The bleeding in Evanston’s firefighters pension investments has subsided for now.
The Evanston firefighters pension fund posted a year-to-date growth of 8.39 percent, financial advisor Mary Tomanek said during a meeting of fire pension board members Friday morning at Evanston Fire Department headquarters, 909 Lake St. Although the fund lost $6.5 million in the 2008-09 fiscal year, continued growth will help the city meet its state-mandated $158.8 million contribution to police and fire pensions by 2033.
Board members supported conservative investing strategies during the two-and-a-half hour “beefy meeting,” Capt. Pat Dillon said.
According to Illinois law, Evanston has 23 years to fulfill debts to police and fire pension funds called the unfunded liability.
According to a 2008-09 report by actuary Gabriel Roeder Smith & Company, the fire pension unfunded liability is $70.4 million while the city owes $88.4 million to the police pension fund.
Board members also listened to a 30-minute evaluation of the latest pension actuarial report. The GRS report presented before Evanston City Council in October assumed a 7.25 percent investment return and 5 percent salary increase over 23 years. GRS was criticized by aldermen for using high assumptions despite the economic recession.
“In my opinion we’re a little bit high on the investment return,” actuarial consultant Art Tepfer said. “I would like to see a lowering to 7 percent. I think that would be a little more appropriate.”
Tepfer noted a lower investment return assumption could increase the city’s contribution to the unfunded liability.
After Tepfer’s report, Capt. Ronald Brumbach said the fire pension board will consider consulting with a different actuary for future analyses of funding. Actuaries rely on past stock performance to make predictions and recommendations on how municipalities should fund pensions. Officials blame Evanston’s current pension deficits on overestimations made by former actuary Ted Windsor.
“We changed our actuary, and when we did, the amount going to the unfunded liability went up substantially,” said assistant city manager Marty Lyons, who was among the 12 board members, financial analysts and firefighters attending the board meeting.
Brumbach showed an Evanston Review article about pension funding from 1982 to pension board members to emphasize the longevity of the problem.
“Pension funding seems to be the hot topic everywhere from radio to city council to the governor,” he said.
Brumbach said he sent copies of the article to aldermen but heard no response. Lyons defended the council, noting City Manager Wally Bobkiewicz made an effort to set aside money for pension funds in his proposed budget.
“The current council sees (the problem) clearly and is trying to honor the commitment,” Lyons said. “It’s not pretty. It’s what we have to do.”
The current budget proposal designates $7.6 million in revenues to fire pension funds.[email protected]
