Fitch Ratings today became the second agency to knock Evanston’s credit rating a notch below the highest possible score, also pointing to the city’s sizable unfunded pension liabilities.
The downgrade from AAA to AA+ comes a few weeks after Moody’s Investor Services lowered the city’s credit rating for the same reason using more conservative calculations of pension liabilities. The city’s police and firefighter pension funds were “severely underfunded” with less than half of both plans funded by the beginning of January, according to Fitch’s report on the downgrade.
(Moody’s downgrades Evanston’s credit rating)
Evanston’s pension liabilities top $173 million, the report said. The credit agency noted, however, that the city has exceeded minimum pension contribution requirements to address its liabilities.
Fitch also attributed the downgrade to the city’s inability to build up its reserves above policy levels. The report stressed that the city’s financial outlook is “stable,” anchored by Northwestern, a big employer, and wealthy residents.
— Edward Cox
