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Actuaries recommend $12.1 million contribution to Rock Island police and fire pension funds; assets about 38% funded
Summary
City actuary presented valuation showing combined recommended contribution of $12,114,114, an unfunded liability of about $128.2 million and an actuarial funded ratio near 38%; council members asked about using state-mandated 90% target.
Noelle Ness, an actuary with Lauterbach and Amen, told the Rock Island City Council the recommended combined employer contribution for the firefighter and police pension funds for the year ending Dec. 31, 2025, is $12,114,114.
The recommendation accompanies an unfunded actuarial liability of $128,192,600 and an actuarial funded ratio of about 38%, Ness said. She also showed the transition-plan contributions: about $5,000,332.70 for the fire fund and $6,055,079 for the police fund.
Why it matters: The city’s pension contributions are funded primarily from property taxes; council members noted the trade-off between increasing property taxes and accepting a lower contribution target. Ness said the actuarial team performs a comprehensive assumption study every four to five years to update retirement, disability, termination, mortality and salary assumptions used in the valuations.
Ness summarized items that drove the year-over-year change in the recommended contribution, including salary experience and demographic changes in each fund. She said net changes produced a roughly $437,000 increase from the prior-year recommendation.
The recommended contribution is the sum of the normal cost (employer cost for active members accruing one more year of service) and the amortization payment toward the unfunded liability. Ness described expected near-term benefit-payment pressure: current annual benefit payments for both funds total about $11,660,700; staff and the actuary project that number could rise to about $14,100,000 in five years and about $16,100,000 in 10 years.
Council members asked whether the city should budget the full actuarial recommendation or the lower state-guided alternative. Ness and staff said the budget under consideration was using the Foster & Foster 90% funded target that the city’s budget had treated as the state-mandated minimum; Ness noted a 90% target corresponds to an alternative contribution of about $10,304,613 for both funds combined. Ness warned that targeting a 90% funding level rather than the full 100% recommended contribution will leave 10% of the unfunded liability unaddressed each year and, over time, could increase the unfunded liability and lower the funded percentage.
Council discussion noted the scale of the pension cost to property taxpayers: one council member said roughly 91% of the city’s general fund property-tax revenue is currently allocated to the police and fire pension contributions for the year, framing the council’s trade-off between property-tax increases and pension funding targets.
Ness closed by noting asset returns for the year (about +9.8% for fire and +8.9% for police on the actuarial summary) and the funds’ year-end fair value of assets. She also offered to take follow-up questions from council members and staff.
The presentation resulted in discussion but no formal budget vote on the actuarial recommendation during the meeting.
