November 17, 2015
Reasonable Plan for Next Year, but Underfunded Pensions Remain a Concern
In an analysis released today, the Civic Federation announced it supports the Forest Preserve District of Cook County’s proposed FY2016 budget of $190.3 million. The District proposes a reasonable, balanced budget without using fund balance reserves for operations while holding the District property tax levy relatively flat. The full 57-page analysis is available here.
“The Civic Federation is pleased to see the Forest Preserve District hold the line on general tax increases at a time when many other local governments have sought large revenue enhancements,” said Laurence Msall, president of the Civic Federation. “However, the respite for taxpayers will likely be short-lived as the District’s severely underfunded pension fund will require an infusion of revenue, even if the proposed reform package contained in Illinois Senate Bill 843 is passed and survives court challenges.”
In the budget document, the District states its intention to deliver a long-term plan to President Preckwinkle and District Commissioners as to how it will afford its pension obligations under SB 843. This is a praiseworthy objective, but the District should also produce a contingency plan for what it will do in the absence of pension reform in order to prevent the Forest Preserve District pension fund from becoming totally insolvent within the next 20 years under the current State-mandated funding plan. The pension plan’s actuarial funded ratio has decreased to 60.2% in FY2014 from 86.9% in FY2005.
In a positive contrast to past budget years, in FY2016 the District will only tap excess Corporate Fund reserves to finance capital projects and for land acquisition, which are best-practice uses of such one-time revenue resources. Even after using $8.2 million in fund balance, the District will retain a significant fund balance ratio well in excess of the GFOA-recommended level of two months’ worth of expenditures or revenues. In addition, the budget does not contain any fee increases, and instead mostly relies on increased revenue from licenses, camping fees and permit revenue to cover increased personnel costs.
The Civic Federation’s full analysis also continues the call for an independent and separate Board of Commissioners for the Forest Preserve District. The current board structure has the Cook County Commissioners governing both Cook County and the Forest Preserve District which results in an unavoidable conflict of interest between the County’s mission and that of the Forest Preserve. In the past, this conflict has resulted in land use policy violations, poor oversight of District land holdings and inadequate transparency of District finances. On June 8, 2015, Moody’s downgraded the District’s general obligation debt to A2 from A1 and cited the current structure as one of its concerns.