The Daily Northwestern

City pension fund deficit still an issue: State mandates that by 2033, Evanston must pay off the $159 million deficit

Dan Hill, Daily staff writer

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City officials said they want to keep Evanston’s $159 million pension fund deficit in the public consciousness.

City officials said they want to keep Evanston’s $159 million pension fund deficit in the public consciousness.

Evanston must fill the prodigious gap by 2033, City Manager Wally Bobkiewicz said. The deficit was realized in 2007 when the city reevaluated its actuarial assumptions and learned it had been failing to keep up with state-mandated contributions.

“For many years this was not discussed on a regular basis,” he said.

Minhaz and Dilshad Lakhani responded to the city’s pension worries last month, donating $5,000 to commemorate the opening of their south Evanston convenience store and gas station.

“It was just the nicest thing,” said Ald. Ann Rainey (8th), who helped broker the donations to the pension funds she calls her “favorite charity.”

“It’s the kind of thing that could lead to a snowball effect,” she said of pension donations.

The fire pension fund also received a $1,000 donation from a Glenview man who was saved during a heart attack by Evanston emergency personnel, Capt. Ronald Brumbach said.

But pension funds are sustained primarily by property taxes and contributions from police and firefighter salaries, not private donations.

“It’s not real common especially during these economic times to see private donations,” Assistant Finance Director Steven Drazner said. “I would say if residents are interested in donating to the city, the pension funds would be a good choice.”

Approximately 34 percent of the $40.2 million property tax proposed for Evanston City Council approval will be put into pension funds. The city expects to spend $18.1 million on pensions in the next fiscal year, Drazner said. The city’s total expenditures for police and fire pensions totaled $13.4 million in the 2009-10 fiscal year.

A number of variables, including employee benefits and changing investment returns, must be considered when pensions are funded, said Bobkiewicz, whose budget proposal must be voted on by the council before Feb. 28. The trick is finding a balance between property tax revenues and investment returns, he said.

“It’s sort of a moving target, but the council has said we’re comfortable with the amount we’re putting aside in property tax and money moving forward,” he said. “The council just wants to make sure (the pension issue) remains on the front burner, and I think we’re succeeding to keep it front and center in the public.”

Evanston’s pension problems require long-term solutions, Bobkiewicz said. With 23 years before the state-mandated deadline, the city has met 42 percent of its pension obligations.

“The bottom line though is our current retirees who have given faithful services to the city of Evanston are getting money for their retirement,” he said. “The long-term question is, ‘What else do we need to do to meet the benefits set by Illinois General Assembly?'”

Although he expressed gratitude for the January donations, Sgt. Jeff Jamraz said the police pension board has not discussed any formal plans to engage the public in a fundraising campaign.

Possible long-term solutions to filling the $159 million gap include reforming pension benefits or extending the deadline to match the unfunded liabilities. Both initiatives require approval from Springfield.

Nevertheless, city officials will not deter citizens who wish to pitch in to the pension fund.
“If you’re talking about $5,000 out of $150 million, that check alone is not really going to making a big difference on the pension,” Drazner said. “But if a lot of people donate, it all adds up.”