Pekin staff briefs council on police and fire pension shortfalls; recommended contributions would meaningfully raise city costs

City finance staff presented actuarial valuations for the police and fire pension funds during the council’s FY26 budget discussion. The presentation summarized key figures: actuarial assets for the police plan ~ $43.8 million with an unfunded actuarial liability of about $26.5 million (funded ratio ~62.3%); the actuary’s recommended employer contribution to meet funding targets (2040 schedule) was reported at about $2.6 million for police (an increase versus the prior year).

For the fire pension, staff reported actuarial assets of roughly $35.9 million and an unfunded actuarial liability of about $46.2 million (funded ratio ~44%); the recommended contribution to meet the same funding target was reported at about $4.7 million. Staff discussed alternative minimum contributions required by state arrangements and noted other revenue streams (personal property replacement tax, video gaming, cannabis tax, property tax levy) that historically support pension payments.

Councilors asked clarifying questions about how adding staff affects liability, the history of underfunding, the impact of investment returns versus state-mandated benefit levels, and whether to consider increasing the tax levy in the FY26 budget to chip away at unfunded liabilities. Staff noted that new hires do not by themselves create unfunded legacy liability; the unfunded portion largely reflects historical underfunding, changes in benefits and investment returns. The presentation was informational; no formal contribution amount was adopted during the meeting.