A certified public accounting firm, Lauterbach & Amen, recommended that the village increase its contribution to the police and fire pensions from about $13.8 million to $14.4 million.
The police and fire pension funds pay for retirement benefits for those respective public service workers. According to Robert Rietz, principal of actuarial services at Lauterbach & Amen, the changes are needed because of fluctuations in staffing and the number of people receiving retirement benefits, which includes eligible surviving spouses of public service workers. These pensions are funded through the property tax levy.
In fiscal year 2023, the Oak Park Fire Department hired eight members, while four members retired, and three retirees and one member with a disability died, all of whom had an eligible surviving spouse for retirement benefits. One surviving spouse also died that year.
For the Oak Park Police Department in 2023, three members were hired, five retired, one became disabled and 10 terminated their employment. Also, five retirees passed away, four of whom had an eligible surviving spouse. Three surviving spouses also passed away.
All of these changes affect the recommended contributions to pension funds.
Both pensions also have a minimum contribution mandated by the state. Oak Park has, on average, exceeded those minimum contributions for the last five years.
For the next fiscal year, Lauterbach & Amen recommended the village contribute about $6.8 million for the fire pension and about $7.6 million for the police pension, for a total of $14.4 million. The state-mandated minimum contributions were less, at about $5.5 million and $6.3 million respectively.
The recommendation, if adopted, means the police pension contributions would increase by $294,832 and fire would increase by $357,330 from the previous year. Combined, this is about a 4.7% increase. Neither Oak Park pension fund board have submitted their requests for funding yet, according to village officials, but they are expected to ask for this recommended amount.
“I would imagine that we would see these numbers have some pretty significant fluctuations at some point down the line, because we’re currently so understaffed,” Trustee Lucia Robinson said.
And Trustee Brian Straw said hiring is going well for police, who have been significantly understaffed. So, he said he’d like the village board to take that into account, potentially by contributing even more to the pension fund than the firm’s recommendation.
“If we know that there’s going to be some cost, and we think that there’s going to be a year where we’re hiring 10, 15 new officers, that would be a significant additional cost,” Straw said. “I don’t want that to create a spike if we can smooth it out by predicting it.”
Rietz agreed that would be a reasonable consideration for the board to offset dramatic increases over time.
“We all talk about how safety is one of the core responsibilities of village government,” Straw said. “Taking care of our pension liabilities for our police and fire goes to that core safety responsibility.”
Oak Park also has unfunded liabilities, or unpaid debt, Rietz said, for each pension fund. For fire, it’s about $70.9 million and for police, it’s $80.5 million. This is due to be paid off within the next 17 years, Rietz said.
Today, Oak Park is paying about $8 million in retirement benefits for firefighters and about $10.5 million for former police officers for a total of about $18.6 million. But that’s expected to increase.
In five years, Rietz said expected benefit payments could total about $22.5 million, a 21% increase. And then those payments are expected to be about $26.2 million in 10 years, a 41% increase. That’s based largely on how many employees will become eligible to retire in those upcoming years.
“The costs that you’re paying today are from yesterday’s workers,” Rietz said. “There’s going to be a point where today’s dollars are paying for today’s workers. That’s the concept that we’re trying to target.”
The village board is not expected to approve a final budget for fiscal year 2025 until December. The fiscal year for Oak Park is Jan. 1 to Dec. 31 of each year.