Evanston City Council members voted Monday night to place funding of police and fire pensions on a 100% track, a step forward toward addressing one of the city’s biggest financial liabilities over the years.

Members voted 8-1 on Nov. 29 to move forward on the 100% funding as determined by the city’s actuary, contributing $4.49 million more to bring funding up to that level.

Tim Schoolmaster, president of the Board of Trustees of the Evanston Police Pension Fund Credit: Submitted

But the council is not scheduled to take a final vote on the issue until its Dec. 12 meeting. If it does approve the proposal as expected, the decision would only commit the city to that level of funding in the 2023 budget.

The funding would be drawn solely from city reserves for the roughly $4.5 million and not include the increase in the property tax that officials had previously advised the council to make as part of the move to raise roughly $2 million of the revenue.

In the discussion leading up to the vote, members of the city’s Police and Fire Pension Boards lobbied strongly for the move, documenting the cost to taxpayers of hundreds of thousands of dollars in interest payments the city has made because of deferring its full payments.

“It s a good first step,” said Tim Schoolmaster, the longtime president of the city’s Police Pension Board. “We need to start worrying about next year, of course very soon. But the budget is big and there are a lot of items in it.”

There was rigorous discussion

Council Member Clare Kelly, 1st Ward, proposed the motion, which came in a year where the city is in an advantageous financial position, with built-up reserves, helped in part by a cushion provided by federal COVID-19 recovery funds.

First Ward Council Member Clare Kelly Credit: Richard Cahan

During the discussion, Sixth Ward Council Member Thomas Suffredin, the lone member to vote against the proposal, asked staff what the increase in property taxes would look like beyond 2023 “to keep this rolling at the pace that the council seems to contemplate they want.”

Hitesh Desai, the city’s Chief  Financial Officer, responded that a number of factors are at play but estimated an 8% increase in the city portion of the tax rate would be necessary to generate the $4.5 million.

To that point, Kelly emphasized the savings the city would be realizing by addressing pension funds, escalating because of interest payments.

“Our Evanston taxpayers are now paying probably $14 million rather than $7 million [without the interest payments],” she said. “So should we choose not to fully fund it, it’ll just continue to increase what gets levied against our residents in interest in fees.”

Council Member Jonathan Nieuwsma, 4th Ward, also emphasized the one-year nature of the action.

“We’re not automatically in one fell swoop closing the gap,” he explained. “We’re changing the curve. Right now we’re on a curve to get [to] 90%” by 2040, the target year set by the state.

“And I really believe we need to be on a curve to get to 100%. The money that we are proposing to put in to the budget for next year gets us onto that curve. Now.

“Is that curve going to change, as the math changes, as future councils contemplate new realities and take into account new inputs? I think that will probably be the case.”

In that instance, the city may be contributing the $4.49 or $5.2 million, “or maybe the new formula would have it at $2.7 million,” he said. “I’m not so hung up on that because we know we are coming from behind and it’s time for us to start catching up.”

‘It’s like not paying off your credit card

Pension funds pay retirement, death and disability benefits for public safety employees as well as their families.

The mounting pension debt dates back at least 40 years, with Evanston standing at one time near the bottom of the list of communities in the state with unfunded liability. Officials have made headway in recent years, raising funding according to actuarial estimates above 50%.

Fitch and other credit rating services have raised concerns about the growing  pension burden in their reports on the city’s financial standing.

A number of the 30 speakers signed up for public comment at the meeting urged council members to move forward.

Jeff Cohen, an Evanston resident and a financial economist who has worked 30 years in economic consulting, told council members, “It’s really important to understand that funding the pension at less than 100% is introducing a kind of compound interest problem.

“It’s like not paying your credit card off every month. And if you ever had to do that, you know how painful it can be.”

In other actions at the meeting, the council:

  • held off on a resolution directing the city to transfer $2 million from the General Fund Reserves to the Reparations Fund. Council members had previously given their backing to direct the transfer tax paid from the sales of properties of $1.5 million into the fund.
  • approved an amendment to the city ordinance on public nudity championed by Eighth Ward Council Member Devon Reid, eliminating language that referred to the showing of a female breast in public with less than a full opaque covering any portion of the nipple. The changes also made the ordinance gender-neutral and brings Evanston into line with the language used by other communities regarding public nudity.

Bob Seidenberg

Bob Seidenberg is an award-winning reporter covering issues in Evanston for more than 30 years. He is a graduate of the Northwestern University Medill School of Journalism.

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  1. Please correct the digest and article regarding pension payments. The city has millions of dollars in surplus funds which are above and beyond the $20,000,000 reserve.

    The funds to cover 100% of the pension fund payment would be coming for the $14,000,0000 Surplus NOT from the 16.6 % reserve which which is about $20,000,000. Residents need to know that over the years while the city underfunded the debt, our 1st responders all paid their portion of the pension debt. Because the city only paid a portion of their payment the city created a growing debt burden which is being carried by residents and business owners. Had the city paid 100% of it’s’ obligation over the past years, the pension payment would only be $7,000,000 instead of approximately $21,000,000.

    It would be great if the Roundtable would start a year of investigative reporting and discussion on out city budget, projects and priorities, surplus funds, and which banks in town have 10s of millions of dollars of city funds in their accounts, and how much interest is made on those vs how much interest taxpayers are paying on the issuing of 23 year bonds. At the budget and finance committee meeting it was suggested that the city look into creating a line of credit at those banks. It would be interesting to hear the pros and cons of lines of credit.