With North Riverside a week away from a bond rating analysis from Standard and Poor’s, the village’s board of trustees on Oct. 3 unanimously approved a resolution adopting a clear annual funding statement for its police and fire pension funds.
According to Finance Director Sue Scarpiniti, the policy cements the informal policy the village board has followed the past couple of years with regards to its pension obligations. And it ought to help the village obtain a more positive bond rating, she said.
“For the last three years the board has been dedicated to reinforcing its pension funds,” Scarpiniti said. “This will help when we go get our rating from Standard and Poor’s next week.”
In a memo to Trustee Vera Wilt, who is the village’s board’s finance chairwoman, Scarpiniti said it was “essential” for the village to adopt a formal pension funding policy “to enhance our current financial management practices.”
The policy, Scarpiniti said would lay out a plan for funding pensions, provide guidance for budget decisions, demonstrate prudent financial practices, reassure bond ratings agencies and show employees and residents how the village intends to meet its pension obligations.
The passage of the resolution also comes just a couple of weeks before the village intends to sell $2.8 million in bonds to fund a road improvement project throughout the village. Work on the east and south sides of the village is largely complete.
Scarpiniti said the plan is to sell the bond by the third week of October.
In 2014, the ratings service Moody’s downgraded North Riverside’s bond rating to Baa1 and gave the village a negative outlook, in part because of its history of failing to fully fund its pension obligations. The service also instituted a mandatory annual “surveillance review” of the village’s financial practices.
When Moody’s conducted that review in June 2015, it reaffirmed both the Baa1 rating and the negative outlook. Moody’s has not done its surveillance review of the village yet for 2016.
In the meantime, North Riverside officials are asking Standard and Poor’s to rate the village creditworthiness, and they hope measures like the pension funding policy and other steps the village board has taken in the past two years are judged kindly.
At the very least, officials are hoping to get the negative outlook removed from the village’s bond rating. A Baa1 bond rating is considered a medium-grade credit risk.