July 31, 2020
In a proposal to stabilize underfunded pensions for Forest Preserve District of Cook County employees and retirees, the Forest Preserves’ Conservation and Policy Council has appealed to the Cook County Board of Commissioners to add the Forest Preserves’ pension fund to an existing intergovernmental agreement (IGA) the County has with the Cook County Pension Fund. Cook County’s IGA allows the County to contribute an amount above the statutorily required contribution to the Cook County Pension Fund, funded through an increase in the County’s sales tax in 2016. This supplemental contribution has helped reverse the downward trajectory of the Cook County Pension Fund.
Cook County is required by State statute to make an annual employer contribution to the pension fund equivalent to 1.54 times the total employee contribution made two years earlier, which is funded through property tax and personal property replacement tax (PPRT) revenue. In 2019 this required contribution was $206 million. If the County only made the statutory multiplier contribution going forward, the Pension Fund estimates it would run out of money by 2043. In 2016, Cook County entered into an IGA with the County Pension Fund to provide supplemental contributions to the fund, which must be renewed annually. The supplemental contribution was $320 million in 2019. In FY2019 the Fund was 61.2% funded, up from 55.4% in FY2015 and the Cook County Pension Fund expects the Fund to be fully funded by 2047 with continued supplemental payments.
The Forest Preserve District of Cook County, a sister agency of Cook County that shares the same Board of Commissioners, has long been grappling with the need for additional funding for its pension fund, capital needs and long-term conservation plan. The Forest Preserve District’s FY2020 operating budget of $124.6 million is 80% funded by property taxes, which for the District are limited to annual increase of the inflation rate or 5%, whichever is less, and the District has limited options for generating additional revenue. In comparison, as a home rule government, Cook County has more options for generating revenue through many types of taxes. The Forest Preserve District does not have an IGA with its Pension Fund for supplemental pension funding.
The Forest Preserve District is required by State statute to make an annual employer contribution to its pension fund equivalent to 1.30 times the total employee contribution made two years earlier. In 2019 this required contribution was approximately $4 million. Based on this annual contribution, the pension fund is estimated to run out of money by 2042, from its FY2019 position of 59.3% funded and FY2008 position of 82.5% funded. The District needs to contribute an additional $9 million annually to its pension fund over the next 30 years in order to pay down the pension deficit, for a total of $13 million annually.
In a letter sent to the Cook County Board President Preckwinkle and the Cook County Board of Commissioners on July 6, the Forest Preserve District’s Conservation and Policy Council requested that the County Board incorporate the Forest Preserves’ Pension Fund into the County’s intergovernmental agreement with the Cook County Pension Fund. The Conservation and Policy Council was created in 2015 to oversee and implement the District’s Next Century Conservation Plan (NCCP), which is a 25-year plan that identifies the long-term strategic goals and priorities of the District. Mark Templeton, Vice Chair of the Conservation and Policy Council, made the same appeal to the Cook County Board of Commissioners at a July 28 meeting of the Cook County Pension Committee. According to the Policy Council, including the Forest Preserves in the IGA should authorize supplemental annual payments to the Forest Preserves Pension Fund in addition to the Cook County Pension Fund, thereby reaching the needed annual $13 million contribution to the Forest Preserves Fund. The Policy Council’s letter notes that the supplemental contribution to the Forest Preserves Pension Fund would amount to only 2% of the County’s supplemental contribution of $320 million.
Commissioners discussed the idea at the July 28 Cook County Pension Committee meeting, noting that there could be technical or legal questions associated with bringing the Forest Preserves into the intergovernmental agreement that need to be addressed. Commissioners also acknowledged other options such as merging the two pension funds and a state legislative proposal by the Forest Preserve District to change the District’s pension fund contribution based on an actuarially-determined calculation. The Pension Committee determined that a subsequent meeting would be held on these proposals.
The Civic Federation has long urged Cook County to assist the Forest Preserve District with its pension difficulties, including proposing the County share its sales tax revenue with the District for actuarially necessary pension contributions. The Federation also discussed several more options the Forest Preserve District and Cook County could pursue in this blog post, though not taking a position on them. Among those options were consolidating the two pension funds or pursuing a property tax rate increase for the Forest Preserve District via State legislation.
Related Links:
Cook County FY2020 Executive Budget Recommendation: Analysis and Recommendations
Cook County Forest Preserve District Pension Fund Funding Gap Growing