Whatever Happened To Illinois’ Plan To Fund Pensions With Asset Sales? Not Much, It Turns Out.
It was going on two years ago, back in February of 2019, that Illinois Gov. J.B. Pritzker’s office announced the creation of two task forces to improve Illinois’ chronic pension underfunding. The first of these led to a report in October, that is, a year ago, proposing the consolidation of the asset management of Illinois’ police and fire pensions, which are managed by local municipalities rather than on a statewide basis, and very quickly thereafter, in November, to legislation accomplishing the proposal.
The second of these task forces, the Pension Asset Value and Transfer Taskforce, was intended, as described in the governor’s press release, “to analyze state assets across Illinois and make recommendations as to their best use to help stabilize the state’s finances. Recommendations could include, but are not limited to, the repurposing or sale of these assets or transfer to state pension systems to improve their levels of funding.” At the time, selling the Illinois Tollway was speculated to be a possibility, with the proceeds plowed into pension plans. Other observers speculated that the state could be playing financial games by transferring currently valued at “book value” into a fund where they’d be valued at “market value,” instantly conjuring up money!
And then . . . nothing.
Or, rather, nothing visible to the public.
According to (heavily-redacted) materials recently provided to me through a Freedom of Information Act request, the task force did indeed meet regularly in the months after its formation.
In April, the governor’s office claimed that their recommendations would be coming in July.
In May, reports were said to be coming “in the coming months,” with the expectation that the end result would be a “long-term pension reform plan.”
In September, the governor’s staff circulated among themselves a draft version of an Asset Transfer report. (I was unable to inspect the report itself.)
In October, that is, almost exactly a year ago, the office told an inquiring reporter that the task force was “still working on their recommendations and should be ready to present them soon.”
Finally, in November 2019, in response to a reporter, the staff said, “the chairs of the taskforce thought it would be helpful to have municipal representation at the table during discussions.”
And here the trail ends. There’s no explicable reason why a task force meant solely to identify whether the state could shore up the funding level of its public pensions via asset transfers, would involve city governments, especially when the Illinois Municipal Retirement Fund (all employees of Illinois cities except fire, police, and the city of Chicago) is nearly fully-funded. Had the scope of the task force been expanded to a point where local municipalities’ participation had truly seemed relevant? It was, after all, at about this time, again, a year ago, when Chicago’s Mayor Lightfoot had been calling for a “statewide pension reform package” — with, of course, no further specifics. Did this hypothetical broadened scope become unmanageable?
Were there indeed assets identified — but then squabbles about how any funds should be allocated? Or, what’s most likely, did they conclude that, other than the planned sale of the Thompson Center, the proceeds of which are unknown but earmarked for pensions, there’s just not a lot of extra cash to be scrounged up from the state’s metaphorical couch cushions? And, having concluded that, did they prefer to let the task force die a quiet death, eventually forgotten about, rather than issue a report which would disappoint its readers and embarrass those who promised solutions? It should be noted that I, likewise, asked the governor’s press office for an update but received no reply.
The bottom line is, of course, that, even prior to the arrival of COVID-19, there was no easy path towards states conjuring well-funded pension plans into existence without simply contributing the necessary funds to those plans.
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