Resolution 2015-06 Resolution No.2015-
A RESOLUTION OF THE UNITED CITY OF YORKVILLE, ILLINOIS
APPROVING A PENSION FUNDING POLICY
Whereas,the United City of Yorkville (the"City") is a duly organized and
validly existing non home-rule municipality created in accordance with the Constitution
of the State of Illinois of 1970 and the laws of the State; and,
Whereas, the City desires to adopt a pension funding policy to determine its long-
term costs of such benefits and define the City's actuarial determined contribution for
such benefits; and,
Whereas,the objectives of said policy include funding based on actuarially
determined contributions, ensuring that future benefits can be paid,maintaining
intergenerational equity, making funding a percentage of payroll and providing for clear
reporting of how sufficient assets will be available to pay for such future benefits.
NOW, THEREFORE, BE IT RESOLVED, by the Mayor and City Council of
the United City of Yorkville, Kendall County, Illinois, as follows:
Section 1: That the UNITED CITY OF YORKVILLE PENSION FUNDING
POLICY, dated April 28, 2015, attached hereto and made a part hereof by reference as
Exhibit A, is hereby adopted to determine the actuarial determined contribution for the
City's Police Pension Fund and contribution to the Illinois Municipal Retirement Fund.
Section 2: This Resolution shall be in full force and effect upon its passage and
approval as provided by law.
Passed by the City Council of the United City of Yorkville, Kendall County, Illinois
this day of 2015.
CITY CLERK
CARLO COLOSIMO KEN KOCH
JACKIE MILSCHEWSKI LARRY KOT
CHRIS FUNKHOUSER JOEL FRIEDERS
ROSE ANN SPEARS DIANE TEELING
Resolution No.2015-O10
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Approved by me, as Mayor of the United City of Yorkville, Kendall County,
Illinois,this 41 day of MA y 2015.
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Resolution No.2015- Olo
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UNITED CITY OF YORKVILLE
PENSION FUNDING POLICY
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I. INTRODUCTION
The purpose of this policy statement is to define the manner in which the United City of
Yorkville funds the long-term cost of benefits promised to plan participants and defines the
calculation of Yorkville's "actuarial determined contribution" (ADC) to the Yorkville Police
Pension and Illinois Municipal Retirement Funds.
II. SCOPE
This Pension Funding Policy applies to the pension funds in which employees of the United City
of Yorkville are enrolled. The specific funds covered by this policy include:
A. Yorkville Police Pension Fund
B. Illinois Municipal Retirement Fund(IMRF)
III. OBJECTIVES
A. Actuarially Determined Contributions - Ensure pension funding plans are based on
actuarially determined contributions (ADC) that incorporates both the cost of current
benefits and the amortization of the plan's unfunded actuarial accrued liability.
B. Funding Discipline - Build funding discipline into the policy to remit timely contributions
to the pension funds to ensure that sufficient assets will be available to pay benefits as
promised.
C. Intemenerational Equity - Maintain intergenerational equity so that the cost of benefits is
paid by the generation of taxpayers who receive services from pension participants.
D. Contributions as a Stable Percentage of Payroll - Contributions should be managed so
that employer costs remain consistent as a percentage of payroll over time.
E. Accountability and Transparency—Clear reporting of pension funding should include an
assessment of whether, how and when the City will ensure sufficient assets will be available
to pay benefits as promised.
IV. ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the pension funding process shall refrain from personal
business activity that could conflict with the proper execution and management of the pension
funding program,or that could impair their ability to make impartial decisions.
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UNITED CITY OF YORKVILLE
PENSION FUNDING POLICY
V. ACTUARIAL DETERMINED CONTRIBUTION(ADC)
YORKVILLE POLICE PENSION FUND
The United City of Yorkville will determine its Actuarial Determined Contribution(ADC)for the
Yorkville Police Pension Fund 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:
1. The investment rate of return assumption will be 7.00%per year.
2. The salary increase assumption will be 5.00%per year.
3. Non-economic assumptions, such as rates of separation, disability, retirement,
mortality, etc., shall be determined by City management in consultation with the
actuary to reflect current experience.
D. The difference between the accrued liability and actuarial value of assets will be
amortized to achieve 100%funding in 2040(a 30 year closed period that began in 2011)
based upon a level percentage of payroll.
E. Actuarial assets will be determined using market valuation.
The City will make its actuarially determined contribution to the Yorkville Police Pension Fund
in monthly installments each year,based on the amount received per the property tax levy each
month.
ILLINOIS MUNICIPAL RETIREMENT FUND(IMRF)
As required by State Statute, the City will, at minimum, fund the Illinois Municipal Retirement
Fund(IMRF) in the amounts determined by IMRF. The City does not obtain a separate actuarial
report for IMRF and instead relies on the information provided by INW. IMRF costs are
allocated to each department's budget activities in which the related salary expenditures are
recorded. The majority of IMRF costs are funded by the City's property tax levy. Other City
funds (ex. Water, Sewer and Parks &Recreation) pay their IMRF costs from revenues dedicated
to those funds.
Both employer and employee contributions to IMRF will occur on a monthly basis in accordance
with statutory requirements.
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UNITED CITY OF YORKVILLE
PENSION FUNDING POLICY
VI. REPORTING
Funding of the Yorkville's Police Pension and IMRF funds shall be transparent to vested parties
including plan participants, annuitants,the Yorkville Police Pension Board,the City Council and
Yorkville residents. To achieve this transparency,the following information shall be distributed:
A. A copy of the annual actuarial valuation for all funds shall be made available to the City
Council and the Yorkville Police Pension Board.
B. The City's annual adopted budget shall include the City's contribution to the Yorkville
Police Pension and IMRF Funds.
VII. The City's Comprehensive Annual Financial Report (CAFR) shall be published on its website.
This report shall include information on the City's annual pension contributions and the funding
status of the Yorkville Police Pension and IMRF Funds as directed by the Governmental
Accounting Standards Board(GASB).
VIII. FUTURE AMENDMENTS
Funding a defined benefit pension plan requires a long term horizon. Assumptions and inputs
into the policy 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 non-economic inputs have fundamentally changed or are no longer
reasonable. If, in the opinion of the City's Finance Director or Treasurer, conditions change to
such an extent so as to alter the effectiveness of this policy statement, such changed
circumstances shall be brought to the attention of the City Council for their consideration and
review.
IX. EFFECTIVE DATE
This policy shall be effective on April 28,2015 upon approval by the City Council.
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