Actuary: LaGrange should boost contributions as police, fire pension funds remain under 60% funded

Kevin Cavanaugh of Lauterbach and Amen presented the village's annual actuarial valuation of the police and fire pension funds, telling trustees the recommended employer contributions for the upcoming year are $1,819,544 for fire and $2,232,288 for police. Cavanaugh said those amounts reflect a roughly 9.3% increase for the fire fund and about a 7.5% increase for police, driven by higher-than-expected salary increases and demographic experience changes.

Cavanaugh said the combined unfunded liability for both funds is about $37.4 million and the funded percentages are roughly 52.3% for the fire fund and 54.7% for the police fund. He explained that employer normal cost plus payments amortizing existing unfunded liabilities over a 15-year closed period produce the full recommended contribution. On the fire side, he listed approximately $16 million in unfunded liability; on police, about $21 million.

The actuary noted the funds are "mature"—a higher share of inactive beneficiaries than active members—and forecasted benefit payments rising from about $4.91 million last year to an estimated $6.32 million annually in 10 years. He also highlighted this year's investment performance: net returns of about 10.24% for the fire fund and 9.05% for police, both above the assumed 7% rate, which helped offset contribution pressure.

Cavanaugh described an assumption study completed this year that modestly increased the pay-increase assumption and updated retirement-rate assumptions after observing earlier retirements; those assumption changes added roughly $73,100 to the fire contribution and about $290 to the police contribution. He also explained an alternative, statutory minimum-funding contribution (based on Illinois state statute) that targets 90% funding by 2040 and would yield lower near-term contribution amounts—about $1.53 million for fire and $1.7 million for police—than the board's recommended 100%-by-2040 approach.

Finally, Cavanaugh said the village's recent contribution history has been strong (near 98–100% of the recommended amount over the last five years), which supports favorable long-term solvency projections under GASB analyses. He told trustees the police and fire pension boards are discussing a layered amortization approach for future years to smooth contribution volatility.

The presentation concluded with no questions from the trustees and a thank-you from President Kukler.