Illinois lawmakers have sent Gov. J.B. Pritzker a measure that will merge 650 local police and fire pension systems to boost investment returns and save money.
The Senate voted 42-12 Today on Senate Bill 1300, the Democratic governor’s plan to create two statewide retirement programs for police employees and firefighters. On Wednesday the House voted 96-14 in favor of the bill, which Governor J.B. Pritzker has already said he intends to sign.
Local reaction to the plan leading up to this weeks voting has been mixed, with the Jacksonville Firefighters pension board supporting the proposal, and the Jacksonville Police pension board still wanting to find out more details of the bill, before fully supporting it.
Jacksonville City Treasurer Ron Smiljanich, who sits in on the pension board meetings in an advisory role, said that he supports and understands the positions of both boards and feels that they are taking the right steps in reaching their decisions.
“Those guys do what they think is the right thing to do for themselves and there’s nothing wrong with that, that is what they are supposed to do. The board is now in support of the union and the consolidation and, you know I have to wear the hat of the city too, and I am hoping, and they are hoping too, that long term we get better investment returns, and it brings the tax levees down. That’s the ultimate goal I hope.”
Smiljanich said that both boards have always had both the pensions and the city’s best interests in mind over the years.
“Those guys have always been very cognoscenti of the fact that the levees are really high, and they have never been greedy, they have always asked for what they are supposed to get and they get it and we usually give them a little more. I think those guys hearts are in the right place and they think it’s right for everybody, that it’s right for the city and right for them and I’m not going to argue with that one bit. I support them 100%.”
The newly created funds’ combined assets would be approximately $15 billion. Pritzker says the investment power would increase returns by $800 million to $2.5 billion in the first five years and save local governments money on administrative costs.
After the House passed the bill on Wednesday, 100th District Representative C.D. Davidsmeyer was quoted as saying that The State IS NOT taking over individual pension funds. The State CANNOT sweep funds that are designated to individual police and fire pensions. Funds will remain their own and be ran by elected pension members, retirees and cities. All decisions on disability will also remain with the local boards.
Smiljanich said that is and has been the hope of the local pension boards, and that some of the fine details are still needing to be known.
“I think that’s the leap of faith that these guys are taking, that if we transport $17 million dollars of fire pension money, that when we need it, it will be there. That is the hope and that is the trust. We will work with Governor Pritzker and, you know, just keep our money safe. But as far as any of the details as far as the accounting, or who does what, I don’t know.”
Davidsmeyer also said Each municipal fund will remain separate, and will operate much like a company’s 401(k), where all employee funds are combined, yet the employee maintains all of their money and any returns from their money.
Republicans objected to a provision in Elgin Democratic Sen. Cristina Castro’s bill that increases benefits for employees hired after 2011, because cost-saving benefits offered so-called Tier 2 employees, are too low to remain in compliance with federal Social Security guidelines.
The tier employee issue was one sticking point with the consolidation plan for local firefighters because of the inequities of those hired after a particular date by local municipalities. Representatives hope that the new plan will level the playing field.