Evanston aldermen split Monday on whether to pay a little extra next year to try to reduce the city’s huge unfunded public safety pension liability.

Evanston’s pension actuary consultant, Arthur Tepfer, speaks at Monday’s City Council meeting.

Evanston aldermen split Monday on whether to pay a little extra next year to try to reduce the city’s huge unfunded public safety pension liability.

The eight aldermen at the meeting agreed to at least come up with the amount recommended by the pension boards and the city’s actuary — which is substantially more than what’s required under a state statutory funding scheme widely viewed as inadequate.

The calculation of the actuary’s new recommended contribution amount includes a reduction in the assumed rate of investment return on pension investments from last year’s 7 percent to 6.75 percent — a decision all the aldermen said they thought was appropriate.

The new amount the actuary recommended totals $14.6 million — an increase of $362,000 over what he recommended last year.

But the City Council voted last year to kick in an extra $500,000 — which means the council could meet the actuary’s recommendation for this year while still slightly reducing next year’s payment.

Aldeman Don Wilson, 4th Ward, who pushed for the extra $500,000 payment a year ago, said he wanted to set aside at least as much for the pensions next year as the city did this year.

Alderman Mark Tendam, 6th Ward, said he agreed and thought the city should contribute “maybe even somewhat more to make an honest attempt to bring down the unfunded pension amount.”

Both police and fire pension funds are now funded at about the 47 percent level — although thanks to relatively good investment returns last year that’s up from just over 45 percent a year ago.

But Alderman Ann Rainey, 8th Ward, said she wanted to spend no more than what the consultant recommended. “Tax bills are skyrocketing out of control,” Rainey said, “Every penny we add is a gigantic burden” on taxpayers.

In a straw poll Mayor Elizabeth Tisdahl requested to help the city manager prepare his budget recommendations, the mayor and aldermen Jane Grover, 7th Ward and Judy Fiske, 1st Ward, generally agreed with Wilson and Tendam on the need to set aside at least a little extra money

Aldermen Melissa Wynne, 3rd Ward and Delores Holmes, 5th Ward, said they sided with Rainey’s view to not go above the consultant’s recommendation.

Alderman Coleen Burrus, 9th Ward, who favored the additional contribution last year, was absent from the meeting. (We didn’t catch what Alderman Peter Braithwaite’s view on the issue was.)

Tepfer noted that the different parties that have a voice in assessing whether pensions are adequately funded — ranging from actuaries to the Government Accounting Standards Board through the bond rating agencies — have sharply differing views about how much money needs to be set aside to adequately fund a pension program.

Some think a 7 percent return is a reasonable assumption, while others think a figure as low as 4 percent should be used, Tepfer said. The trend, though, he added, is toward making lower rate-of-return assumptions, and “in the future 6.75 percent won’t be considered an acceptable rate.”

Bill Smith is the editor and publisher of Evanston Now.

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  1. Goodbye paradise, hello Detroit

    Anyone paying attention to Illinois' pension crisis should know that it will get worse. 

    There's a dark cloud looming over Illinois, Chicago and other cities regarding the pension crisis. Moodys in July gave Chicago a super downgrade, putting Chicago at the bottom of Moody's public finance ratings. If nothing is done, by 2015 Chicago would have to raise taxes 150 percent just to keep up with the minimum payments. 

    There is an urgent need to reform the pension system for current government employees such as raising the retirement age,  raising workers' contributions toward their own pensions, phase out healthcare coverage and temporarily freezing inflation adjustments now paid to retirees.

    But pension reform won't happen because Democratic party leaders that have been in control of Springfield for decades refuse adequate and meaningful reform (there are a few Democrats trying to do the right thing at risk of their political careers) . This is because 90 percent of all union campaign donations go to Democrats. It's basically a money laundering system. Many Illinois Republicans, on the other hand, have been sounding the alarm for years and ahve come up with pension reform ideas. But low-informed voters and many in the media shout them down.

    It was only three years ago that unionistas marched on Springfield demanding a tax hike. Democrats, and only Democrats, granted their wish, raising our income taxes 67 percent!!!! Did you pay your second installment property tax? I bet it went up from last year. 

    No one on the City Council dares talk about the fact that our city pension fund is exponentially increasing. In other words, the more we put in the more we owe. Our pension debt now exceeds the annual city budget.  

    If you consider all the local tax money being frozen out of the public coiffures because of the TIF crazy council along with increasing payment to the pension fund and handing out millions to corporations Evanstonians are paying more taxes for less service. 

    History has shown us that as long as Democrats are in power the pension crisis will worsen and our taxes (income, property, sales, etc) will continue to rise until at some point the bubble will burst – there will be nothing left. Goodbye paradise, hello Detroit. 

    The only salvation will come from voters. 

    1. Rant

      Al, what a rant but you are right.

      Anybody that doesn't agree with what you said is an idiot or has a personal financial interest. Our city and our schools, especially, should be cutting expenses. I am sure there is a lot of waste in both areas. For example, a good teacher should easily be able to handle 30 or more children in a class. More should be allow in an auditorium class.

      Taxpayers are looking for some relief from the ever growing burden that we receive in the mail 2 times a year.

      On top of that. the city keeps raising fees and fines on everything they can think of. Pension reform on a state and local level is a must. I personally feel that we should become a right to work state and that unions should not be allowed in the public sector.

  2. Huh?

    I cannot believe there is any discusison about how to address pension liabilities.  The issue is not going to go away.  The amount will only grow.  Direct as much money as possible to the liability .  Recognize that a return of investment assumption of 6.75% is still too high.  Let's be realistic about the problem, and not load up future generations to pay off something over which they had no control, and a City Council that did choose to act responsibly.

  3. Is it a surprise?

    Evanston has only followed the same path  the state legislature and school boards have. They certainly don't understand we don't and won't have the Jimmy Carter type interest rates to discount out debt.

    They always have enough money to provide themselves with all office space and fixtures for government employees and gifts to businesses they think will be 'winners' while hanging all other businesses out to dry, have taxpayers pay for their 'choices' and saying they need to give special deals to draw business—instead of cutting taxes and reducing nusiance laws that keep business out—and leaving.

    Springfiled recently showed the contempt they have for taxpayers and lack of fiscal understanding let along the various debt [pension and other] and inability to pay bills by putting expensiive doors on the Capitol.  I'm sure we wiil find out about more of such waste over time on this construction and other projects.

    Elected officials are there to serve  the public not spend money on themselves and make their life more comfortable and plush.  They are not a high end  law office on Wall Street!

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