The Illinois House Wednesday gave approval to legislation consolidating the 649 existing local police and fire pension funds:

The bill is intended to boost the financial security of the largely-underfunded pension systems. Currently, each one is a separate fund with its own board of trustees and its own administrative staff, including investment managers. By consolidating them into two funds, supporters say the funds could generate upwards of $1 billion a year in additional earnings because they would have the flexibility to diversify their investments and to invest in more kinds of instruments. Consolidation would also greatly reduce the funds’ combined administrative costs, potentially saving local taxpayers millions of dollars per year.

The Illinois Municipal League also supports the pension consolidation plan contained in Senate Bill 1300. The legislation was approved by the House of Representatives by a vote of 96-14-3. State Representative Dan Brady of Normal voted in favor of the legislation and explained his yes vote following the debate.

According to most recently available estimates, Illinois’ 649 downstate and suburban police and fire pension funds are underfunded by a whopping $11 billion.

The idea for consolidation came from the Governor’s bipartisan Pension Consolidation Feasibility Task Force that met eight times throughout the last year and issued a report in October recommending that downstate police and fire pension system assets be consolidated to achieve higher investment returns and lower the cost of managing the funds.