Cook County Pension Liability Leaps by 130% in 2015 by Switching to New Accounting Standards – WP Original
By: Mark Glennon*
If you follow our pension problems closely, you probably think Cook County faces an unfunded pension liability of about $6 billion, which makes it about 60% funded. That’s how it has been very commonly reported over the last year.
Under the new accounting standards of the Governmental Accounting Standards Board, which are now gaining wide acceptance, the unfunded liability in fact was $15.3 billion and was 36% funded as of 12/31/15. Details are contained in an actuarial report recently completed that I had to get through a Freedom of Information Act request.
If you prefer to look at it apples-to-apples, year-over-year, here are the details:
Under the old method of reporting, which is shown in the actuary report for 2015 recently posted on Cook County’s website, the unfunded liability increased by $700 million, from $6.5 billion to $7.2 billion, and the funded ratio dropped from 57.5$ to 55.5% from 12/31/14 to 12/31/15.
Under the new method of accounting, the Net Pension Liability increased from $12.9 billion to $15.3 billion and the funded ratio dropped from 41% to 36% during 2015.
The new accounting standards differ from the old ones primarily because they require more realistic assumptions about expected returns on assets.
Sorry I can’t post a copy of the actuarial report I got. That’s because they mailed me a hard copy, contrary to my specific request that they share an electronic copy, which they surely have. The inexcusable, maddening difficulty of getting even the deliberately obfuscated actuarial reports on pensions for Illinois municipalities is a scandal unto itself, which warrants a separate article today, which is linked here. I’m not surprised that they wouldn’t want to publish the one I had to FOIA. It’s the most convoluted piece of crap I have yet to see in actuarial reports.
The Cook County Forest Preserve District has its own, smaller pension. I also FOIAd it’s separate report under the new GASB rules.
Under the old accounting rules, its unfunded liability worsened from $125 million to $129 million during 2015, as shown in the report on the County’s site. Its unfunded ratio held steady at 60%. Under the new rules, its unfunded liability rose from $215 million to $265 million, ending the year with a 42% funded ratio.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.