The Strategic Goal of Enterprise Resilience is designed to ensure ongoing, reliable, and cost-effective services by planning for climate change and other man-made and natural events, improving and streamlining internal operations, and maintaining a strong financial position.
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A key component of resiliency is preparedness to meet future changes, including both known risks and unforeseeable emergencies.
To meet new energy reduction goals, the MWRD Strategic Plan will guide future infrastructure planning and outline how the MWRD will address climate action through a variety of adaptive and mitigative strategies to maintain its reliable and essential services.
Reduction of Greenhouse Gas Emissions: Faced with increasingly stringent regulations and additional power required to comply with environmental regulations, the MWRD has had to increase its electricity usage from 547,425 megawatt hours in 2005 to 556,823 megawatt hours in 2021. However, during this time the MWRD has been able to reduce its electricity use-related carbon footprint by 44% due to improved purchasing agreements with MWRD suppliers, which stipulates that an increasing amount of energy must be generated by renewable sources, in addition to the procurement of renewable energy credits (RECs). As a result, the carbon dioxide equivalent (greenhouse gas emissions) from electricity usage was reduced from 383,869 metric tons in 2005 to 214,672 metric tons in 2021. Additionally, the MWRD’s new state of the art West Side Primary Treatment Facility at the Stickney Water Reclamation Plant will be brought online in 2022 to replace the outdated Imhoff Tanks, which will remove a significant source of fugitive greenhouse gas emissions from the MWRD’s inventory.
The MWRD will continually utilize its emergency preparedness cycle to ensure organizational and employee readiness to react to sudden changes.
Financial risks can be mitigated through strong management of revenues, expenditures, reserve balances, and investment of assets.
The MWRD enjoys a stable revenue stream in its main source of revenue, ad valorem property taxes. First-year collection rates have consistently exceeded 100% despite the 2018 financial downturn and COVID-19 pandemic.
Another major revenue source for the MWRD is the user charge system, which imposes a surcharge above property tax payments for commercial, industrial, and tax-exempt users of the sewerage systems. Receipts are predictably cyclical each year. Estimated user charge revenues in 2022 are $38.0 million.
The MWRD has a long history of proactive and responsible financial management of expenditures, demonstrating a continued commitment to providing taxpayer value and security to the residents of Cook County.
The Corporate Fund pays day-to day operational costs. Corporate Fund appropriations support the Strategic Plan through activities that include wellness programs for employees, a continued emphasis on creating modern and mobile processes, and a focus on upgrading technology infrastructure for the water reclamation plants.
The 2022 Corporate Fund Budget is $438.5 million, with a targeted expenditure rate of 92%. The chart below shows the projected expenditure rate for 2022. The full budget information can be found here.
- This projection is based on the time-weighted average of expenditures.
- Due to differences in the timing of payments during the first two weeks of the year, January projections based on historical expenditures are skewed.
Although the constancy and predictability of both revenues and expenditures keep financial risks low, the MWRD also maintains substantial General Corporate Fund and Long-term Reserve Balances to provide liquidity and flexibility during times of change.
The MWRD’s General Corporate Fund comprises the Corporate Fund, Working Cash Fund, and Reserve Claim Fund. The Reserve Claim Fund is used to self-insure against unforeseen expenditures. Corporate Fund reserves have been utilized to reduce the MWRD’s pension liability through advance funding contributions to the MWRD’s pension fund, including contributions of $30 million in 2013 and $30 million in 2022 (not pictured above).
Due to sound management practices, long-term reserves did not need to be accessed during the 2008-2009 financial crisis or the COVID-19 pandemic.
Research shows that companies that score higher on sustainability factors tend to have stronger fundamentals that mitigate financial risk, which puts those companies in a better position for long-term stability and profitability; additionally, investing in companies that prioritize sustainable business practices should help protect our environment for future generations. In 2020, following a change to the Illinois Public Funds Investment Act requiring consideration of sustainable investment factors in investment decisions, the MWRD adopted the integration approach to investing which combines sustainability criteria with traditional financial considerations. Such sustainability factors include environmental, social, governance/leadership (ESG), human capital and business model/innovation factors. To view the MWRD’s policy on sustainable investing, please see its Investment Policy.
It is the goal of the MWRD to operate efficiently and effectively to ensure resilience and excellence as an organization.
The MWRD has reliably provided affordable service to its customers, with fees paid for MWRD services falling significantly under the industry norm during each of the past 10 years.
In December 2021 and January 2022, the MWRD’s Executive Team participated in a two-part workshop where they defined innovation for the MWRD as an organization and for individual work groups, and learned how to foster and recognize innovative ideas. These lessons will be passed on throughout the MWRD to cultivate a universal culture of innovation and creativity.
The MWRD has a history of strong fiscal management and good financial health, and its Strategic Plan to improve Enterprise Resilience will help maintain this trend. For details, click on the report links below.
|The MWRD’s Budget presentation has been recognized annually by the Government Finance Officers Association of the United States and Canada since 1985, and its Annual Comprehensive Financial Report has been recognized since 1975. Additionally, the MWRD Retirement Fund and Retiree Health Care Trust have also been recognized annually for their financial reporting excellence since 1993 and 2007, respectively.||
The MWRD’s credit worthiness was affirmed by Fitch Ratings and S&P Global in 2021, citing its sound financial management, reliable revenue streams, low operating costs, and an improving debt leverage ratio. Click on the ratings above to view the reports.
The majority of the MWRD’s current Limited Tax Bonds have been conservatively structured to be repaid prior to 2038. The MWRD has ample borrowing capacity to fund future capital projects through additional debt issuances, which are estimated to increase the debt amounts in years 2038 and later.
Commitment to Fund Liabilities
The MWRD is strongly committed to funding its retirement liabilities. In recent years, the MWRD has consistently contributed in excess of the Actuarially Determined Contribution (ADC), the minimum contribution amount required to be contributed to each fund. These excess contributions have helped sustain the funds’ funded ratio through the 2018 economic downturn and the COVID-19 pandemic.
The MWRD’s Pension Funding Policy was developed in conjunction with the MWRD Retirement Fund and designed to better provide for the long-term financial health of the Fund while balancing the interests of employees, retirees, taxpayers, and the MWRD.
On August 3, 2012, the Governor signed Public Act 97-0894, which increased the required employer contributions from $2.19 for each employee dollar contributed two years prior, to the lesser of $4.19 for each employee dollar contributed or the actuarially determined contribution requirement. This not only opened a path for the MWRD to feasibly reduce its pension liability over time, but it also ensured retirement benefits as promised to its employees.
Actual MWRD contributions have exceeded the Actuarially Determined Contribution amount each year since 2013.
The MWRD’s Retirement Fund funded ratio has been trending upwards the last 10 years.
In addition to its required contribution of $76.8 million to the Retirement Fund in 2022, the MWRD contributed $42.0 million in advance funding contributions, for a total 2022 contribution of $118.8 million. Additional contributions to the Fund will be budgeted if excess revenues are available.
The pension funding policy will be reviewed and updated in 2022 as part of the Strategic Plan’s efforts to achieve a 65% funded ratio in the near term and a 100% funded ratio by 2050.
Retiree Health Care Trust
The MWRD Retiree Healthcare Trust Fund was established in 2007 to recognize the contributions made to the MWRD by its employees, through healthcare benefits for qualifying retirees and their eligible spouses and dependents. In 2014, the MWRD committed to providing an annual advance funding contribution of $5 million from 2015 through 2026, at which point the funded ratio is expected to reach 100%.
The MWRD’s Retiree Health Care Trust funded ratio has been trending upwards the last 10 years.
The information presented here is meant to provide context for this Strategic Goal and serves as a baseline for efforts going forward. We are still in the early stages of implementation; as we progress further through the Strategic Plan, we will provide more information as it becomes available.