The world's largest wastewater treatment utility has taken an unusual step to ensure it can afford to pay retirees their benefits.
When federal financial reporting requirements revealed a $443 million shortfall, the Metropolitan Water Reclamation District of Greater Chicago petitioned the Illinois Legislature for the authority to create a trust dedicated to funding retirement benefits. Issued in 2004, Governmental Accounting Standard Board accounting Statement 45 requires governments to measure their liability for all post-employment benefits except pensions.
Working with investment advisor IC-MA Retirement Corp., the district developed a four-phase plan to reach half the funding target over the next 50 years. Chaos in the financial markets is prompting changes to the overall investment strategy, but in the meantime the district is contributing $5 million/year for the next five years.
In two years the trust's balance has reached $47 million. Public Affairs Manager Jill Horist says it'll be two decades before the district, which employs 2,100, expects to start using it.