Ahead of Friday’s unveiling of the city manager’s proposed 2019 budget — expected to call for layoffs and fee increases to close an estimated $7.5 million revenue gap — Evanston taxpayers have gotten a bit of good news from the city’s public safety pension funds.
Annual actuarial reports, posted to the city website Wednesday from the actuary for the fire and police funds, indicate that, because of a relatively strong performance of fund investments last year, the city will only have to boost its contribution to the funds by 0.05 percent next year to meet recommended contribution levels.
The police pension fund achieved an 8.22 percent investment return in 2017 while the fire fund earned 6.36 percent. Both of those results were above the 6.25 percent return the funds had been anticipating.
2017 was an unusually good year in the stock market, with the S&P 500 index up 18.74 percent. But because of state-imposed restrictions on the pension funds’ investment choices, the fire and police funds generally achieve much more modest returns.
Foster & Foster, the actuary for both funds, says most of the decrease in the recommended contribution for the fire fund is the result of fewer retirements than expected and smaller than anticipated salary increases.
The actuary says the increase in the recommended contribution for the police fund is the result of fewer deaths than expected, fewer terminations and higher than expected disability levels.
The actuary estimates that the fire pension funding level has increased to 45 percent in the current report, up from 43.2 percent a year earlier and that the police pension funding level has increased to 48.8 percent, up from 46.9 percent a year earlier.
The actuary’s report projects that, at the recommended funding level and investment return assumption, it will talke until 2041 to reach the desired 90 percent funding level for the two pension programs.