Despite promising to fund the police and fire pensions properly, the Village of Oak Lawn shortchanged the funding by over $3.6 million dollars in 2015 according to Village records provided to the Oak Lawn Leaf.
In the current fiscal budget year, Oak Lawn’s Village Board of Trustees had approved expenditures of $2,457,525 for the police pension fund and the same amount for the fire pension fund. However, the Village’s administration has now informed the Trustees that it has only contributed approximately $500,000 thus far and will end up contributing $625,000 to each pension fund.
The failure to fund the pensions at the budgeted amount comes as a possible surprise to Village Trustees, who were only informed of the failure to fund the pensions during a budget meeting last week, which was attended by Mayor Sandra Bury, Trustees Robert Streit, Terry Vorderer, William Stalker, and Michael Carberry. The failure to properly fund the two pension funds has never been discussed at any previous public meeting.
Pension funding, or the lack thereof, has been a consistent issue in Oak Lawn as well as throughout the State of Illinois. State officials routinely shorted the state pension systems for decades before attempting to change the law and reduce pension benefits for state workers and teachers. The Illinois Supreme Court ruled that pensions could not be reduced for any participant of a pension fund.
In Oak Lawn, the issue of pension funding was first raised by Sandra Bury in her election against former Mayor Dave Heilmann. The attacks on the funding of the pensions have continued both statewide, with the passage of a law requiring pensions to be funded at 90 percent, and at the local level. In 1996, the General Assembly passed a law requiring pensions to be funded at 90% but the legislators ignored that law and now has an estimated unfunded liability of $83 billion dollars for pensions. In 2010, the State of Illinois passed the Public Safety Pension Law which mandated that all local governments fund their pensions at 90% of the liabilities. In 2016, the State can divert local government revenue to make up for any shortfalls in those contributions.
In Oak Lawn, former Village Treasurer Pat O’Donnell presented a plan, in August 2013, to the Mayor and Trustees that set forth a five year budget and pension impact. Ironically, O’Donnell urged the administration to avoid temptation to “kick the can down the road” by not making the recommended pension payments. In his analysis, O’Donnell blamed prior administrations for not properly funding the pensions even though the pensions have never been funded at 90% of the recommended level since Larry Deetjen was appointed as the Village Manager in 2007.
O’Donnell set approximately $8 million dollars combined for the two funds as the recommended amount to meet the 90% funding goal. The 2015 budget ignored that amount setting aside about $5 million dollars for the police and fire pensions. While O’Donnell had labelled such budgeting as “kicking the can down the road”, the administration not only kicked the can down the road by not budgeting as he suggested but also then failed to then make the budgeted payments in 2015.
The same scenario is true for 2014. O’Donnell had recommended a funding amount of about $7.4 million combined for the two funds although the administration did not follow that recommendation. According to O’Donnell, the failure to follow his funding advice would result in an unfunded liability of the pensions by 41 percent in each fund.
In August of 2015, the Village’s auditors presented the audit for 2014 to the Mayor and Village Board. At that time, the auditors explained that the pension liability for the two funds under the new standards is over $200 million dollars.