December 1, 2016
(CHICAGO) In an analysis released today, the Civic Federation announced its support for the Metropolitan Water Reclamation District’s FY2017 Tentative budget of $1.13 billion because the District continues to demonstrate a sensible and proactive approach to meeting its financial challenges. The full 57-page analysis is available here.
As detailed in the report, the FY2017 Tentative budget is 9.0% less than the FY2016 adjusted budget of $1.24 billion, which is due to the variance that often occurs between budget years, reflecting the District’s multi-year capital projects. In FY2017, the District will continue to maintain substantial reserves, a high level of liquidity and other safeguards to cover potential shortfalls without having to resort to short-term borrowing.
“In recent years, and reflected in this budget, the MWRD has proven to be a thoughtful steward of taxpayer dollars,” said Civic Federation President Laurence Msall. “We commend the District for continued implementation of prudent financial management policies aimed at stabilizing the pension fund and ensuring the future financial health of the MWRD.”
Since 2013, the MWRD has contributed more than the actuarially determined contribution to its pension fund in order to make up for shortfalls in previous years. Though the additional contributions have begun to reverse the fund’s downward trajectory, it is still significantly underfunded, which concerns the Civic Federation.
Additional concerns include the MWRD’s reliance on a property tax base that is shared with other local governments, several of which are in fiscal distress and also have high debt and pension burdens. This puts pressure on the property tax base for all of the governments that access the Cook County property tax. The Federation remains concerned about a possible court challenge to the District’s 2012 pension funding reform law and recommends that the District evaluate the possible impact of a reversal of the law and make the findings publicly available.
On top of the aforementioned fiscal safeguards, the analysis includes Federation support for the District’s pre-funding of retiree healthcare costs, its transparent capital planning process, controlled Corporate Fund spending and increased time between the public budget hearing and the Board’s approval.