Illinois police and fire pensions will be combined. What’s that mean for East St Louis?
Illinois lawmakers have sent Gov. J.B. Pritzker a measure that merges 650 local police and fire pension systems to boost investment returns and save money.
East St. Louis Mayor Robert Eastern III, whose city was nearly $4 million in pension contributions, said the bill “will be a true benefit for all parties involved.”
On Thursday, the Senate voted 42-12 to send the bill for Pritzker to sign into law. The bill cleared the Illinois House of Representatives Wednesday afternoon by a vote of 96-14.
Passage comes as welcome news to East St. Louis, which has been subject to a revenue intercept by the Illinois comptroller since late October. More than $1.6 million in revenue the city uses for operational expenses such as sanitation, public safety and payroll, has been redirected directly toward the underfunded retirement pensions of its first responders.
The intercept will continue until the $3.9 million deficit is retired and the city shows it can continue to make the contributions on its own.
“We have to make sure we handle this problem or situation,” Eastern said after the vote Thursday. “There has to be a long term plan to handle the pension issues for everybody.”
The intercept has put a strain on East St. Louis, which already was contending with a $5.5 million budget deficit.
Passage of Senate Bill No. 1300 doesn’t give East St. Louis any immediate relief, but does set a path forward for maintaining the pensions the city’s retired firefighters and police officers have earned, Eastern said.
“If it’s for the good of the people and for the pension funds, I have to support it,” he said. “Right now, there won’t be an immediate impact. Even though it is a good idea, it’s not going to help us this year or next.
“Hopefully, down the way we will see the impact.”
Local legislators supported bill
Greenwood called the bill “a common sense proposal that consolidates first responder pensions to improve their financial standing moving forward.”
“The plan I backed is a responsible effort to eliminate overhead costs, increase expected returns and take real action toward needed property tax relief for local families,” she said.
Belt said that the legislation would not eliminate the control local municipalities have on pension funds, saying it would give residents more property tax relief, help prevent small communities that struggle to pay workers’ retirement funds, and save Illinois tax payers “millions of dollars.”
“This is a new pension system that Illinoisans deserve,” he said.
The funds’ combined assets would be $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.
Rep. Jay Hoffman, D-Swansea, was a sponsor of the bill.
“If you’re a mayor, you want to make sure that your property taxes are kept at a minimum, you want to make sure that your pension funds are adequately funded,” Hoffman said. “If you are an individual who is working and paying into the system, you want to make sure that those retirement funds are solvent .... This bill meets all those goals.”
A win for Pritzker
Approval gives Pritzker another in a string of legislative victories in his first year in office. But it does nothing to address monstrous funding gaps in the state’s largest pension programs — nine Chicago and Cook County retirement accounts which are $44 billion short of adequate funding and six statewide funds underfunded by more than $130 billion.
The plan underwent weeks of negotiations over administration and control.
Republicans objected to a provision to improve benefits, at a cost of up to $95 million in five years, to newer employees. The so-called Tier 2 pension beneficiaries were hired after the state reduced pension benefits for new hires to save money, but forecasters now fear that they were cut so much they do not meet Social Security benefit minimums.
During debate on the floor, Hoffman assured critics that the boards would be governed by representatives of the municipalities, their employees and retirees, and not controlled by the state. The state, he said, could not “sweep” money from the accounts to pay other bills.
Not all are in favor
Any impact felt in East St. Louis won’t come soon enough, said Johnny Anthony, president of the East St. Louis Fire Pension Board.
“We are against it because it is not going to help us. It won’t address the immediate needs of our funds,” Anthony said of the legislation. “We need enforcement to be sure sure the city pays money into our funds. In the long run it will benefit the city’s tax levy. Right now, we don’t have enough money to invest to make a dramatic difference in what the city is trying to do.”
Nick Mueller, president of the East St. Louis Police Pension Board, said his membership was against the consolidated system as well, adding Thursday that members of police union “are disappointed.”
Rep. Allen Skillicorn, an East Dundee Republican, pointed out that last year, 220 of local pension accounts were short-changed; the responsible municipalities did not contribute the required annual amount.
Hoffman said the legislation would allow the state comptroller to withhold other state money from those governments failing to keep pace.
GOP Rep. Ryan Spain said his hometown of Peoria is unable to fill 21 vacant police officer positions and 15 for firefighters because the pension costs are too high.
This story was originally published November 14, 2019 at 4:43 PM.
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