Retirement plans for Oak Park police and firefighters had a good year in 2017, a result of good investments, a boost in tax funding and changes in actuarial assumptions, according to a report by the village’s auditor, Sikich LLP.
Sikich partner Dan Berg said in the 2017 certified annual financial report that the police pension funded status increased 8 percentage points last year to 59 percent funded.
Oak Park’s firefighter pension fund made similar gains, increasing from a 37 percent funded to about 44 percent, according to the report.
The funded status is the percentage of funds available if all employees retired at the same time.
The unfunded liability – the amount needed to make the pension fund fully funded – for the police pension fund dropped from $89 million to $67 million in 2017, while the fire pension fund liability dropped from $80 million to $66 million.
The Oak Park Board of Trustees has been working to improve the funded status of the pension plans over the last few years by directing additional funding to the pension plans above the recommended contribution levels.
“There’s a lot of different variables that make up the change between the beginning and ending balance, but in general the majority of the change was due to using different assumptions with the new actuary,” Steven Drazner, Oak Park’s chief financial officer, told the board of trustees on June 25. “Also, in the prior year the board opted to contribute an extra $1.5 million (in the 2017 budget) in the fire pension, so that also helped.”
Trustee Bob Tucker, who has pushed for improving the funded status of the plans, praised the improvement.
“I think we have to stand with the public safety employees because they’ve always been there for us,” he said in a telephone interview. “These are people who put their lives on the line.”
Oak Park Mayor Anan Abu-Taleb said the pension funded status is important because it affects the village’s bond rating. “[I]t has affected how we borrow money and how we get valuated by Moody’s and others, and this is fantastic,” he said.
Trustee Jim Taglia noted that the pension funded status increase was the result of a number of factors.
“We actually reduced the unfunded liability by about $35 million this year, which is significant, and there are a number of reasons why, some of which are actuarial and … related to mortality tables,” he said. “Also, the return on the fund has been very good; it was about 15 percent, on each one of those (funds).”
“All those things add up, and it made a $35 million difference. That is great news for the village.”