Former City manager Julia Carroll met with the City’s Blue Ribbon Committee on July 2 to provide input concerning the unfunded liability in the City’s police and firefighter pension funds.

There appears to be agreement amongst most Committee members that they should accept the estimate made by the City’s current actuary that pegs the unfunded liability at $140 million. Under state law the City must make up that shortfall by 2033.

“Where do we get the money?” Committee member Peter Morris asked Ms. Carroll, attempting to get the benefit of her vantage point as former City Manager of Evanston. “It can’t all come from property taxes.”

Ms. Carroll responded, “That’s the $64,000 question. The City can raise property taxes; it can cut services; it can fund it with alternative revenues; it can issue pension obligation bonds, if it makes the revenue side work.”

Ms. Carroll summarized some of the service cuts and alternative sources of revenue that she had put before City Council during the budget meetings held late last year and early this year: closing branch libraries; outsourcing sanitation collection; assessing a fee that covers the entire cost of residential refuse collection; reducing funding to the Mental Health Board by 50 percent; cutting back on tree planting. “None are real popular,” she said.

When Mr. Morris asked Steven Drazner, acting finance director for the City, to provide documentation reflecting the proposals, Mr. Drazner said, “I don’t have the time to go through the minutes and pull out the recommendations.” Mr. Morris told Mr. Drazner the Committee was addressing a $140 million shortfall. “You’re not being helpful,” he said.

The Committee also generally explored the timeframes in which TIF revenues would become available, the timeframes in which general obligation bonds would be paid off (which would reduce the tax burden on residents), whether the City had assets it could sell and generate a one-time infusion of funds, whether non-profit organizations could be charged a payment for City services in lieu of paying property taxes, and whether the City was aggressively pursuing state and federal grants.

Committee Chair Mark Metz said, “We have to face this problem down, no matter how bad or ugly it is. We can’t put our heads in the sand.” He said the City will be required to pay the annual required contribution determined by the City’s actuaries, which will include payments to amortize the unfunded liability so it is fully paid by 2033. He questioned, though, whether the City could begin paying down the unfunded liability at a lower rate in the first five years and then increase the payments when TIF revenues became available or general obligation bonds were paid off.

The Committee will have to determine whether it is permissible or prudent to do so. The Committee’s target date to prepare a report is the end of July.

According to a schedule presented by City staff to City Council during the budget meetings late last year, the City will be required to pay approximately $530 million to the police and firefighter pension funds through 2034 to cover current costs and to amortize the unfunded liability.

Larry Gavin was a co-founder of the Evanston RoundTable in 1998 and assisted in its conversion to a non-profit in 2021. He has received many journalism awards for his articles on education, housing and...