirement Fund.

Perhaps they'll recommend doing nothing. If they recommend consolidation, another big legislative fight will be required to get it done.

Sections (2):Editorials, Opinion
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