The blue ribbon committee studying Evanston’s public safety pension problem has concluded there’s no reason to doubt the $145 million funding shortfall estimate by the city’s new actuary.
In a report released Tuesday, the panel says it found “no evidence of any wrongdoing or malfeasance” by city officials as the pension liability increased from $48 million over the past decade.
But it says that if more questions had been asked, the city might have chosen to increase funding sooner “to mitigate the depth of the current crisis.”
And the panel says the mayor and city council now “must take action to implement a plan to restore the health of the pension funds.”
The panel also provided a laundry list of possible steps the city might take to raise funds to cover the pension cost.
But, other than recommending against the issuance of pension obligation bonds and suggesting that raising property taxes should be a “last resort,” it provided little guidance about which strategies look most promising.
The full report is available for download.
A few choice excerpts…
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A number of questions arise as to why action was not taken earlier to address this growing underfunded pension issue. Oversight of the pension funds is a responsibility of the City’s Finance Manager and the City Manager. The Aldermen and Mayor ultimately oversee all operations for the City. We would also note that the Police Fund Board of Trustees sued Evanston in 1987 for failure to adequately fund the Police Pension Plan. A decision was rendered in 2005. While the court found in favor of the City, the underlying issues that gave rise to the lawsuit seemed to go largely unheeded by the City Council.
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2. Incremental Revenue Sources
a) Not-for-profit, charitable, and religious organizations are typically exempt from property taxation and several other taxes, though they use or benefit from municipal services including fire and police. Since the time, that these exemptions were granted, municipal financial situations and the social contracts with their citizenry have evolved and/or been modified. Thus, in Evanston, such concessions should be reviewed and if warranted, tax exemption should be eliminated, or user fees for public services used should be imposed.
Conduct analysis for services consumed by each major not-for-profit entity, including hospitals, educational institutions, churches, retirement homes and others.
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4. Budget Cuts and efficiency reorganization
a) The budget defines expenditures for the upcoming fiscal year. Former City Manager, Julia Carroll, gave City Council a list of items to consider cutting. In
addition, we suggest changing the budgeting process from the current incremental approach to new zero based budgeting. Zero based budgeting requires reevaluating each program every year to justify its expenditures.
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5. Economic Development
As a result of recent very successful economic development efforts, the City has experienced a large influx of high rise apartment buildings. These buildings expand the taxpayer base, but also put greater demands on fire and police services. Economic development should now be directed towards acquiring more business, office, industrial, and retail services, which may provide increases in revenue to the City that is proportionately higher than the increase in cost of services.
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As a candidate for 7th Ward alderman, I’ll only say that I agree wholeheartedly with the diagnosis and proposed solutions contained in this report.