Marengo Has Poured a Decade Into Its Police Pension. It Has Barely Moved.

This spring, with little fanfare, the City of Marengo walked back a promise.

In 2023, by the city's own account, the council had pledged the pension board an extra $150,000 a year, on top of what the law requires, to chip away at the hole in the city's police pension fund. The pledge always carried a caveat, "as funds allow," and at the March 23 meeting staff invoked it. "Due to a significant reduction in use tax revenue," the budget report presented that night told the council, the city "is no longer able to fulfill the additional $150,000 verbal commitment made two years ago." Staff had informed the pension board, the report added, and would keep watching for room to pay extra "as funds allow." No alderman is recorded asking a question about it, and five weeks later the council adopted the budget without the payment, 8 to 0.

It is three sentences in a budget presentation. It is also one of the clearest recent signs of a problem that has shaped Marengo's budget for a generation: the police pension fund, and the slow, expensive job of digging out of years of underfunding.

Here is the number that tells the story. In 2014, the city's administrator told the council the fund was about 45% funded. Ten years later, six of them with the city paying at least the state-required minimum, the fund's annual report to the council put the figure at 45.05%.

A decade of payments. The number had barely moved.

Asked to confirm the current figures for this story, Megan Lopez, the city's finance director, provided fresher numbers in July 2026, along with the May 2026 actuarial valuation they come from, a draft that becomes final once the annual audit is complete: about $9.9 million in assets against $19.3 million in promised benefits, a funded ratio of just over 51%. Measured at raw market value instead of the smoothed figure actuaries prefer, the assets are about $11 million and the ratio about 57%.

Marengo Police Pension, by the Numbers

Measure	Figure
Fund assets (smoothed)	$9.9M (51% funded)
Fund assets (market value)	$11.0M (57% funded)
Promised benefits	$19.3M
This year's minimum payment	$847,455
Actuary's recommended payment	$1,506,855
Active officers vs. retirees and beneficiaries	11 vs. 17

Source: the city's draft May 2026 Lauterbach & Amen actuarial valuation, pending audit.

The climb since has been real, six points in two years. But it owes more to one very good year in the markets than to the city's payments, which did run above the minimum in both years: the fund's investments returned just over 22% in the year ending April 2026 alone. After a generation of catch-up, the fund is barely half full.

That is not because the city has gone cheap lately. It is because the target keeps moving. The amount Marengo owes its retired and active officers grows faster than the payments do, and part of that growth is built in: for officers hired before 2011, state law raises pension checks 3% a year, compounded. Even full minimum payments mostly run in place. Lopez, in written answers, listed the reasons plainly: "Years of underfunding, investment returns fluctuate during that period, our demographics and obligations continue to grow, assumptions continue to change."

How the Hole Got Dug

For roughly two decades ending in 2018-19, Marengo paid into the pension at less than the law required. Then-Mayor John Koziol marked the turn at a May 2019 council meeting, telling the council, as the minutes summarize it, that it was the first year since 2000 the city had met the funding level the state requires. A staff memo prepared for a July 2024 pension presentation, delivered alongside actuaries from Foster & Foster, a firm the city brought in to model the fund, put the early years bluntly: two decades ago the city owed about $161,000 a year and paid about $74,000, roughly 46 cents on the dollar.

The shortfall was not hidden. An officer or the finance director brought a pension report to the council nearly every year, and nearly every year the council accepted it and then set a property tax levy that came up short of the full bill. November 2017 is the plainest example in the minutes. The pension board's report that year put the statutory minimum at $502,034. Staff laid out a levy that would send the fund $450,647, telling the council that even so it would still be "$51,387 short of the statutory requirement." The council adopted the levy that night. Every one of those levies was also set under a state cap that limits how much the total can grow each year, so covering the full pension bill would have meant cutting something else. In 2007 the city promised the pension board it would raise contributions at least 10% a year, and contributions did climb steeply from there. The bill climbed faster. It still took until 2018-19, the first budget written under a new administration, to fund the full minimum, and only then by transferring extra money from the general fund on top of the dedicated pension tax.

What It Costs You

The city's slice of a Marengo property tax bill is about 12.6% of the total. Nearly half of that slice, 5.8% of the whole bill, goes straight to the police pension fund.

The squeeze shows up another way too. In 2021, staff told the council that over the previous ten years the city had put almost 110% of all the new money from property-tax increases into the pension fund. In plain terms: every extra dollar homeowners paid through rising levies, and then a little more, went to the pension. Any single year's step was small; staff put the cost of that year's 5% levy increase at about $28 for the owner of a $150,000 home. The rest of the city budget got nothing out of that growth.

Lopez said she was not sure about the exact figure, but confirmed the practice for the years she has run the city's books: "Throughout my tenure as the Finance Director all new net property tax revenue generated by the annual levy was directed to the Police Pension and the remaining line items essentially stayed flat." In answer to another question, she wrote that city operations and staffing levels "have remained flat as well because of budget constraints."

City Administrator Derik Morefield, asked what the pension cost forces the city not to do, drew a distinction first: "it's not so much the police pension itself," he wrote, as the bill for years of deferred payments the city is now making up. That catch-up has meant diverting money from operations and capital, and he was specific about where it lands: limited staffing, and "most importantly, an inability to meet capital asset needs," the replacement of vehicles, equipment and technology. Asked whether a budget that keeps staffing "at the bare minimum" and operating expenses "essentially flat," as a November 2025 staff memo put it, is sustainable, and for how long, his written answer opened with one word: "No." Costs keep rising, he wrote, and holding staffing down has meant assigning the work of multiple positions to single employees. "This results in employee burnout and, in the worst case scenario, an inability to meet the needs of residents."

The City's Answer

Lopez answered written questions for this story on July 16. Morefield answered a companion set, focused on the tradeoffs and the path forward, on July 24, copying Lopez on his replies in case, he wrote, he was "providing incorrect or incomplete information."

On the years of short levies, Lopez pointed to the state's tax cap and to the council. Marengo is subject to the Property Tax Extension Limitation Law, which limits how much the city's total property tax take can grow each year, so every added pension dollar competes with everything else the levy pays for. Beyond that: "The City Council makes the final decision on the tax levy. As with any elected body, decisions to increase taxes are never easy and generally not popular."

As for what finally changed, Lopez pointed to Springfield: "In 2019, the pension law changed, stating that municipalities were required to meet the statutory minimum and if we didn't the pension boards could intercept our state shared revenues." The intercept power she describes was in fact older, enacted in 2011 and enforceable from 2016; the 2019 change was a separate, statewide consolidation of the pension funds. The city's turn also came a year ahead of the date she cites, with the March 2018 budget. Asked about that gap, Lopez gave two reasons: "Mayor Koziol ran on pension funding and also municipalities were made aware that this change might be coming." The timeline fits. Koziol won the mayor's office in 2017, and the March 2018 budget was the first his administration wrote, the same budget that funded the full minimum for the first time in two decades.

Morefield did not condemn the councils that produced the short years, and cautioned against condemning them. Asked what a homeowner should make of the pension line on a rising tax bill, he called it "a financial commitment as a result of a mandate," and part of "being honest about the fact that we need to commit additional funds as a result of not meeting minimum payments in the past." About the choices behind that past: "We don't know the financial situation facing the city at the time that those decisions were made," he wrote; there may have been legitimate reasons "that we aren't aware of today." His conclusion: "In other words, they may not be out of negligence." And in his view, assigning blame gets the city nowhere either way: "We can point the finger but that doesn't solve the problem." Asked whether there is anything the city wishes it had done differently, he wrote: "Yes. Meet the minimum payments and stay on track so that we wouldn't be in this make up situation today."

The Bill Is Not Done Climbing

The minimum payment for the next budget cycle is $847,455. The July 2024 presentation by staff and the Foster & Foster actuaries projected that number reaching about $1.13 million by 2030 and peaking near $1.7 million around 2039, roughly double what the city pays now.

The newest valuation does not update that long-range path, and this year's minimum actually came in a little lower than last year's after the strong investment year. But the pressure underneath it is not speculative: the May 2026 valuation expects the fund's benefit payments to grow 45% to 50% over the next ten years as more officers retire onto the rolls. The rolls have already tipped: seventeen former officers and their beneficiaries are owed benefits from the fund, against eleven active officers paying in, a balance that stood at exactly twelve and twelve as recently as 2020. The checks going out already exceed what the fund's investments are expected to earn in an average year, a condition the valuation flags as cash-flow risk. In plain terms, part of what the city pays in each year goes straight back out the door to retirees instead of compounding. And the minimum is itself the smaller number. The fund's actuary recommends $1,506,855 for the coming cycle, which is $659,400 more than the law requires, a gap Lopez confirmed. Asked what the realistic plan is to cover the climb, whether new commercial growth, higher levies, staffing decisions, or investment returns, her written answer: "A mix." Morefield's answer to the same question was development: new growth, "residential, commercial, industrial," that adds to the tax base. That is why he called completing the Route 23 utility extension, water and sewer mains the city is building out in phases toward the Interstate 90 interchange, with more than $13 million in construction contracts awarded so far, "so vital to provide the canvas for future development." Beyond that, he wrote, it is "difficult to assign an honest number" that addresses all of the issues.

The fund's actuary is blunt about what paying the minimum instead of the recommendation means. In the valuation presented to the council in November 2025, Lauterbach & Amen writes that the statutory amount "is not recommended because it represents only a deferral of contributions," that an employer relying on it "should view the contributions as short-term relief," and, borrowing a phrase the Securities and Exchange Commission used in 2013 for arrangements like this, calls the approach "Statutory Underfunding": payments that look manageable now and set up payments later that may not be. The firm's standing advice is to move to a real long-term funding strategy within three to five years. The same warning appears, nearly word for word, in the May 2026 valuation the city provided for this story. It has been in front of the council since at least last November, and it is in the current report too. The deferral is not just a warning label, either. In the new valuation, contributions coming in below the recommended level added roughly $395,000 to the unfunded liability this year, though the strong investment year offset much of that in the books.

State law requires the fund to be 90% funded by 2040. In the July 2024 presentation, staff told the council they did not believe the escalating payments it demands would be reachable without significant new growth or revenue arriving soon. Asked about the target now, Lopez said projections show the fund exceeding 90% by 2040 on the statutory minimum alone. That is true by design: the statutory minimum is recalculated every year precisely so that it lands on 90% by 2040. Paying it means hitting the target by definition. The open question was never the math. It is whether the city can keep affording the payments the math demands. Asked to confirm that reading, Lopez answered in writing: yes.

There is also a stick. The fund is run by its own pension board, a separate public body that formally asks the council for the full recommended amount each November, and if a city falls too far behind on the required minimum, the board can certify the shortfall to the Illinois Comptroller, who then intercepts the city's share of state revenue and sends it to the fund instead. That is not a hypothetical: Harvey and North Chicago both had state revenue intercepted after falling behind. Lopez said Marengo has never been close.

Marengo is not unusual in this. Illinois has roughly 650 local police and fire pension funds, most of them underfunded, squeezing town budgets across the state. And in fairness, the city has funded at least the legal minimum every year since 2018-19, which is exactly what keeps the Comptroller away.

But funding the minimum is not the same as catching up. The $150,000 the city dropped this spring was the catching-up part, and the fund's own books show it was real money while it lasted. The city paid exactly $150,000 over the statutory minimum in both the 2024-25 and 2025-26 budget years, according to the contribution figures in the valuations, a figure Lopez confirmed for this story. What ended it, per the budget report and confirmed by Lopez for this story, was a drop in the city's share of the state use tax, a tax Illinois collects on out-of-state and online purchases and shares with local governments. Morefield described the ambition as unchanged; the goal of staff, he wrote, "is always to include the increased payments in the annual budget to play catch up." Lopez framed those extra payments as acceleration rather than necessity: paying more now draws down the unfunded liability, makes the yearly bill "more affordable," and frees up general fund money "to be used elsewhere." It is also a plain description of what was given up. The budget the council adopted in April carries $877,977 for the coming year, about $130,000 less than the city actually paid last year, and the newly recalculated legal minimum is lower still, at $847,455. The extra $150,000 was never large enough to solve the pension problem by itself. It was an attempt to shorten a decades-long catch-up. What is left is a fund barely half full, and a bill that roughly doubles from here.