A committee that examines Evanston’s police and fire pension funding agreed Wednesday to remain independent of policy-making and not to cut benefits.
The Blue Ribbon Committee comprises eight community members appointed by the Evanston City Council.
“We’re not grinding any political axe about reducing benefits,” said chairman Mark Metz. “What we’re trying to do is help the city solve the problem. We’re out to solve a problem that has a material effect on the stability of (police and fire) funds.”
The extent of the pension deficit became apparent when Evanston switched actuaries and the amount of money the city needed to fund the pensions was re-evaluated. The new actuary estimated the city’s pension liability at about $140 million, about $40 million more than the previous figure. In February, the council set aside more than $12 million in its 2008-09 budget for the pension funds. The council earmarked the $12 million to ensure the city will cover its “minimum annual required contribution” toward the pension funds, which are $140 million short of their state-mandated goal for the year 2033.
Now, this fiscal year, Evanston will have to play catch-up to avoid staying behind its pension funding . The city will need to contribute about $500,000 per year over the next decade to stay on schedule.
The council appointed the Blue Ribbon Committee but chose not to give it specific goals, which puzzled committee members. They said they will advise the city on how to address the liability. No council members attended the meeting, which had only three people in the audience.
“To expressly not charge us with a certain output is really odd,” Metz, the committee chairman said.
The police and fire pension funds are mandated by the state but funded locally. Increases in pension benefits raise the funding liabilities and Evanston is legally obligated to have the pensions completely funded by 2033.
The city has limited financing options. By state law, no more than 45 percent of the pension can be funded through equity. The remainder of the fund is financed through fixed income securities, mainly government bonds, which have a lower level of return.
Committee members are struggling with a lack of information because the police and fire department board of trustees have not returned phone calls, said committee member Peter Morris. Members speculated that the board of trustees may want to stay out of Blue Ribbon Committee discussions because they’re worried benefits may be cut.
“We’re strictly trying to get information and come up with ideas and suggestions about the unfunded liability,” Morris said.
The next Blue Ribbon Committee meeting is scheduled for May 21 at 6:30 p.m.
