Evanston’s Big Liabilities

Evanston faces a $145.8 million unfunded liability in its public safety pension funds — a 44% funded ratio for the police fund and 41% for the fire fund, a blue ribbon committee appointed to study the issue reported last week.

The liability does not take into account recent losses from declines in the stock market. As of March 1, the city’s pension funds totaled $108 million, of which $40 million was invested in stocks and mutual funds.

Issuing pension obligation bonds is one of a number of options the city is considering to begin to fund the growing liability. Other options include selling or leasing the right to manage city property, such as parking garages, charging fees for some city services, reducing some city services, outsourcing municipal operations, and cutting spending, according to the report.

While the committee did not endorse any of the funding options, it did recommend that the city work with state officials to reform some of Illinois’ current pension laws, including a law that prohibits pension funds from investing more than 45% of their assets in equity investments.

Evanston must fully fund the shortfall by 2033. Late last year, Moody’s Investors Service downgraded the city’s general obligation debt to Aa1 from Aaa, citing in part the growing pension liability.

Meanwhile, the city, located just to the north of Chicago along Lake Michigan, also faces a $2.8 million budget deficit heading into 2009, according to reports. Officials will craft a final budget by March 1, 2009, the start of the city’s fiscal year.

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