Island Lake's police pension fund was underfunded by nearly $389,000 between 2010 and earlier this year, a newly completed audit shows.
According to the report from George Roach Associates, a Crystal Lake firm hired to examine the village's books, the village received $513,316 in tax funds for the police pension fund between the 2010 and 2013 fiscal years. But of that sum, only $142,777 was paid into the fund, an estimated 27 percent.
The biggest discrepancy occurred in the 2011 fiscal year. The village collected $178,005 in taxes for the fund but didn't put a penny into the account, according to the auditor.
"As a result, the village owes the police pension a substantial amount of money, which is not currently available in the general fund of the village," a Nov. 8 memo from George Roach to village officials reads. "This presents in our opinion a significant material weakness on the part of the village."
In an interview before Thursday's village board meeting, Mayor Charles Amrich said he and the trustees will make the pension fund whole.
"We don't have a lot of extra dollars, but somehow we're going to figure out a way to pay that money back," Amrich said. "It may take us a little while, but we're going to make it right."
The problem was discovered by George Roach Associates after the firm was hired to audit the books for the 2013 fiscal year, which ended April 30.
Concerns about the villages finances and legal bills that totaled hundreds of thousands of dollars in recent years prompted the inquiry, Amrich said.
"We knew monies had to be coming from somewhere to pay the exorbitant legal bills from last year," Amrich told the Daily Herald. "But we didn't know where it was coming from."
The issue became public in late October, following media reports.
The missing payments occurred during Debbie Herrmann's time as mayor. She lost to Amrich this past spring.
A Warrenville firm called Lauterbach & Amen was the auditor during Herrmann's tenure.
When contacted by the Daily Herald about the auditor's findings, Herrmann said she didn't know there was a problem while she was mayor.
"We're audited every six months. If it was an issue, why hadn't it been brought to our attention by the prior auditor?" Herrmann said,
Herrmann said no one on the police pension board ever told her or other village officials about the shortfall. If someone knew there was a problem with pension funding but didn't report it, "then shame on them," Herrmann said.
According to the audit, payments to the pension fund started flowing properly in the current fiscal year.
All tax money collected by the village for the pension fund has been transferred to the account, the auditor wrote.
Island Lake's shortfall isn't unusual. Many suburban pension programs haven't been fully funded as costs have risen.
Much of the problem came from municipal officials planning for large investment returns during years when little to no investment income was seen, a 2012 Daily Herald analysis showed.
In some cases, that's led to higher tax bills and reduced municipal services, the analysis showed.