ACTION REQUESTED:
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Communication from the Police and Fire Pension Boards with a request to:
A. Execute a CONTRACT with LAUTERBACH and AMEN to develop an OPTIMAL FUNDING POLICY for Public Safety Pensions, with options; and
B. ADOPT an ORDINANCE AMENDING the CITY OF PEORIA 2018 - 2019 BIENNIAL BUDGET Relating to the USE of the GENERAL FUND BALANCE in the amount of $5,765 to fund the City's portion of the OPTIMAL FUNDING POLICY for PUBLIC SAFETY PENSIONS Study.
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BACKGROUND: Police and Fire pension funds are funded at a municipal level, but many of the laws that govern the operation of the funds are not in the control of the City. The State of Illinois establishes the benefit levels for police officers and fire fighters, sets the employee contributions, determines the composition of the pension boards, and even regulates the percentage of investments that can be placed into equities or fixed income investments. The State requires that each pension fund be 90% funded by 2040.
The individual Police and Fire pension boards have duties as well. These boards hire investment fund managers and determine investments. The boards also make disability determinations that can provide retirees with tax free retirements and at times, city health insurance for an employee and his or her spouse until 65, and their dependents until 26. And the boards hire actuaries that calculate how much the Cities need to contribute annually to the funds.
The actuaries will work with the pension boards to establish a rate of return for each fund, and then calculate a level of funding that the City, by law, is obligated to make. Should the City not fund at a level that would meet the statutory level of funding, State law can allow the pension boards to intercept other state revenues to meet that funding obligation.
The City has a duty to levy the taxes necessary to meet the employer's pension obligation.
The pension boards have performed actuary studies to determine con...
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