Police Pension on Track to Meet State Requirement

Police pension fund board members sat down Wednesday for a status update on the fund. Here's a round-up of what was discussed:

Fund made profit in 2nd quarter, not as much as in 1st

Gregory Williams, a representative from Northern Trust Bank, which manages the fund’s investments, gave a presentation near the start of the meeting. “I think you’re doing what you need to be doing," he said.

He mentioned intensified economic instability “given what’s happening with the debt-ceiling, compounded with what’s happening with the Euro-Zone debt crisis.”

Earlier:

“However, just given your quarterly performance, you’ll see that you earned money for the quarter,” Williams told board members.

Returns on investments yielded about $381,138 in the second quarter, in contrast to the first quarter’s gains of more than $650,000. That’s $1.04 million in gains for the year, bringing the market value of the pension fund to about $27.8 million as of June 30. 

Officials say village on track with contributions

The benefits pool is still only funded up to 57.4 percent of the capacity needed to fund the village’s police pension system, according to projections by actuary consulting agency Goldstein and Associates.

However, hose same projections show the village is on track to fulfill stipulations in a recently passed Illinois law requiring municipalities to reach a 90 percent funding ratio by 2040.

Village Trustee Larry Gomberg, the village board's liaison, said the village is committed to holding itself to contributions commited to the fund, which come by way of taxes.

“Unless the village is making its proper contribution each year, then what happens is we fall behind like apparently happened in the 90s,” Gomberg said.

That was when, as a 1992 "Chicago Sun-Times" article noted, the Illinois assembly “decreed the fund had 'an excess of monies' that could be tapped for other uses, even though the five retirement systems showed unfunded liabilities of $11.7 billion through 1991.”

“Village managers took that and said, this is fantastic,” President and Deputy Chief Brian Fennelly said. “The money that we were allocating to the police pension, or fire pensions or whatever, we don’t have to allocate anymore—and they spent it on other things.”

From 1992 to 2000, the village only contributed to police pensions in three fiscal years, for a total of about $51,000. By the end of 2001, the funded ratio was 79.2 percent. That number dropped to 69.3 percent by the end of 2005. By the end of 2009 it was at 56.4 percent, then fell at a slower rate than previous years, to 55.4 percent the following year.

Playing catch-up on its contributions, the village raised the tax levy 20 percent in 2006 — something residents might not have to worry about in 2012.

No drastic tax levy hike

Finance Director Ryan Horne told the board he believes that the tax levy for 2012 will feature no drastic increase due to the pension.

The village contributed about $1.65 million in 2010 and is slated to contribute close to $1.5 million by the end of 2011 for a year to year decrease of about 8.7 percent. Though projections for 2012 indicate a $1.56 million obligation, it's a much smaller increase than the 20 percent increase in 2006, when the village failed to meet its obligations to the fund.

Recently passed legislation should mean a reduced levy burden for the village. The act, Senate Bill 3538, has a provision to help municipalities struggling to meet pension obligations for police and fire fighters: funds were previously required to be 100 percent funded by 2033, but new provisions stretch the deadline to 2040 and decrease the funding requirement to 90 percent, allowing debt to be refinanced years years further.

The bill also pushes the normal retirement age to 55 for police.

Appeals, benefits and resignations

Board Attorney Laura Goodloe, of Puchalski & Goodloe, gave the board updates regarding a pending appeal filed by the fund against a July ruling in favor of a former officer who successfully had a denial of his request for disability benefits overturned after administrative review by a Cook County judge.

The Pension Board is waiting for a record for the appeal to be completed and filed with the appellate court.

The board also announced Commander Robert Zielinski's application for disability benefits, and Officer Brandan Bernabie's resignation. Bernabie is joining the Libertyville police, according to the board.

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