Cary trustees keep pension funding schedule as finance staff seeks levy increase tied to larger police contribution
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Summary
Actuary Luke Shane Hoffman reported Cary’s police pension is 60.4% funded with a $13.37 million unfunded liability; trustees heard options including an open 15‑year amortization but signaled comfort keeping the current schedule and directed staff to pursue a levy that captures CPI and new growth to cover a larger recommended contribution.
Luke Shane Hoffman of actuarial firm Foster & Foster presented the village’s annual Police Pension Fund valuation, telling trustees the plan’s valuation as of May 1, 2025, shows an actuarial accrued liability of $33,786,000 and an actuarial value of assets of $20,413,000, leaving an unfunded actuarial accrued liability of $13,372,000 and a funded ratio of 60.4%.
Hoffman explained the village’s recommended contribution for fiscal 2027 is $1,518,425 and said that the increase from last year stems partly from the amortization schedule tied to payroll growth and partly from unfavorable plan experience this year. “On an actuarial asset basis…there was about a 7.41 percent return,” he said, noting investment smoothing and the way gains and losses are recognized over five years.
Hoffman described an alternative: instead of a closed amortization that targets full funding by 2040 (a date derived from the Illinois pension code’s 90% by 2040 requirement), the village could adopt an open amortization method that maintains a 15‑year rolling amortization to reduce contribution volatility late in the schedule. He warned that the tradeoff to the open approach is a later date for reaching full funding.
Trustees questioned the risk and reward of the open method. One trustee asked whether a sustained higher return would still achieve fast funding; Hoffman answered that higher returns would bring the plan to full funding sooner but that the open method smooths contributions when market swings occur. Trustees also discussed the plan’s assumed investment return (noted in the packet as 7 percent) and past reductions to that assumption.
After discussion, trustees indicated they were comfortable staying with the current amortization approach and not switching to an open amortization at this time. Mayor and trustees also instructed staff to continue budget work and coordination with the state on adjustments to actuarial figures, while including the larger pension contribution in the recommended tax levy strategy.
The committee did not take a formal ordinance vote on amortization method; staff will reflect the board’s direction in upcoming budget materials and return with any recommended ordinance language if needed.
