By Anna Lothson
The general fund remains a focus for Oak Park's 2013 draft budget discussions now that the village is seeing better days following the economic downturn.
Budget season, however, is in its early stages still as the numbers won't be finalized until late November or early December. For much of the year, however, rising pension costs have been at the top of many discussions for village leaders.
The village finance committee recently tackled the subject in a meeting with representatives from the police and fire pension groups, and it's been hot topic throughout the budgeting process.
The issue with pension costs stems from state-mandated levels that must be absorbed by local municipalities.
"The state legislature over the course of the past 15 years has significantly increased the benefits that are owed to pensioners, both for current employees and retirees," explained David Pope, village president. "Requirement to pay for those benefits, however, is born solely at the local level and therefore needs to be met through the investment performance that can be achieved by the pension fund and the boards overseeing them."
Because of that, Pope said, money for the pension fund comes either from growth in assets in investments or from financial contributions from taxpayers. Regardless, the state mandate requires a certain level of funding.
This has proven to be difficult for local municipalities, many of which have lobbied the state legislature for pension reform. Pope said this has an impact on budget planning because a decline in a projected rate of return for an investment would increase the amount needed to be covered by taxpayers.
Moving forward, Oak Park's financial team will have to run an actuarial analysis, or examination of risk, to see how the projected numbers match what's required.
"There is no getting around the fact that these costs are a significant obligation," Pope said.
As for the rest of the 2013 budget, Oak Park will focus its efforts on tasks like raising its general fund balance, having a more organized budget structure that analyzes budget amendments throughout the year and equipping each department with better tools to be fiscally responsible.
Board goals for the recommended budget plan are broken down into 12 categories, which include items like retail strategy and commercial district viability, sustainability, intergovernmental cooperation, community building and civic engagement, and government transparency and communication. A number of goals were outlined for the board to be completed from 2011-13.
According to the draft budget document, from 2001-2011, there were seven years where expenditures in the general fund exceeded revenues and four years where the opposite was true.
To grow the general fund balance, the plan outlines that expenditures in fiscal year 2013 should be limited to 99 percent of estimated revenues. This limits funding for some requests, according to the document, and reduces some costs from 2012. Consequently, one percent of the general fund will be "budgeted" for fund balance.
Between now and November the finance committee will dissect the proposed budget. Village management is expected to have an initial draft budget for village board review before its first regular meeting in November, and at least one public meeting will be held before the budget is passed in late November or early December.