Politics & Government

Council Debates Police, Fire Pension Funding Levels

Aldermen disagree over how much the city should levy in property taxes to fund police and fire pensions in 2014.

Evanston city council members are divided on how much to contribute to police and fire pension funds in 2014. 

At a council meeting Monday night, aldermen considered whether or not to reduce funding slightly from last year, based on the recommendation of a consultant and the city’s pension boards. Under that recommendation, the city would levy $14.6 million in taxes to contribute to the pension funds in 2014. In total, that would mean a contribution of about $137,000 less than the city made in 2013.

While the city initially contributed about $362,000 less to its public safety pension funds last year, aldermen agreed to increase the contribution by $500,000 before the end of the year. For this reason, the recommended amount to appear on this year’s tax levy would actually be higher than what appeared on the tax levy last year.

Find out what's happening in Evanstonwith free, real-time updates from Patch.

Aldermen Don Wilson (4th Ward), Mark Tendam (6th Ward) and Judy Fiske (1st Ward), as well as Mayor Elizabeth Tisdahl, all said they would like to see the city fund its police and fire pensions at the same level as last year. But Aldermen Ann Rainey (8th Ward), Delores Holmes (5th Ward) and Melissa Wynne (2nd Ward), said they would not support higher levels of pension funding than the consultant and city staff had recommended.

“As our real estate values diminish, I have seen my tax bill just skyrocket out of control,” said Rainey. “When you look at the total general fund tax levy, the percentage given to the pension funds is a gigantic burden. I think adding one more penny to that is just plain wrong.” 

Find out what's happening in Evanstonwith free, real-time updates from Patch.

The city’s tax levy makes up about 18.2 percent of the total property tax bill. In fiscal year 2013, when the total operating budget was $247 million, the city contributed about $14.7 million to its police and fire pension funds, which is less than one percent of the total budget.

Whether the city contributes the same amount of money as last year or a little bit less, Evanston would still be exceeding state requirements for pension funding by several million dollars. To meet state requirements, the city must contribute $6.2 million to the police pension fund and $4.5 million to the firefighter’s pension fund in 2014, which is roughly $3.8 million less than the minimum contribution aldermen are considering. 

The Governmental Accounting Standards Board (GASB), however, recommends a much higher contribution level, which the city would still exceed under the current recommendations. What the GASB recommends is important because it’s one of many factors that rating agencies use to assess a local government’s financial health—and how much debt it can take on.

Moody’s downgraded the city’s debt rating from Aaa, the highest possible score, to Aa1, the second highest level, in June. That was done as part of a change in the way Moody’s assesses pension liabilities on the balance sheets of all local governments, and the rating agency downgraded several other municipalities around the country at the same time, including the city of Chicago.

In its downgrade report released Friday, June 27, Moody's cited Evanston's higher education and health care sectors, home rule status and "strong management team" as strengths. However, the rating agency listed "sizable" pension debt, an above average debt burden and some reliance on "economically sensitive revenue sources" in the general fund as serious challenges.

In order to move the rating up, Moody’s said Evanston must reduce its pension liabilities and grow its reserves and liquidity, according to the report

 

 

 

 

 

 

 

 

 

 


Get more local news delivered straight to your inbox. Sign up for free Patch newsletters and alerts.

We’ve removed the ability to reply as we work to make improvements. Learn more here