SPRINGFIELD (AP) — Illinois lawmakers are considering combining police and firefighter pensions into one fund to save local governments money.
Republican Rep. Ryan Spain, of Peoria, has proposed creating a single board and fund for all downstate communities, The State Journal-Register reported.áThe bill is still in committee.
Having each pension board employ separate local trustees and employees is expensive, said Mark Fowler, the executive director of the nonprofit Northwest Municipal Conference.
“In 2000, most of the Northwest Municipal Conference police and fire pension funds were 100 percent funded,” he said. “Over the next decade we saw funding levels declining, despite contributing increased amounts to the pension funds, exposing structural flaws in those pension funds.”
The larger combined fund also could lead to more lucrative investment opportunities, Fowler said.
“Consolidation allows for greater investment returns that smaller funds are not able to achieve through current statute,” Fowler said.
A 2012 study by the Commission on Government Forecasting and Accountability found that funds could take more than 10 years to recoup transition costs under the consolidation model, said Pat Devaney, president of the Associated Fire Fighters of Illinois. Some investments have requirements that make them difficult to be moved from how they operate.
Local boards are also more personal and efficient when reviewing applications, he said.
“Considering applications for disability is a tedious, time-consuming process,” Devaney said. “I can assure you the (local) pension fund trustees closely scrutinize each application to ensure participants only receive the benefits they are entitled under the statutes.”
Legislators could remove some regulations and bureaucratic hurdles to make the process more efficient, said Andrew Bodewes, with the Fraternal Order of Police. He suggested reducing the number of actuaries required to analyze the funds and removing limitations on what kinds of funds the police and firefighter pension boards can invest in.