Editorial: Don't let opportunity pass for progress on pensions
On the final day of the 101st Illinois General Assembly's fall veto session, lawmakers have a lot to accomplish. We addressed on Wednesday the importance of tackling ethics issues and approaches on which it should not be difficult for Republicans and Democrats to find common ground. Today, let's focus on a topic that is just as important and should be even easier -- pension consolidation.
In fact, the House did its part on Wednesday, approving legislation to consolidate nearly 650 police and fire pension funds outside the city of Chicago into just two. Now, it's up to the Senate to take action on legislation the governor already appears eager to sign.
A little over a month ago, a 10-person governor's task force composed of people representing every facet of the looming crisis over police and fire pensions -- including executives from police, fire and other unions, business interests, a former lawmaker, community leaders like Barrington Village President Karen Darch, financial experts and pension fund veterans -- offered a detailed analysis and recommended merging the funds.
Among the findings leading to the group's conclusion was an estimate that overall, the pension funds are losing out on $1 million a day they could be earning if they were part of two large asset pools instead of hundreds of distinct smaller ones. A separate analysis by the Daily Herald's tax watchdog editor Jake Griffin found that the state's pension funds missed investment targets by $1 billion over the past five years.
Closing those financial gaps is important not just because it reassures first responders that the pensions on which they rely will be healthy and available when they need them, but also because keeping up with the demands of funding pensions is steadily bankrupting local governments. The end result of that burden falls on local property taxpayers.
Some local communities with healthy funds have raised objections to mingling their assets with communities that, in their view, have not been as responsible in meeting pension obligations. Their hesitation is understandable, but the truth is that a merger will not harm these funds, and indeed will only make them stronger, relieving potential future property tax pressures.
Other interests have complained that the Illinois Pension Consolidation Feasibility Task Force's recommendations don't go far enough. If consolidation into two funds is good, some argue, consolidation into one should be even better. Still others balk because the recommendations don't address complaints about growth in the size of pensions or other legitimate problems with the current pension system.
To whatever degree there may be justification for such reluctance, we must also recognize that a broadly diverse team of sometimes competing interests has produced measurable, significant progress on a long-intractable problem. This is not the conclusion of the reform process, but a remarkable beginning. The only result of waiting to do anything on pensions until we can do everything is that we will do nothing.
The House has taken the first step toward doing something, and it's something that makes the system better for almost every interest. The Senate should quickly follow.