ROCK ISLAND — The county will have to borrow internally to make up at least a half-million dollar shortfall in its pension fund.
County board members on Wednesday learned during the committee of the whole meeting that the county's Illinois Municipal Retirement Fund (IMRF) is short by $500,000 and money from the working cash fund will be used to make up the difference.
Rock Island County Auditor April Palmer said the loan is necessary in order to make timely pension payments.
"That's what I was telling you guys a few months ago that I was considerably worried about," Palmer said. "We shortfalled this fund quite a bit in the property tax cycle of 2017, collectible in 2018. We wanted to stick to the promise we made to the public in keeping the property tax levies below 5% that year. When we did the budget, it took a (hit) on this particular fund."
Palmer attributed part of the shortfall to the rate of return on investments being reduced from 7.5% to 7.25% last year. She expects the amount to be made up when property taxes are paid to the county in mid to late June.
County board members approved a tax increase of 11% to the county's portion of property taxes in its 2019 budget.
"We did foresee this happening, and we suggested to (board members) an increase in the property tax levy this cycle that will be sufficient for that shortfall," Palmer said.
However, Palmer said things will get worse without another tax increase.
"I want to make you aware that the 2019 and 2020 IMRF rates are extreme," Palmer said. "We are going to suffer approximately a 20% increase in this fund alone, which is more than $1 million property tax levy increase that will have to be done or we will fall drastically shorter."
Rock Island County Administrator Jim Snider told board members the county is mandated by the state to pay annual contributions, 75% of which is based on stock market performance.
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"It's an annual rate; every spring we get an estimated rate for the next year," Snider said. "We got the rate last week and those numbers show a 20% increase we'll have to pay as the employer's portion. It really surprised me. It's going to be a challenge if it continues at this current level of lending."
Deputy Auditor Amanda Van Daele said there are currently three county funds with outstanding loans; IMRF, the general fund and the Hope Creek Care Center fund.
Van Daele said the general fund has a tax anticipation warrant in place to borrow from as needed during dormant months when no property taxes are received.
Hope Creek, the county-owned nursing home, borrowed $350,000 from the county's liability fund to cover expenses in March.
"Hope Creek owes for 2019 and 2018 — they never paid last year," Van Daele said.
Snider said Monday that the facility is now $5.3 million in debt.
Rock Island County Treasurer Louisa Ewert was in Springfield to attend a conference but issued a summary report to board members in which she stated she is trying to save credit in anticipation of borrowing money to make bond interest payments for Hope Creek.
The first payment of $206,637 is due June 1, and the second payment of $1.3 million is due Dec. 1.
"If an emergency should arise and I have to borrow, then a full December bond payment may be in jeopardy," Ewert said.