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FY2019 Budget Briefings

October 2018

TONI PRECKWINKLE
President, Cook County Board of Commissioners
**Embargoed until 1 p.m. October 10**
Executive Summary

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**Embargoed until 1 p.m. October 10**

Our Foundation for this Budget


The County is creating and implementing a Policy Roadmap—the first comprehensive policy driven
strategic plan for the Offices Under the President (OUP) since the administration’s 2011 transition plan.

Criminal Justice Administered by the Cook County Justice Advisory Council, in 2019 the
County will award $4.08 million in two-year grants to 20 community-based
(Safe and Thriving organizations to support violence prevention, recidivism reduction and
Communities) restorative justice.

The County continues to respond to the health needs of the community. In


Health and Wellness
FY2019, the Health System will establish dialysis services, expand outpatient
(Healthy Communities) services and invest in care coordination to improve patient care.

The Department of Transportation and Highways is the newest member of


the Chicago Regional Environmental and Transportation Efficiency (CREATE)
Economic Vitality
Program. The Department’s commitment of $78 million in matching funds
(Vital Communities) was critical in winning a $132 million federal grant in June 2018 for much-
needed area rail improvements.
The County implemented a program to assess and remediate contaminated
Environmental Justice brownfield sites in south suburban communities. Additionally, a revolving
(Sustainable Communities) loan fund to pay for remediation of contaminated sites has been instituted
and fully funded by federal grants.

Public Infrastructure & Assets The County Clerk is purchasing new state of the art election equipment in
(Smart Communities) suburban Cook County to help secure election results from cyber attacks.

In FY2019, the Offices Under the President will establish the Office of
Operational Stewardship
Research, Operations and Innovation to implement solutions to make
(Open Communities) operations more efficient and cost effective. 3
**Embargoed until 1 p.m. October 10**

FY2019 Total Budget: $5.9B


Where the Dollars Come From Where the Dollars Go
Self-Insurance Fund,
$410.3
in millions
Fees,
$266.5

Non Property Health


Annuity & Benefits Fund,
Taxes, Enterprise
Revenue,
General Fund, $1,219.1 $209.5
$517.1
$783.0
Additional Pension
Payment, $350.3
Personal
Property Sales Tax, $831.5
Replacement
Tax , $44.5 Health Enterprise Fund,
CountyCare Revenue, $1,019.7 Capital Projects Fund,
$1,829.1 $488.4

Property Taxes*,
$766.1

Health Enterprise Fund Debt Service Fund, $285.0


(CountyCare), $1,547.9
Special Purpose Funds,
Debt $134.6
Proceeds, Grant Funds, $231.1
Motor Fuel Tax, $166.6 $350.3
Intergovernmental Election Fund,
Revenues, $74.7
$22.4
Grants, $241.9 Miscellaneous
Revenues, $47.0

66.8% of the budget are funds for a restricted purpose: Capital, Self –Insurance, Pension, Special Purpose Funds,
Election Fund, Grants and CountyCare.

Public Health and Public Safety are 88% of operations, excluding pensions & debt service
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**Embargoed until 1 p.m. October 10**
Operating Budget by Office

Offices Under the President, 4.7%


Chief
Judge,
5.3%
Sheriff, 11.8% Fixed Charges, 3.0%
Assessor, 0.6%
States Attorney, 2.6%

Clerk of the Circuit Court,


2.4%
County Clerk, 0.3%
Public Defender, 1.6%

Treasurer, 0.3%

Recorder of Deeds, 0.2%


Cook County Health and
Hospitals System, 54.2%
Board of Review, 0.2%
Health and Hospitals System Total Cook County Board of
49.5% Commissioners, 0.2%
Public Administrator, 0.03%

Board of Election
Commissioners, 0.02%

Excludes Capital, Grants and Pension Funds 5


**Embargoed until 1 p.m. October 10**

Position Review – All Funds


CCHHS investing in 246 new FTE to expanded services, still holding overall increase to only 0.3%

13% decline since 2010


30,000

25,613
25,000 23,985 23,660 23,650 23,706 23,439
23,169 23,233
22,017 22,171 22,239

20,000

15,000

10,000

5,000

-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2018 (A) 2019
Grants 779 725 665 590 505 484 481 409 408 408 421
SPF 1,014 1,117 1,080 1,050 1,030 929 910 989 953 953 912
Health Enterprise 7,627 6,638 7,058 6,668 6,744 6,747 6,736 6,865 6,895 6,895 7,141
General Fund 16,193 15,505 14,857 14,861 15,371 15,546 15,312 14,971 13,762 13,916 13,765
TOTAL 25,613 23,985 23,660 23,169 23,650 23,706 23,439 23,233 22,017 22,171 22,239
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*2018(A) – Adjusted after Office of the Chief Judge settlement, restoring 154 positions.
FY2019 Operating
Budget Overview

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2019 Preliminary Budget Forecast
2019 – Lowest Gap in 8 years. Structural deficits reduced by 83% since 2011
In millions
600.0

500.0

400.0

300.0 17.7

487
200.0 200.6

315.2 315.9
267.5
100.0 198.8
152.1 168.9 174.3
97.6 81.8
0.0
2011 2012 2013 2014 2015 2016 2017 2018 2019

Preliminary Gap SBT Repeal Impact State Impact

FY2019 budget deficit was projected at $81.8 million


• Health Enterprise Fund - $29.5M
• General Fund - $52.3M
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**Embargoed until 1 p.m. October 10**
Operating Budget Overview
2018 2019 Preliminary 2019
$ in Millions Appropriation Forecast Recommendation $ Variance % Variance
General Fund Revenues $ 1,799.8 $ 1,810.3 $ 1,855.9 $ 45.6 2.5%
General Fund Expenditures $ 1,799.8 $ 1,862.6 $ 1,855.9 $ (6.7) -0.4%

Health Fund Revenue $ 2,043.2 $ 2,632.7 $ 2,690.5 $ 57.7 2.2%


Health Fund Expenditures $ 2,043.2 $ 2,662.3 $ 2,690.5 $ 28.2 1.1%

Total Revenue $ 3,843.0 $ 4,443.0 $ 4,546.4 $ 103.3 2.3%


Total Expenditures $ 3,843.0 $ 4,524.8 $ 4,546.4 $ 21.5 0.5%
General Fund Gap $ - $ (52.3) $ - $ 52.3
Health Fund Gap $ - $ (29.5) $ - $ 29.5
Corporate Funds Gap $ - $ (81.8) $ - $ 81.8

• General Fund revenue increased $45.6M over Preliminary projections/$56.1M or 3.1% over FY2018 budget
• Health Fund revenue increased $57.5M over Preliminary projections/$647M or 31.7% over FY2018 budget
• Tax Allocation to Health Fund remains flat at $101.9M, supporting Public Health and Correctional Health
• Expenditure drivers include:
• Increase in CountyCare membership*
• Expanded surgery, dialysis, health center capacity*
• Increase in employee medical benefits
• Decreases in personnel expenses – vacancy eliminations and step freezes

*Expense drivers with Impact on Health Fund revenue 9


**Embargoed until 1 p.m. October 10**
General Fund Review
Favorable revenue growth, while limiting expenditures to inflationary growth
General Fund Revenue growth over FY2018 adopted budget
▲ Property Tax available to General Fund: $24M - lower debt service from General Obligation bonds

▲ County Sales Tax growth: $52M – improved economic conditions, reduction in State admin fee

▲ Other Non-Property Tax growth: $8.8M - increased enforcement efforts


These increases offset declines in other Non property taxes and fees

General Fund Expenditures


Personnel related expenditures make up 67% of the General Fund budget.
▲ Negotiated mid-year COLA increase
▲ Health benefit increases
However, the following decreases hold expenditure growth at only 3% above FY2018, yet 4% below FY2017
▼ Overtime expenditures declined 22% ($8M) in the last 2 years

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**Embargoed until 1 p.m. October 10**
Health Enterprise Fund Review
CountyCare membership growth and expanded services to the community
Health Enterprise Fund revenue growing 31.7% over FY2018 budget
▲ Managed Care (CountyCare) Revenue – up $611M
Membership growth:
• 2018 projected: 225,000
• 2018 actual: 332,000
• 2019 projected: 345,000

Health Enterprise Fund expenditure drivers:


▲ Managed Care (CountyCare) is 58% of the Health Enterprise Fund and increasing by 55% to service
increased membership

▲ Personnel costs are increasing by 5.8%


• Increase in FTEs to support expanded services
• Negotiated mid-year COLA increase
• Health benefit increases

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**Embargoed until 1 p.m. October 10**
County Health Fund Allocation
CCHHS Operating Tax Allocations has declined by 63% since 2011, while they
continue to provide over half a billion dollars in uncompensated care
Direct Operating Tax Allocation Legacy Liability Tax Allocation
$300 $350
$250 $300
$250 $116 $107
$200 $113
$200 $86
$214 $193 $191
$150
$110 $93 $150
$100 $41 $29 $100 $172 $184 $186 $175
$50 $102 $102 $125 $150 $136 $141 $152
$63 $61 $61 $65 $71 $80 $83 $50
$0 $0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019
Tax Allocation for Hospital and Ambulatory Acturially Recommended Supplemental Contribution
Tax Allocation for Public Health and Correctional Health Statutory Pension & Legacy Debt Service

Uncompensated Care provided by CCHHS


$600

$500

$400

$300
$502 $543 $536 $505 $505
$438 $473
$200 $405
$314
$100

$0
2011 2012 2013 2014 2015 2016 2017 2018** 2019**
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Long-Term Fiscal
Planning

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**Embargoed until 1 p.m. October 10**
Long-Term Fiscal Planning
By implementing structural budgetary solutions, the County’s five year
forecasted deficits continue to shrink

General Fund-Net Surplus/(Deficit) Projection ($B) Health Fund-Net Surplus/(Deficit) Projection ($B)
$2.3 $3.0

Billions
Billions

$2.2 $2.8
$2.1 $2.6
$2.0 0 0 0 -10 -23
0 $2.4
$1.9
$1.8 -49 -116 -179 -224 $2.2

$1.7 $2.0
Revenue Expense
$1.6 $1.8
Revenue Expense
$1.5
$1.6
$1.4
$1.3 $1.4
2015 2016 2017 2018 2019 2020 2021 2022 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023

Projections based upon data submitted for FY2019 Executive Recommendation:


• General Fund projected FY20 deficit: $49 million
• Health Fund projected FY20 deficit: $0 million
• Total projected deficit FY20: $49 million
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Structural Concerns
While expenditure growth has been moderated to inflationary levels, a number of
County revenues do not keep pace with inflation
FY19 Projected $10
Amount %
Revenues $0
Declining $366,610,496 15.0%
-$10
Failing to keep

Millions
pace with -$20
$767,917,106 31.3%
inflation -$30
Growing with -$40
$1,145,091,591 46.7%
economy
-$50
Other
Growth/Decline $171,032,158 7.0% -$60
patterns FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Grand Total* $2,450,651,351 100.0%
County Treasurer Clerk of Circuit Court

Cigarette Tax Sheriff

• Cook County’s base property tax levy has not increased in over 20 years
• Most local governments increase their levies annually by the rate of natural growth
• If Cook County took natural growth over the last 20 years, the base levy would be $1.18B
• If natural growth were included in the FY2019 budget, the value would be $24M

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**Embargoed until 1 p.m. October 10**
Fulfilling Sales Tax Commitments
Increased Sales Tax funding allowed the County to address legacy
liabilities and critical transportation infrastructure needs
FY2016 FY2017 FY2018 FY2019*
Taxable Sales - Historical Correlation
10.0% Value of 1% Increase $308 $474 $445 $475

$500 $1 $2
5.0%
$55 $27 $58
$400 $65 $65 $65
0.0% $3
$300

Millions
$25
-5.0% $10
$200
$354 $353 $350
$271
-10.0% $100

-15.0% $0
FY2016 FY2017 FY2018 FY2019*
Proj: 18
2001

2002

2006

2007

2012

2013
1997

1998

1999

2000

2003

2004

2005

2008

2009

2010

2011

2014

2015

2016

2017

Additional Pension Appropriation Increased Transportation Funding


US Gross Dometic Product Cook County Taxable Sales Increased Legacy Debt Service Costs Pay-Go Capital Equipment Purchases

• National Gross Domestic Product (GDP) is a • The County Board approved a 1% increase
good indicator of Taxable Sales in Cook County effective January 1, 2016 to help fund:
• Over the last 10 years the correlation between • Additional Appropriation to address the
GDP and County Taxable Sales has been 80.4% Pension Fund’s liabilities
• Sample of independent forecasts for 2019: • Increased Transportation Funding by stopping
2019 National Gross Domestic Product Forecasts Motor Fuel Tax diversion
Federal Reserve 4.50% • Increased debt service costs
Survey of Professional Forecasters 4.90%
Wall Street Journal Survey 4.70% • Pay Go Capital equipment purchases 16
As of Q3 2018
**Embargoed until 1 p.m. October 10**
Addressing Pension Fund Liabilities
Pension Fund’s funded ratio increased to 60.1% in just 2 years; without
supplemental funding the ratio would be 56.1%
• The County has an annual Intergovernmental Agreement (“IGA”) with the Pension Fund, which
includes supplemental payments in addition to the statutorily required maximum contribution

• These payments will total, by the end of FY18, close to a billion dollars, allowing the Pension
Fund to keep its assets invested and take advantage of strong market performance
Projected Funded Ratio with Supplemental Projected Funded Ratio Without Supplemental
120.0% Funding Funding
80.0%
100.0%
60.0%
80.0% 40.0%
20.0%
60.0%
0.0%

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050
40.0% -20.0%
-40.0%
20.0% -60.0%
-80.0%
0.0%
2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

-100.0%
-120.0%

On track to achieve 100% by 2047 Insolvency by 2038

• The FY19 budget recommendation includes an amount of $350.3M


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Key Initiatives

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Public Safety
County on track to provide $19.2M by 2020 to support public safety initiatives

Justice Advisory Council Public Safety Grant Awards


$3.50

$3.00 $0.14 $0.19


$0.50 $0.46 $0.17
$2.50
$0.74 $0.72
$0.81
Millions

$0.68 $0.58
$2.00
$0.24 $0.24

$1.50 $0.60 $0.60

$1.00 $1.90 $1.90


$1.85

$1.20 $1.20
$0.50

$0.00
FY14-FY15 FY15-FY16 FY16-FY17 FY18-FY19 FY19-FY20*
Violence Prevention Recidivism Reduction Restorative Justice Alternatives to Detention and Employment Services

*planned
Other FY2019 public safety initiatives:
• Public Defender expanding the Police Station Representation Unit and piloting mental
health services to:
• Provide better counsel to those held in custody at Police stations
• Identify clients with potential mental health issues early to help expedite the dispositions of
their cases 19
**Embargoed until 1 p.m. October 10**
CCHHS Service Innovations
Improving service delivery and expanding programs to address
community health needs
• Establish dialysis services in Provident community based on needs assessment
• Increase surgery services and outpatient dental services based on community demand
• Establish mental health services for court-involved youth
• Grow outpatient services to maximize facility efficiency and improve timely access to
healthcare
• Invest in care coordination to improve care and outcomes
Monthly
Monthly Average Projection Difference
FY19 v.
Visit Type FY 2016 FY 2017 FY 2018 * FY 2019 FY18
Surgical Cases 1,238 1,233 1,245 1,320 6%
Emergency Visits 12,901 12,074 12,037 12,750 6%
Primary Care Visits 18,436 18,482 18,144 19,051 5%
Specialty Care Visits 20,230 20,143 21,325 22,391 5%
Deliveries 83 98 81 90 11%
*based on first 7 months of FY2018
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**Embargoed until 1 p.m. October 10**

Budget Calendar
Oct. 10 – Early Nov. November Dec. 1, 2018 – Nov. 30, 2019
Budget
Gather Feedback Pass Budget
Accountability

• Hold department • Amendments will be • Monthly STAR review


hearings with Finance presented sessions
Committee

• Hold public hearings • Amendments must be • Budget controls via


(North, South, West, budget-neutral quarterly reports &
City) allocations

• Incorporate feedback • Present budget for


into budget revisions, as Board vote
necessary

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