Are the LaGrange police and fire pensions underfunded?

Are the LaGrange police and fire pensions underfunded?

In a recent blog on the LaGrange Patch and in village board meetings, Jim Palermo asserts that the village has made flawed pension assumptions which understate our pension obligation. The two boards which oversee the police officer and firefighter pensions, the Fire Pension Board and the Police Pension Board, do NOT agree with Mr. Palermo. Neither does the La Grange Village Board nor the professional actuary hired by each of the pension boards.    

Mr. Palermo’s approach would require that the village either raise taxes, cut services and/or employees – by $385,000 - an amount equivalent to four public safety employees – to increase our pension funding to a level he’s comfortable with.

Background

By state statute, La Grange’s Police Pension Board and Fire Pension Board are separate and independent from the Village Board of Trustees.  The members of the pension boards are current and retired police officers and firefighters.  The pension boards hire an independent actuary to evaluate and make funding recommendations for each pension fund.  The pension boards then make a request to the Village Board for annual funding. 

We, as a Village Board, have funded at 100% of the requested level every year.  The police and fire pension boards of La Grange appreciate that the Village Board of Trustees has consistently and fully supported their requests for funding.

Fact

By state statute, the Village’s pensions must be 100% funded by the year 2040.  Each year, the pension boards and Village Board review pension assumptions and funding status, and engage independent experts to assist in determining appropriate funding levels.  Based upon this independent analysis, both the Police and Fire pensions are on target to be 100% funded well before the deadline.

Point of Reference 

Most people who own a home have a mortgage obligation.  Simply stated, payments are made over a period of time, usually many years, to satisfy the long-term debt obligation.  La Grange’s pension debt is similarly a long term obligation.  The Village makes annual contributions to each pension fund, and expects to fully satisfy all pension obligations when due.    

Keep it working

Mark Langan, Bill Holder, and Dave McCarty, along with Village President-elect Tom Livingston, will continue to exercise the fiscal discipline that has earned LaGrange an Aa2 credit rating – one of only six non-home rule communities in Illinois to achieve that distinction. We understand, respect and will honor our fiduciary responsibility to our pensioners, their spouses, and the residents of this Village.