Cook County gets rating boost from Moody’s

Moody’s Investors Service raised the rating for Cook County, Illinois, a notch to A1 with a stable outlook, citing its accumulation of “sound” reserves, along with the recent enactment of a state law governing its pension contributions.

Tuesday’s upgrade affects about $2.1 billion of outstanding general obligation bonds issued by the nation’s second most-populous county.

“Improved financial operations have been driven by a willingness and ability to raise revenue, robust growth in sales tax receipts, operational improvements, and an influx of federal aid,” Moody’s said in a statement. 

It warned the rating is constrained by potential volatility “stemming from large healthcare operations, and reliance on economically sensitive revenue.”

“The county’s leverage is above sector medians and investments in capital assets are lagging depreciation, but outstanding liabilities are in line with other large counties,” Moody’s added.

Cook County expects to end fiscal 2023 on Nov. 30 with surpluses of $215 million in its general fund and $402 million in its healthcare fund as it eyes a fiscal 2024 budget gap.

A bill signed into law Aug. 11 by Gov. J.B. Pritzker locks in supplemental pension contributions the county has been making since 2016 under an intergovernmental agreement.

HB 2352 requires actuarially based contributions to reach a 100% funded ratio in 30 years. Cook County has $6.3 billion of unfunded pension liabilities and a funded ratio of 67.2% with the latest results expected to lift it to over 70%. Supplemental pension payments totaled $2.34 billion over the last six years since the sales tax was raised to save the fund from insolvency.

Cook County Board President Toni Preckwinkle lauded Moody’s for acknowledging the county’s “sound fiscal management, work to increase reserves, and passage of landmark pension funding reforms.” 

“This step shows once again that we are on the right track and our efforts to create long-term fiscal stability are being rightfully recognized,” she said in a statement.

In July, Fitch Ratings revised the outlook on the county’s AA-minus rating to positive from stable pointing to “continued improvements in the county’s budget management practices, including the recent codification of its supplemental pension payments into state statute, and an ongoing commitment to maintaining a strong general fund reserve cushion.”

“Continued strong operating results, supporting a continued robust level of reserves, could lead to an upgrade,” Fitch said in a statement.

The county is rated A-plus with a stable outlook by S&P Global Ratings.