Burr Ridge village administrator Steve Stricker doesn’t see eye to eye on many issues with the village’s Police Pension Fund Board and one of its former members.
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One of the things he does agree with police pension proponents on is that more money should be going into the pension fund.
“If we had all the money in the world, we would put more into the police pension fund but the money is not there,” Stricker said of the village’s proposed tax levy request of $1.18 million, a 4.7 percent increase over this year’s request.
The village has asked for $780,713 for the police pension fund for next year, a $98,000 increase from this year’s allocation. The police pension fund will take 65 percent of the village’s total tax levy.
Burr Ridge continues to pay the state-mandated minimum amount to reach the state-required 90 percent funding of all police pension funds by 2040. Members of the village’s Police Pension Fund Board have continued to say that paying the minimum will cost the village more in the long run. They contend paying more now is a better way for the village to finance the pension fund.
Tom White, an outspoken former member of the Pension Fund Board, said future required payments will be unsustainable because they will totally devour future village budgets. He said it is not just Burr Ridge facing a pension funding crisis down the road, but municipalities throughout the state.
“You have Stricker saying things like ‘Oh, don’t worry about paying it now because we have a $4 million rainy day fund,'” White said. “You know what? It’s not enough. Your liabilities, which are now exposed, are not $6 million anymore. They’re not $7 million. They’re $13 million and maybe more.”
He said Burr Ridge residents will be on the hook for millions of dollars in pension payments down the road because the village is not putting enough into the police pension fund now.
White said if the village is $150,000 short for 10 years, that’s $1.5 million. That doesn’t count the 7 percent on that or whatever the interest-rate assumption is, White said. He also said the deficit is actually $13 million, and to fund things properly the village has to be sure its unfunded liability doesn’t go up through recovering lost interested on an underfunded pension fund.
“It comes down to that it’s really a mess,” he said. “Burr Ridge is not the only one. They’re not the most egregious.”
Jason Franken, an actuarial consultant at Foster & Foster Inc. in Oakbrook Terrace, was hired by the Burr Ridge Police Pension Board to come up with the board’s recommendation on what the village’s level of funding for the police pensions should be in the next fiscal year.
He said the Illinois pension code, which is used to determine the village’s annual pension payment, is based on “back-loaded methodology. It is geared to having contributions that are three or four times higher 15 years from now that the current contribution.”
“In our opinion, that is not the most sound approach for either the pension fund or a village or municipality to contribute to the plan because you can’t necessary count on having that much money in the future,” Franken said. “When you get there and can’t afford it, well, we have seen at the state level, you end up with a mountain of unfunded liabilities.”
Franken said his estimate is that the village should be contributing $914,000 to the police pension fund for the coming fiscal year.
“To the extent that the contribution is less than that, it really does compound and add on unfunded liabilities,” Franken said.
Stricker said the proposed 31 percent increase in funding is not possible for Burr Ridge to handle.
“With the state system, we will pay 5 or 6 percent more. You are proposing a 31 percent increase,” Stricker said. “We can’t afford that.”
He said the difference in the Police Pension Board’s sought-after funding for next year and the village’s police pension funding level this year could mean personnel.
“You are talking $215,000. That represents two police officers,” Stricker said., “There is no one on this (village) board who is going to say eliminate two police officers to fund police pensions 30 years from now.”
Kevin Beese is a freelance reporter for Pioneer Press
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