(The Center Square) – The Illinois Supreme Court is poised to hear a challenge to the state’s law consolidating police and firefighter pension funds.
The law consolidating about 650 first responder pensions outside of Chicago was enacted in 2019 by Gov. J.B. Pritzker. All existing funds were pooled together into two separate funds, one for police and one for firefighters. Each local fund retained a separate account managing operation and the financial condition of each participating pension fund with the power to adjudicate and award retirement and other benefits from the funds.
Last year in a meeting with the Associated Fire Fighters of Illinois, Pritzker said it was a hard fight that had taken decades to come together.
“If you can make the municipal government happy and you can make firefighters happy … and property taxpayers who are going to see the ultimate benefit in their roles, yeah, it’s a big deal,” Pritzker said. “And it’s an unusual thing to get everyone around the table feeling really good about something as hard as this.”
Pritzker said in that June 5, 2022, meeting that consolidation is beneficial for the local funds and for taxpayers by pooling resources for greater investment returns.
“You still have local control of your benefits, of the decision-making about who’s getting what from those funds, but it’s just the investment function that we put together,” Pritzker said. “Felt like a very simple thing to suggest. It was a hard thing to get done. It’s why it didn’t get done for 75 years but I’m really pleased about where we arrived and where we are going.”
More than a dozen of the hundreds of funds have not consolidated, arguing in court the consolidation takes away local board voting rights for control of the funds. They alleged in a three-count complaint that the law violated the pension protection clause, the contract clause, and the takings clause.
The Kane County trial court dismissed the case. Earlier this year, the Appellate Court of Illinois Second District upheld the lower court’s ruling.
“The Act does nothing more than require one type of government-created pension fund to transfer assets to another type of government-created pension fund,” the appeals court said. “Plaintiffs’ rights to receive benefit payments are not impacted by these transfers.”
Last month, the Illinois Supreme Court accepted the plaintiffs’ appeal. It’s not yet known when the case will be heard.
“The Illinois Police Officer’s Pension Investment Fund (IPOPIF) is not surprised that the Illinois Supreme Court has agreed to hear arguments regarding the constitutionality of [the law],” said a statement from IPOPIF. “To date, 332 of the 357 [police funds] funds have transferred approximately $9.1 billion in assets to the IPOPIF consolidated fund.”
The IPOPIF said it remains “laser-focused on investment excellence.”
The Illinois Firefighters’ Pension Investment Fund’s annual comprehensive financial report for fiscal year 2022 said there was a total of $8 billion in assets. Four local firefighter pension funds remain unconsolidated, the report said.
The Illinois Municipal League said it believes the law will be upheld, “as it has been twice already, and will eventually yield to better financial results for both pension beneficiaries and taxpayers.”
Attempts to contact attorneys for the plaintiff funds were not successful.
The police fund plaintiff groups are from Arlington Heights, Aurora, Champaign, Chicago Heights, Chicago Ridge, Cicero, DeKalb, Elgin, Elmhurst, Evanston, Mokena, Palos Heights, Rantoul, Villa Park, Wood Dale and Woodridge. The firefighter fund plaintiff groups are from Maywood and Pleasantview.
