Politics

Chicago Ended 2024 With $161M Deficit: Officials

Chicago ended 2024 mired in red ink, facing a $161 million deficit after the Chicago Police Department overspent its budget by 10%, leaders of the Chicago Public Schools refused to reimburse the city for making a $175 million pension payment and the city received lower-than-expected corporate tax revenues, officials said Monday.

The city had no choice but to use what officials called its “unassigned fund balance,” to ensure that Chicago’s budget was back in the black by Dec. 31, Budget Director Annette Guzman told reporters during a virtual news conference about the release of Chicago’s 2024 Annual Comprehensive Financial Report.

The decision to use those uncommitted funds, essentially every penny left over in the city’s main bank account after all of the city’s other bills had been paid, did not require the approval of the Chicago City Council, Guzman told reporters.

The city also used those uncommitted funds to help pay $306 million more than required toward its four pension funds, officials said.

City officials did not dip into its reserves or “rainy day fund” to cover CPD’s unbudgeted expenses, the $175 million pension payment the city made for Chicago Public Schools employees who are not teachers or to make up for the $80 million drop in corporate tax revenues, officials said.

“A lot of that deficit was reduced by the fact that we had significant reduction in our spending,” Chief Financial Officer Jill Jaworski said. “So we were well under own expenditures and implemented a number of strategies to lower our costs, and they were very effective.”

Those reductions in spending from the city’s general fund, which did not require layoffs or service cuts, totaled $399 million, including $132 million that had been earmarked to pay off debt, according to the presentation from the city’s finance team.

The city has nearly $11 billion in cash across all of its funds, in line with the past five years, giving it a “strong cash position on an all-funds basis,” officials said.

However, the Chicago Police Department exceeded its nearly $2 billion 2024 budget, approved by the Chicago City Council, by $207 million, according to city data.

CPD exceeded its 2024 personnel budget by approximately $127 million, according to the audit, even though the department has approximately 1,000 vacant positions, records show.

WTTW News reported Monday that city officials have yet to detail exactly how much Chicago taxpayers spent to pay employees overtime. Most of the city’s overtime expenses are incurred by CPD, records show.

In addition, CPD exceeded its budget to resolve lawsuits alleging misconduct or wrongdoing by $80 million, according to the 2024 audit.

In 2023, CPD overspent its budget by more than $242 million, according to that year’s audited annual report.

Had CPS made the payment as the mayor requested, the city would have ended the year with a “significant surplus,” Jaworski said.

Chicago Public Schools faces a $734 million budget shortfall for the 2025-26 school year, according to interim CEO Macquline King. That includes the $175 million payment for non-teacher pensions due in 2026, officials said.

City officials said they were pleased to see that payment included in CPS’ budget projections and were confident it would be paid in 2026, even as city officials work to reach a binding agreement to disentangle the city and school system’s finances.

Officials also detailed the first look at the city’s finances in 2025, reporting that the city had spent 4% less than expected, in the face of significant financial uncertainty, while revenues were 5% higher than expected.

However, through the end of May, the city has spent $45.5 million more on overtime, mostly for CPD members, than it budgeted, and $39.3 million more than it set aside in order to resolve lawsuits alleging misconduct or wrongdoing by police officers, officials said.

Officials are scheduled to appear at a meeting of the Chicago City Council’s Revenue Subcommittee on July 21 to discuss a series of proposals made by alderpeople to increase the city’s revenues, including a measure to legalize video poker and slot machines in bars and restaurants.

An economic impact study of that proposal found that change would not significantly change the city’s financial state, but cost nearly 400 jobs at the city’s casino, scheduled to open in 2026 at its permanent location in River North, Jaworski said.

The study shows “that we’re not going to make money and we risk actually losing money and having less revenues overall from gaming,” Jaworski said.

Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]

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