The Oak Lawn Village Board has adopted a formal funding policy for the police and fire pension funds, guaranteeing that a set amount of money, increasing annually, will be budgeted for the pension funds over the next 10 years.
Finance director Brian Hanigan, who drew up the policy with his management team, detailed the situation regarding the pension funds at the April 26 board meeting, He and village actuary Todd Schroeder explained why they felt a formal funding policy was needed to meet the village’s long-term obligations, and the six trustees approved the plan at Tuesday’s meeting without much discussion.
Schroeder credited the board with increasing pension funding from $1.4 million in 2011, to the $6 million budgeted for 2016. This represents a 350 percent increase for the police pension and 461 percent for the fire department.
However, Hanigan said that as of Dec. 31, 2015, the pensions were still underfunded, at 54 percent for police and 56 percent for fire.
At the current funding level, Hanigan said Oak Lawn households are each paying $275 annually toward the pensions. But he said complying with the anticipated state law that both pensions be funded at a 90 percent level by 2040 would require an additional $200 per household per year over the next 25 years.
The formal funding policy adopted Tuesday calls for the funding to be increased by $1 million each year ($500,000 per fund) until reaching $26 million in 2026. Funding would level off thereafter.
He said the pension costs could take 22 or 23 percent of the general fund. But the finance director suggested that much of that additional cost could come from the tax levy, without tax increases, if the village board is conservative with its spending elsewhere.
“We’re trying to keep the tax levy constant during this period,” said Schroeder at the April meeting. “Adopting a standard payment schedule will pay down the village debt overall, but not doing so could cost $126 million to our balance sheet.”
“Cash flow out is going to be constant. So the cash flow in is an important consideration,” said Schroeder.
“There needs to be a committed effort to pay down the debt,” said Hanigan. He warned that failing to adopt a formal funding policy so would also endanger the village’s current A+ bond rating.
Although Mayor Sandra Bury said on Tuesday that the bond rating would be threatened if the policy had not been adopted, she and several trustees said the village’s contractual agreement to fund the pensions for the first responders was most important.
“It’s the right thing to do,” said Bury after the meeting. “These first responders who risk their lives every day deserve to know their pensions are secure.”
Earlier in the meeting, before the pension issue came up, Fire Chief George Sheets presented several dozen police and firefighters with certificates of commendation for their roles in saving the lives of two people in the village in recent months.
One of those they helped was Tony Calderone, the owner of Palermo’s restaurant, who suffered a major heart attack while at the restaurant at 4845 W. 95th St.
Sheets noted that the person who initially called 911 thought he was choking, and praised the 911 operator who recognized what was happening and upgraded the call.
Sheets said Calderone was found “not breathing and pulseless,” but regained consciousness when a defibrillator was applied before being taken to Christ Hospital.
Calderone was back at work a few weeks later and was at the meeting to thank the first responders himself.
“I have always had respect for you guys. But I have a newfound appreciation for what you do,” said Calderone. “Now every time I hear an ambulance on 95th Street, which is a lot, I make a sign of the cross.”
“Thank you for saving pizza in Oak Lawn,” added Trustee Terry Vorderer (4th), injecting some levity into the conversation.
The other person the first responders were honored for saving was Tyler Bishop, an Oak Lawn High School student who suffered a seizure while at school. He was there too, in a wheelchair, but making progress toward a full recovery. The high school staff who provided CPR and used a defibrillator were also honored.
“This funding policy is a good attempt at making sure these men and women have the pensions they deserve. It is finally put on paper,” said Vorderer.
“We’ve seen here what these men and women do every day. We made this contractual agreement with these folks. This is an attempt to make sure we fund police and fire pensions properly,” said Trustee Bud Stalker (5th). “I agree with what we did, but we also have to make sure we cut expenses in administration and other areas where we can. We don’t want to have to raise residents’ tax bills.”
“So we have a lot more work to do, and we will continue to do it,” added Stalker.