Cook County FY2022 Executive Budget Recommendation: Analysis and Recommendations

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Click here to read a press release for this analysis.

EXECUTIVE SUMMARY

The Civic Federation supports the Cook County FY2022 Executive Budget Recommendation of $8.04 billion. The County is in a good financial position to recover from the disruptions caused by the COVID-19 pandemic. The County has built up reserves, maintained manageable long-term debt levels, and conducted long-term forecasting, which has helped plan for budget gaps over time. The County’s positive financial position has also led to the first credit rating upgrade in over a decade. The $1 billion in federal COVID-19 relief funding provided through the American Rescue Plan Act (ARPA) will support personnel positions in FY2022 and fund investments related to coronavirus recovery over the course of the next several years.

The FY2022 budget proposal represents an increase in spending of 15.9%, or $1.1 billion, from the FY2021 adopted budget of $6.9 billion. Nearly half of this increase, or $501.1 million, will take place within Cook County Health. The majority of that increase is within Managed Care, which reflects a projected rise in CountyCare membership in FY2022 and the associated cost in medical claims. The health system is also adding 758.4 positions, a personnel increase of 11.1%, to support nursing positions, expanded surgical capacity and screening services at Stroger and Provident Hospitals and reestablishing the ICU at Provident Hospital. Another large portion of the total budget increase, $409.6 million, is an appropriation of federal American Rescue Plan Act funds.

Fiscal year 2022 will mark the seventh year in a row of supplemental payments to the pension fund to improve pension funding. The supplemental contributions are powering improvements in pension funding levels.

The Civic Federation applauds the work done this year by the new Independent Revenue Forecasting Commission, which has recently expanded its scope to include Cook County health revenue projections. The Civic Federation is hopeful that this review work will not only improve Cook County health projections, but will also improve clarity and transparency around the health system’s funding. The Commission’s revenue forecasting work will also be critical to the County’s plans for continuation of ARPA-funded investments over time, especially as economically sensitive revenue sources continue to be impacted by COVID-19.

However, the Federation continues to raise concerns over the expansion of inpatient services at Provident Hospital. After a nearly two-year delay of construction for the new Provident Hospital due to COVID-19 and a change in leadership at the health system, it is important to establish that the reversal in strategy related to what was originally going to be an outpatient facility is the right move for the future of care at Provident. Now that the health system has received an extension on the hospital project, the Federation urges the County Board to review the plans for Provident and receive ongoing updates on utilization of emergency and inpatient services in a public forum.

As the County moves forward with its planning and implementation for the use of federal ARPA funds, the Civic Federation urges the County to produce public reports with sufficient detail to understand how much of the funds are being used for short-term vs. long-term initiatives, details about the departments, number of personnel and actual expenditures associated with ARPA-funded initiatives, and details about how ongoing program operations will be absorbed into the budget.

The Civic Federation presents the following key findings from the Cook County FY2022 proposed budget:

Appropriations:

• The County’s Executive Budget Recommendation proposes total spending of $8.04 billion, which is an increase of 15.9%, or $1.1 billion, from the FY2021 adopted budget of $6.9 billion. Total appropriations include a proposed operating budget of $7.7 billion, an increase of 16.9%, from the FY2021 adopted operating budget of $6.6 billion.
• General Fund appropriations of $1.98 billion, which account for public safety and administrative County functions, represent an increase of 4.5% from the prior year.
• Cook County Health appropriations are expected to increase by $501.1 million, or 14.8%, to $3.9 billion from $3.4 billion in the FY2021 budget. The increase mainly reflects the projected rise in CountyCare membership and the associated increase in medical claims from healthcare providers in the plan’s network. The County projects average monthly membership in the managed care program to be 390,689 in FY2022, compared to 356,343 in FY2021.

Property Tax Levy:

• Cook County expects to generate $779.8 million in property tax revenue in FY2022, which is a slight increase of $6.7 million, or 0.9%, from the FY2021 levy of $773.1 million. While the County has held its base property tax level flat at $720.5 million since 2001, the total tax levy also includes $71.3 million in additional property tax revenue due to $24.4 million from expiring TIF districts, $43.3 million from new property and $3.6 million from expiring incentives.
• The property tax allocation provided to Cook County Health will increase by $15 million from the prior year to $137.7 million in FY2022. The Cook County Health allocation had decreased annually from FY2009 through FY2019, before increasing by $10 million in FY2020 and by another $40 million in FY2021. The additional $15 million in FY2022 is intended to help Cook County Health balance its budget and cover public health services.

Personnel:

• The County proposes a total of 22,589.9 full-time equivalent (FTE) positions in FY2022 across the operating funds (but excluding grant funds). This is an increase of 1,341.9 positions, or 6.3%, from the adopted FY2021 budget.
• The largest increase in personnel in FY2022 will take place within the Health Fund, with Cook County Health personnel increasing by 758.4 FTEs, or 11.1%, from the FY2021 adopted budget.
• Other large increases in personnel are proposed within the offices of the President (including the Public Defender and administrative and IT related positions associated with the administration of ARPA funding), the Sheriff and the Clerk of the Circuit Court.

Pension Fund:

• The County plans to make a total pension fund contribution of $547.2 million in FY2022, which includes a supplemental contribution of $345 million above the statutory multiple contribution of approximately $202.2 million. The County has made supplemental contributions to the pension fund since FY2016, which have improved the funded status of the fund.
• The actuarial value funded ratio for the County’s pension fund has increased from 57.5% funded in FY2011 to 68.7% in FY2020.
• The unfunded actuarial accrued liabilities for the County’s pension fund grew from $5.8 billion in FY2011 to $7.2 billion in FY2016, then decreased to $6.7 billion in FY2020.

The Civic Federation supports the following elements of the Cook County FY2022 proposed budget and the County’s financial position:

• Federal American Rescue Plan Act funding provided to Cook County and other governments;
• Cook County is in a good financial position to recover from the COVID-19 economic crisis;
• Supplemental pension contributions have reversed downward trends of the pension fund;
• Independent Revenue Forecasting Commission has begun to include Cook County Health revenue projections in its scope of work;
• Improvements in Cook County Health revenue collections; and
• Legislation that takes effect in 2022 will help improve publicly available information about charity care provided throughout Cook County.

The Civic Federation has concerns about the following issues:

• Cook County Health’s reversal on plans for inpatient services at Provident Hospital; and
• Plans for continuing investments after ARPA funds run out.

The Civic Federation offers the following recommendations to Cook County:

• Ensure that public progress reports on the use of ARPA funds provide detailed information about operations, personnel and expenditures;
• Post video recordings of Cook County Health Board of Directors and Committee meetings on an online archive, and continue to livestream meetings after meetings return to being held in person;
• Reclassify Health Fund revenue sources for consistency and transparency;
• Obtain statutory authority for supplemental pension contributions;
• Enact a multi-year intergovernmental agreement with the pension fund for supplemental pension contributions; and
• Be prepared to provide pension funding support to the Cook County Forest Preserve District in the event that the 2022 property tax referendum fails.

Click here to read the full report.
Click here to read a press release for this analysis.