Chicago mayor releases long-awaited Ernst & Younger report

Chicago Mayor Brandon Johnson has launched to Metropolis Council a report from the accounting agency Ernst & Younger that his administration commissioned to supply options to the town’s funds hole. 

The Johnson administration had beforehand advised alderpeople it could not launch the $3.185 million full report, however would launch excerpts.

Greater than half the Metropolis Council had formally requested entry to the total report, in accordance with a letter despatched to Johnson this summer time from 27 alderpeople and Janice Oda-Grey of the Metropolis Council Workplace of Monetary Evaluation. 

The report, a copy of which was shared with The Bond Purchaser, stresses that the town’s budgetary imbalance displays deep structural points and underlines “the significance of adopting recurring options reasonably than counting on short-term measures.”

Its launch comes on the heels of Johnson’s 2026 funds — which is replete with one-time measures — and forward of what guarantees to be a troublesome funds negotiation with Metropolis Council.

The town faces a structural funds hole of $1.15 billion in 2026, rising to $1.23 billion in 2028, in accordance with its most .

By means of a mixture of efficiencies, income enhancements and funds and repair supply enhancements, the Ernst & Younger report identifies an estimated $530 million to $1.396 billion in complete potential financial savings and income technology.

The report cautioned that none of its suggestions have been each extremely possible and extremely fiscally impactful; they have been principally one or the opposite.

For instance, one of many largest advised financial savings, with a 10-year fiscal influence of $517.4 million, requires the minimal manning on Chicago Hearth Division engines and vehicles to be minimize to 4 from 5.

That may require negotiations with the firefighters’ union, which is unlikely to be receptive. The report classifies the proposal as low feasibility.

Different important however hard-to-achieve financial savings have been advised for the police and hearth departments, together with reassigning some work to non-sworn personnel and disbanding the mounted unit and promoting off the horses. It mentioned the 10-year fiscal influence of all its public security service suggestions might prime $1.4 billion.

The accounting agency mentioned its evaluation was benchmarked towards greater than 40 peer jurisdictions, together with New York Metropolis, Los Angeles, Philadelphia and Houston. Its report teams Chicago’s alternatives for financial savings into 9 classes. 

The agency’s worker profit evaluation recognized $80 million to $103 million in potential annual financial savings, principally from well being advantages adjustments. 

These suggestions embrace growing the extent of medical worker contributions, elevating medical copays and different out-of-pocket prices to staff, enacting a proper return-to-work coverage, and making a strategic settlement effort within the metropolis’s employee’s compensation association.

For actual property, report mentioned the town might see a preliminary 10-year monetary influence of $157 million to $202 million, $30 million of that doubtlessly realized within the first 12 months alone, the report mentioned.

The last word financial savings would hinge on the town’s potential to hold out important workplace consolidation, land gross sales and coverage reforms, the report mentioned. 

Chicago has over 21 million sq. ft of house from greater than 500 owned and leased properties, plus 10,400 vacant parcels, the report mentioned.

The full potential income alternatives from adjustments to Chicago’s greater than 240 charges and fines ranged from $20 million to $74 million yearly. 

The procurement evaluation recognized 5 problematic themes: duplication throughout departments; non-contract spend; provider focus; vendor tail; and non-Division of Procurement Companies managed spend.

The agency urged the town to undertake the Class Administration strategy to procurement, which, it mentioned, emphasizes strategic decision-making over the extra conventional and transactional strategy.  That might save the town between $55 million to $110 million a 12 months, Ernst & Younger mentioned.

For budgeting, the report advised a shift away from conventional budgeting and towards performance-based budgeting. 

The report additionally advised financial savings in the best way the town handles particular occasions and manages its car fleets.