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Actuary: East Dundee police pension has $8.5 million unfunded liability; recommended contribution about $1.26M
Summary
An actuarial representative told the East Dundee Village Board the police pension fund is roughly 62% funded with an unfunded liability of about $8.5 million and recommended a roughly $1.257 million contribution; projections show the fund could reach full funding in 11–12 years under the recommended schedule.
Todd Schroeder, an actuarial representative for the firm presenting to the Village of East Dundee Board, summarized the police pension valuation and funding options and urged sustained contributions to close a funding gap.
"Our recommendation is coming in at $1,257,000," Schroeder said, explaining that the recommended contribution decreased slightly year‑over‑year due to demographic experience and investment gains. He reported the fund’s unfunded liability as "about $8,500,000," and the funded ratio at roughly 62 percent as of the 12/31/2024 valuation.
Schroeder walked trustees through factors that changed the recommended contribution, including new hires (four in the valuation year) and two terminations that reduced future liability. He said transfers of service into the plan produced additional employee contributions that also lowered the net recommended village contribution.
The presentation included multiple projection scenarios. Under the recommended contribution pathway, Schroeder said the unfunded liability is expected to be paid off in about 11–12 years and estimated that achieving full funding on that schedule would require about $13 million in contributions over the amortization period to pay off an $8.5 million shortfall. By contrast, relying on the statutory minimum contribution—based on a 90% funding target by 2040—would lengthen the payoff period to roughly 16 years and increase long‑term costs.
Trustees asked about alternatives such as bonding. Schroeder said a bond analysis is feasible but cautioned about market‑timing and interest‑rate risk: "When you bond out and you put a large amount into the pension fund at one time, there's definitely a lot of market timing risk," he said, adding the village can ask bond advisors for a before‑and‑after comparison. Board members also discussed payment schedules; Schroeder confirmed the village may make contributions monthly instead of semiannually if desired.
Finance Director Brandon Martin and trustees noted the village has already made surplus payments in 2025 that are not reflected in the 12/31/2024 valuation and that the 2025 audited valuation may show an improved funded percentage. Schroeder said the report reflects the 12/31/2024 snapshot and that subsequent payments will be included in the next valuation.
The board asked Schroeder to follow up with a bond analysis and to provide updated projections if the board decides to add recurring supplemental payments. The village will consider these options as it prepares the FY2026 budget and related levy recommendations.
