Village Board Makes Good On Pledge to Fully Fund Police and Fire Pensions

Underfunding of Lake Zurich police and fire pensions is an issue more than 15 years in the making, but steps are being taken by the village board and administration to ensure both are funded properly.

At the village board meeting Monday night, Finance Director Al Zochowski reported that sufficient revenues are available to meet the pension fund obligations in the upcoming budget year.

“We’ve been talking about underfunding for police and fire pensions since we adopted the budget last April, and we have been adamant to make sure we have funds to pay proper amounts into these funds,” said Zochowski.

The total amount for both pension funds that needs to be distributed is $404,548.99.  An additional $50,899.28 was also ‘under distributed’ resulting from additional funds collected by the Lake County auditor.

“There was an unpaid liability of approximately $51,000 above the actual budget amounts; collections were $51,000 more and we are obligated to pass that on to the pension funds,” said Zochowski.   

At a Jan. 24, meeting between the village board, administration, fire and pension board members, lawyers and actuaries who estimate levy amounts for pension funds, all of the issues were spelled out in detail.

Mayor Suzanne Branding pledged at the meeting that the issue would be addressed, and it appears the village board and administration are making good on that promise. 

An update on the budget process was also reported to the board, which included three tasks the board requested Zochowski include along with the update.

“You asked me to provide a fund transfer summary; there was an additional transfer of $61,000, and there will be four happening in next year’s budget,” said Zochowski.

Clarification was also requested by the board about revenues from a telecommunications tax.  Zochowksi said $450,000 of those revenues would be earmarked for the Capital Projects Fund. 

Zochowski said the rest of the funds would remain in the General Fund.

“You wanted it to be clear where road project funds were; there are $1.89 million- worth of projects, which have been taken out from the rest of the capital projects so they are more transparent,” said Zochowski.

The ending fund balance from a budget meeting held on March 12 was determined to be $21,530,640. 

The fund beginning balance was $22,525,539, and Trustee Jeff Halen asked why there was a $994,899 difference between the two figures, and if there was a balanced budget.

“We take all of our revenues and any restricted revenues for future projects, and deduct total expenses for the year to achieve a ‘balanced budget,’” said Zochowski. 

“The definition of a balanced budget is a budget where total expenditures and other uses of the budget do not exceed the anticipated new revenues and other sources,” Zochowski stated in a budget memorandum attachment for the board.

What can skew the ending totals are when funds are restricted for a specific use, but are still counted within the budget totals, said Zochowski.

The final budget is expected to be approved by April 30.