From excerpts shared on ChicagoTribune.com:
In a recent meeting, the Lake Forest City Council expressed concerns over escalating expenses related to fire department operations, especially concerning pension costs. In 2005, the fire pension levy stood at $466,229. Fast forward to this year, it has surged to $1.2 million, with projections indicating it could reach $2.6 million by 2027.
When combined with the police pension fund, the total expenditure earmarked for public safety is expected to hit $6.7 million by 2027. Firefighters currently contribute 9.45% of their earnings toward the pension fund, whereas police employees contribute 9.91%. Both pension funds are overseen by a five-member pension board and advised by professional investment experts.
Elizabeth Holleb, the city's finance director, mentioned that collectively, the two pension funds hold approximately $60 million. She explained that like many pension plans, both funds experienced poor market performance in late 2015 and early 2016. The funds closed their books on April 15, yielding extremely low returns. Typically, the city assumes an average return rate of 7%, but the actual returns were quite different. The firefighter pension investments saw a mere 0.28% return, while the police pension investments recorded a loss of 1.64%, as per city records. Consequently, the city of Lake Forest is obligated to cover any shortfall.
The fiscal 2017 budget for the fire department is set at $6.25 million, with 98% of the expenditure allocated towards personnel costs. The department employs 35 full-time workers. Holleb stated that the city has consistently met or surpassed the mandated pension contributions set by the state.
In previous years, the city resorted to reducing staff through natural attrition. However, Holleb highlighted that "the problem is that we are so lean...it's difficult to make those sorts of reductions." City Manager Robert Kiely echoed similar sentiments during the October 3rd meeting, emphasizing that the cost of fire services is climbing at a faster pace than the city's capacity to generate revenue.
Alderman Stanford Tack read a prepared statement from a committee, pointing out that unaddressed, the rising public safety pension obligations would necessitate substantial tax hikes and service cuts across other municipal departments just to keep pace with annual increases. He further noted that the committee found no significant avenues for revenue generation or efficiency improvements within the fire department to mitigate these unsustainable trends.
For the immediate future, the city council directed staff to explore the possibility of introducing a quarterly fee of $10, or $40 annually, for residents. This measure aims to provide the city with one to two years to investigate and implement necessary adjustments.
Additionally, Lake Forest plans to engage neighboring communities to discuss potential collaborations in fire services, though specifics remain undecided.
Mayor Don Schoenheider reassured residents, stating, "We will not compromise public safety."
While the city grapples with these financial challenges, it remains committed to ensuring its residents' safety without compromising on essential services.
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