Standard & Poor's Ratings Services lowered the Metropolitan Water Reclamation District of Greater Chicago’s general-obligation debt rating to AA+ from AAA on Thursday, citing concerns over the district’s pension liabilities and increasing overall debt burden.
The $1.2 billion Chicago Metropolitan Water Reclamation District Retirement Fund is 55% funded and faces $1.1 billion in unfunded pension liabilities. The funding shortfall is a result of inadequate district contributions and investment losses, according to the ratings report.
District pension contributions have been raised in recent years, although the funded status remains low, the report notes.
“The MWRD is actively addressing and funding its pension liability with the funding reform plan that was changed by state law effective in Jan. 1, 2013. Since then, the pension funding ratio has increased from 50.4% to 55.2% funded at the end of 2015,” said a spokeswoman for the water reclamation district in an e-mail.
“Fitch Ratings assigned its AAA/stable outlook rating to the MWRD’s upcoming bond sale and affirmed its AAA/stable outlook on existing outstanding general obligation bonds,” she added.
Meanwhile, Chicago faces more than $20 billion in unfunded pension liabilities across its four pension funds — the $1.35 billion Chicago Laborers' Annuity & Benefit Fund, the $4.6 billion Chicago Municipal Employees' Annuity & Benefit Fund, $2.4 billion Chicago Policemen’s Annuity & Benefit Fund, and $1 billion Chicago Firemen’s Annuity & Benefit Fund.
