LAKE GENEVA, Wis. (WCIA) — Thousands of pension fund managers and trustees are gathering for an all-expenses paid convention at the out-of-state Grand Geneva Resort and Spa, and local taxpayers are picking up the tab.

Because there are so many local police and fire pension funds scattered across the state — 656 separate funds to be exact — the board member and trustee positions are often held by police officers and firefighters, not necessarily career investment advisers or trading experts. Since managing investment funds falls outside of their daily duties, state law requires the lay people to undergo a minimum of 16 hours of annual training.

Taxpayers reimburse the cost of the posh events, including additional travel expenses, lodging, meals, and wage compensation for missed time at work. According to an estimate from the Illinois Municipal League, the total cost to taxpayers could reach $8 million, not counting food and hotel expenses. IPPFA has not responded to requests for the specific cost of this year’s event.

The Illinois Public Pension Fund Association charges the fund managers and trustees to attend the state-mandated training courses, which are comprised of slideshow presentations and guest speakers.

Members of the group can spend up to $485 to register to attend the conference. IPPFA charges non-members up to $895 per person to attend the classes. To become certified trustees, new members must also attend 32 hours of training, which costs up to $1,700.

Under one plan in Springfield, those local pension funds — and the cost of the annual training seminars — would go away. Advocates of consolidation argue that cost savings pales in comparison to the higher investment returns the small local funds are currently leaving on the table.

Governor J.B. Pritzker’s administration has convened a pension consolidation task force to examine ways the state could combine the scattered funds into one downstate pool and reduce the cost of fees and potentially increase their combined returns.

Because so many of the local funds are funded at such low levels, and due to protections in state law that restrain the smaller funds from investing too heavily in equities, the local funds often underperform much larger statewide investment funds. For example, a study published by the Northwestern Municipal Conference, the Illinois Municipal Retirement Fund outperformed the combined police and fire pension funds by 67% over a 10-year span.

Jim McNamee, President of the IPPFA and a retired police officer from Barrington, defended the network of local pension funds as a more direct, democratic way for public servants to keep tabs on their retirement funds and disability claims.

“Right now, an officer or firefighter knows he’s going to retire, he knows who sits on his board,” McNamee told WCIA on Tuesday. “He turns in his paperwork. There is a comfort level in that.”

Supporters who back consolidation argue combining the smaller funds into one pool would cut the cost of paying investment fees to several fund managers. McNamee said eliminating the local fund managers and pension boards would harm the local economy, and downplayed the possibility for reducing cost.

“Everybody thinks that they wave a magic wand and this is going to, wow wow wow, it is going to save all of this money,” he said, and then predicted consolidation would only save “$20,000 to $25,000 per city. Oh, well that moves the needle,” he said sarcastically. “That doesn’t move the needle at all.”

Peoria police sergeant Shawn Curry sits on the IPPFA board. He argues the state should relax the regulations and allow the local pension funds to invest more heavily in equities.

“Instead of the state hijacking our pension dollars, give us the authority to invest the way we should, the way everybody else does,” Curry said.

“If you lift the restrictions and allow us, un-handcuff us, to make better investments,” Curry said the smaller funds could match the higher returns of funds like the IMRF.

Rob Martwick, a newly minted Senate Democrat who just recently left his seat as Chairman of the House Personnel and Pensions Committee, attended the Lake Geneva event on Thursday as a guest speaker.

Martwick characterized pension consolidation as the state gathering “nickels in the couch cushions,” and cautioned against rushing a hasty plan through the statehouse during the upcoming fall veto session next month.

“We need public hearings,” Martwick said. “I am open to anything that creates efficiencies,” he said, “but [consolidation] doesn’t offer any tools to fix the poor funding levels.”

Several cities across Illinois suffer under increasing pension debt loads after decades of shortchanging their police and fire pension funds. Now, several cities are slashing staffing levels on the active duty police force or scaling back in their fire departments to make up for the immediate budget shortfalls.

Martwick did acknowledge the wisdom in pooling together smaller funds to create larger pools of money.

“Larger funds can leverage for greater returns,” he said, adding that the most qualified, experienced fund managers often decline to work with smaller pension funds.