Forest Park’s public safety pensions — which police and fire staff help fund while working and are paid annually after retiring — are severely underfunded, as they’ve been for the last several years.
By the end of the year, the village is supposed to funnel more than $5.7 million into its pensions for the Forest Park Police Department and the Forest Park Fire Department in order to fund them 90% by 2040, a quota set by state statute. The pensions are currently about 35% funded, according to Finance Director Letitia Olmsted.
“It’s a serious issue,” Olmsted said during a budget meeting in early July, especially considering the village has projected a $9 million deficit for the 2025 fiscal year, which started May 1.
“I know it’s hard to say what is the village’s number-one priority, but it’s one of our top priorities,” Maria Maxham, commissioner of accounts and finance, said of funding the public safety pensions.
As Forest Park approved its budget for the 2025 fiscal year, projected pensions for the Forest Park Police Department are over $2.8 million. Those for the Forest Park Fire Department are more than $2.5 million.
Police and fire staff pay a percentage of their salaries into the pension funds. Pensions are also funded by revenue from the general fund, which consists of money from property, state and utility taxes, license and permit fees, plus grants.
Over the last several years, the village’s general fund has been reduced to meet minimum contribution requirements for pensions. According to officials at previous budget meetings, it’s clear that the village’s tax levy can’t support the pensions.
The public safety pension numbers for the 2025 proposed budget include police and fire pension supplementals, or additional contributions made by the village outside of the tax levy, which started in Feb. 2022. The supplementals are more than $236,000 for both the police and fire departments.
The proposed budget also shows replacement taxes for both police and fire, which are allocated by the state, according to Olmsted. The Illinois Department of Revenue and Illinois Municipal League have estimated that replacement taxes in the 2025 fiscal year are more than $31,000 for police and more than $34,000 for fire.
The amount that pensions should be funded is determined by an independent actuary. The actuary calculates the amount based on the number of retirees or dependents receiving benefits, the fund’s return or loss on investments and whether staffing levels increase or decrease, according to Olmsted.
If the pension is not fully funded by 2040, Olmsted said the pension funds can intercept state-shared revenues, such as sales and income tax, to meet the minimum requirement.
“There’s always the risk that, if things get bad enough or the village isn’t contributing a high enough percentage, there could be intervention of some of our state revenue,” Maxham said. “Some of the state income that we should be getting doesn’t come to us and instead goes straight to the pensions.”
Olmsted said that she, Maxham and Village Administrator Rachell Entler meet regularly to discuss potential revenue sources that increase pension funding.
Maxham said she’s hopeful that revenue from the two dispensaries slated to open in Forest Park will help fund the pensions.
“I’m going to push very hard for us to automatically allocate a certain percentage of that to the pension fund,” Maxham said. “We have an obligation, and not just a moral responsibility, which it also is, but a legal responsibility to make good on the promises we’ve already made.”
Police and fire pensions
Neither police or fire staff pay into social security, and they don’t get health insurance benefits when they retire. Because pensions are their only source of money after they stop working, police and fire staff start paying into them well before retirement.
According to Article 3 of the Illinois Pension Code, police officers pay 9.91% of their non-overtime salary into a pension fund.
Firefighters pay about 9.45% of their salaries into their pension, according to Fire Chief Phil Chiappetta.
In Forest Park’s police and fire department, there are two tiers of pensions for officers. Tier one officers were hired before Jan. 2011, while tier two staff were hired after.
Tier one officers must be over 50 years old and have 20 years of service to collect their pensions. When they retire, they receive 2.5% of their salary each year for every year of service. The maximum benefit is 75% of their salary after 30 years of service.
The police department’s tier two officers collect benefits starting at age 55 and after 10 years of service, according to Chief of Police Ken Gross. Retired officers receive 2.5% of their final average salary — or average monthly salary for their last eight years of work — every year. The highest pension is 75% of the final average salary.
The fire department’s tier two officers also start collecting at age 55. These retired officers receive a pension based on the average monthly salary over 48 months out of the firefighter’s last 60 months of work, according to Chiappetta.
Gross, who has been with the Forest Park Police Department since 2000, and Chiappetta, who has been with the Forest Park Fire Department since 2001, both say they remember pensions being underfunded since they started. And both also say the underfunded pensions haven’t affected their staff’s morale.
“We would end up having more money for operations stuff, but I don’t think there’s a morale problem,” Chiappetta said. “There’s been pension funds that have been way less [funded] and they’re sustainable. It’s not great, but it’s not like it’s the end of the world either.”
“I don’t want to be scared of talking about things that aren’t going that well in the village,” Maxham said of the underfunded pensions. “We have a lot of things that are going really well, but we also have big financial concerns, and I think we need to not protect the residents from that.”
Clarification, Aug. 13, 2024, 2 p.m.: This story has been updated to clarify that the pension funds can intercept state-shared revenues, if the pension is not fully funded by 2040.