In your Nov. 28 editorial, “Time for coordination,” you conclude your piece with the statement: “The IMRF, the Massachusetts standard and the New York City proposal could show the way for many public defined benefit plans.” I disagree.
The idea of consolidation is not without merit; however I think you paint an overly broad stroke with the above conclusion. This is not another case of “too big to fail,” or more appropriately “too small and confused to fail.” People rise and fall on the merits of their actions; this has been the way of life from the beginning and although painful, this way should continue. To impose a misplaced crutch where it shouldn't be is simply delaying the inevitable. Furthermore, not everyone fits into the same neat mold. While I cannot speak to the Massachusetts standard or the New York City proposal, I can speak about Illinois, specifically the “Downstate Police Pension System” under Article 3 of the Illinois Pension Code.
First off, Illinois is in the position we are, not because smaller public defined benefits plans are inept in their management skills, but because the larger bureaucratic machines impose their errant will upon us. Consider the following:
- Our boards have five members who are immediately accessible to the public as well as the pensioners (superfunds like IMRF lack this quality), which adds accountability to the smaller boards.
- Police officers must contribute 9.91% of their pay every pay period without exception, and do so from their very first check to their very last.
- Although Illinois statute orders municipalities to levy a tax to help fund the pensions, they often don't, or they underfund them. When this happens, the Legislature in Springfield gives them more time to pay their bills, which makes the situation worse.
- Boards of trustees in Illinois (like other boards) are held both criminally and civilly liable for their actions. Not a strong incentive to practice poor managerial skills. Coincidentally, there are no sanctions against the municipalities for failing to do their part.
- Boards are mandated to complete a 32-hour “trustee” course as well as 16 hours of continuing education each year thereafter.
- The board in my community retains a consultant, an attorney, an accountant and an actuary. It is a small fund of around $10 million in assets, but the board does make wise use of the assets.
Second, I am not a proponent of large government, but a prudent utilization of the taxing authority of the municipality to assist in funding the pensions should not be avoided out of political expediency. That mindset is what has set this snowball into motion. Fiscal irresponsibility on the part of the municipalities and state has been aggravated by recent economic and political turmoil.
Lastly, while IMRF has had success, your readers need to know that there is a provision in the Illinois law that allows IMRF to take municipal funds against the will of the local officials, if they do not fund the IMRF pensions as recommended by the actuarial report. Downstate police and fire do not have that luxury in Illinois.
In closing, my point is simply this: We cannot use too broad a brush stroke with the retirements of individuals not even given the chance to participate in Social Security (for good or bad), but rather look at the funds individually. Perhaps those that are under a benchmark “funded ratio” should be combined into a central fund until their fiscal health can improve or the new fund serves the relevant purpose. But those funds that are doing what they are supposed to and work well with their municipalities should be extended the trust their members give them to do the jobs as they have been.