The Jacksonville Police and Fire Pension Boards are asking Governor J.B. Pritzker and the state legislature to hold off on voting for consolidating downstate pension funds, until more explanation is provided on just how the consolidation is going to work.
Secretaries from both the fire and police pension boards signed a letter to the state requesting more in formation on how pensions will be managed after the proposed consolidation.
Jacksonville City Treasurer Ron Smiljanich said the boards are not for or against the consolidation at this point, because they have not been informed just what is in the proposal.
“It looks like that the state thorough consolidation is going to take over the downstate police and fire pension funds. The details on it are very sketchy, what we have is from the Illinois Municipal League, and it is my impression that they are going to vote on this before the veto session and it is pretty much a done deal.
There are a lot of questions the the pension boards have, we just had a board meeting for both boards, and they both signed a letter, not saying they are against it, but they would like to see it before it is voted on.
They would like to see it, and there are no details on that. Will the boards stay intact? What authority will the boards still have? Who will do disability hearings? How will pensioners be paid? Again the letters really just stated we would like for you to not vote on this so quickly until we have had a chance to look at it.”
The Illinois Pension Consolidation Feasibility Task Force released it’s report on October 10th , recommending the consolidation of over 600 downstate police and fire pension funds into two, one for police and one for fire. The idea behind the proposal is that the larger investment funds can achieve greater returns by attracting more professional investment managers and leaving more room to diversify investment portfolios.
Smiljanich said that the Jacksonville fire and police pension funds are in good shape financially compared to many other funds in downstate Illinois.
“Both funds are over 50% funded, there is no danger of a pensioner not receiving a check with 17 million dollars in there, plus there is constantly money going into it. The tax levees this year, were each a million dollars plus.”
Smiljanich said that the better than average funding amount results came despite an unfortunate time period for the auditors to sample from.
“The thing about last year was this, the numbers that were used to determine the amount we are funded, was an amount that was as of 12/31/18. The stock market was at an incredible low, one of the lowest points all year.
Since then it has recovered almost 20%. So if you take that snapshot of when the audit was done, and if you took that picture right now, the funding level numbers would be different- way different. So that snapshot of the numbers was taken at the absolute very worst time it could have been taken. It was at a stock market low, the market has now recovered, and by the same token, if the stock market were at an all time high at the end of the year, you are going to look great.
But then in three months later it could be back down, so again, it is that snapshot that killed us last year as far as funding levels. All our gains for that year were wiped out in the 4th quarter. This year, both funds are already up 10% for the year. So it is when that snapshot is taken that really determines what the funding level is.”
The biggest concern for the pension board members is not what is in the proposal, but the details that are not included, are what gives Smiljanich the most questions.
“I think it pretty well is going to happen, and we hope it works out well and that it is more defined. I think the boards are going to stay intact, but who will pay bills? If I get a bill for the police pension for example, what do I do with that bill? Does it stay here? Does it go to the state? How fast does it get paid? The details are what is really troubling right now.
The boards may come back later and say, well, concerns were overblown and this is great idea. Or they could say, well we didn’t know this was going to be in there, or that is going to be in there. The fact that it is unknown is what scares the board, and I suspect that the boards will remain intact, but what their duties will be- I don’t know.
We just hope those details are worked out and I think we will find out relatively soon.”
The consolidation, if it goes into action, would only help a small fraction of the Illinois pension problem, affecting only 11 billion of the state of Illinois total pension liabilities in excess of 199 billion dollars.