Excerpts from the ChicagoTribune.com:
The Lake Forest City Council is facing a growing financial challenge as it seeks to manage the rising costs of its fire department, particularly related to pension obligations. According to a presentation made at the October 3 city council meeting, the fire pension levy was $466,229 in 2005. This year, that figure has climbed to $1.2 million, and officials expect it to reach $2.6 million by 2027.
When combined with police pension expenses, total public safety costs are projected to hit $6.7 million in 2027. Firefighters contribute 9.45% of their salary to the pension fund, while police employees contribute 9.91%. Each department maintains its own pension fund, overseen by a five-member board and supported by professional investment advisors.
Elizabeth Holleb, the city’s director of finance, noted that the two pension funds hold approximately $60 million in total. However, the past few years have been challenging for these funds. “In late 2015 and early 2016, the market wasn’t doing well,†she explained. “We closed our books on April 15, and we had very low returns. We assume a seven percent return.â€
According to city documents, the actual return on firefighter pension investments was just 0.28%, while police pension investments lost 1.64%. The city is responsible for covering this shortfall. Meanwhile, the fiscal 2017 fire department budget stands at $6.25 million, with 98% of that going toward personnel costs. The department employs 35 full-time staff members.
Holleb emphasized that the city has always met or exceeded state-mandated pension contributions. In the past, the city reduced staff through attrition, but she admitted that the current lean structure makes further cuts difficult. “The problem is that we are so lean… it’s hard to make those kinds of reductions,†she said.
City Manager Robert Kiely warned during the October 3 meeting that the cost of fire services is increasing faster than the city can generate additional revenue. “The math doesn’t work long term,†he said. Alderman Stanford Tack read a prepared letter stating that without changes, the growth of public safety pension obligations could force significant tax hikes and service cuts just to keep up.
The city council has directed staff to explore a potential fee of $10 per quarter, or $40 annually, for residents. This would provide one to two years to research and implement long-term solutions. Additionally, the city plans to discuss the possibility of sharing fire services with neighboring communities, though the details remain unclear.
“We will not compromise public safety,†Mayor Don Schoenheider said, emphasizing the city’s commitment to maintaining essential services while addressing financial challenges.
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