November 09, 2022
Click here to read the full report.
Click here to read a press release for this analysis.
EXECUTIVE SUMMARY
The Civic Federation supports the Cook County FY2023 Executive Budget Recommendation of $8.75 billion because it reflects strong financial management and puts the County in a good position moving forward post-pandemic. The County’s FY2023 proposed budget includes a strong level of reserves and positive revenue projections, without any increases in taxes or fees.
The FY2023 budget proposal represents an increase in spending of 7.8%, or $634.9 million, from the FY2022 adopted budget of $8.1 billion. The Cook County Health budget for the health and hospitals system makes up almost half of the entire County budget, and has increased by nearly $1 billion in the past five years since FY2019. The majority of that increase is within Managed Care, which reflects an increase in CountyCare membership throughout the pandemic and the associated cost of managed care program medical claims. It also includes expansion of the ICU at Provident Hospital and administrative capacity.
The FY2023 budget contains many positives. In addition to the County’s strong fiscal position following robust revenue performance and built-up reserves, FY2023 will be the eighth year of supplemental payments to the pension fund. These supplemental contributions have significantly improved the funded level of the County pension fund. The County also still has a significant level of American Rescue Plan Act funds left to spend from the $1 billion the County received in 2021. The County further conducts long-term forecasting, which has helped plan for budget gaps over time. Current projections forecast very small budget gaps over the next five years. FY2023 represents the smallest budget deficit under President Preckwinkle’s tenure.
However, the Federation’s analysis also brings forth several concerns. The Illinois Supreme Court has ruled that the County’s transportation-related taxes are constrained by the “Transportation Lockbox” amendment to the Illinois Constitution, which limits how tax revenue generated from transportation-related sources can be used. The elimination of the Wheel Tax, while a small source of revenue, further widens the gap between the cost of providing services in unincorporated areas of the County and the amount of revenue actually generated from those areas. The Civic Federation recommends that the County work to reduce the subsidy provided to unincorporated areas and toward their eventual annexation into neighboring municipalities.
Late property tax bills this year also present a challenge for the County. The Civic Federation commends the County for creating a bridge fund to help local government entities continue to pay for operations while awaiting property tax collections without resorting to short-term borrowing. However, this is an issue that could continue to impact tax bills in future years, and is something the Cook County Board and Board President must ensure is addressed.
The Civic Federation also offers recommendations specific to Cook County Health (CCH). The health system should better reflect the true cost of CCH operations and the resulting subsidy provided by Cook County to the Health Fund by including the cost of pension contributions and debt service in the CCH proposed annual budget. Cook County Health should also justify the expansion of inpatient services at Provident Hospital regarding the utilization of emergency room, ICU and inpatient services. The Federation calls for more articulation of how these services correspond to the CCH Strategic Plan and long-term vision for Provident Hospital.
The Civic Federation presents the following key findings from the Cook County FY2023 proposed budget:
- Appropriations: The County’s Executive Budget Recommendation proposes total spending of $8.7 billion in FY2023, which represents an increase of 7.8%, or $634.9 million, from the FY2022 adopted budget of $8.1 billion.
- General Fund appropriations, which account for public safety and administrative County functions, are proposed to be nearly $2 billion, an increase of 1.9% from the prior year budget.
- Cook County Health appropriations of $4 billion represent an increase of $128.4 million, or 3.3%, from the FY2022 appropriation of $3.9 billion. The increase reflects growth in managed care expenses associated with CountyCare membership levels, which remain higher than budgeted, as well as the expansion of new programs and administrative capacity.
- Property Tax Levy: Cook County proposes a total property tax levy of $783.1 million in FY2023, which is an increase of $3.3 million, or 0.4%, compared to $779.8 million in FY2022. The County will continue to hold its base property tax level flat at $720.5 million as it has done since 2001, but will generate an additional $77 million from expiring TIF districts, new property and expiring incentives. The County will provide a property tax allocation of $147 million to Cook County Health, which is an increase of $10 million from the prior year.
- Personnel: The County proposes a total of 23,153.5 full-time equivalent (FTE) positions budgeted for FY2023 in the operating funds (excluding grant funds). This is an increase of 494.6 positions, or 2.2%, from the adopted FY2022 budget. Large portions of this increase will take place within Cook County Health and the Offices Under the President as positions that were previously grant funded are moved to the operating budget. The personnel count also accounts for positions needed to implement the SAFE-T Act within the public safety offices.
- Pension Fund: The proposed budget includes a total pension fund contribution of $512.1 million in FY2022, which includes a statutorily required contribution of $200.4, a supplemental contribution of $291.7 million, and another $20.0 million allocated to the pension reserve. The County has made supplemental contributions to the pension fund since FY2016, which have helped improve the funded status of the fund to 67.2% funded on an actuarial basis as of FY2021, compared to 53.5% funded in FY2012.
- Debt: Cook County’s general obligation debt totaled $3.2 billion as of FY2021, down from $3.5 billion five years prior. The County’s debt service appropriations make up less than 3% of total expenditures, which signifies a low bonded debt burden.
The Civic Federation supports the following elements of the Cook County FY2023 proposed budget and the County’s financial position:
- Use of excess reserves;
- Smallest budget gap of the current administration;
- Holding the line on tax increases;
- Providing assistance to local taxing jurisdictions in response to late property tax bills;
- Supplemental pension contributions continue to rebuild the pension fund;
- Independent Revenue Forecasting Commission’s work on the Cook County Health chart of accounts; and
- Cook County Health Board of Directors meetings are now livestreamed and videos are archived online.
The Civic Federation has concerns about the following issues:
- Transportation tax revenue constraints;
- Unincorporated area funding subsidy;
- Property tax bill delays;
- Expansion of the emergency room and inpatient services at Provident Hospital with no public discussion; and
- Personnel and hiring challenges.
The Civic Federation offers the following recommendations to Cook County:
- Create a unified property tax administration office;
- Address the subsidy provided to cover the cost of services in unincorporated areas;
- Include the full cost of the County subsidy to Cook County Health in the CCH proposed budget;
- Increase public discussion and transparency about the direction for Provident Hospital;
- Obtain statutory authority for supplemental pension contributions; and
- Enact a multi-year intergovernmental agreement with the pension fund for supplemental pension contributions.
Click here to read the full report.
Click here to read a press release for this analysis.