Recently, Moody’s Investors Service downgraded the City of Chicago, Chicago Park District and the Chicago Board of Education’s general obligation bond ratings below investment grade, with a negative outlook. Soon after, Fitch Ratings and Standard and Poor’s Ratings Services both followed suit by downgrading Chicago’s general obligation bond rating one notch to BBB+ from A- and to A- from A+, respectively, with negative outlook, but keeping Chicago’s rating at investment grade. These downgrades…
What local government purposes, services, or expenditures does your property tax dollar fund? Governments traditionally use property tax revenues to pay for a wide variety of expenditures, including employee salaries and pensions, debt service and administrative costs. But, there are significant differences among local governments regarding the use of these revenues. This blog post describes how property tax dollars were proposed to be spent in FY2015 by the three largest governments in…
The Civic Federation has long supported sensible legislation aimed at improving the efficiency and effectiveness of government operations in Illinois. The purpose of this blog is to summarize briefly consolidation legislation and initiatives that have been proposed since our last update on this topic in September 2014. Local Government Consolidation and Unfunded Mandates Task Force One of Illinois Governor Bruce Rauner’s first actions upon taking office was Executive Order 15-15, which…
Short-term or current liabilities are financial obligations that must be satisfied within one year. They can include short-term debt, accounts payable, accrued payroll and other current liabilities. This blog post presents 12-year trends for 1) total short-term liabilities in the Governmental Funds and 2) short-term liabilities as a percentage of operating revenues for the three largest local governments the Civic Federation regularly monitors and evaluates: the City of Chicago, Cook County…
Even after lowering the City of Chicago’s bond rating another step last week, Moody’s Investors Service maintains a negative outlook on the City, heightening the risk of additional ratings actions and possibly increasing termination costs on its swap agreements. On Friday February 27, 2015 Moody’s reduced the City’s General Obligation Bond rating by one step to Baa2 from Baa1. This move triggered the termination clauses of several of the derivative instruments tied to the City’s variable rate…
Two lawsuits seeking to overturn a pension reform law for the Chicago Municipal and Laborers’ funds have been put on hold pending the outcome of State pension litigation at the Illinois Supreme Court. Oral arguments for the State pension case have been scheduled for March 11, 2015. In December 2014, two lawsuits were filed in Cook County Circuit Court that challenge the constitutionality of pension reforms for the Chicago Municipal and Laborers’ funds that were signed into law in June 2014.…
The Civic Federation’s previous blog examined the long-term debt of eight major local governments in northeastern Illinois. This blog explores the unfunded pension liabilities of ten pension funds sponsored by local governments in the Chicago area using a per capita indicator based on unfunded pension liabilities. Between FY2004 and FY2013, pension obligations per capita for Chicagoans’ increased by 199.4%, rising from $4,305 to $12,889. For Chicago residents, the pension obligations per capita…
The Civic Federation regularly analyzes and comments on the budgets and audited financial statements of eight major local governments in northeastern Illinois: 1. City of Chicago; 2. Chicago Public Schools (CPS); 3. Cook County; 4. Chicago Transit Authority (CTA); 5. Forest Preserve District of Cook County (FPDCC); 6. City Colleges of Chicago; 7. Chicago Park District; and 8. Metropolitan Water Reclamation District (MWRD). As part of these analyses, we examine trends in these governments’…
The Civic Federation and IIFS blogs have written extensively about reductions to assumed rates of return on investment by State and some local public pension plans over the last several years. These changes are part of a nationwide trend, influenced partly by the low interest rate environment and by a larger debate over whether pension plans should use a risk-free rate of return to discount liabilities or the expected rate of return on investment, as used by most public pension plans. In…
The following posts were among the most highly read on the Civic Federation blog in 2014 and represent some of the most closely followed local government issues this year: Illinois General Assembly Passes Pension Reforms for Chicago April 16, 2014 This blog discussed Senate Bill 1922, which was approved by the Illinois House and Senate on April 8, 2014. The bill contained benefit reforms and funding increases intended to stabilize the financial condition of the City of Chicago’s Municipal and…
