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player ready...Despite struggling with its police pension fund, Kenilworth’s financial status over the past year has been strong enough to convince Moody’s Investors Services to maintain the village’s triple A credit rating, according to Village Manager Patrick Brennan.
Brennan said the rating, which Moody’s delivered June 1, also comes with Moody’s “stable outlook” ruling, something he said was equally important to the village.
“I was very happy to see that (Moody’s) recognized all our hard work and maintained that stable outlook. Some communities manage the Aaa rating but get a negative outlook, which can affect their ability to operate financially just as much as a lower rating,” he said.
Moody’s reviews the village’s finances and updates its rating annually; Kenilworth has been Aaa rated for many years, Brennan said. He said that in Moody’s latest review, its assessment team cited Kenilworth’s conservative management policies and healthy reserves as reasons to maintain the level.
Information about Kenilworth’s 2017 budget, available on the village website, featured $8.65 million in revenues against $8.15 million in spending; most of its fund balances are expected to increase by the end of this December, over the same period in 2016. The general fund, the village’s largest single fund, is scheduled to rise from roughly $4.13 million at the end of 2016 to roughly $1.7 million by the end of this year, according to the website.
According to Brennan, Moody’s report also stated that Kenilworth’s continued rating “is stronger than the average for cities in the United States.”
In a June 2 announcement about the Moody’s decision, Village President Ann Potter said that Kenilworth must now focus on capital improvements, and “upon our pension obligations.”
The police pension is currently 44 percent funded, with a net liability of $8.5 million as of Dec. 31, 2016, which Brennan said he would like to raise as much as possible: “My target would be to have us in the 65 percent range.”
He said the village’s police pension has long been under pressure, but that its liability began to increase, and its funds to slide, beginning in 2008. Much of the blame lies in low investment returns, he said.
“Due to the small size of Kenilworth’s pension plan, the state restricts what we can invest in … it keeps us from investing in things like equities,” Brennan said. “We are more reliant on bond returns. If you follow the markets at all, you’ll know that bonds aren’t where you want to put your money.”
Despite that, Potter said in the June 2 announcement that Kenilworth has been making more contributions to the pension fund to help improve that fund’s position.
kroutliffe@pioneerlocal
Twitter: @pioneer_kathy