Evanston City staff changed the actuary who reviews its police and fire pension funds, and the likely result will be higher property taxes for Evanston property owners. City Treasurer Marty Lyons and the two pension boards recommended an $800,000 increase in contributions, funded by a 2.1% property tax increase, and Council voted to accept the report and recommendations on the consent agenda of its Oct. 19 meeting.

The increase appears in the budget currently before Council, but the increase seems certain to pass. Illinois law permits a much lower contribution level, but, according to the staff memo, neither pension board would be willing to accept state minimum funding. City Council members have recently shown reluctance to fund at minimum levels as well, given their stated desire to have adequately funded pension funds.

In recent years, the City turned to a different actuarial consultant, Tepfer and Associates. Mr. Lyons explained, however, that a change in actuarial viewpoints is needed every several years. Tepfer delivered the last four actuarial studies ,according to the staff memo, so the City put this year’s contract out for bid. Tepfer declined to bid.

The new actuarial firm, Foster and Foster, was represented by its associate Jason Franklin. Mr. Franklin walked the Administration and Public Works Committee members through his firm’s recommended changes and the reasoning behind those changes.

By far the largest change in assumptions came from the mortality table used by Tepfer, Mr. Franklin said. Foster and Foster recommended “a move to a more standard table” in the RP 2000 Blue Collar mortality table. All the other changes essentially canceled each other out, with some recommending greater contributions and others lower contributions, he said.

The result: Under last year’s recommendations, the Police Pension contribution would have been about $8.25 million, the Fire Pension $6.25 million (as compared with last year’s contributions of $8.7 million and $6.3 million, respectively) . With the new mortality table in place, the new recommendations call for $9.28 million to the Police Pension and $7.35 million to Fire Pension

“Using the old mortality table was artificially lowering the bar,” said Mr. Franklin.

“It just gets harder and harder for people to pay their taxes here,” said Alderman Ann Rainey, 8th Ward. Taxpayers look at their bills and see over $16.5 million going to just Police and Fire pensions, and it’s tough, she said. “We have not shirked our responsibility… [the City] has been paying all along.”

Ald. Rainey also pointed out the one bit of good news in the report – the funds received almost an 8.6% return on investment last year, and both funds beat the expected 6.5% return.

“Most plans your size use 6.75% or 7.0%” anticipated return on investment, added Mr. Franklin. He did not recommend a change to the City’s assumptions.

Mr. Lyons said that neither of the pension board presidents was able to attend the meeting, but “we continue to work together” on pension fund funding. “You don’t see that in a whole lot of communities,” he added.