Police Pension Fund Board - Regular Meeting

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And then when you want to mute all of them, you can just do that and that keeps you live. There's the public microphones on the outside. I'm sorry, the red and the yellow. I lost two microphones. And then the public speakers are up here.

Okay. All right. I know I could mess it up. Yeah, just if you...

Thank you very much.

I just like, I'll be like, hey man, you caught me and you got me. I'm not going to deny it.

It's not an omission to me.

It's an omission. It's just to do that in fact.

Everybody.

I feel like, you know, it's like, you know, it's like, you know, it's like, you know,

Thank you.

Welcome. Before we have city council, we have a special meeting of the Finance and Personnel Committee. Sir, could you please take a roll? Cross. Here.

Red. Here. Beach.

Here.

South Alabama.

Present.

Corporate.

All right, thank you. Under information only, we have a 2026 budget update and a 2027 budget preview. I see we have Ms. Haggerty here on that.

So we revised our 2027 budget process a little bit to add in sort of a review for state council to sort of bring together all the information, financial information that's been communicated so far this year, kind of give you an update of what we've seen as we move into the 2027 budget process. So just a recap, 2025 year end, with the 2025 Supplemental Appropriation Ordinance. At the end of 2025, our general fund balance is $6.6 million under the policy. That policy is to maintain a fund balance of 20% of our operating budget. That is for a number of reasons. A, to prepare us to be able to have resources to respond to emergency situations, to weather economic changes, and make and reasonable budget decisions when we have an economic downturn, and also for cash flow purposes. It's important to maintain that general fund balance policy of 20%. So we're currently $6.6 million under that policy. Year-to-date revenue, you can see the bars are budget. The line is actual. You can see we are underperforming in replacement tax and in other revenue in total. But through June, we are under budget on revenue by $2.7 million, or about 2.6%. Uh, if we were, and again, I just want to make a really general statement here that this, these numbers are very, very preliminary and they're based on only four months of several of our major revenue sources. So to call something after four months is, is it's really early in the process to do that, but. If we assume that current revenue trends continue through to year end, we estimate that revenue will fall short $6.8 million, or approximately 3% of the total. That would put us at about $6.8 million under budget on revenue in total. Year-to-date expense here. I know this scales a little off because police and fire such are such large operating departments in comparison to others But every operating department except the fire department is currently under budget through June in total the general fund is two point million under budget or about 1.8 percent and If we assume that all departments end the fiscal year on budget, and should current fire staffing practices continue, we estimate the general fund will be $4.4 million over budget for the year. You can see there budget versus projection. So if you take revenue under performance and expense over performance, you can see here the net of that is $11.1 million shortfall for the year. Specifically, some deficit challenges for 2026. The general fund balance is not sufficient. As I mentioned, we're already underneath our general fund balance policy. That general fund balance isn't sufficient to continue to absorb operating losses. 2026 needs to end in a positive position to begin to restore that fund balance to policy. And finance staff will closely monitor department staffing vacancies and overtime use as the fiscal year continues to ensure that our departments stay at or below budget numbers for the year. Revenue challenges that we've seen so far that we anticipate will continue into 2027. As I mentioned, PPRT has continued underperforming, not only in 2025, in 2026 year to date, but we don't anticipate a recovery, so to speak, of those revenue numbers into 2027. Ambulance revenue is currently under review and discussion with our billing partner to recommend a path forward that may include changes in our billing structure, other billing updates to help make sure that we're collecting as much per transport as we are eligible to collect. And our sales tax is currently lagging slightly. And we'll have the full June year to date next week. But as of the fourth disbursement, we're about 2 and 1 half percent under budget. I will say that's moving in the right direction. After three disbursements, we were 4% under budget. So we're hoping that that is an indication that we'll see some recovery there. This is just a general fund revenue graph to kind of show how that bottom bar there is property tax, and that has remained flat since 2017. The spike you see there is related to ARPA COVID recovery funds. But to show how we have attempted to diversify or expand our revenue collection outside of property taxes while we hold the line flat on that to keep up with expense growth. Expense challenges going into 2027. We have unknown wage adjustments under outstanding collective bargaining agreements. The health fund is currently in a deficit position. And so increases in premiums paid into the health fund will be necessary to restore balance to that fund. And our 2027 pension contributions are planned increase of 7% or $2.6 million. The actuary will be here on August 3rd to present that final report to city council. And a similar graph here for general fund expense. Again, that spike there is related to ARPA funding and the associated expense there. That blue bar at the bottom is our pension contribution. So you can see just from 2017 to 2026 how much pensions have become a larger component of our overall general fund budget. And that is the end of my prepared presentation. I'm happy to take any questions anyone has.

Thank you. Are there any questions? Alderman Beach.

Thank you, Mr. Chairman. And thank you, Carrie, for your continued work in the area of these budgets. But sooner or later, we have to really take a serious look at Not very long from now, every single dollar that's collected from our property taxes, which we've held up for nearly 13 years, every single dollar plus some will go to pay the pensions. the unfunded mandated pensions from the city. And we're at about 50% now, it seems. That number is about 400 million, roughly, between two. That makes a serious problem that you're pointing out to us as we look here as the committee is going into discussion on how to restructure and come up with ways in which we can turn this thing around and head it a different direction. It's very concerning to me, personally. And I think we need to say those things out loud enough times until we can really have it adjust to us, till we understand it. It's just not a number on a sheet, it's the reality of what's occurring. Thank you for letting me speak and thank you for your hard work.

Alderman Meeks.

Thank you so much for allowing me to speak. Thank you so much for putting this together. I'm just curious because I am thinking of those big dollar amount police and fire and I am kind of understanding some of the recent information related to the number of firefighters on duty, so on and so forth. So if we were to implement a I think the word is to codify the ordinance. If we were to do something like that and get to a number of like 60 or 62, what would that shortfall look like?

Well, it would be the budget that was approved for 2027 assumed that the 36 staff that we hired in addition to prepare for VEBA-based retirements starting this year would leave, would retire, and those positions would not be filled. So I don't have an exact number on what that cost would be in addition to what we're looking at today, but we can certainly share that. you know if you're talking about making a a Permanent change to require 62 staff every day.

That's again It's not just or 60 60 or 62.

We will be happy to put those numbers together and share them with City Council Okay.

Yeah that that's what I would just kind of want to understand what that shortfall number could be and What was the other question that I had? I know I asked a lot of questions all the time. When we talk about the budget, we focus a lot on capital improvements. There was a long time where we invested a lot into capital improvements, vehicles, just anything to improve the life of the items that we have. Sure. Is there an area or room to kind of pause some of those capital purchases to make some of these changes that we're possibly going to need to make before the end of the year?

Certainly, council could make a decision to forego capital investment in place of staffing. But I would recommend we use, for a long stretch of time, we did not replace capital equipment at all and spent a significant amount of funds on maintenance-related expenses. Our fleet grew to at least 30% larger than it needed to be because the backup equipment needed a backup because nothing was reliable. We had vehicles in our fleet that we could have replaced two to three times based on the amount of money we spent keeping them running. So I would caution against doing something like that. and committing to an operational change that doesn't have a permanent funding source to pay for. Capital, regardless of our staffing level, the personnel heavy operation that we have requires a significant amount of capital equipment, certainly, to get the job done. And we're not talking about small SUVs. We're talking about million plus dollar pieces of fire equipment. $200,000 to $350,000 dump trucks. The equipment we use is expensive, but it's absolutely necessary for the people to do their job. So a budget that doesn't fund the entire operation, both personnel and capital, is not a fair representation of the cost of services. And using one-time revenue to pay for operating expenses really just kicks the can down the road for our funding challenges because now we've added operational cost that we don't have an ongoing revenue source to pay for.

Yeah, and I do understand that it's just, like, I'm going to give a for instance. We're going to be discussing the command vehicles and upfitting the command vehicles. And I believe, I don't know what the upfitting actually, like, what that means, like what that describes. Sure. it came to, I think, 90 plus thousand dollars. And we know that one additional officer for just, I mean, and I am just focused on this year and really kind of getting through this year best way that we can. And if there are ways to just say, pause on that, not to stay forever, because we learned our lesson before with not continuing on capital investment. But I just, you know, I haven't seen us really take those kinds of measures. where we make those kinds of cuts. I just haven't seen it in my time here.

Sure. We have revisited the useful life schedules that we use for our vehicles that determine how often they get replaced, which determines how much we pay a year to use that vehicle, basically. And we've made revisions to... essentially every fleet type across our platform. Because once we started replacing them and replacing them on a regular basis, not only did we see that they were functioning reliably for longer, but we also identified a point where they still had value left. We could sell them in a secondary market and apply the proceeds from that sale to the purchase of a replacement piece of equipment. We also continue to maintain a smaller fleet because of that. So it is something that we look at. Again, any individual capital purchase certainly we could review, and that's at council's discretion. But again, to say that we're not going to outfit command vehicles to help pay for a portion of this, we have command vehicles coming that would then not be ready for use in the field, which would be a problem. But also, how do we pay for those staff after the $90,000 is gone? It's the question.

Yeah, we worked that out. But yeah, I got you. Thank you so much. Yeah.

Alderman Slagato. Thank you, Chairman. I have a couple questions. They're related to each other. On slide two, if you wouldn't mind going back. The statement there at the end of 2025 general fund balance is $6.6 million under the policy. Yes. Is that under the 20% or 25%? 20%, yes. So currently that's where we're at right now? Yes. So if I were to go to your projections for 2026, you're saying $11.1 million is under?

Correct.

So it would be essentially 17, 18 million?

Correct.

Under our policy?

Correct.

All right. Do we know... Is there a way that we could get... And I do appreciate Frank's... Question about five-year projection. Is there a way that we could maybe get that? Based on assumptions that we may know things change all the time. Sure Based on our trends we've something.

Yeah, we provided a five-year projection with the 2026 budget I would be reluctant to project the next five years based on four months of this year. I You know, I don't feel Great projecting the end of 2026 on only four months. So we would normally update that projection once we have final budget numbers. So when 2027 revenue and expense are calculated, then we project out from that point. So I'd be happy to share the projection we completed for 2026, what that looks like. We can take, you know, 2026 performance year to date and kind of tweak that a little bit and kind of carry those impacts forward. But, yeah, I can share at least a rough estimate with council.

Off the top of your head, do you remember what that 2027 projection was?

I do not off the top of my head, no.

So based on that policy, is that something that would be an audit finding based on

Or just the recommendation that saying hey you guys are under I don't think in the first year It would be a finding it would it would be certainly be if it's not addressed in a timely manner than it would be Thank you, thank you

All right, moving on to resolutions.

Alderman Neal. Alderman Neal, I'm sorry.

I didn't see your hand up.

I understand that there are certain pockets of money that you might be considering to handle this deficit for the coming year. Are you able to send over to us an email with those possible resolutions that you have to handle this deficit? Certainly. Thank you.

All right. Seeing no further questions, we'll move on to resolutions. Number one is an award bid for the South Pierpot Avenue resurfacing to TCI concrete amount of $503,370.43. The contract creation is through October 9, 2026. And the funding source is the Lincolnwood TIF funds. Is there a motion to approve? So moved. Second. Any questions or comments for staff? Seeing none, all those in favor indicate by aye. Opposed? The matter passes. Item two is approval of the Department of HUD grant-funded subrecipient agreement with Rosecrans for an amount not to exceed $193,320. This agreement is from June 1, 2026 through May 31, 2027. The funds will be used to provide eligible clients with housing and supportive services and admin costs. Is there a motion to approve?

So moved.

Second. Any questions or comments for staff? Seeing none, all those in favor indicate by aye. Aye. Opposed? The matter passes. Item three is the approval of a HUD subrecipient agreement with Rosecrans to consolidate an amount not to exceed $1,049,712. The agreement is from May 1, 2026 through April 30, 2027. The funds will be used to provide eligible clients with housing and supportive services and admin costs. Is there a motion to approve?

So moved. Second.

Any questions or comments from staff? Seeing none, all those in favor indicate by. Aye. Opposed? Matter passes. Item four is acceptance of a HUD Continuum of Care Roast Grants Consolidated Grant Award in the amount of $1,074,080. The grant does require a cost match in the amount of $268,520, which will be provided by Roast Grants. The grant term is from May 1, 2026 to April 30, 2027. Is there a motion to accept? So moved.

Second.

Any questions or comments from staff? Seeing none, all those in favor indicate by aye. Aye. Opposed? Matter passes. Item five is acceptance of a HUD Continuum of Care Roast Crants 2003 grant award in the amount of $201,379. The grant does require a cost match in the amount of $50,344.75, which will be provided by Roast Crants. The grant terms from May 1, 2026 to April 30, 2027. So a motion to accept. Any questions or comments for staff? Seeing none, all those in favor indicate by aye. Opposed? The matter passes.

Is there a motion to adjourn? Not yet. We're not there yet, sir. We're not yet, sir.

It'll be later in the meeting, okay? This meeting is adjourned.