Forest Park is looking into adopting an optional Early Retirement Incentive program for nonunion municipal employees.
Village Administrator Michael Sturino presented the retirement plan at the council meeting Monday night, and the council will discuss the issue again at its meeting of Aug. 29, after receiving additional information. Sturino said he presented the program because some village employees had requested it.
To be eligible for the Early Retirement Incentive (ERI) program, employees must be at least 50 years old and have 20 years of service to Forest Park or another Illinois Municipal Retirement Fund employer.
Employees can purchase up to five years of additional “service” credit to ensure a higher pension. Each year of service costs 4.5 percent of their highest consecutive 12 months of salary. Each eligible employee may purchase up to five years of service, and employees 60 and older may purchase an additional five years.
Eight village employees are currently eligible to opt into the program or will be eligible in the next year, Sturino said. Unionized departments such as the police and fire department would not be eligible for the program. Assuming all eight eligible employees opted into the program, the resulting higher benefits would increase the village’s cumulative cost by $833,069.
In a letter to the commissioners, Sturino noted that ERI programs are usually offered as cost savings measures and that savings would only be achieved if the person retiring was either not replaced or was replaced at a significantly lower rate of pay.
“This only makes sense if the village (filled those posts) at a lower rate of pay or not at all,” said Commissioner Timothy Gillian.
Sturino prepared cost scenarios assuming that all eight eligible employees would opt into the program. In a best case scenario for the village, which would involve not replacing one of the eight employees, the village would save $53,720 over six years. However, if all the employees were replaced, person for person, the ERI plan would save the village just $1,458 over that same time period. If the village chose to amortize the cost over eight years, that cost would rise to $113,739, assuming a 7.5 percent amortization rate.
“If the employees were replaced person by person, this is disadvantageous to the village,” Sturino said.
“It becomes a question of, ‘What’s the cost savings?'” said Village Commissioner Patrick Doolin. “It’s a bit of a gamble no matter what you do. It’s a risk depending on who opts in.”
The commissioners unanimously agreed to allow Sturino to prepare the necessary paperwork so the council can return to the issue in two weeks. In the meantime, “we’ll keep our ears to the ground,” Gillian said.
Library referendum approved for Nov. ballot
The library referendum, which had to be redrafted because of a technicality, passed unanimously at Monday’s meeting with about 137 petition signatures. It will be submitted to the county clerk for inclusion on the ballot for the Nov. 7 election.
The reworded referendum will relieve the library of its duty to follow state tax cap laws for the next four years. Tax cap laws limit annual funding increases to the lesser of either 5 percent or the year’s Consumer Price Index (CPI).
The library will seek voter approval to increase the tax rate by .150 percent for the tax years 2006-2009, to .346 percent of the equalized assessed value. This will be an increase of about 32 percent, increasing the library’s budget by about $300,000 over 10 years.
The library’s budget for the current fiscal year is $731,000. Library officials hope that the referendum would allow the library to increase its spending on staff salaries and circulating materials by 20 percent, allowing it to pay its employees competitive wages and fill several positions that are currently vacant because of recent layoffs.
“It would enable us to be not so thinly staffed,” and to add more popular, recently published books to their shelves, said library director Rodger Brayden.