President Toni Preckwinkle Unveils Preliminary Budget Forecast for Fiscal Year 2025

Tue, 06/18/2024 - 12:00

Highlights record-low hospital budget gap, strong fiscal position for FY2025

Cook County Board President Toni Preckwinkle today unveiled the preliminary forecast for the County’s Fiscal Year 2025, showing a projected gap of $218.2 million – significantly reduced from the $409.6 million peak during the pandemic. The hospital system projects no deficits this coming fiscal year, marking the lowest gap of President Preckwinkle’s administration.

Since the pandemic, Cook County has received two bond rating upgrades, spearheaded legislation to fully fund its pensions in 30 years, built up reserve funds and developed hundreds of millions of dollars in equity programs and pandemic relief. These accomplishments come while closing almost $1 billion in preliminary budget gaps since 2020 and putting forward balanced budgets without increasing existing taxes.

The preliminary forecast report presents a mid-year projection of year-end revenues and expenses for FY2024. The report also presents an initial forecast for FY2025 revenues and expenses for the General Fund and Health Enterprise Fund, the County’s two major operating funds.

“Years of hard work and tough decisions have put us in a strong fiscal position. Despite a pandemic and fiscal challenges, we’ve protected pensions, expanded equity programming, improved our bond ratings, managed pandemic relief wisely and closed nearly $1 billion in budget gaps without raising taxes,” said President Preckwinkle.

Continued Federal Pandemic Relief Efforts

Cook County directly received over $1 billion from the federal government through the American Rescue Plan Act (ARPA) and has coordinated an extensive process to develop a responsible, comprehensive and equitable spending plan. The County will invest $800 million, roughly 80% of the federal funds received, in community programs for County residents and businesses. This means that an overwhelming majority of this once-in-a-lifetime funding will go to programs for residents, not operational costs.

Cook County continues to strategically invest in communities using a holistic approach to support both immediate recovery needs and long-term transformative initiatives. This includes the nation’s largest publicly funded guaranteed income initiative and a program to abolish up to $1 billion of medical debt. Hundreds of millions of dollars in additional funding will go to health care and health access initiatives, justice initiatives, violence prevention programs, infrastructure improvements and environmental projects.

Last year, the County established a $166 million American Rescue Plan Act (ARPA) reserve to help sustain ARPA programs during a step-down period as the County continues to identify grants and permanent funding sources for these programs. This reserve will provide the County with additional time and flexibility which is an important step toward sustaining vital programs established during the height of COVID-19.

Cook County is now building on this work and is dedicated to making informed decisions that best serve the County’s needs and preferences regarding continuing the important work of these and many other pandemic programs. In the coming year, Cook County will conduct a large-scale public outreach effort to gather resident feedback and integrate it into the ARPA sustainability plan, ensuring continued alignment with community needs.

Overview of FY2024 Year-End and FY2025 Preliminary Forecast

For the FY2024 year-end, the County projects positive net results of $142 million in the General Fund. Several factors have contributed to this positive variance. The continued national trend of longer hiring timeframes, which increases payroll savings, is one factor, while economic growth and higher-than-anticipated interest rates have led to increases in sales tax and investment income. President Preckwinkle noted the County has taken advantage of higher interest rates on its stable and conservative investment options. In 2024, the County expects investment income to come in a little over 20% higher than anticipated in the budget.

In FY2025, the County is forecasting a budget shortfall of $218.2 million. In FY2024, the County appropriated FY2022 unassigned fund balance to support critical Special Purpose Funds (SPFs) including the Disaster Response and Recovery Fund. Accounting for these one-time investments into the SPFs, expenses in the General Fund are forecasted to be $271.6 million above the FY2024 adjusted budget due to expected increases in personnel costs, the inflationary impact on the cost for goods and services procured by the County, rising health costs and a $35.7 million increase in the County’s pension payment to the Pension Fund. Higher-than-expected revenues of $53.3 million projected in FY2025 partially offset these expected expenditure increases, bringing the total forecasted shortfall to $218.2 million.

The County’s hospital system expects positive net results of $224.6 million for the FY2024 year-end driven by higher than anticipated CountyCare membership levels, patient volume and successful collection strategies. For FY2025, the County’s health system forecasts no negative variance, making this the smallest gap at the hospital since President Preckwinkle took office.

“Our strong financial position reflects our dedication to public service and fiscal responsibility,” said President Preckwinkle. “We will continue this focus on financial responsibility as we work with stakeholders to close this manageable gap in the coming months.”

A virtual public hearing on the preliminary forecast will take place at 6 p.m. on July 17. Residents will have an opportunity to provide testimony and engage directly with the President’s office on their budget priorities. The President’s office will livestream the public hearing.

Beginning Tuesday at 9 p.m., residents can visit the County’s website at https://www.cookcountyil.gov/Budget to view the preliminary forecast. Residents will also be able to submit budget questions at www.cookcountyil.gov/service/submit-budget-questions.