Pension funding for the village of Forest Park’s fire and police departments is healthier than some of its neighbors, according to an analysis by the Better Government Association, released Aug. 5.
The village’s firefighter pension funds are 58 percent funded, according to the survey. Forest Park police pension funds are 66 percent funded.
Out of 121 police and 80 fire pension funds, 58 (or one quarter) of the systems are less than half-funded, the BGA reports, meaning “fewer than 50 cents for every dollar owed in long-term benefits.”
Getting severely low funds up-to-date may require tax hikes, or even liquidations of assets, says the report. The BGA said the ideal amount of funding for pensions should be around 80 percent, but 204 Cook County municipalities (or 94 percent) were below the 80 percent threshold.
In neighboring North Riverside, the village has proposed privatizing the fire department to make up for a shortfall of $8.5 million in pension funds. The Illinois Department of Insurance (IDI) sent North Riverside a warning letter in February demanding that they “take immediate steps to bring the village into compliance” with pension funding code. Between 2009 and 2012, North Riverside paid just $100,000 of the $2 million it was required to pay into its fire pension fund.
In Stone Park, until recently, the police fund had seven cents for every dollar owed, according to the BGA. The village issued a $2 million bond to pay pension debts and now is 23 percent funded.
Melrose Park’s firefighter and police pension funding gap is 32 cents for every dollar owed, and Maywood has contributed less than 35 cents for police and fire pensions.
Forest Park is not in that situation, said Village Administrator Tim Gillian.
“[Pension fund payments are] a very difficult payment to make, and we’ve been lucky to make them all along,” Gillian said.
“We are lucky the market investments are doing well; that certainly helped,” he added.
Gillian said actuarial numbers expect municipalities to earn around 7 percent per year with pension investments. Once, early in his tenure with the village, the stock market had a bad year and those investments lost around 19 percent, he said.
“They took a bad hit and that meant we had an effective loss of 26 percent. We just had to wait and see if the market came back up, and luckily it did.”
The village of Forest Park owes $10,666,924 for the police pension fund and $9,673,129 for the firefighter’s fund.
The amount required by pension payments increases every year, Gillian said.
This year’s appropriation for the police pension fund is $953,200. It’s up $132,000 or 14 percent from last year’s amount. The village’s contribution taxed for the firefighter fund rose $156,480 year over year. That’s a 22 percent increase.
A state law passed by the General Assembly in 2010 gives pension funds the power to intercept sales taxes, grants and other revenues owed to towns by the state “if required contributions aren’t made,” the BGA report says. That possible seizure of municipal sales taxes and other refunds (which will happen in “gradually increasing increments”) will start in 2016.
According to the BGA, this has caused other very small towns with fire departments, such as McCook, Forest View and Chicago Ridge to think about joining a fire protection district.
Because Forest Park has been paying the payments all along, the village isn’t in immediate danger of pension funds seizing their state rebates.
Gillian said the rising pension bite takes up most of the revenues as property taxes are beginning to rise again.
“Almost every year the increase required in the police and fire pensions completely eats up any new money the village gets from real estate taxes,” Gillian said.