The Oak Lawn Leaf has learned that both the Oak Lawn Police Pension Board and the Oak Lawn Fire Pension Board have contacted the Village to demand that the village board increase its payment to the pension funds in order to fund it at a level required by law.
State law requires any municipality with a population between 5,000 and 500,000, that employs at least one full-time police officer or firefighter, to have a pension fund. In 2011, a new law went into effect to attempt to bolster funding of those pension funds. The law required all public safety funds to have a funding ratio of 90 percent by 2040.
In October of 2018, the Illinois Policy Institute published a story reporting that Oak Lawn’s police and fire pensions posted unfunded liabilities of $154 million at the end of 2017.
However, the Illinois Municipal League, of which Oak Lawn is a member, is supporting various laws to erase those protections for pensions. The IML has noted that the benefits would not be affected by the bills. Here is the legislation:
SB 1106/HB 1566: Consolidation into the Illinois Municipal Retirement Fund, with IMRF Formula for New Hires. Consolidates all downstate public safety pension funds into the Illinois Municipal Retirement Fund (IMRF) and requires the regular IMRF pension formula to apply to all newly hired public safety employees after a certain date. Local pension boards would be abolished following consolidation.
SB 1107/HB 1567: Consolidation into IMRF, with Retained Police and Firefighter Formulas
Consolidates all downstate public safety pension funds into IMRF. This proposal would allow the benefit characteristics of these funds to stay the same, but be under the management and administration of IMRF. Local pension boards would be abolished following consolidation.
SB 1108/HB 1568: Consolidation with IMRF, for Investment Funds Only
Consolidates the investments (only) of all local pension funds by the transfer of assets and investment authority into IMRF and maintains local pension boards for each fund to administer pension determinations.
SB 1109/HB 1569: Consolidation Creating a Single Downstate Police Pension Fund
Consolidates all downstate police pension funds into a single downstate police pension fund. The fund would have one statewide board that would carry out all aspects of the fund’s management, thereby eliminating the local pension boards.
SB 1110/HB 1570: Consolidation Creating a Single Downstate Firefighter Pension Fund
Consolidates all downstate firefighters pension funds into a single downstate firefighter pension fund. The fund would have one statewide board that would carry out all aspects of the fund’s management, thereby eliminating the local pension boards.
SB 1111/HB 1571: Consolidation with IMRF, for Investment Funds Only, By City Council Action, Maintaining Local Pension Boards
Allows municipal officials to direct the local pension fund board to transfer and consolidate its investment funds into a single statewide fund. Allows local pension boards to maintain all other authority, such as pension awards and disability determinations. Participating communities would see their property tax levies for pensions be exempted from the Property Tax Extension Limitation Law (PTELL).
SB 1112/HB 1572: Extend the Amortization Period and Reduce the Funded Ratio Target
Maintains all characteristics of each local pension fund (i.e., no consolidation), extends the amortization period from 2040 to 2050 and reduces the required funding ratio target from 90% to 80%, and directs a comprehensive study be done to examine the costs and benefits of full consolidation.
It is highly unlikely that Senate Bill 1107 or House Bill 1567 which consolidates the local police and fire pensions into IMRF, will pass. The Illinois Municipal Retirement Fund, or IMRF, is the best-funded pension system in Illinois.
IMRF has a funding ratio of 87 percent. IMRF is the pension system for local-government workers in municipalities outside of Chicago. IMRF’s funding level is at that level because municipalities don’t have a choice as to how much money must be applied to the pension funds. IMRF determines the amount each year and mandates that the municipality pay that amount.
Without the historical underfunding that other pensions have suffered from statewide and locally, IMRF has struggled in bad and good economic times because village officials have been unable to “kick the can down the road”.
While Oak Lawn’s pension funds have the right to request that Oak Lawn’s tax funds be intercepted from the Comptroller’s Office and directed to the pensions, neither pension fund has done so at this time.