Advocates for the city’s public safety workers say city taxpayers face a choice — pay a little more now, or pay a lot more later — to fund their pension programs.
Tim Schoolmaster, president of the Police Pension Board, told residents at an online 1st Ward meeting Tuesday evening that if the pensions weren’t underfunded now “60% to 70% of pension benefits would be paid for by pension fund investment income.”
If they were properly funded, he said, the cost to taxpayers would be only about 25% of the total, with just under 10% paid by employee contributions.
But with the pension programs only roughly 50% funded now, taxpayers “are paying three times as much now as if it had been fully funded in the past.”
Jason Franken, the actuary to the pension boards and the city from the firm of Foster and Foster, said the city would need to add about $4.5 million to the proposed 2023 budget’s pension contribution of $20.6 million to be on track to have the pensions fully funded by 2040.
Retired firefighter Dave Ellis said he thinks the city should issue pension bonds to close the funding gap.
But Ald. Clare Kelly (1st) said that, given the large size of the city’s existing bond debt, it could end up harming the city’s credit rating to pile on that much more debt.
Schoolmaster added that while issuing pension bonds might have been a good idea a year or two ago when interest rates were around 2%, it wouldn’t be a smart move in today’s higher interest rate environment.
Kelly said the city is likely to face a recession and higher interest rates for years to come.
“I feel the city can cut back in many areas, and — if need be — potentially raise the property tax levy” to fully fund the pensions, she added.
Leslie McMillan, a member of the city’s Finance and Budget Committee, said, “I think there’s a lot of fat in the budget.”
She suggested not spending to repair the broken fountain in Fountain Square and scaling back spending on the planned new animal shelter.
“There’s a plethora of things in the budget that ought to be cut back,” she added.
So, tell me, how do Evanston Pensions compare to those in other similar communities? We all know Pensions were both Pushed Up a Lot AND UNDERFUNDED A LOT. Where are we compared to other cities pension plan costs and funding TODAY?
Chicago, Dallas, Providence and quite a few others are worse off in their underfunded pension liabilities than Evanston. Oddly enough, the City with the strongest funded police and fire pensions is Detroit. There are a vast array of reasons why Evanston (and many Illinois locales) have a major pension crisis. The main one is not enough money in compared to money out. Our pension system is in the Illinois constitution and has been a contractual right for locales to meet their burden. This was enacted long before the rising health care costs, the average age increasing, the salaries going up (pensions generally based on average of last 3 yrs of work including OT), poorly managed investments, and so much more. No one is should blame the retirees who get the pensions because they have a legal right to it. The issue stems from a collection of poor choices, a nasty game of kick the can, a law in the constitution that is not viable, and factors never considered when this all started. I’m not sure if Northwestern provides any money (I know not in taxes) to assist Evanston – but Evanston has to take a look at all the areas (including the buildings operating not for profits) who take up space and resources but don’t provide anything in taxes towards what we legally owe the pension fund.
Leave a comment