At a press conference last week, Cook County President Toni Preckwinkle announced a projected budget surplus. When most people hear that the county has a surplus they think it means there is a surplus of money to spend. But that is not the case.
In accounting, a surplus means the excess of assets (money had) over liabilities (money owed) accumulated. But in government budgeting it is defined as an excess of receipts over disbursements. This means the money coming into the government via taxes and even loan proceeds is greater than the money going out based upon checks written.
These two definitions result in two very different numbers. While the county is forecasting a $59.7 million surplus for this fiscal year, its latest audited financial report indicated the county had a net deficit of $15.9 billion as of November 30, 2019.
The county is projecting its expenditures will be less than its receipts, but if history is any indicator this does not include the correct retirement payments for county workers. For 2019 the actuaries determined the county should have contributed $523.6 million into the pension plan, but the county only contributed $488 million. The actuaries for the county’s retiree healthcare system determined the county should have contributed $158 million into the system, but the county only contributed $38 million. While the county claimed a surplus for 2019 it shorted its pension and retiree healthcare systems by almost $200 million. This is like not making the minimum payments on your credit card, yet claiming you have a surplus.
Over the years, the county has touted balanced budgets or surpluses while it promised $22 billion in pension benefits, but only set aside $10 billion to fund these promises. The bottom line is that while it is good to have a “surplus,” that doesn’t mean the county has a surplus of money to spend.