Dan Proft welcomed back Mark Glennon, founder of wirepoints.org, for the show’s weekly policy conversation, this time centered on a new analysis of Illinois’ roughly 650 local police and firefighter pension funds. Glennon said the funds are, on average, only about 63% funded, a figure he called deeply troubling despite sounding survivable on its face. He noted that funding levels have been slowly worsening in recent years even as the dollar amount owed continues to climb, and he pushed back on the notion, sometimes floated by pension advocates, that an 80% funding target is an acceptable goal, pointing out that the American Academy of Actuaries has rejected that benchmark as a rule of thumb.
Glennon walked through the mechanics behind the strain, explaining that Illinois law now requires every local pension fund to reach 90% funding by 2040, an unfunded mandate that is increasingly consuming municipal budgets. He cited Des Plaines as an example, where police and fire pensions now eat up about 21% of the city’s general fund, up from under 8% less than two decades ago. Much of that cost, he said, flows directly into rising property tax bills. Glennon also cautioned that the official funding figures rely on investment return assumptions above 7%, a rate he said is rarely permitted in private-sector pension accounting and one that has only looked achievable because of unusually strong stock market returns over the past three years. A sustained downturn, he warned, would expose the shortfall much faster.
Proft and Glennon also discussed the wide gap hidden within the statewide average, with Glennon noting that roughly 200 local pension funds fall below 60% funded and about 100 sit under 50%. He pointed to shrinking mid-size cities such as Decatur, Rockford and Springfield as particularly exposed, with Springfield in particular directing its entire property tax collection toward pension obligations. Glennon referenced a recent Reason Foundation 50-state study that ranked Illinois worst in the nation for debt per capita at the state level, a figure that he stressed does not even include the additional local police and fire pension shortfalls, which he estimated separately at roughly $15 billion. The conversation closed with a comparison to Florida, where voters are considering a ballot measure exempting the first $250,000 of a home’s assessed value from property taxes, and with Glennon noting that neither Chicago’s mayoral candidates nor state officials have offered a concrete plan for addressing the pension shortfall.