The current structure for paying into the police and fire pension is not working the way it needs to in order to meet the village goals of fully funding those pensions by 2040, and the Village of Oak Park is working to fix it.
The village board’s finance committee on Sept. 3 supported a new structure to pull money from small capital improvement projects that can be financed through bonds and create a limit on the levy growth. Final decisions will be made by the full village board.
There has been a “timing mismatch” between the annual actuarial report recommendations and when the village has to set pension levies, according to a presentation by finance consultants from Stifel and Speer at the meeting. For example, the 2025 report was not received until August 2026 and the pension levy was already set in December 2025.
This has resulted in the pensions being “slightly” underfunded from the recommendation and is expected to require $5.41 million in additional contributions through 2053 and the goal will not be fully met on time.
“Our thought process is: Is there a more efficient or perhaps smarter way to go about making those presentations or making those contributions over time, in order to minimize the taxpayer impact and the impact to the village’s budget,” said Tom Reedy, managing director with Stifel, at the meeting.
The presentation only looked at the firefighter pension as the most up-to-date actuarial report for police was not available at the time of the meeting. Reedy also reiterated the disclaimer that “everything in PensionLand” is based on assumptions when looking at the long-term projections.
The team of consultants presented seven different scenarios of how to fund the pensions going forward from staying the way it is all the way to using general obligation bonds to fund it relatively immediately. The committee looked more seriously at solutions somewhere in the middle.
Kevin Bueso, Oak Park’s chief financial officer, said the new plans show a “strategic, holistic view” of the pensions while being more “creative” about how to achieve those goals with the best interest of the taxpayer in mind.
The scenario that had consensus support from all three trustees present, Brian Straw, James Taglia and Derek Eder, combines “revenue reprogramming” and a limit on levy growth.
Revenue reprogramming will take the about $5 million generated through the home rule sales tax and put it towards the levy payment and capital improvement projects that the money typically funds such as road, alley and sidewalks will be financed through bonds. The amount that the village pays into the levy will have an annual increase limit of 2% no matter what an actuarial report may recommend after the fact.
These tactics combined create a more stabilized payment plan that allows for the pension to be fully funded by 2039, if the estimated projections become reality. Those projections show a gross saving of over $9 million compared to the structure currently being used. That number does factor in projected inflationary impacts.
“I think it is a strategic, holistic view of the pension and making sure that we maintain the board’s commitment to 100% funded by 2040 and just being a lot more creative in terms of how we get there, with keeping in mind what is the least impactful on the taxpayer,” said Bueso.
He said the sooner the pension is fully funded, the sooner taxpayers can feel the effects with a lower tax bill, similar to paying off a credit card at an accelerated rate to avoid extra interest.
No plan is without its risks, and there is a chance of falling back into the deficit the original plan created if the supplemental revenue and 2% limit does not offset a possibly higher interest rate on debt service.
The committee did show interest in funding the pension through a taxable pension fund bond should the market change to make that option cheaper in the future.
“If there’s an opportunity where the bond market slips and we can we can see cheaper taxable debt, then I think we absolutely should consider and look at whether we can sort of cover the gap from the revenue reprogramming with taxable debt because it has the opportunity to save a lot of money in the long term,” said Straw.
The actuarial report for the police department has been completed and reviewed by village staff and consultants since the Sept. 3 meeting. The combined information of police and fire pensions now in the context of the new funding structure will be presented to the committee at a future time.