Where Marengo's Police Pension Stands, and Why the Gap Is So Hard to Close

Marengo has set aside about 47 cents for every dollar it owes in police pension benefits. That is better than it was three years ago, when the figure was 37 cents. But it still leaves an $11.5 million gap between what has been saved and what has been promised to retired and active officers. ¹ For context, pension professionals generally consider 80% funded to be healthy.

The trend is moving in the right direction, and meaningfully so. The fund was 36.8% funded in fiscal year 2023. ² It improved to 40.5% in 2024. ³ It reached 45% in 2025 and 47.3% by the latest valuation. That is 10 percentage points of improvement in three years, driven by contributions that have consistently exceeded the statutory minimum. At this pace, the fund could reach the 60% mark within five to six years, though the remaining gap is still $11.5 million. ³

The Marengo Pension Fund is 47.30% funded, up from 45.03% last year.

Police Pension Annual Report, November 10, 2025

Lauterbach & Amen actuarial reports, GW & Associates annual audits

How did it get here? Underfunded police pensions are not unique to Marengo. Across Illinois, the average downstate police pension fund is roughly 55% funded, according to the Illinois Department of Insurance. The problem is structural: unlike most states, Illinois requires individual municipalities to fund their own local police pensions, primarily through property taxes. For decades, many communities contributed only the statutory minimum, which was set below what actuaries recommended. Investment losses during the 2008 financial crisis compounded the shortfall. The result is a statewide pension gap measured in billions, with small towns like Marengo bearing a disproportionate share relative to their tax base.

In 2023, Marengo made a verbal commitment to contribute an extra $150,000 per year from the General Fund, above the statutory minimum, to draw down the unfunded liability faster. ⁴ That commitment lasted two years. The FY26/27 budget, presented to the council on March 23, does not include it. The reason is a steep decline in Use Tax revenue, a tax Illinois collects on purchases from out-of-state sellers (including online retailers) and distributes to municipalities. Over three fiscal years, Marengo's Use Tax collections fell by approximately $260,000, eliminating the revenue that had supported the voluntary contribution. ⁵

The pension now consumes the largest single share of Marengo's property tax levy. In fiscal year 2024, the police pension allocation was $639,760, representing 33.5% of the city's total property tax extensions. ³ For context, the entire General Fund allocation was 25%. This is a common pattern in small Illinois municipalities, where pension obligations often exceed general operating costs.

The Pension Board requested $1,486,077 for the coming year, the full actuarially determined contribution to keep the fund on a path to solvency. ¹ The statutory minimum is $877,977. The city plans to budget roughly $1 million, above the legal floor but below the full request. The city has exceeded the minimum every year in recent memory, a point staff has emphasized in budget presentations.

To put the scale in perspective: Marengo has 28 people in its police pension system (14 active officers, 13 retirees or beneficiaries, and one inactive vested member). ³ The unfunded liability works out to roughly $411,000 per member.

One enforcement mechanism adds urgency. The Illinois Comptroller now has authority to withhold state-shared revenues from municipalities that fail to meet their required pension contributions. ⁴ Marengo has met that minimum consistently, but the gap between the minimum and the actuarially recommended amount means the fund reaches full solvency more slowly.

The city's total property tax levy for 2025 was $2,084,744, a 4.99% increase. ⁶ On a $150,000 home, the city's share of the increase works out to roughly $15 to $16 per year. The pension is the primary driver. For context, the city accounts for only 12.6% of the total property tax bill; school districts take the largest share at over 59%.

The path to closing the $11.5 million gap will likely take years of sustained contributions above the minimum. Illinois law guarantees that pension obligations will be paid. The council's next budget decision, expected in April, will determine how much the city contributes this year.