Why Is the City Doing This?

According to the staff memo presented by Finance Director Michelle Richter, Chief Frausto cannot participate in either the Freeport Police Pension Fund or IMRF because she already earned pension benefits during more than 25 years with the Chicago Police Department. Instead, the City proposes creating a governmental 401(a) retirement plan administered through Pelion Benefits.

The memo accurately identifies the underlying issue but simplifies the legal requirement.

Illinois law, 40 ILCS 5/3-109.4, requires municipalities to establish a qualified defined contribution retirement plan for certain police officers who are ineligible for the local police pension because of prior participation elsewhere. The statute provides:

"Each municipality shall establish a defined contribution plan..."

The law requires an alternative retirement benefit.

It does not specifically require a 401(a) plan. A governmental 401(a) is simply the option Freeport has chosen to satisfy that legal obligation.

That distinction matters.

What Exactly Is a 401(a)?

Many people have heard of a 401(k).

A governmental 401(a) is different.

A traditional 401(k) or governmental 457(b) generally allows employees to choose how much they contribute.

A 401(a) is largely controlled by the employer.

The employer determines:

• who is eligible,

• how much will be contributed,

• whether contributions are mandatory,

• and what benefits are provided.

The Summary Plan Description adopted by the City specifically states that contributions will be made according to the employee's employment contract rather than a standard formula available to all employees.

That means this is not a retirement plan available to every City employee.

It is a customized retirement arrangement.

Only One Employee Is Eligible

Perhaps the most significant detail appears almost casually in the staff memo.

The Finance Director writes:

"Since the plan will only be offered to one employee..."

That sentence changes the conversation.

City staff is asking Council to establish:

• an entirely new retirement plan,

• new legal documents,

• a new trust,

• a new administrative agreement,

• annual administration,

• and eventual termination procedures—

for a plan expected to serve one individual.

The Summary Plan Description reinforces this by excluding all employees unless they are specifically deemed eligible under an employment agreement.

What Will It Cost?

Staff identifies two direct costs:

• $500 plan setup fee

• $3,500 termination fee

However, those are only the beginning.

The Administrative Service Agreement also includes:

• quarterly participant fees,

• minimum quarterly administrative fees,

• distribution processing fees,

• IRS reporting,

• discrimination testing if required,

• audit support billed at $275 per hour, and

• additional hourly charges for services outside the agreement.

The staff memo highlights only the setup and termination fees.

Taxpayers should recognize that operating any retirement plan carries continuing administrative obligations.

The City Remains Responsible

Another point that deserves attention:

Pelion Benefits is not assuming responsibility for administering the plan.

According to the Administrative Service Agreement:

• the City remains the Plan Administrator;

• the City is responsible for providing accurate information;

• the City assumes responsibility for many legal obligations;

• the City agrees to indemnify Pelion in numerous circumstances.

Likewise, the Resolution itself states:

"The Employer will act as administrator of the Plan and will be responsible for performing all actions necessary to carry out the administration of the Plan."

In other words, adopting the plan does not eliminate City responsibilities—it creates them.

What Would the Chief Receive?

Interestingly, the Resolution does not specify:

• contribution percentage,

• annual contribution amount,

• salary percentage,

• matching formula,

• vesting schedule tied specifically to the Chief,

• or projected taxpayer cost.

Instead, the Summary Plan states contributions will be made according to the employment contract addressing retirement benefits.

That means the financial impact cannot be fully evaluated from Resolution R-2026-87 alone.

Taxpayers should reasonably ask:

• What percentage of salary will be contributed?

• What is the projected annual cost?

• Is the contribution guaranteed every year?

• Can future Councils modify it?

• What happens if the Chief resigns?

Those answers are not contained in the memo presented for Council approval.

Public Opposition

This proposal is not being considered in a vacuum.

During the June 6, 2026 City Council meeting, multiple Freeport residents spoke in opposition to providing this benefit.

Residents questioned whether it was appropriate to establish a special retirement plan for a police chief who has served the City for less than a year.

Several speakers also expressed concern over Chief Frausto's interactions with both elected officials and members of the public, arguing that her conduct had not demonstrated the level of professionalism they believe should warrant additional contractual benefits.

Whether one agrees with those criticisms or not, the public comments made clear that this proposal has become about more than retirement law.

For many residents, it has become a question of trust, leadership, and accountability.

The Policy Question

There are really two separate issues before Council.

The legal issue

Illinois law appears to require an alternative retirement arrangement for police chiefs who cannot participate in traditional municipal pension systems.

That is largely outside the City's control.

The policy issue

The amount of retirement benefit, timing of approval, employment contract provisions, and financial commitment remain entirely within the City's control.

Those are policy choices.

Council members are not simply voting to comply with state law.

They are deciding how Freeport will comply.

Questions Council Should Ask Before Voting

Before approving Resolution R-2026-87, taxpayers deserve answers to several important questions:

• What is the annual employer contribution?

• What will the plan cost over five years?

• Over ten years?

• Is the contribution guaranteed regardless of performance?

• Does the employment contract already require this benefit?

• Could another retirement structure satisfy state law at a lower administrative cost?

• Why establish a permanent retirement plan before the Chief has completed even one year leading the department?

• Should the benefit be conditioned upon continued satisfactory employment?

These are not arguments against complying with Illinois law.

They are questions about responsible stewardship of taxpayer dollars.

The Bottom Line

There is little dispute that Chief Frausto requires an alternative retirement vehicle because of her previous Chicago Police service.

The larger question is whether the City has provided Council—and taxpayers—with enough financial information to evaluate the proposal.

The staff memo focuses primarily on the legal necessity of creating a 401(a) plan.

It says comparatively little about the long-term taxpayer commitment that accompanies that decision.

When public dollars are involved, transparency matters.

Before creating a retirement plan for a single employee, many residents will reasonably expect elected officials to understand not only why the plan is needed, but exactly what it will cost, how it will operate, and whether the terms serve the long-term interests of the City of Freeport.

F4F Chairman's Analysis | Joshua T. Atkinson

We’re having he Wrong Argument!

There has been a tremendous amount of anger surrounding this proposal. Quite honestly, I believe much of that anger has been directed at the wrong issue. Very few people seem to have stopped and looked at what Illinois law actually requires.

Under 40 ILCS 5/3-109.4, municipalities are required to establish a qualified defined contribution retirement plan for certain police officers who are ineligible to participate in the traditional police pension because of prior service. That requirement is not optional. The law says what it says, and no amount of frustration with the Police Chief changes that reality.

That's where this discussion should begin.

The debate should not be about whether Chief Jacquelyn Frausto deserves a retirement plan. It should not be about whether we like her, whether we approve of her leadership style, or whether we believe she has performed well during her first year in Freeport. Those are entirely separate conversations. Like every other employee who is entitled to retirement benefits under Illinois law, the Police Chief is entitled to participate in a lawful retirement program. Period.

Unfortunately, due to this City's failed leadership, the conversation has spiraled into something it never should have become.

The Mayor and the City Manager should have explained this months ago. Imagine how different this discussion might have been if City Hall had simply said, "State law requires us to provide an alternative retirement plan. Here are the legally available options. Here are the costs, the advantages, and the disadvantages of each. Tonight we'd like your input before City Council makes a decision."

Instead, taxpayers were left with the impression that City Hall was attempting to quietly create a special retirement benefit for a brand-new Police Chief without any meaningful explanation or public discussion. That perception was entirely predictable, and more importantly, it was completely avoidable.

None of this means residents are wrong to question Chief Frausto's performance. Many have raised concerns about how she has conducted herself since arriving in Freeport. Others continue to question aspects of her professional history that they believe should have been addressed more openly before she was hired. Those are legitimate discussions for a community to have.

But they are not the discussion we should be having today.

If residents believe the Police Chief's current performance has become unacceptable, accountability begins with her direct supervisor, City Manager Rob Boyer. Managing department heads is one of the most important responsibilities of a city manager. If he cannot effectively supervise those department heads, then City Council has every right—and arguably an obligation—to have an honest conversation about whether he is fulfilling the responsibilities of his own office.

Again, however, none of that determines whether the Police Chief is legally entitled to an alternative retirement plan. She is. The law settles that question.

What remains unsettled is which retirement plan best satisfies the City's legal obligation while also protecting taxpayers. That is where City Council's attention should be focused.

Present every legally compliant option. Explain the long-term costs of each. Discuss the advantages and disadvantages openly with both City Council and the public. Then allow elected officials to make an informed decision based on facts rather than frustration. That is what transparency looks like. That is what accountable government looks like.

Perhaps my biggest concern is how we arrived at this point in the first place.

The City hired a 25-year veteran of the Chicago Police Department to serve as Freeport's Police Chief. During the hiring process, City Hall highlighted her experience, her education, and her credentials. Yet somehow, everyone involved reached the point of employment without having a clearly established retirement package in place.

Really? In what world does that happen.

An experienced executive should know exactly what retirement benefits are being offered before accepting the position. Likewise, the City should know exactly what legal obligations accompany that hiring decision before extending an offer of employment.

This wasn't a problem created by one person. It was created by a hiring process that failed to address an issue that should have been resolved before the ink was ever dry on the employment contract.

The good news is that it can still be fixed.

But it needs to be fixed the right way.

Openly. Honestly. Transparently.

Real leadership isn't forcing a proposal through once public opposition erupts. Real leadership is explaining the law, presenting every available option, fully disclosing the long-term financial impact to taxpayers, and allowing City Council to make an informed decision in the open.

That's the conversation Freeport should have been having all along. I hope it's the one we finally have before a vote is cast.