October 13, 2019
Chicago Sun-Times
A smart way to grow police and fire pensions across Illinois
A state mired in pension debt at all levels can’t miss a chance to fix at least part of the problem.
Consolidating downstate and suburban police and firefighter pensions - an idea supported by Gov. J.B. Pritzker - could do just that. But the Illinois General Assembly must step carefully.
Illinois has about 650 police and firefighter pension funds outside the city of Chicago. If you’re counting, that’s the second highest number of public pension funds in the country. But our high ranking in quantity is not matched in quality - Illinois has the ninth-lowest assets per system of any state.
In fact, Illinois’ assorted police and fire funds, which are required even if a community of 5,000 or more has just one police officer or firefighter, together have gotten themselves into the red by $12.4 billion, or $294,462 per pension fund participant, according to the Illinois Municipal League.
Partly, that’s due to mismanagement.
The Better Government Association in 2014, for example, found that south suburban Harvey - which had annual required contributions for its police and fire funds of $10.1 million - had in fact from 2010 to 2013 contributed just $140.
Part of the problem is also that the Illinois Legislature has added sweeteners to downstate and suburban pensions over the years without paying for them. Another problem is rules that limit smaller funds to low-risk, low-yield investments. Over the past 10 years, the unconsolidated police and fire funds have had returns that are 2% less on average than the statewide Illinois Municipal Retirement Fund, which consolidates investments for other municipal workers.
Like the successful IMRF, the consolidated funds would be managed independent of state government, which should offer some reassurance to critics such as the Illinois Fraternal Order of Police, who understandably worry about Springfield’s abysmal record of handling pensions.
The state doesn’t have $12.4 billion to fix this problem nor do local municipalities. But what they can do is let two professional statewide boards - one for police and one for fire - manage the investments for each individual fund to get better returns and reduce costs. That’s the recommendation of a task force report last week, and it makes sense.
The Illinois Pension Consolidation Feasibility Task Force estimates net gains could reach from $164 million to $500 million a year. According to the Illinois Department of Insurance, that could lead to as much as $12.7 billion in higher investment returns over 20 years, an amount roughly similar to the level of underfunding now.
The task force reports that a 1967 consolidation in Ohio of funds that had only $75 million in assets and $490 million in liabilities created a single police and fire pension fund that today has a portfolio of $15.7 billion.
Skeptics aren’t betting on hefty higher returns on investments after consolidation, but even they admit a larger diversified portfolio with lower fees, along with far fewer investment advisers and lawyers than are need for 650-plus funds, should result in significant cost savings.
But here is where the Legislature must be careful:
The committee also is recommending pension improvements, such as better survivor benefits and an increase in annual cost-of-living increases for newer workers in Tier 2, who currently get lower benefits than those in Tier 1. Those are laudable goals, but lawmakers had better get their calculators out first. Springfield has a long history of overestimating savings and underestimating expenses when it enacts reforms.
Moreover, a study done for the Illinois Public Pension Fund Association - which opposes consolidation - concluded that transition costs could be as high as $155 million, a number disputed by supporters. And there is a risk that better-managed local plans will find a consolidated statewide plan doesn’t achieve the returns they are used to, forcing local taxpayers to chip in to make up the difference.
The consolidation task force recommends the Legislature act in the veto session, which starts later this month, because in the task force’s judgment, the current system is unnecessarily costing us $1 million a day.
Many other bills and concerns will compete for the Legislature’s attention. If it does decide to act on consolidation now, it had better do so thoughtfully and comprehensively so that unexpected problems don’t crop up later, as has happened so often in the past.
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October 14, 2019
The (Champaign) News-Gazette
Governor’s plan for the future
J.B. Pritzker wants to further strengthen already strong areas of the state’s economy.
The Pritzker administration last week released the details of its five-year economic plan aimed at improving the jobs climate and increasing wages.
It contains the usual boilerplate and braggadocio, but also outlines its plans to focus on key industries and make them even stronger forces in the Illinois economy.
They are agribusiness and agriculture technology, energy, information technology and health care, manufacturing and transportation and logistics.
Even though Illinois finances remain in a disastrous state, the state economy, carried along by a strong national economy, is doing relatively well.
Pritzker noted that the state has enjoyed “simultaneous job growth in every region.” He wants to build on that by “laying the foundation for long-term growth” that will “attract more workers and businesses.”
Illinois has a strong foundation that it can strengthen further with the proper policies. It’s centrally located and has an educated workforce, an impressive transportation network, abundant natural resources and a solid K-12 and higher education system.
At the same time, Illinois trails its neighboring states in terms of economic growth, suffers from a reputation of being hostile to job creators and has more people moving out than moving in.
Meanwhile, Chicago is booming economically, even though that great city also is confronting severe fiscal problems, and downstate communities lag behind.
Pritzker and his economic advisers clearly will have their hands full reversing those negative trends.
Of the seven areas Pritzker targeted, five - agribusiness, information technology, life sciences, health care and transportation and logistics - are growing. They reported increases in employment ranging from 8 percent (health care) to 39.5 percent (information technology) from 2009-2018.
Only two - energy (-3 percent) and manufacturing (-2.2 percent) - sustained declining employment.
The Pritzker administration envisions adopting a variety of plans and programs - grants, training, expanded broadband, infrastructure improvements, tax credits - that will meet the particular needs of the industries in question.
That sort of thinking is not new. In fact, it’s part and parcel of what state and local governments across the country do to enhance their economies.
“In this economic development plan, we identify a set of concentrated industry clusters in which the state has a large employment base and is positioned to compete globally for talent and investment,” the report states. “The performance of these industries in particular will have a large impact on the state economy, and that impact will be felt across the regions of the state.”
Pritzker bills his five-year plan as a means of revitalizing the economy and building “the workforce of the future.”
It pre-supposes creating an economic atmosphere that catches up and passes our neighbors, like Indiana, Michigan, Missouri and Wisconsin, by reversing negative trends, including out-migration.
These ideas are good as far as they go. But there is more to righting the ship that is Illinois than incentives, technology and job training. The state’s most fundamental problems remain its sorry finances and policies that drive up employer costs, a combination that creates the kind of instability job creators avoid.
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October 14, 2019
(LaSalle) News-Tribune
It’s harvest - Let’s be better motorists
A north central Illinois harvest is a time of prosperity and beauty. It’s a time of long days and nights for our farmers whose livelihood is complicated by many factors including the weather.
Impatient or distracted motorists should not be one of those complicating factors.
According to state police, as farmers move equipment from field to field, they will be traveling at speeds of 25 miles per hour or less. Police are urging motorists to pay attention to the roads and farm equipment that will be moving on the roadways. Drivers should be aware and prepared to slow down when encountering farm vehicles.
It doesn’t always work that way.
A tractor accident occurred near Sterling recently. The Whiteside County Sheriff’s Department report indicated a car attempted to pass the tractor, but the vehicle impacted the tractor’s carriage and a passenger in the car - a 9-year-old girl - died.
“There’s a lot of equipment, tractors, combines that are going to be rolling up and down the roads,” agriculture director John Sullivan said on RFD Radio Network. “Just go slow and cautious and give everyone enough time to get done what they need to get done.”
Motorists should be mindful of the following:
Motorists should not attempt to pass the farm equipment unless it is legal and safe to do so, even if the farm operator waves the motorist around.
If traffic begins to back up behind the farm implement, the operator should look for a safe place to pull over and allow traffic to pass.
Farmers should avoid movements of farm machinery at sunrise and sunset. Visibility is more limited during these times.
For motorists, reduce your speed immediately upon seeing a slow-moving implement in front of you. You should maintain a safe driving distance and be patient. Be prepared to share the road with an oversized farm vehicle.
The No. 1 goal for the harvest season is to make it a safe one and is encouraging all motorists and farmers to take the necessary safety precautions.
The beauty of north central Illinois at harvest need not turn deadly.
Let’s all be mindful and slow down for everyone’s sake.
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