November 07, 2024
In a report released today, the Civic Federation shared the findings of its analysis of Cook County’s proposed FY2025 budget of $9.89 billion, noting the continuation of prudent financial practices that has resulted in the Preckwinkle administration proposing a responsibly structured FY2025 budget without burdening residents with tax and fee increases. The County is benefitting from higher-than-expected natural revenue growth and lower-than-expected healthcare and payroll costs, both of which helped close a General Fund gap forecast at $218.2 million. The Federation’s full analysis is available at civicfed.org/CookCountyFY2025.
The proposed FY2025 budget includes a spending increase of $628.5 million, or 6.8%, from the FY2024 adopted budget of $9.3 billion. The expenditure increase reflects scheduled employee cost of living wage increases, higher managed care claims expenses due to higher-than-expected CountyCare membership enrollment in the health systems and increased pension contributions due to an increase in liabilities associated with higher than anticipated current employee salaries. The budget also includes a decrease of 44.9, or 0.2%, vacant positions.
The budget is balanced primarily through $181.8 million in revenue increases stemming from a $60 million sales tax increase, court fee increases and the use of General Fund balance, combined with $35.8 million in expenditure reductions. County budget projections for the next four years show manageable projected shortfalls in both the General Fund and Health Fund due to expenditure projections exceeding revenue growth.
“The County is in stronger financial shape than many of its regional governmental peers through its commitment to best financial practices and long-term planning,” said Joe Ferguson, president of the Civic Federation. “The County built healthy general operating reserves with a specific intention to mitigate the disruptive effects of the wind down of federal pandemic funding that have left peers with daunting fiscal cliffs, while continuing to utilize forecasting techniques and strategies that help predict budget shortfalls and make plans to address them.”
The proposed budget’s total pension contribution is $568.3 million, including a property tax and PPRT contribution of $223.3 million and a general fund contribution of $345.0 million. To its credit, the County’s pension funding system is based on actual requirements and a 100% funding schedule that accounts for the possibility of pensions for Tier 2 employees falling out of compliance with federal Safe Harbor rules in the future. Debt service payments account for approximately $260 million, or 2.6%, of the proposed budget’s total expenditures, indicating a low bonded debt burden.
The proposed FY2025 budget also allocates $210.3 million in excess unassigned fund balance to one-time uses, prioritizing use of excess fund balance over restricted reserves. The County had $1.4 billion in unrestricted general operating reserves at the end of fiscal year 2023 – well above the target set through the County’s fund balance policy. Among its prudent financial moves, the County created a plan for its use of excess revenues, including establishing an American Rescue Plan Act (ARPA) sustainability reserve fund that helps support programs created using those funds.
“Other governments struggling financially year after year would be wise to look to Cook County as an example of how long-term planning can help stem the succession of fiscal crises too often met through short-term, transactional trade-offs rather than long-term structural solutions,” Ferguson said.