Local government – Illinois: Ability to absorb pension costs supports exceptional credit quality for some cities

Source: David Levett, Rachel Cortez, Alexandra S. Parker, Moody’s, U.S. Public Finance, Sector In-Depth, December 14, 2018
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Heavy pension burdens have weakened credit quality for many Illinois cities in recent years, but some Illinois municipalities have maintained exceptional credit profiles. Such cities typically have drawn on their strong legal revenue-raising flexibility and high median family incomes (MFI) to support increased pension contributions while maintaining strong reserves. However, credit quality could deteriorate for even these cities if they do not continue to absorb growing pension contributions and keep already high unfunded liabilities in check…..