December 6, 2018
(CHICAGO) In an analysis released today, the Civic Federation announced its support for the Metropolitan Water Reclamation District’s tentative FY2019 budget of $1.09 billion. The full analysis is available here.
As detailed in the report, the District continues to follow a number of financial best practices. These include developing a strong capital improvement plan, publishing a five-year financial forecast, maintaining high general operating reserves, using working cash funds rather than short-term borrowing when awaiting property tax revenue and holding study sessions on the budget and capital improvement plan.
The District is on a proactive plan to fund the MWRD Retirement Fund annually at a level that is projected to reach 100% funding by 2050. The District has contributed an amount above the actuarially determined contribution amount since FY2013. The increased funding from both employees and the MWRD has contributed to a reversal of the downward financial trajectory of the fund and will make retirees’ pension benefits more financially secure and sustainable for taxpayers.
“The MWRD remains a leader in adhering to prudent financial practices,” said Civic Federation President Laurence Msall. “The Federation hopes the MWRD will continue to strive for maximum transparency moving forward.”
While the District’s financial stewardship is commendable, the Civic Federation remains concerned about its reliance on the property tax as a funding source while sharing a tax base with several other Chicago area local governments, many of which will likely increase their levies to address significant pension liabilities in the near future. The MWRD plans to increase both its aggregate levy and its Stormwater Management Fund levy annually for at least the next five years. The Federation encourages the District to develop a plan that details how and when each of its property tax levies will reach a stable point when automatic increases are no longer necessary.
Further, the pension reform litigation experiences of other local governments in Illinois leave open the question of whether the MWRD’s employee contribution increases might be challenged in court. The Federation fully supports the District’s pension funding plan, but urges the District to work with the pension fund to release a public evaluation of the possible impact of a reversal of its reform law as a precautionary measure.
Finally, the Civic Federation recommends that the MWRD incorporate all budget amendments made subsequent to release of the Tentative Budget into a final proposed budget document and allow sufficient time for the final proposal’s review before adoption by the Board of Commissioners.