Police Pension Fund Board - Regular Meeting

Welcome to the Finance and Personnel Committee meeting held tonight, Tuesday, May 26, 2026. Sir, please take roll.

Logan, here.

Toomber, here. Ross, here. Granite, here. Beach, here. Five present. Thank you. First item under information only is financial discussion for April 2026. Yes, sir. Thank you.

through April of 2026 in the general plan of revenue performance. We continue to see underperformance in replacement tax. We're at about 1.3 million under budget through three of eight payments, or 30%. That is offset in part by overperformance on income tax and other revenue sources to about 316,000 over budget year to date. We'll continue to monitor that replacement tax performance and certainly speak with council about any intervention that may be necessary as the fiscal year progresses. On the expense side, general funding total $4.1 million under budget year to date, or about 5.5%. In the CIT fund, we have CIT sales tax over-performing by about $460,000. Water fuel tax is just about 1% over budget in total. And in the redevelopment fund, hotel and hotel tax and restaurant tax over-performs offset by over-performance in package deferred tax.

Do you have any questions?

Are there any questions? Thank you, Chair, for allowing me to speak on your committee. Quick question for you, Ms. Haggerty. On the police, I noticed year-to-date expenses versus the actual were trending $3 million. Is that correct? Currently...

Yes, there are about 3 million under the expected expenditures for the year. However, we have about 3.1 million budgeted for capital equipment purchases, several of which will be approved this evening. So there's some expenses that are one time in nature that would sort of throw off those totals.

So your forecast projections will eat that up completely?

Yeah, we would anticipate that by year end, the police department budget will end on budget.

Yeah, and then a similar thing, if I may ask one more. Fire, I know that we're running hot a little bit here over budget. Is this trend going to continue from that perspective? Or here to date, will it balance out based on what we kind of forecasted for this year?

Certainly. So overtime is currently over budget. If you look at the detail on the fire department's line-by-line, it's page 17 of 34 in the PDF document. Permanent salaries is currently under budget here today, so anticipating that there will be some offsetting expense saving there to cover the overtime expense. Additionally, there are... excuse me we have capital some capital expenses in the fire department that are uh conservative police there have been spent already um 851 000 1.2 budget um so again we anticipate by your end that the fire department budget will all right thank you

Thank you. Moving on to community reports, item one is the approval or voucher of $13,402,796 in seconds or cents. Is there a motion to approve vouchers? So moved. Second. Any questions or comments on vouchers? Seeing none, all those in favor make it by aye. Aye. Opposed? Very best. Item two is the approval of the 2025 Supplemental Appropriation Ordinance. Is there a motion to approve?

So moved.

Seconded. Before we take questions, Ms. Haggard, I'd turn to you to kind of give an overall perspective of what happened, how it happened, why it happened, and the summary of the... Yeah, absolutely.

So I'll remind City Council that when we approve the budget, we're technically approving the expenditure plan. So based on what we estimate revenues to be collected for the year. We have a requirement to adopt a balanced budget, as everyone's aware, but the official appropriation ordinance and of this supplemental appropriation ordinance creates a spending authority or an upper limit that puts restrictions on how much staff can spend throughout the fiscal year. As part of our annual audit and year-end closing procedures, we always present a supplemental appropriation ordinance to city council to adjust the budget to reflect what actually transpired during the fiscal year. We focus on the portions of the budget where we may have overspent more so than we focus on underspending. So you'll see in this memo, we are proposing adjustments to the general fund that total approximately $2.1 million in individual line adjustments That does not, however, adjust downward all of the budgets where we might have been under budget. Based on our audit numbers, the general fund expense for 2025 is approximately $43,000 over budget, or approximately 0.02%. on a $226 million budget. So while we're asking for 2.1 million in adjustments, that doesn't give us authority to spend that much. This is just reflecting actual expenditures for the fiscal year at $43,000 over budget in total. We would normally, this SAO process is really just a final step before we conclude the audit establishing the legal authority to spend what was spent in 2025. We would generally, as part of that process, discuss revenue. While not officially part of the appropriation ordinance, we want to make sure Council understands how we pay for this. So in general, while we landed basically on budget for the fiscal year on the expense side, revenues fell short. As you mentioned, as I mentioned in the financial discussion, replacement tax or PPRT, this is under budget year to date. It was under budget as we monitor 2025 in our monthly year to date reports. We ended the fiscal year approximately $6 million under budget on PPRT. In addition, we had an approximately $6 million shortfall in ambulance revenue collections in 2025 as well. That was in part due to a software change and a pretty extensive review of what we had booked as collectible balances that were determined to not be collectible. But in total, our revenue generated per transport is down to 2025, and we anticipate that that will likely continue into 2026 as well. That $12 million in revenue underperformance was offset by some overperformance in other areas, income tax and sales tax were bright spots in 2025. So the net operating results for 2025 are a negative $9.5 million. So while expenditures came in on budget, revenue fell short. We will address that negative $9.4 million through our fund balance, which is there for this purpose. We maintain a 20% fund balance policy so that in the event that we have unanticipated expenditures or revenue performance that doesn't meet budget, we have funds to rely on to keep the bills made in the interim, and we can restore that fund balance to policy compliance over time. I'm happy to answer any specific questions anyone has on that, but all we're asking you to approve tonight is the budget amendments that bring our appropriation into compliance with what actually transpired in 2025.

I don't have any questions. All in the lawyer.

Thank you, Director Hagerty. I imagine, especially with the replacement tax, other municipalities in Illinois have been hit pretty hard. Can you detail any knowledge you have about any other municipalities in Illinois and how they're navigating the situation? I imagine Chicago is being quite hard. Yes.

Property is unique in the state. So personal property replacement tax is called replacement tax because it replaces a locally imposed tax that was in place up until the 70s. when the state decided that they were going to take away the local jurisdiction's ability to levy that tax. It was basically a corporate income tax. Rockford had a significant number of industries operating in the city at the time, and it was a significant revenue source for us at that point. the tax that's collected at the statewide level now is allocated back to municipalities based on a formula, based on the revenue that was collected at the time the tax was eliminated. So while Rockford doesn't necessarily have the same manufacturing presence that we did in the 70s, we continue to receive a large proportion of the total replacement tax revenue that is shared amongst municipalities. while it's a large revenue source for us, it is not necessarily a significant revenue source for a number of, or all local governments in the state. Certainly Chicago is, and Chicago's had a number of They have a number of other creative options at their disposal for replacing that revenue. I will point out that replacement tax in particular has been the source of significant variability over time. Before COVID, we averaged about between $6 to $7 million annually in revenue from the revenue source. During COVID, it jumped. or immediately post-COVID, 2022, that number jumped up in excess of 30 million and has been slowly declining since that point. That number was driving significant budget surpluses in 2022 and 2023, and now partly responsible for the shortfall that we're seeing in 2025.

Any other questions? Aldo Beach.

Thank you, Mr. Chairman. A couple thoughts. One, I don't mean to put the mayor on the spot, but we did have a conversation today, and I wish that he would tell us in the millions how much we've lost that the state has taken from us in other ways, let alone through unfunded mandates. that has cost this community in the last 10, 10 years?

Go ahead, Larry. So we were discussing Alderman Beach today, the local government distributed fund. That local government distributed fund residents pay their income tax. 10% of that income tax goes back to local municipalities. That's what the deal was always from day one. I believe 1969, 1970, around that same time period. Since probably 2011, 2012, they have slowly cut away from that percentage. So today we get 6.47%, not 10%. The budget before the legislators today drops that down another 0.12 or 0.14%. If you go back to 2012, we have lost 2012 through 2025. the state has taken 144 million dollars so what i was mentioning is if you look at all the property tax revenue in the city of rockford we generate about 48.2 million dollars in property tax revenue so they've taken more than three years of property tax revenue As for unfunded mandates, I could not begin to tell you the total cost of unfunded mandates. And there are good ones that I think everyone agrees with that still cost us money. I think everyone agrees that we need to get lead service out of our waterways. There is definitely not enough money from state or federal government to do it in the time frame that they provide. But it's a good mandate. We need to do that. We all want to do that. This council has been working towards it. Body cameras. We want to do it. It's a good mandate. But also we have to pay for the storage. And I think that's hundreds of thousands of dollars every year we're paying just simply to store that body camera. with no assistance from the state. Then there's a whole host of others that are not, that everyone doesn't agree with, that are also costing money. Thank you.

Well, I thought it was just good that we hear that again. of three years roughly of total property tax collections disappeared. And we still try to make it work here week after week. One other comment, does the casino revenue guarantee 7 million, is that equally divided per month over 12 months? Because I noticed when I looked at what we collected, it was less than what we should have gotten if we took that number divided by 12, multiplied by three.

Yeah, I think that it's not necessarily an equal 112 because we're only one year into a little over, I guess we're getting close to two years now, of operations. But difficult to, over time, we'll be able to sort of better predict what monthly revenue will be. But until we have a couple more operating years under our belt, that would be a little bit more difficult to predict.

But I know it's not equally dispersed over 12 months.

So our guarantee from the $7 million, how much did they?

By year end. Yes, correct.

Thank you.

All right, Aldo Salgado. Yeah, just a quick question for Ms. Haggard. And again, thank you for allowing me to speak in your committee. Getting back to the reserves, what's, I mean, you mentioned 9.4 underperformance. What is the drop from year to year on those reserves? What percentage, you mentioned 20%, is... what our policy or 25 whatever it is typically it's three months of you know payroll essentially um what is that percentage puts us at at this point in time um i don't have the percentage calculated but we were slightly over maryland's policy going into 2020

So the actual drawdown, this 90.5 million shortfall will put us 6.6 million under our fund balance policy for the 2026 fiscal year.

Yeah, so similar discussion that we had. Last budget cycle, if we recall, you know, we were at $3.4 million deficit. I can't remember. And we have a balanced budget. So is that 3.4 additional that would eat into that reserves that we currently have? Or how does that work?

No. Well, we improved the balance on it. Correct. So, you know, assuming that we end the 2026 fiscal year with... So it's just 6 point whatever. We're still at 6.6 million, yes. But because our requirement is 20% of our operating budget, as our operating budget increases, so does our fund balance requirement. So really, we should be adding to that surpluses annually to keep up with the policy requirement.

Yeah, and I just caution us to kind of look at that percentage and make sure that it's not significant in order to, from an auditing standpoint, threshold that it's material from that aspect of it. So going into this next cycle, You know, a little concerned, you know, as some colleagues have said about the reclaiming tax, some of these things, unfunded mandates, et cetera. So hopefully we can keep an eye on that because it is a significant drop. Thank you.

Alderman Tubert. Thank you, Chairman. I would like to say thank you to Alderman Beach for asking that question, because I was going to address that as well. The mayor has been very vocal on the local government distributed fund in the past, and I would commend anyone... yourself, anyone else still here in the city to continue to put pressure on the state as much as we can to get what we believe should be coming back to us. Also, you know, when we look at, and I spoke with Director Haggerty today on some issues here, and again, stressing the property taxes that the city of Rockford collects, And many times we're lumped in with the other taxing bodies. I think we take up about 20% the city of your property taxes. I think it's been, what, 12 years, 13 years since we've kept our living flat. So essentially, we as a city are collecting the same amount in property taxes as we were 12 years ago. As other taxing bodies have taken the inflation bump and maybe even raised their levies, we as a city have kept that flat. So I know that many of us here on council are probably talking with constituents and uh, other individuals that when people talk about Rockland City property taxes, Rockland property taxes, uh, you know, you need to distinguish that there are, how many taxing bodies, uh, how many, 12? I thought it was around there. Uh, that, uh, Your property taxes aren't all the city of Rockford. It's about 20%. Keep in mind that we have in the past kept this levy flat. And that does, by doing that, we do find ourselves sometimes in a situation like this. So we have been steadfast on keeping reserves, which is prudent. And so at times we might have to dip into those reserves, but there will be some obviously hard conversations coming to alleviate this from happening in the future. So I just wanted to point that out. Thank you very much.

All right. On item number two, all those in favor indicate by aye. Aye. Opposed? The matter passes. Moving on to resolutions. Number one is approval and acceptance of a DCO grant awarded by $3 million. We use the fund to fund a portion of the cost associated with the acquisition and renovation of the new Family Peace Center located at 214 Montrose Street. Is there a motion to approve? So moved. Second. Any questions or comments from staff? Seeing none all the favor to keep I Post matter passes. Thank you Number two is a war of a joint purchasing contract for a police vehicle computers docking stations printing and components of CDS office technologies in the amount of 153 thousand three hundred and sixty two dollars It's a one-time purchase the funding source of the capital lease fund police department capital budget is emotional group Any questions or comments for staff? Seeing none, all those in favor indicate by. By. Opposed? The matter passes. Item three is a joint purchasing contract for Panasonic Toughbook laptop bundle and extended warranty for FTO to CDS office technology in the amount of $36,900. It's also a one-time purchase. And the funding source is a police operating budget. Is there a motion to approve? So moved. Second. Any questions or comments from staff? Seeing on all that they were to keep I post matter passes item 4 is the warm a joint purchasing contract with police vehicle equipment and installation of data safety supply in the amount of four hundred and thirty nine thousand three hundred and eighty eight dollars This is also a one-time purchase and funding sources are the capital lease fund police department capital budget. It's a motion to approve Any questions or comments or staff? Seeing none, all those in favor indicate by aye. Opposed? The matter passes. Item five is an award of joint purchasing contract of police radar equipment, the custom signals, in the amount of $39,870.46. This is also a one-time purchase and the funding source is the capital of these funds. Is there a motion to approve? So moved. Second. Any questions or comments from staff? Alderman Tuber.

Thank you, Chairman. We just had, in the recent past, a running radar put in to the squad cars front and back. Just wondering how this is in relation to what we've already done previously. Thank you.

sure this is uh for the 22 new squad cars that you've just approved that we're outfitting sir we're replacing the radars that are currently in the old squads but we need 14 because our fleet isn't old thanks to the council members for approving that so we only need 14 out of the 22 to ensure all the trailers all right thanks for clarification all right any other questions

Seeing none, all those in favor indicate by aye. Aye. Opposed? The matter passes. Item six is a change order for the Activate Church Street and Main Street two-way conversion supplement number two to GFT infrastructure. The original contract was $799,243.56. There is a proposed supplement of $708,236.27. The change order includes additional consultant services for right-of-way acquisition, appraisal, and land acquisition negotiations, tile commitments, and right-of-way plans for approximately 42 parcels along the corridor, as well as additional survey and design work to address IDOT review comments related to drainage plans, ADA ramps, and maintenance of transit points. The funding sources are the 1% infrastructure sales tax and the state of Illinois jurisdiction transfer points. Is there a motion to approve the change order?

So moved. Second.

Any questions or comments for staff? Alderman Grant.

I sent a text to Mr. Sanders this morning. And I just wanted to reiterate that why I was back, got back was that we are adding the parcel costs. We weren't, that wasn't in the original budget or the original thing. And my question was why were we doubling So I think it's a project that has a lot of things on it, but I would like to see if Mr. Sanders can say more.

Sure, Mr. Sanders.

Mr. Carter. So this project started out of a contract. I'm not even sure the contract's inception point or award point. I know that we paused things in 2022, 23. We started with a $700,000 contract. The first amendment you'll see for $300,000 was adding land acquisition, right-of-way takes, and easement takes. And that was even done with some assistance from our own legal department back at that time. That was for, I believe, 20 or 30 parcels back then, maybe 20, 30, 30 to take. so funding what we thought was a six million dollar funding package we were getting back then all of a sudden to our surprise became a three hundred thousand dollar funding package and we paused the project we have since resumed or resurrected the six million dollar funding assistance the project has been reactivated but a lot of time has passed and IDOT has changed their standards by which they make us get easements, which becomes more complicated and more akin to a property acquisition. If the initial agreement and supplement number one was 30 parcels, we have 47 more. So we have 77 parcels now for them to assist us with getting the necessary legal documentation to move. Also, since the project has laid dormant for so long, a lot of the reports, a lot of the studies, a lot of the permit applications that have been submitted are now outdated and need to be updated and submitted again. So the bulk of this... Next amendment you're approving now is $700,000 roughly equates to another $500,000 in assistance in land acquisition and another $200,000 of design revision. I will ask our traffic engineer to weigh in and correct anything I do, sir. I couldn't second that. Okay.

All in favor. Thanks, Chairman. I feel like this original contract probably dates back maybe to my great-grandparents. Yeah. And I'm sure the mayor can attest, too. As I see him shuffling over there, this has been just a thorn, personally, in my side for umpteen years. Mayor as well, I'm sure. Mr. Carter and some of the other public works. You know, it just seems as though you know, working with IDOT sometimes, and I'm not throwing IDOT under the bus here. It's just, it's, you know, government entities working with government entities and et cetera, et cetera. And it just seems like who wants to outdo who? And I think sometimes with IDOT and how many times that, you know, I've been, asking when is this going to get underway and really many times the answer in a nutshell was IDOT wants more changes and we have to come back with other plans so I think the city We as a city have really done, in the most part, a good job in trying to get this project underway, but have just run into so many obstacles. And I've kept constituents updated as much as I can. And I guess my question here then with those statements is, out of this proposed supplemental change number two, We are using the 1% infrastructure sales tax, which this would be an example of why we have that. What percentage of that is put into this change order versus the other state supplemental amount we're getting?

I believe our intention is to put all of the state money towards the actual construction of the project. So that's currently estimated at about $4 million, $8.4 million. And so the $6 million that we've got committed to the bill is that. So to answer your question, all of this would be a quality system.

All right. When do we... Again, I know I've asked this question multiple times.

I think we're looking at 2027 now for... We were optimistic it could change how the instruction initiatives work.

Like I said, it's like the Cubs. There's always next year. And this project is the epitome of... Thank you.

Or maybe no year at all. Yeah.

Thank you.

Any other questions? Seeing none, all those in favor make it by aye. Aye. Opposed? No. All right, there's a motion to adjourn. So moved. Second. All those in favor?