By Peter Hancock
A plan to consolidate 649 downstate municipal police and firefighter pension funds into just two unified systems hit an unexpected snag Tuesday, but officials on both sides of the disagreement vowed to continue talking in hopes of reaching an agreement.
Just hours before the bill was scheduled for a hearing in a House committee, the Illinois Municipal League, which long has supported pension fund consolidation, issued a statement saying a last-minute change to the bill forced that organization to withdraw its support.
“I would say we have an agreed bill. It is not this bill,” IML Executive Director Brad Cole told the Personnel and Pensions Committee, using a legislative term that refers to a bill on which all affected parties have agreed.
The bill, Senate Bill 1300, is intended to boost the financial security of the largely-underfunded pension systems. Currently, each one is a separate fund with its own board of trustees and its own administrative staff membership, including investment managers.
By consolidating them into two funds, supporters say the funds could generate upwards of $1 Billion a year in additional earnings because they would have the flexibility to diversify their investments and to invest in more kinds of instruments. Consolidation would greatly reduce the funds’ combined administrative costs, potentially saving local taxpayers millions of dollars per year.
At issue, Cole said, are four words that were inserted in two places in the 200-page bill dealing with administrative hearings that are held to consider someone’s application for retirement, disability, or death benefits, hearings that typically involve the applicant and the board that manages pension benefits.
Where the original bill prohibited either of the two new investment boards from intervening or reviewing actions from those administrative hearings, a last-minute change was made to insert the words, “A third party, including” the investment board, “shall not have the authority to control, alter, or modify, or the ability to review or intervene in” the proceedings or decisions.
According to Cole, “a third party” would include the very municipal government that employed the police officer or firefighter.
“We support pension fund investment consolidation. We support providing relief to taxpayers and their municipal governments who have the liability to fund pension benefits,” Cole said. “However, not frivolously, we do not support excluding taxpayers and their municipal governments from activity at the local level.”
— Capitol News Illinois