December 6, 2017
In an analysis released today, the Civic Federation announced its support for the Chicago Park District’s proposed FY2018 operating budget of $462.3 million. The proposed budget reduces the District’s reliance on prior year fund balance, implements savings and efficiencies and reduces the size of the District’s workforce. At the same time, the District plans to increase the level of funding to its pension plan. The full analysis is available here.
As detailed in the report, the Federation supports the District’s efforts to maintain a high level of budgetary reserves and a reasonable increase in the property tax levy given the District’s prior taxing restraint and prudent debt management. Additionally, the Federation supports the District’s efforts to increase the level of detail provided in its budget book and calls on the District to transparently—and in one place within the budget—show how its special recreation levy, which is not subject to property tax caps, is spent on special recreation services and infrastructure alongside other funds from the Corporate Fund.
“The Civic Federation applauds the Park District for continuing to employ financially responsible practices, including ongoing work to improve the sustainability of the pension fund, while meeting its recreation-focused mission through expanded programming,” said Civic Federation President Laurence Msall. “Still, uncertainty surrounding pending pension litigation and its effect on the long-term solvency of the fund remain a cause of concern for the Federation.”
When pension reforms were first implemented by the Chicago Park District in 2014, the District was able to assure beneficiaries and current employees that the fund would not run out of money, as it had been scheduled to do in 2023. However, because part of the reforms were reversed in litigation, the fund is now projected to become insolvent after 2055.
Of additional concern to the Federation is the use of non-recurring revenues to bolster the District’s budget, including $2.0 million of prior year fund balance and $9.2 million in TIF surplus. This is at least the tenth year in a row that the District has used non-recurring revenue sources to close budget shortfalls.
“While the District has made significant strides in reducing, but not eliminating, its reliance on fund balance, there is more work to be done. It is critical that the District achieve a structurally balanced budget given the uncertainty surrounding the pension reforms,” said Msall.
The Federation again recommends that the District study consolidation of its pension fund with the Illinois Municipal Retirement Fund and consider funding pensions at an actuarial level rather than by a multiplier. Additionally, the Federation recommends incorporation of a three-year financial forecast into the District’s budget book.