Gov. J.B. Pritzker created two new groups to study ways to improve the state's underfunded pension systems.
One will focus on the consolidation of more than 650 local pension funds for police officers and firefighters. The other will look at selling state-owned real estate and infrastructure assets to improve the balance sheets of the state's five pension systems.
“The enormity of Illinois’ pension problems at all levels of government cannot be overstated, and these two taskforces will provide concrete recommendations on two ideas that will improve the health of pension funds around the state: potential consolidation of funds to achieve the highest investment returns and transferring valuable state-owned assets to the pension funds to help address our nearly $134 billion in unfunded liabilities,” Deputy Governor Dan Hynes said in a statement.
The Pension Consolidation Feasibility Taskforce will look at the 656 police and fire pension funds. Those funds manage $170 billion in assets and have liabilities of more than $355 billion.
The Illinois Municipal League, which represents municipalities, supports consolidation and has helped craft bills that would allow for that to happen. A group that represents the pension boards that manage those local pension funds has said the cost of consolidating could be larger than any administrative savings it produces.
“[These studies] also demonstrate that bigger isn't always better, and that consolidating local pension funds is risky, may not generate the expected cost savings, and may harm local economies,” Illinois Public Pension Fund Association President James McNamee said in a statement.
McNamee referred to two studies done by Anderson Economic Group LLC at the request of the organization.
Pritzker's other study group, the Pension Asset Value and Transfer Taskforce, will look at how state assets – from real estate to roads – could be used to help the state's pension funds.
"Recommendations could include, but are not limited to, the repurposing or sale of these assets or transfer to state pension systems to improve their levels of funding," according to a news release from the governor's office.
Pension payments account for 24 percent of the state's annual budget. The hundreds of police and fire pension systems are funded by municipalities using local tax dollars.
Connecticut, which spends about 10 percent of its budget on pensions, formed a similar committee last year.