R-15-08VILLAGE OF DEERFIELD
LAKE AND COOK COUNTIES, ILLINOIS
RESOLUTION NO. R -15- 08
A RESOLUTION ADOPTING A FUNDING POLICY FOR THE VILLAGE'S
POLICE PENSION FUND
PASSED AND APPROVED BY
THE PRESIDENT AND BOARD OF TRUSTEES
THE L"' DAY OF April 2015.
Published in Pamphlet Form by
Authority of the Corporate
Authorities of the Village of
nom, Illinois, this
day of Apri 1 , 2015.
RESOLUTION NO. R -15- 08
A RESOLUTION ADOPTING A FUNDING POLICY FOR THE VILLAGE'S
POLICE PENSION FUND
WHEREAS, pursuant to Article 3 of the Illinois Pension Code, 40 ILCS 511 -101
et seq., the Village of Deerfield, Lake and Cook County, Illinois, ( "The Village ")
maintains a police pension fund for the benefit of Village police officers and for their
surviving spouses, children, and certain other dependents; and,
WHEREAS, an annual actuarial pension valuation is developed in order
to determine, among other things, the annual required contribution from the Village to
the Police Pension Fund; and,
WHEREAS, pursuant to recently- adopted standards promulgated by the
Governmental Accounting Standards Board (GASB), the Village must adopt a pension funding
policy; and,
WHEREAS, in order to satisfy the new GASB standards, the Village
President and Board of Trustees desire to adopt a pension funding policy for the Police
Pension Fund, as set forth in this Resolution; and,
WHEREAS, the President and Board of Trustees have determined that the
adoption of the Pension Funding Policy will serve and be in the best interests of the Village and its
residents;
NOW, THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF
TRUSTEES OF THE VILLAGE OF DEERFIELD, LAKE AND COOK COUNTIES,
ILLINOIS, in the exercise of its home rule powers, as follows:
Section 1. The facts and statements contained in the preamble to this Resolution are
found to be true and correct and are hereby adopted as part of this
Resolution.
Section 2. The President and Board of Trustees hereby adopt the Pension
Funding Policy in the form attached to this Resolution as Exhibit A.
Section 3. This Resolution will be in full force and effect from and after its
passage and approval as provided by law.
PASSED this Fth— day of
2015.
AYES: Benton, Farkas, Jester, Nadler, Seiden, Struthers
NAYS: None
ABSENT: None
ABSTAIN: None
APPROVED this 6th— day of Anril 12015.
Village President
ATTEST
Village Clerk
Exhibit A
Village of Deerfield
Police Pension Funding Policy
1.0 Applicability
This policy applies to the calculation of the Village of Deerfield's "actuarially determined
contribution" (ADC) to the Deerfield Police Pension Fund (DPPF), a police pension trust fund
organized under Article III of the Illinois Pension Code.
2.0 Background
The financial objective of a defined benefit pension plan is to fund the long -term cost of benefits
provided to the plan participants. In order to assure that the plan is financially sustainable, the
plan should accumulate adequate resources in a systematic and disciplined manner over the
active service life of benefitting employees. This funding policy outlines the method the Village
will utilize to determine its actuarially determined contribution to the DPPF to fund the long -term
cost of benefits to the plan participants and annuitants.
The Village believes that this funding policy meets the guidelines for state and local
governments set by the Pension Funding Task Force convened by the Center for State and
Local Government Excellence. The guidelines set by this task force outline the following
objectives for pension funding policy:
• Actuarially Determined Contributions. A pension funding plan should be based upon
an actuarially determined annual required contribution (ADC) that incorporates both the
cost of benefits in the current year and the amortization of the plan's unfunded actuarial
accrued liability.
• Funding Discipline. A commitment to make timely, actuarially determined contributions
to the retirement system is needed to ensure that sufficient assets are available for all
current and future retirees.
• Intergenerational equity. Annual contributions should be reasonably related to the
expected and actual cost of each year of service so that the cost of employee benefits is
paid by the generation of taxpayers who receives services from those employees.
• Contributions as a stable percentage of payroll. Contributions should be managed so
that employer costs remain consistent as a percentage of payroll over time.
• Accountability and transparency. Clear reporting of pension funding should include an
assessment of whether, how, and when the plan sponsor will ensure sufficient assets
are available for all current and future retirees.
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3.0 Policy
3.1 Village Actuarially Determined Contribution (ADC)
The Village will determine its ADC to the DPPF using the following principles:
a. The ADC will be calculated by an enrolled actuary.
b. The ADC will include the normal cost for current service and amortization to collect or
refund any under- or over - funded amount.
c. The normal cost will be calculated using the entry age normal level of percentage of
payroll actuarial cost method using the following assumptions:
i. The investment rate of return assumption will be based on the long -term
expected rate of return on pension plan investments as determined by Village
management in consultation with the Village Board's actuary.
ii. The salary increase assumption will be projected by the Village Board's actuary
based on projected and historical increases. Assumptions will be monitored on
an annual basis and undergo a full review no less frequently than every 5 years.
iii. Non - economic assumptions, such as rates of separation, disability, retirement,
mortality, etc., shall be determined by Village management in consultation with
the Village Board's actuary to reflect current experience.
d. The difference between the accrued liability and actuarial value of assets will be
amortized to achieve a minimum of 90% funding in 2040 (a 30 year closed period that
began in 2011) based upon a level dollar basis. Upon achieving 90% funding in 2040,
the Village will evaluate continuing the level dollar payments until the unfunded liability is
paid off.
e. Actuarial assets will be determined using market valuation.
The Village will make its actuarially determined contribution to the DPPF in or around December
of each year.
3.2 Transparency and Reporting
Funding of the DPPF should be transparent to vested parties including plan participants,
annuitants, the DPPF Board of Trustees, the Village Board, and residents. In order to achieve
this transparency, the following information shall be distributed:
a. A copy of the annual actuarial valuation for the DPPF shall be made available to the
Village Board and the DPPF Board of Trustees.
b. The Village's Comprehensive Annual Financial Report shall be published on its website.
This report includes information on the Village's annual contribution to the DPPF, and
funded status of the DPPF.
c. Each year, the Village Board shall approve the Village's annual contribution to the
DPPF.
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d. The Village's annual operating budget shall include the Village's contribution to the
DPPF as well as a budget for the DPPF. The budget for the DPPF is controlled by the
DPPF Board of Trustees, in accordance with state law. The budget document shall be
published on the Village website and made available for public inspection at the Village
Hall.
3.3 Review of Funding Policy
Funding a defined benefit pension plan requires a long -term horizon. Assumptions and inputs
into the policy should focus on long -term trends, not year -to -year shifts in the economic or non-
economic environments. Generally, assumptions or inputs should be evaluated and changed if
long -term economic or noneconomic inputs have fundamentally changed or are no longer
reasonable. As such, the Village will review this policy at least every five years to determine if
changes to this policy are needed to ensure adequate resources are being accumulated in the
DPPF. The Village reserves the right to make changes to this policy at any time if it is deemed
appropriate.
3.4 Illinois Statutory Minimum
Article III of the Illinois Pension Codes defines the minimum amount that should be contributed
by the Village from all sources. Notwithstanding any of the parameters described in the prior
sections the Village intends to contribute at least the minimum required under Illinois Statues.
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