City says other neighboring communities do so as well and that there’s ‘no phantom’ budget item
By Bob Seidenberg
City says other neighboring communities do so as well and that there’s ‘no phantom’ budget item
The city is following a practice used by a number of area communities by including public safety pension funds in its annual budget, even though those funds are controlled by a separate pension board, said Evanston officials in a statement on Thursday.
Officials responded sharply to a charge leveled at the March 11 Finance and Budget Committee meeting, suggesting the city falsely claimed the funds as an expense.
Jack Mortell, president of the firefighter’s pension board, made the accusation during a presentation to the committee on the state of pension funds.
Mortell, as well as Timothy Schoolmaster, the president of the police pension board, manage money and oversee the operation and administration of their respective pension funds. These funds are used to pay pension benefits to retirees, permanently-disabled firefighters and police and their eligible children and surviving spouses. All in all, approximately 350 people receive benefits from the funds, Mortell estimated.
The city’s annual contributions to public safety pensions go directly to the Firefighters’ Pension Fund and the Police Pension Fund, with specified amounts for each fund, Mortell told the committee.
“These pension funds are separate entities from the city with a Board of Trustees that manage the pension funds,” he said.
“Erroneously, the City of Evanston has claimed over $30 million that the pension boards paid for retiree benefits and administration as a City of Evanston budget expense for 2024 and previously, increasing the City of Evanston’s budget by over $30 million of expenses that the city would not be paying.”
Mortell is a retired fire captain who has taken several deep dives into city finances since assuming the pension board’s presidency in 2023. He maintained that further research showed five years of erroneously overstated budgets between 2020 and 2024. Collectively, these totaled close to $135 million, he argued.
“In other words,” he maintained in a document submitted to the committee, “the City of Evanston falsely claimed City of Evanston budget expenses, increasing the overall budget for expenses that are paid by the Public Safety Pension Boards [Pensioners essentially pay 10% of their salaries into the funds], not the City of Evanston,” Mortell stressed.
Officials at the meeting, as well as Fourth Ward Councilmember Jonathan Nieuwsma, responded almost immediately and in a follow-up letter from the City Manager’s Office, refuting Mortell’s assertion.
“We’re just showing a $30 million expense going from the General Fund into the pension fund,” said David Livingston, who chaired the committee when it backed a first time policy of addressing the city’s longstanding underfunding of pensions. “And so it was talked about openly when the budget was pulled together.”
‘No phantom‘
“Maybe you can add to that further,” Livingston said to Mortell, “but I don’t think there’s anything untoward relative to the source of the pension contribution of approximately $30 million to the two funds. So we definitely talked about it at the time, and there was a change in presentation.”
Councilmember Nieuwsma said he wanted to know if city staff agreed with Livingston’s explanation.
“I would like to say that an allegation or an insinuation that there’s a $30 million phantom in our budget is a pretty serious allegation,” he said.
He noted that the presentation from Mortell showed that the pension funding is in a great place, “and so I think for the benefit of our community, making such a serious accusation or insinuation in public knowing there’s probably a very reasonable explanation, does our community a disservice to put that kind of uncertainty and fear and doubt in the community.”
Hitesh Desai, the city’s chief financial officer and treasurer, told committee members that the figures quoted go along with the city’s system of pension payments.
“Everybody got paid — fire pensioner, police pensioner,” he said. “We gave the money, whatever the required contribution.”
The city budget for the pension funds shows roughly $19 million in revenue, based on money raised through the tax levy. Approximately $29 million is shown as an expense in the General Fund.
Desai said the funding scenario might seem confusing, but that the city is required to present it that way.
“Did you get the money?” he asked Mortell. “Let’s look at your bank account for last year: Did you get what was levied there or not?”
City Manager Luke Stowe’s office buttressed that view in a follow-up email to Mortell as well as to the Finance and Budget Committee and City Council.
“Throughout the budget process, staff regularly highlighted three key changes to how the budget was presented in FY25 to more accurately present the city’s budget information. Among these changes was only appropriating funds where there is a statutory requirement to do so and excluding those funds that are appropriated by other entities [i.e., pension funds],” the city said in its response.
From 2020 to 2024, “the City included the public safety pension funds in its annual budget, even though those funds are controlled by a separate pension board,” the statement from the City Manager’s office continued.
