Illinois' public employee pension fund underperformed last year,meaning local governments will have to pick up a bigger tab for their employee pensions.
The Illinois Municipal Retirement Fund, or IMRF, made a 0.44 percent return on investment in 2015, far short of the anticipated 7.5 percent. Kane County Board member Drew Frasz said it's frustrating to tell taxpayers they will have to make up for those lower returns.
"Since the recession, those types of normal returns are outside of reality," Frasz said.
Frasz suggested leaving IMRF and shifting to a 401(k)-style retirement fund to give employees more control over their retirements.
The IMRF has earned more than its 7.5 percent return expectation 23 times since 1982, but it has also lost money six times in the same period.
County Board Chairman Chris Lauzen said, while he likes IMRF's funding model and the securityit offers county employees, Illinois' local services are getting shorted because of various pension obligations.
"About a quarter-century ago, it would have been three to four cents out of every dollar that taxpayers paid into pensions," he said. "Now that number is between 20 and 25 cents. That's a lot of services, a lot of education that just ain't gonna get paid for."
Lauzen said Kane County sends about $67 million in IMRF pension contributions yearly. He said the county doesn't know yet how much extra it will have to contribute because of the shortfall.
At its May board meeting, IMRF officials discussed changing the expected rate of return, but they worried that if IMRF’s assumed rate of return were lower, liabilities would increase, its funded status would decrease and employer contribution rates would increase.