Submitted By
Donna M. Gayden, Interim Chief Financial Officer
Agenda Item Title
Title
A Review and Discussion of the Police and Fire Pension Actuarial Reports in Preparation for the Fiscal Year 2025 Budget and Property Tax Levy
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Overview
Overview
This is the first in a series of annually-scheduled Village meetings to prepare for the next fiscal year’s budget. Each year, the Village reviews the actuarial valuations for the Police and Fire pension funds. The Police and Fire Pension Boards are also invited to participate in this conversation.
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Anticipated Actions/Commitments
Recommendation
As noted above, this is part of a series of meetings to prepare for the next Fiscal Year (FY) budget.
Chapter 2 of the Municipal Code establishes the foundation for the Municipal Budget and provides:
• The Village fiscal year is January 1 - December 31 annually.
• The Board of Trustees must adopt the annual budget prior to the start of the Fiscal Year and passage of the annual budget shall be in lieu of passage of the appropriation ordinance.
• On or before the Village Board of Trustees' first regular meeting in November of each year, the Village Manager shall submit to the Board of Trustees an annual Municipal budget which contains estimates of revenues together with recommended expenditures in conformity with good fiscal management practice.
Report
The Village of Oak Park, pursuant to Sections 9-1-3 and 19-1-3 Municipal Code, has established the Firefighters Pension Fund and Police Pension Funds as required by state statute.
A property tax levy is the sole source of funding for the Police Pension and the Firefighters’ Pension Funds. The Village has a contract with Lauterbach & Amen, a certified public accounting firm with a separate actuarial division, to prepare the two public safety pension actuarial valuations for the Village. Although the Fire and Police Pension Boards may hire their own firms to prepare a valuation and recommend an annual pension contribution, both pension boards have agreed to use L&A as contracted by the Village for this purpose.
This meeting is a discussion of Lauterbach & Amen’s police and firefighters’ actuarial valuations.
In the current FY24 (levy year 2023) budget, the public safety pension levies are approximately $13.8 million of the total $37.0 million levy (approximately 37%).
The recommended contributions for Police and Firefighters’ pension will be 100% funded by the property tax, typically approved by the Village Board in December.
A tax levy in December 2024 based on the 12/31/2023 Actuarial Funding Report will determine the municipal contributions to the Pension Fund for 1/1/2025 through 12/31/2025.
Compared to current FY23, the FY24 police levy recommendation is increasing by $294,832, from $7,344,715, to $7,639,547 while the fire pension levy is increasing by $357,330, from $6,456,313 to $6,813,643. The combined total recommended levy increase is $652,162 compared to the prior year.
Pages 5 through 12 of the actuarial valuations explain and summarize the primary reasons for the recommended contribution increases.
Please note that although neither pension fund board has formally submitted their levy request for FY24, it is anticipated that each will request the amount recommended by L&A. Each pension fund board meets quarterly and the actuarial valuations are typically an item placed on their meeting agenda for discussion and review.
The pension boards were also provided the option to request that L&A to attend one of their quarterly meetings for a thorough presentation and the opportunity for pension board members to ask questions. Some pension board members may also attend the L&A presentation to the Village Board tonight to observe and participate as needed in the discussion.
DEI Impact
N/A
Alternatives
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