Illinois Gov. J.B. Pritzker has signed legislation cementing a Cook County Forest Preserve District pension funding overhaul that rescues the fund from looming insolvency.
Lawmakers approved House Bill 1859 amending the state pension code’s article relating to the district during their lame-duck session last month. The legislation, signed by Pritzker Friday, takes effect June 1.
Voters made the pension rescue possible by passing a measure in November allowing the district to raise its property tax levy so that an additional $41 million will be collected annually in addition to the current $100 million raised. About $10 million will go toward pensions with the remainder funding upgrades to the forest preserves.
The additional funding now permitted by state law puts the pension fund on a path toward a full funded ratio in 30 years beginning in 2024 by requiring actuarially based contributions.
“The Forest Preserve explained on its website that it cannot increase its pension contribution absent a change to state statute,” the Chicago Civic Federation, which endorsed the referendum, wrote in a commentary noting the legislation’s passage. “The structure for the new statutory pension funding schedule is the same as the one Cook County implemented via an intergovernmental agreement with its pension fund in 2015.”
Until now, the Forest Preserve district’s employer contributions, like those of many Illinois public pension funds, was tied to a multiplier of employee contributions that proved lower than actuarial requirements. It had been paying about $9.7 million a year.
The district’s funded ratio fell to 59.37% in 2021 from full funding in 1999. The unfunded tab rose to $149 million in 2021 from $145 million in 2020 and $140 million in 2019. Under the old funding policy, the fund was projected to run out of assets by 2042.
Cook County itself raised its sales tax in 2015 to generate additional money for a supplemental pension contribution to its own pension system and for infrastructure. The additional pension contributions so far total about $2.3 billion and have been made under an intergovernmental agreement because the county is still in negotiations for legislation that would cement the supplemental funding into the pension code.
The infusion of additional payments lifted the county pension fund’s funded ratio to 67.2% in 2021 from 56.7% in 2016 when they began. Unfunded liabilities have fallen by more than $1 billion and totaled $6.3 billion in 2021, down from $6.7 billion in 2020 and $7 billion in 2019.
The Chicago Civic Federation had endorsed the forest preserve district’s referendum “based on a number of factors including the administration’s strong leadership and management, demonstrated fiscal restraint, limited options for other revenue alternatives and the district’s clearly laid plans for how additional property tax funds would be used.”
In addition to pumping money into its pension system, the new revenues will help pay for the acquisition and protection of open lands and trails, expand the district’s restoration work to improve the ecological health of the preserves and increase programs and events for the public and schools.
The district also has plans to improve energy efficiency, improve accessibility, and address deferred capital needs at the Brookfield Zoo and Chicago Botanic Garden.
The district provides the land that houses the zoo and the garden and nearly one-fifth of its annual budget is dedicated to the operation of the zoo and garden.
Large unfunded pension liabilitieswith low funded ratios weigh on Chicago, many local governments statewide, and the state. Chicago’s four pension funds have moved to an actuarially-based contribution that put them on a path to a 90% funded ratio in the 2050s and began making supplemental contributions this year to help stave off increases in its $33.7 billion net pension liability. The city’s funded ratios are between 21% and 46%.
Suburban and downstate public safety funds are on a path to 90% funding in 2040 with collective unfunded liabilities of $13 billion and an average funded ratio about 44% to 45%. General suburban and downstate employees participate in the well-funded Illinois Municipal Retirement Fund. Illinois carried $139 billion of unfunded liabilities for fiscal 2022 for a collective funded ratio of 44.1%.