Mostly Good New On Finances, But Skokie Counters Critic

By Pam DeFiglio


Skokie received the highest credit rating--Aaa (triple A) from two ratings agencies, Fitch Ratings and Moody's Investor Service, in the past week. 

That good news was clouded by Fitch's changing of the village's outlook from stable to negative, however. Skokie Village Manager Al Rigoni challenged Fitch's assessment, saying it was based on arbitrary, one-size-fits-all criteria and did not  take into account Skokie's plan to address pension funding. Nor did it look at Skokie's promising conditions as the nation recovers from recession, he said.

Earlier: Skokie's Outlook Rated As Negative

Moody's did not provide an outlook.

In assigning the village a Aaa rating, both Fitch and Moody's observed it has significant sales tax revenue, above-average income levels, proximity to Chicago and home rule powers that afford it taxation abilities.

Fitch's had two concerns, though, and Rigoni addressed each.

Reserves (savings) dropped from their typical 25 percent level

Over the years, Skokie has typically kept 25 percent of its general fund monies in reserves, or what individuals might think of as "savings in the bank." During the recession, though, the village tightened its belt on spending and dipped into reserves to pay for village services, Rigoni said.

Before the recession, the village had as much as 28 percent in reserves, though that dipped to 15 percent during the recession. It's currently at 18 to 20 percent, depending on when tax revenue checks arrive.

"Yes, we're going to get back to that 25 percent level," he said. "SuperWalmart and Mariano's will produce $1 million in sales taxes each year.

"But he (the Fitch analyst) wrote what he wrote."

How Skokie Funds Police and Fire Pensions

Skokie's 5 percent utility tax on electricity, natural gas and water funds the village's contribution to police and firefighter pensions, Rigoni said.

The village contracts with an independent actuary who reviews the pension funding each year, Rigoni said, and the village follows his recommendations for putting money into the pension fund. 

Skokie is on track with the state of Illinois guideline to have pensions 90 percent funded by 2020, "but Fitch says it has to be 100 percent" Rigoni complained. It was 100 percent before the recession, he said.

When Skokie calculates pension funding, it assumes an 8 percent rate of return on investments, a rate Rigoni documented it has historically achieved, on average. But Fitch would only assume 7 percent, Rigoni said, leading it to conclude Skokie had a cloudier picture of pension funding than the village maintains.

"I'll stake my reputation we are on the correct path on pensions and we'll reach 90 percent and perhaps beyond," Rigoni said.

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