Civic Federation Supports Cook County’s FY 2015 Proposed Budget

The Civic Federation supports Cook County’s proposed FY 2015 operating budget in a recently released report. November 13, 2014 Dear President Preckwinkle: The Civic Federation recently completed its analysis of your $3.7 billion proposed FY2015 operating budget and I am writing to convey our findings in advance of the Cook County Board’s November 15 budget vote. The full 95-page report is attached and available at www.civicfed.org. The Civic Federation supports Cook County’s proposed FY2015 budget, which takes a reasonable approach by holding the County’s property tax levy relatively flat and not including any new fines or fees. Instead, a $168.9 million shortfall is closed with $92.9 million in revenue increases, including net revenue from CountyCare and higher state reimbursements for juvenile justice; $53.6 million in expenditure reductions, including debt service savings and vacancy eliminations; and $22.5 million in management and efficiency initiatives. Under your leadership, Cook County is continuing to become a more accountable and efficient steward of public resources. We have seen encouraging progress over the last four years including significant modernization efforts, the introduction of an innovative pension reform proposal and ongoing transformation of the County’s Health and Hospitals System. In addition, the County has achieved many of the goals set forth by your 2010 Transition Report and our 2010 Modernization Report such as the repeal of the 2008 sales tax increase and the adoption of budgets prior to the start of the County’s fiscal year. Despite this progress, uncertainty continues to surround two areas that are central to the County’s fiscal well-being: CountyCare and proposed County pension reforms. CountyCare, which is expected to account for more than 30% of total County revenue in FY2015, began in early 2013 as a demonstration project that allowed the Health and Hospitals System to get a head start on Medicaid expansion under the federal Affordable Care Act. When the demonstration project ended in June 2014, the project was converted into a broad-based Medicaid managed care plan that can enroll all Medicaid recipients rather than being limited only to those who are newly eligible for coverage. The Federation supports this effort but warns of tougher challenges ahead including intense competition for members and financial pressures related to the popularity of its network partners. The Federation urges the Health System to develop and publicly release multi-year projections as well as an updated strategic plan to replace a 2010 document that was developed prior to the creation of CountyCare. While the County’s pension fund is not yet in as dire straits as other State and local funds, it will be soon if no action is taken. Unfunded actuarial accrued liabilities reached $6.4 billion in FY2013 and the fund is currently projected to be insolvent by 2038. The Federation commends the County for developing a pension reform package that was approved by two-thirds of the unions that represent County employees. However, the package was adopted only by the Illinois Senate last session and passage is uncertain in the Illinois House. Failure by the General Assembly to pass this legislation or some amended version jeopardizes the stability of the pension fund and of County finances. The full report also expresses concern that a lack of cooperation among the County’s elected officials is hampering efforts to improve operations of the criminal justice system. These challenges will be analyzed in more detail in the second edition of our Cook County Modernization Report next year. We would like to express our sincere thanks and appreciation to you, Cook County Budget Director Andrea Gibson, Deputy Budget Director Shellie Riedle, Chief Financial Officer Ivan Samstein, Cook County Health and Hospitals System Chief Executive Officer Dr. Jay Shannon, Health System Budget Director Aaron Galeener, and their staffs for their work in preparing this budget. We appreciate their cooperation and willingness to answer our many budget questions and follow-ups. Thank you for this opportunity to comment on Cook County’s finances. Sincerely, Laurence MsallPresident cc: Cook County Board of CommissionersAndrea Gibson, Cook County Budget DirectorShellie Riedle, Deputy Budget DirectorIvan Samstein, Chief Financial OfficerDr. Jay Shannon, Cook County Health and Hospitals System CEOAaron Galeener, Cook County Health and Hospitals System Budget Director