(Adds Chicago dateline, details on pension funding shortfall,
pension reform bill, recent court ruling)
CHICAGO, July 11 Fitch Ratings on Friday
downgraded Cook County's general obligation rating to A-plus
from AA-minus, citing challenges Illinois' biggest county faces
as it attempts to shore up its "severely underfunded" public
The county, which includes the city of Chicago, ended fiscal
2013 with an unfunded pension liability of $5.3 billion, while
the funded ratio improved to "a still weak" 61.5 percent from
58.5 percent in fiscal 2012 largely due to high investment
returns, Fitch said in a report.
"Meaningful improvement would require action by the state
legislature, which is not expected to be back in session until
the fall at the earliest, and possibly not until January 2015,"
Legislation to reform retirement benefits and require Cook
County employees to make bigger pension contributions passed the
Illinois Senate but was not taken up by the House in the spring
legislative session, which ended May 31.
Meanwhile, challenges to public sector pension changes got a
boost last week from the Illinois Supreme Court, which extended
constitutional protection to retiree health care benefits. The
ruling was seen as having implications for recent pension reform
laws affecting retirements systems for the state and for
Fitch placed a negative outlook on Cook County's A-plus
rating, noting that "inability to implement an affordable plan
to shore up long-term pension funding would likely lead
to a downgrade."
The one-notch downgrade affects about $3.6 billion of
(Reporting by Karen Pierog and Abinaya Vijayaraghavan; Editing
by Joyjeet Das and James Dalgleish)