Posts Tagged police and fire pension funds

Lake Zurich Fire Department news

Excerpts from the

Lake Zurich officials are preparing for substantial increases to cover police and fire pension obligations, as they deal with low investment returns and the fact that officers and firefighters are living longer.

But Lake Zurich homeowners shouldn’t see a direct effect when they go to pay their property tax bills, although money for other village services could be constrained to cover pension costs, said Finance Director Jodie Hartman.

Other Illinois municipalities are dealing with a similar dynamic. Lake Zurich trustees recently heard from fire and police pension board members about proposed increases of 17.6 percent and 14.4 percent to their fire and police pension levies, respectively.

“Being that we are a non-home rule community, the required levy amounts will be absorbed within our capped levy,” Hartman said. “The only impact to taxpayers is indirect, as it will reduce funding available for other services provided by the village.”

Village board members are expected to approve their overall annual property tax levy, the requested amount Lake Zurich wants to collect in property taxes, during a meeting Dec. 5. State law caps Lake County taxing bodies’ annual levy requests to 5 percent, or the rate of inflation — whichever is less, according to the Illinois Department of Revenue.

Even with a proposed 14.4 percent increase to fund police pension obligations, village expenses in the fund only will be 43.1 percent funded, a decrease from last year when pension expenses were 44 percent funded. Lake Zurich is required by law to fund at least 90 percent of both pensions by 2044.

Fire Pension Board Secretary Eric Ryan also appeared before trustees to request a $2.1 million increase, up 17.6 percent from last year’s actual levy of $1.8 million, Ryan said. Expenses in the fire pension fund will be 60.6 percent funded under the proposal, up from 58.4 percent funded.

Lake Zurich was able to increase funding for the fire pension — and not the police pension — because of various factors, including different laws for calculating police and firefighter fund requirements.

Each fund also covers a different composition of members who are active or retired, Hartman said. Each fund also has its own board, which makes its own investment decisions that can affect returns, she said.

Municipalities face various challenges with funding pensions, including substantially low investment returns since the Great Recession and increases in mortality among retirees, said Village Manager Ray Keller.


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Lake Forest Fire Department news

Excerpts from the

The Lake Forest City Council is looking for ways to handle the increasing costs of running a fire department, particularly pension costs. The fire pension levy in 2005 was $466,229, according to a presentation at the Oct. 3 city council meeting. This year it’s $1.2 million. By 2027, city officials project that it will increase to $2.6 million.

Adding the police pension fund, total public safety costs are projected to hit $6.7 million in 2027.

Firefighters contribute 9.45 percent of their pay to the pension fund while police employees contribute 9.91 percent of their pay. Each entity has a pension fund managed by a five-person pension board and advised by professional investment advisers.

There is about $60 million total in the two pension funds, said Elizabeth Holleb, director of finance for the city.

“Like many of the pension plans, in late 2015 and early 2016, the market was not doing well,” Holleb said. “We closed the books on April 15. We had very low returns. We assume a return of seven percent.”

The actual return on firefighter pension investments was .28 percent while police pension investments lost 1.64 percent, according to city documents. The city of Lake Forest is responsible for making up the difference.

The fiscal 2017 budget for the fire department is $6.25 million with 98 percent of the cost being personnel. The department has 35 full-time employees. The city of Lake Forest has always met or exceeded the state-mandated pension contributions, Holleb said.

In past years, the city has reduced staff by attrition.

“The problem is that we are so lean . . .its difficult to make those sort of reductions,” Holleb said.

“The math doesn’t work long term,” said City Manager Robert Kiely during the Oct. 3 meeting, adding that the cost of fire service is rising faster than the city’s ability to raise revenue.

“Unaltered, the growth of public safety pension obligations alone will require massive tax and fee increases as well as severe cuts in other governmental services in order to merely fund the annual increase,” Ald. Stanford Tack read from a prepared letter. “The committee determined that there were no significant opportunities for revenue enhancement or fiscal efficiencies in the fire department that could clearly contribute the mitigation of these clearly unsustainable financial trends.”

In the short term, the city council instructed city staff to research a fee of $10 per quarter, or $40 per year, on residents. That would offer the city government one to two years in which to research and implement changes.

The city also plans to reach out to neighboring communities to discuss sharing of fire services, although what that could look like has yet to be determined.

“We will not compromise public safety,” Mayor Don Schoenheider said.

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