The Illinois Senate passed legislation that will consolidate 650 police and firefighter pensions, sending the bill to Governor JB Pritzker, who has said he will sign it into law.
The bill, which the senate passed 42-12, amends the Cook County Article of the Illinois Pension Code to allow for the pensions to pool their funds into two statewide funds for investment purposes – one for police and one for firefighters. It will also allow contributions to be taken from any revenue source, including, but not limited to, other tax revenue, proceeds of borrowings, or state or federal funds.
The move is intended to help improve the financial stability of the pension funds, while easing pressure on local governments to raise taxes to fund those pensions.
“Bipartisanship in this general assembly has achieved what none of their peers from previous general assemblies has been able to do,” Pritzker said in a news conference after the vote passed the state senate, “consolidate the jungle of police and fire pension funds that serve first responders in the suburbs and downstate.”
Last month, a bipartisan task force on pensions created by Pritzker released a report that said consolidating the plans’ investment assets was the single most impactful step the state can take to address the underfunding of the police and fire pension funds.
“This step is immediately actionable and beneficial to the health of the plans, retirees, and taxpayers,” said the report.
If the more than $14 billion of suburban and downstate police and fire plans were to achieve investment returns like the other larger Illinois plans over the next five years, they would collectively generate an additional $820 million to $2.5 billion alone. That is the result of analysis by the state’s Department of Insurance The report also added that if they earn comparable returns over the remaining 20 years on their statutory ramp to 90% funded status, they would create an additional $3.6 to $12.7 billion in investment returns alone.
The Illinois Municipal League, a government sector lobbying association, lauded the passage of the bill.
“This has been a top priority for municipalities across Illinois for several years and will provide much needed financial relief to local governments and their taxpayers while also protecting the retirements of our public servants,” Illinois Municipal League Executive Director Brad Cole said in a statement. “While the latest compromise isn’t perfect, this is an important first step that will benefit employees, retirees and taxpayers across the state.”