Village Policy Fastracks Road To Fully Funded Police And Fire Pensions
APRIL 20, 2017
– In 2014, the Village of Carpentersville Board of Trustees has adopted a revised policy that will allow for the Village to fully fund the Village’s police and fire pensions by 2040.
“Throughout my 27-year law enforcement career here in Carpentersville, the Village has historically been and continues to be faithful to both its residents and public safety officials by making the necessary annual contributions to both the police and fire pension funds,” said Police Chief Michael J. Kilbourne.
Historically, the Village has been utilizing a “Projected Unit Credit (PUC)” funding method in which the pension contribution costs tend to continually increase each year as the employee nears their projected retirement date.
In order to spread out pension contributions over time, and thus requiring the Village to pay a more manageable amount each year, the Village has opted to switch to the “Entry Age Normal Funding” method, which is the same funding method used by the Illinois Municipal Retirement Fund (IMRF) which covers the Village’s non-public safety employees. Under this method, the normal cost for each participant is computed as the level of percentage of pay from the age of entry into the plan to their expected age at retirement. “Although this method is more costly to the Village up front, it protects the Village long-term as well as our valued public safety employees long-term as well,” said Village Manager Mark Rooney.
“Implementing this new type of funding method protects retirees and their pensions while providing the Village with the ability to manage its fiscal future,” said Finance Director Hitesh Desai. “I have been so fortunate to work with the Village Board and the Village Manager who deeply care for the public safety pensions.”
In 2010, the Illinois General Assembly passed Public Act 096-149, which requires local governments to begin funding pensions for police and fire employees on an actuarial basis in order to assure 90 percent funding by 2040. Nonetheless, the Village-adopted funding policy contributes to the public safety pension funds at a higher level than required, with the intention of hitting 100 percent funding, rather than the required 90 percent, by 2040.
To date, the Village has levied approximately $1.24 million more than the state mandate, with a clear objective to keep these funds sustainable long-term.
“It is clear that the Village of Carpentersville is not backing away from their responsibilities to the pension; the Village is providing better financial support to ensure that the firefighters and police officers pensions will be at the needed levels by the year 2040,” said Fire Chief John-Paul Schilling. “It is refreshing to see that the pension responsibilities have been made a high priority, and that the Village Board, Village Manager, and Finance Department are looking out for the interest of its employees.”