By Bob Seidenberg

The president of the Evanston’s Firefighter’s Pension Board pushed the city Thursday to disclose how much of a special tax is being used to pay retiree pensions.

Jack Mortell, the board president, pressed Hitesh Desai, the city’s chief financial officer and treasurer, to release figures for the revenues generated through the personal property replacement tax (PPRT). The public deserves greater transparency about pension contributions, Mortell said.

Mortell said the amount of PPRT — a special tax established by the state in 1979 — the city contributed to pensions was listed in the 2022 and 2023 city budgets but not in 2024 and 2025.

“I like to see things precise and I think that’s my fiduciary responsibility,” said Mortell, who has led several deep dives into city funding in his position.

Desai said the money goes into the general fund, which supports a wide range of basic services. Money is then taken from that fund for the city’s annual contributions to the retirement funds, which the council has placed on a full funding track by 2040.

The city is then making payments from there, in accord with the 100% funding track approved by the council in 2023. “That’s what we are doing,” he told Mortell. “If you want something different, (the new City) Council can say, ‘Give X,Y,Z.’”

Dan Philipaitis, one of the two active firefighters on the board (which has two vacancies) and the board’s secretary, said the dispute “sounds like an issue between the council and the city.”

He said he had talked with the board’s longtime attorney about the issue and his position was “if there’s 100% funding, that was it.”

Pension contributions becoming ‘a punching bag’ for city’s structural deficit 

Mortell said he had also talked with the board’s attorney and others and found that the board can’t demand what the city pays to meet the 100% contribution, “but it’s fully within our rights to understand where it’s coming from.”

After years of underfunding, the City Council approved a landmark pension policy in 2023, to put the city on a path toward 100% funding of public safety pensions by 2040.

The city’s annual contributions will increase from $25.6 million to $29.6 million this year. In the long run, though, Evanston expects to save hundreds of million in interest costs, seeing an estimated $26.6 million in savings the first year the council went to 100% funding.

Mortell called attention in November 2022 to the council pointing to the tax as a revenue source that could be used rather than a tax increase for the city to meet its pension obligations. He said his examination of city budget reports dating back to 2002 found that a very small percentage of personal property replacement tax revenue the city had brought in over 20 years had gone to pensions.

Mortell noted that Alexandra Ruggie, the city’s corporation counsel, had confirmed that 100% of PPRT funds is allowable. But Ruggie also said the city doesn’t have an ordinance specifying where pension funding should come from.

Mortell quoted from an Illinois Department of Revenue document stating “the basic intent of PPRT law is to prevent the excessive taxation of real estate.”

“It’s not to be flipped into the budget,” he added.

At Tuesday’s meeting, Mortell said he’s raising questions about the city’s contributions, with some members of the Finance and Budget Committee earlier this year starting to blame the structural deficit the city is facing on pension contributions. “The pension then becomes a punching bag for all the woes of the budget,” said Mortell.

He maintained his own study of city documents indicate officials have been wrestling with a structural deficit — expenses outpacing revenues — since at least 2008.

“Now all of a sudden it’s 100% funding,” he said.

At the meeting, City Councilmember Clare Kelly of the First Ward questioned why the PPRT contributions aren’t being disclosed.

“The funding sources are very important for everything. We’re a public body,” she said. “You can’t just play games and say it’s all fungible. We have a right to know the funding sources for everything and with PPRT, the state intended it to be used for pensions.

“Up until 2024, 2025, there was always transparency as to how much PPRT was going into our pensions,” she said. “Suddenly it’s not there, and it wasn’t based on council direction. We never said just blend it in so we don’t know.”

She suggested that the council may have to establish an escrow account to ensure tax revenue funds pensions.

Finance and Budget Committee members voted 4-2 against her motion in May 2024 to create an escrow account for money generated by the PPRT.

David Livingston, the then-chair of the committee, noted that by taking that path, “you’re just going to create a hole in the general fund, because that’s where the money is going today.”