Katrina Wheelan is a recurring contributor for A City That Works. She lives in Chicago and works as a managing consultant for Watson & Yates, a government consulting firm founded in Detroit.

Chicago is once again facing a budget gap: an $85 million hole that must be closed by December 2026. To close this gap, the Johnson administration has proposed refinancing $500 to $525 million in bonds to generate $65 to $71 million in savings. The administration has also asserted that the deal won’t “add to the city’s long-term liabilities” and will “lower overall debt service costs.”

We won’t have the full maturity schedule, preliminary yields, or refunded-bonds list for a few weeks (the city floated a bond sale date of September 29 at its Investors Conference), but the winds of the bond market are blowing strongly against all municipal issuers. Long term Treasury bond yields are currently at a multi-decade high. Under today’s market conditions, the city will likely have to choose between generating less than its projected $65 to $71 million or achieving those upfront savings at the expense of future interest payments. Both possibilities are bleak.

This bond refinancing plan is at best a one-time quick fix that is unlikely to generate its promised savings – now or in the future. And even if the city somehow generates its expected $65 to $71 million, it will still have to dip into its $6 to $10 million in remaining ARPA funds and/or reserves in the city’s Grant Management Fund. The city is in a tough spot and obviously needs to pay its bills, but the administration should be realistic and transparent about what it will take to close the budget gap. This moment should serve as motivation for the city to deeply invest in long-term solutions to its structural budget woes.

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The Idea

Just as with a homeowner refinancing a mortgage, borrowing money at a lower interest rate to pay off a loan set at a higher interest rate can sometimes generate “free money.” But you don’t see many homeowners refinancing their mortgages right now, and that’s because interest rates are high – substantially higher than they were ten years ago.

Because interest rates are high, the city is likely to pursue a refinancing strategy last used in 2024: calling (buying back) roughly ten-year-old general obligation bonds and issuing new Sales Tax Securitization Corporation (STSC) bonds to pay for it. This strategy generates savings because general obligation (GO) bonds are backed solely by the “full faith and credit” of the City of Chicago. In theory, the city has an obligation to raise revenue to pay these taxes – primarily through property taxation – but under extreme duress the city could opt not to make a bond payment. This would definitionally mark the city as insolvent, but it does happen in especially financially distressed cities, most notably Detroit. The city’s credit rating is essentially an indicator of how likely investors think the city is to default on its bond payments, and the city’s credit ratings are currently hovering just above junk status. In practice, this means that the city must offer relatively high interest rates on its GO bonds to attract investors.

In 2017, the city worked with the state to create a work-around to its pricey borrowing: the Sales Tax Securitization Corporation. The STSC works as a lock box on sales tax revenue sharing from the state. Bondholders get first dibs on sales tax revenue, before the money even touches the city. The contracts are designed to be “bankruptcy-remote,” meaning that the city can’t get out of paying the STSC bond payments, even in the case of insolvency. This guarantee means that the STSC’s credit ratings are excellent, and the corresponding interest rates on its bonds are much lower than for City of Chicago GO bonds. As a result, the city can save on interest payments by selling STSC bonds and buying back higher interest STSC bonds. The city did exactly this in a refinancing deal in 2024.

The city may also refinance existing STSC bonds. The city doesn’t have any STSC bonds that will be “callable” this quarter – able to be repurchased by the city by default – but could pay a small penalty to buy the bonds back early at market rates (via a “tender offer”). The city has about $535 million in STSC bonds issued in 2017 and nearly another billion dollars from 2018. But the interest rates are already fairly low on these bonds, lower than on the city’s GO bonds, so any upfront savings would almost certainly require some combination of extending maturities and/or offering higher long-term interest rates, both expensive in the long run.

The Specifics

For the city to afford to retire old bonds, it will almost certainly issue new STSC bonds. The city can choose to issue these new bonds with interest (coupon) rates above market price. Doing so makes these bonds worth slightly more than their face value – the amount of principal repaid at the end of the term – because buyers will get a little extra money in interest every year. The difference between the bonds’ face values and the prices buyers are willing to pay is called a “premium.” The premium is money that the city gets to pocket right away, and it is probably how the administration plans to close part of this year’s budget gap. Premiums are basically a way to preemptively claim interest savings that would otherwise accrue over many years.

But expecting a $65 to $71 million premium on a $500 to $525 million bond sale is very optimistic. In 2024, the city refinanced about $1.5 billion of GO and STSC bonds, issuing new STSC bonds to pay for it. In that significantly larger deal, the city generated an $86 million premium, which was then partially whittled down by transaction costs. Today, interest rates are higher, the city’s credit outlook is worse, the proposed deal is smaller, and all the lowest-hanging fruit (high interest GO bonds) were already refinanced in 2024. If the upcoming deal looks like the 2024 one (ie. refinancing the city’s highest interest GO bonds with similar maturity STSC bonds), the city might optimistically generate something like $20 to $35 million in premiums. Less transaction costs, the upfront savings could land somewhere closer to $15 to $30 million, a far cry from the $85 million budget gap.

There are other, less responsible ways the city may increase its one-time cash infusion by deferring rather than reducing costs:

1. Extend the maturities of the newly issued bonds
   The Mayor’s Office has indicated that this deal may extend bonds’ maturities. This is a classic “scoop and toss” strategy, the municipal equivalent of opening a new credit card to pay the debt incurred on a first credit card. To “scoop and toss,” the city extends its debt repayment, allowing it to skip the next principal payment and spread its payments over more years. This decreases annual payments but typically increases overall debt service costs by requiring the city to pay interest for more years. The city has $112 million in GO principal and $253 million in STSC principal due on January 1, 2027. Because the city typically sets aside this money at the end of 2026, averted January payments will look like savings in the 2026 budget. So, if the city buys back these nearly-due bonds using long-term bonds, it will “save” on upcoming payments – at the cost of higher principal and interest payments in the future.

2. Offer the STSC bonds with interest rates above the current GO bonds
   If the city issues STSC bonds with high coupon rates, it could generate higher premiums, but this risks increasing debt service costs in the long run. To generate ~$70 million of net upfront savings, the city would have to issue about $425 million of STSC tax-exempt bonds with roughly 6.75% coupons, higher interest rates than we’re currently paying on most of our GO debt.

3. Divert some of the bond proceeds to close more of the budget gap.
   Alternatively, if the city diverts some of the bond proceeds – something it was barred from doing by ordinance in 2024 – the city would be issuing more new debt than it’s retiring, increasing long-term liabilities. There is no ordinance that would currently prevent the administration from diverting some of its bond sale proceeds to closing the FY26 budget gap.

The Take-Away

According to a back-of-the-envelope analysis (I’ve shown my work below), the refinancing deal, as described to date, is extremely unlikely to yield immediate “savings” of the scale advertised. There are a few different ways the bond sales can play out, but it seems likely that the deal won’t really “save” much money at all; it may just kick costs down the road.

The city’s financial challenges were not created overnight, and the Johnson administration has unenviably tough choices ahead with a limited set of tools. That being said, we’ve faced worse in-year deficits before (like a $146 million deficit just last year, which the administration closed via measures like a temporary hiring freeze). But the city can’t limp on forever with a series of one-time budget fixes. Eventually the city will have to pay the piper, and ideally we’ll set ourselves up for that showdown by investing now in long-term solutions, like the ones City that Works has advocated for before: offering pension buyouts, civilianizing administrative police positions, investing in procurement reform, and fully implementing the EY recommendations.

The Math

Really basic model

• $400M in tax-exempt GO bonds at average coupon rate 5.7% with 10 year average maturity, refinanced to tax-exempt STSC bonds at 5% coupon rates = ~0.7% x $400M = ~$2.8M in nominal interest savings / year.

• $100M in taxable GO bonds at average coupon rate 6.8% with 10 year average maturity, refinanced to taxable STSC bonds at par (average of 5.2%) = 1.6% x $100M = ~$1.6M in nominal interest savings / year.

• Tax-exempt STSC bonds have an estimated yield of ~4.2% on average (as of September 2, 2026)

  
  = PV - face-value

  = PV of coupons + PV of face-value - face-value

  = $400M x 0.05 x [1 − 1/(1.042)¹⁰] / 0.042 + [$400M / (1.042)¹⁰] - $400M

  = $425M - $400M

  = $25M in estimated premium
  

• $25M estimated premium, plus ~$9M in averted January 2027 principal and coupon payment, less ~$4M in transaction fees = ~$30M upfront savings + nominal $4.4M / year, less principal and interest for the pushed $9M of debt.

• Tax-exempt STSC bonds have an estimated yield of at least ~4.25% on average (as of September 2, 2026)

  
  = PV - face-value

  = PV of coupons + PV of face-value - face-value

  = $400M x 0.05 x [1 − 1/(1.0425)¹⁰] / 0.0425 + [$400M / (1.0425)¹⁰] - $400M

  = $424M - 400M

  = $24M in estimated premium

  $24M estimated premium, plus ~$9M in averted January 2027 principal and coupon payment, less ~$4M in transaction fees = ~$29M upfront savings + nominal $4.4M / year, less principal and interest for the pushed $9M of debt.

Some assumptions and a more extensive model:

GO bonds

The Johnson administration hasn’t indicated which bonds it will buy back as part of the restructuring, but the city has indicated it will refinance roughly ten-year-old bonds (municipal bond issuers are allowed to “call” or buy back their bonds at the ten year mark). Based on this information, it seems likely that the city will:

• Call its taxable 2015B bonds (up to ~$98M)

• Call its tax-exempt 2015C bonds (up to ~$40M)

• Possibly tender some of its tax-exempt 2017A bonds / taxable 2017B bonds (up to ~$414M)

• (The city could also call its 2014B and older bonds, or tender offers on STSC bonds, but none of these options would likely save much).

The new STSC bonds

To refinance, the city will issue $500 to $525 million in STSC bonds. Based on the GO bonds eligible for refinancing, about $100 million in new STSC bonds will be taxable.

The city last issued STSC bonds in November 2025. The yield on the tax-exempt 10-year bonds in that series was about 3.46%, about 66 basis points off of the AAA muni yield curve at the time. However, we have several reasons to expect a higher spread for a potential September sale:

• The November 2025 offer ended with $75 million in unsold bonds, so we would expect the pricing to adjust accordingly to clear the market in a future sale.

• Chicago’s GO bonds were downgraded by both Fitch and Kroll in February 2026.

• One tranche of STSC bonds were also mechanically downgraded a notch by Fitch in February 2026.

Estimating a 10 bp penalty for the above, we’d have a 76 bp spread on top of substantially higher interest rates across the board, giving an estimated ten-year yield of something like 4.38% (using AAA muni yields on September 2, 2026).

For taxable bonds, I’m estimating a 60bp spread above USTs, based roughly on the secondary market for taxable STSC bonds.

Additional assumptions

• A caveat: The bond market has moved a lot in recent days, and these deals are very sensitive to bond yields. If yields change substantially, so will these estimates.

• Technically, there are two tranches of tax-exempt STSC bonds, but the yields in the secondary market are nearly identical, so I’m ignoring the distinction for this exercise.

• The city offers 5% coupons on STSC tax-exempt bonds, generating a premium (consistent with past issues).

• The city sells STSC taxable bonds at par, generating no premium (consistent with past issues).

• STSC bond issue has a weighted average maturity that roughly matches the bonds being refunded (consistent with the 2024 refinancing).

• Transaction fees amount to about 0.78% of par (including the underwriter discount, credit rating, etc), which was the cost of the 2024 refinancing deal.

• The next coupon and principal payment is on January 1, 2027 but booked to FY2026’s budget (as indicated in the most recent ACFR).

• Tendering the 2017A bonds requires a small (1% of par) tender penalty for refunding bonds slightly before their call dates.

Effects

• Using a 76 bp spread on top of 9/2/2026 municipal bond yields, the city gets a ~$18.5M premium from the bond sale, and saves an additional $9.4M by deferring its January 1, 2027 principal payment, but pays something like $7.8M in transaction fees, netting the city about $20M.

• The discounted interest savings is minimal: about $44 million in present value over 17 years.

• September 2nd (today!) | A Conversation with Matt Brewer: Matt Brewer is an attorney and former CEO of the Chicago Housing Authority. He’s also running for Mayor. Join us for a conversation with him about his career, the CHA, and how he’d run the city. We’ll be at Jefferson Tap and Grille from 5:30-7pm. Register here.

• September 9th | Pilsen Happy Hour: Come on out and join the A City That Works crew to talk housing, public safety, schools and anything else. We’ll be joined by Jesus Ayala (running for School Board in District 7A) and Nubia Willman (running for Alder in the 25th Ward). We’ll be at Monochrome Brewing from 5:30-7:30pm. Register here.

Alex Montero is the chairperson of Strong Towns Chicago, an all volunteer advocacy group focused on housing, street safety, and transit.

When state legislators passed the People Over Parking Act (POPA) last fall, they intended to reduce the number of hoops that local builders, small businesses, and city officials need to jump through to build new housing or set up shop. Unfortunately, Chicago is currently set to implement the new state law into its zoning code in the most cumbersome way possible. There is a better way.

POPA went into effect on June 1, 2026, prohibiting Illinois municipalities from imposing or enforcing minimum parking requirements within 1/2 mile of rail stations and transit centers and within 1/8 mile of most fixed transit routes. In Chicago, that covers virtually all the areas where people live and do business:

• 84% of the land area within the city’s borders

• 96% of the city’s population based on the most recent census tract data

• Areas not covered by People Over Parking are nearly all unpopulated, including airport land, cemeteries, lakes, and rail yards

Map: Steven Vance | Chicago Cityscape

POPA applies to residential and commercial uses, and it covers both new buildings (whether by right or Planned Developments) and changes to existing buildings. This law is the culmination of years of local and statewide reform efforts and a growing recognition among legislators and planners that minimum parking mandates increase the cost of housing (by up to $37K per parking spot in Chicago), hurt local small businesses, and are based on arbitrary standards that fail to predict real demand. Eliminating parking mandates is the most impactful and straightforward “cut the tape” reform that cities can take, and many have.

But developers and city departments don’t dig through state statutes every time they propose a project or issue a permit or license. Instead, the city zoning code needs to be updated to reflect changes in state law. The simple way to do this for POPA would be to just update the zoning code to eliminate any reference to parking requirements, shortening the code and getting rid of the residual requirement on the last bits of city land.

Instead, the Mayor proposed an ordinance in June that would use an overlay district to supersede the zoning code parking requirements anywhere the People Over Parking Act applies. In effect, it’s a special exception that Chicago’s Department of Planning and Development (DPD) would need to maintain and other city departments would need to decipher for every building permit application and business license application that they receive. This approach would be a serious mistake for three important reasons.

1. It adds another layer of bureaucratic complexity to be administered by city departments that are already short-staffed and taking months to process most permits. Given Northern Illinois Transit Authority (NITA)’s governance reforms and funding expansion, POPA coverage will continue to grow with new transit stops and routes. To comply with state law, the overlay will need to be updated every time a transit route is added or modified.

2. It creates a complex set of eligibility rules that small local builders without teams of zoning attorneys on standby cannot easily understand or untangle. At a time when the city is desperate for middle housing and modest infill on vacant neighborhood lots, this uncertainty will lead some small operators and nonprofit developers to mistakenly pass up projects that pencil without parking requirements.

3. It preserves parking requirements in a trivially small portion of the city, mostly made up of industrial land, waterways, and parkland devoid of housing or businesses. In effect, the city is making its zoning code more difficult to enforce and taking on more legal liability to retain the right to require parking for a hotdog stand on runway 28C at O’Hare or a two-flat at the bottom of Lake Calumet. This is madness.

City Council should instead pass a clean repeal of minimum parking requirements from the city zoning code. This makes it simpler to understand the zoning code, minimizes the city’s liability risk, strikes pages of obsolete language, and allows city departments to focus their enforcement efforts on more important zoning matters. It also sends a clear message to builders, small businesses, and housing organizations that Chicago is serious about Cut the Tape, one of the few things that Mayor Johnson and the entire City Council seem to agree on these days.

Fortunately, perhaps sensing the winds of change at the state level, city staff did their homework and drafted a clean repeal in 2024. This language needs to be lightly updated and checked by the city’s Legislative Reference Bureau (LRB) to catch any references to parking requirements in more recent zoning code changes, but it is basically ready to go and should be the basis of the city’s POPA compliance ordinance.

This is an easy win for Chicago. City Council should pass a full repeal of minimum parking mandates.

• September 2nd | A Conversation with Matt Brewer: Matt Brewer is an attorney and former CEO of the Chicago Housing Authority. He’s also running for Mayor. Join us for a conversation with him about his career, the CHA, and how he’d run the city. We’ll be at Jefferson Tap and Grille from 5:30-7pm. Register here.

• September 9th | Pilsen Happy Hour: Come on out and join the A City That Works crew to talk housing, public safety, schools and anything else. We’ll be joined by Jesus Ayala (running for School Board in District 7A) and Nubia Batista Willman (running for Alder in the 25th Ward). We’ll be at Monochrome Brewing from 5:30-7:30pm. Register here.

Katrina Wheelan is a recurring contributor for A City That Works. She lives in Chicago and works as a managing consultant for Watson & Yates, a government consulting firm founded in Detroit.

Even by the standards of the policy world, procurement is not the most thrilling topic. But despite its unsexiness (or perhaps because of it), it’s also an area with substantial untapped savings potential for the City of Chicago. Municipal procurement – government purchasing for goods and services – is a multi-billion-dollar domain. Selling to governments is a specialized skill that comes at a high premium.

Like all public and private entities, the City of Chicago has to purchase goods and services that it needs but doesn’t produce. This is mostly for good reason; the city is not (and should not be) equipped to manufacture snowplows or laptops, nor is the city interested in hiring full-time window-washers or porta-potty servicers.

Procurement has historically been a ripe opportunity for corruption in city politics. For many years, passing business to a friend or relative was a classic mechanism for alders to maintain political support. But while blatant corruption is obviously bad, we also face a real trade-off when we add bureaucracy to prevent corruption. As with city hiring, that bureaucracy can go too far. A totally informal procurement process enables nepotism and prevents meritocratic vendor selection. But over-proceduralization can also lead to ‘unfair’ vendor selection, all while increasing process timelines and procurement costs. Instead of an informal bidding process that rewards alders’ cousins, an overly cumbersome process rewards expert hoop-jumpers.

Unfortunately, hoop-jumping is a skill that is generally orthogonal to a vendor’s ability to provide excellent services or goods for the city. A vendor that is really good at filling out city paperwork is not necessarily really good at building software or paving roads. At the same time, smaller, less expensive vendors who are good at delivering goods or services may not have the experience and skill needed to navigate the city’s procurement process. Consequently, all that hoop-jumping can be very expensive for the city.

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What does the city procure?

The City of Chicago purchases between 4 and 5 billion dollars of contractual goods and services each year. The city’s Department of Procurement (DPS) is responsible for the purchasing process. Except under rare circumstances, departments that need goods and services must work through DPS. The overwhelming majority of contractual city purchases are for services rather than goods. Top categories include professional services, employee benefits (mainly health insurance), construction, and IT. The data quality for the public payments data (and the internal data as well) is poor – for example, the data shows duplicate payments of at least $150 million – but the data still relays some valuable information:

• The city has many vendors, but most of the dollars are concentrated with just a few. Even excluding the city’s two giant benefits contracts, half of all of Chicago’s contractual dollars went to just 57 vendors – about 3% of all vendors.1 Relying on just a few vendors can reduce the city’s negotiating power and introduce single points of failure. On the other side, there is a huge tail: the bottom 50% of vendors account for just 1% of total contractual spend.

• The single largest category for contractual procurement spend is construction and engineering, with O’Hare modernization the largest project within that category. The next largest category is employee benefits, which is mostly health insurance administration costs. Logistics and facility operations include utility fees, facility maintenance, and airport operations. Professional Services includes legal services, financial services, consulting, and others.

Where are savings opportunities?

Here’s the current contract procurement process in a nutshell:

1. A city department decides it needs to make a large non-emergency purchase for which it has budget authorization. (Small purchases, emergency purchases, or sole-supplier purchases may sidestep the competitive bidding process described below.)

2. In collaboration with DPS, department employees create a scope of work, draft the rest of the solicitation, devise a rubric to guide selection, gather an evaluation committee, and publicize the solicitation. There are three types of solicitations: straightforward bids that can be evaluated solely based on price, Requests for Qualifications (RFQs) for a specific service or good; and Requests for Proposals (RFPs) for a strategy or solution. The internal process prior to posting for RFQs and RFPs can take months, but the city doesn’t publish data summarizing this part of the procurement timeline.

3. Vendors respond to the solicitation, which may have slightly different processes depending on the type but usually require potential vendors to file extensive proposals and submit an Economic Disclosure Statement in a separate system.

4. DPS employees then evaluate the bids or proposals and possibly bring vendors back for follow-up interviews. Vendor responses are often thrown out on technical grounds; depending on the reviewer, vendors may be disqualified for something as simple as missing a single signature or checkbox. If all submitted responses are disqualified, the city needs to start the solicitation process over again.

5. Ultimately, if a solicitation is successful, the city will select a vendor (or sometimes multiple vendors) and award the contract. The city’s public contracts and bid data suggest that the median competitive RFP takes 6 months from bid opening date to award date, and for RFPs over $1 million, the median time is 14 months. The median RFQ takes 22 months – nearly two years!

6. After winning an initial contract, vendors may file for a contract extension or modification. Contract extensions are not usually bid competitively.

Given this process, there are basically three mechanisms to reduce costs in city procurement:

1. Issue solicitations more strategically

2. Once a solicitation is issued, increase competition among bidders

3. Once a contract is awarded, manage costs better

Issue solicitations more strategically

Chicago’s procurement process is long, convoluted, and onerous for both departmental staff and potential vendors. In part because of its complexity, the city does not maintain high-quality data about its own purchases. According to EY’s 2025 report on efficiency opportunities, only about half of the city’s procurement spend has a reliable industry code. That leaves the city with a limited view on how it spends its money. The same report suggests that the city could save up to $111 million by implementing “Category Management,” which is procurement-speak for analyzing spend patterns, improving supplier selection, and consolidating duplicative contracts at a better bulk rate. The city targeted $10 million in savings in its Corporate Fund by applying this strategy this year and reported $2.21 million in realized savings as of May 2026.

These are great first steps. The city clearly needs to work toward better stewardship and analysis of its contracts and vendor data. At the same time, the city can and should be even more ambitious in its procurement reform agenda. EY is right to identify non-contract spend, procurement outside of DPS, and duplication across departments as areas for reform, but many of these issues are downstream effects of a system and process that are excessively rigid and hard to navigate.

Once a solicitation is issued, increase competition among bidders

The number of bidders on a particular solicitation has a direct impact on the ultimate price that the city receives. One academic study found that each additional bidder on state construction contracts reduced costs by an average of 8.3%. Another study, about pharmaceutical procurement in Chile, found a 10% reduction for each additional bidder. According to the city’s bid tabulations data from the last five years, the median number of first-round respondents to city solicitations is just two. In a system where only a couple – and sometimes only one – vendors compete for city business, those vendors can get away with charging the city well above market value.

In recent years, the city has focused on attracting more minority-owned and women-owned business enterprises (MBEs and WBEs). Although the goal is to increase participation for small and underrepresented firms, in practice the main effect has been to mandate quotas for MBE and WBE participation without reducing any of the barriers to respond to solicitations. Mandating a different outcome without actually changing the process is a bit like banging on a gumball machine and hoping a steak dinner comes out. The MBE/WBE quotas are an (expensive) band-aid solution to vendor concentration, but ultimately the city should look beyond quotas and toward actually fixing the underlying process that prevents MBE/WBEs from bidding in the first place.

• Consolidate online systems: In 2015, Mayor Emanuel assembled a Procurement Reform Task Force to modernize and standardize procurement across the city and its sister agencies (CPS, CTA, etc). One of the task force’s recommendations was to create a universal procurement system and a common Economic Disclosure Statement system. The city moved into a new platform in 2017 – Oracle’s iSupplier – which was an improvement at the time, but the task force languished post-2020 and ultimately failed to implement the universal procurement system that it promised. Revisiting this recommendation could reduce friction for vendors and potentially increase bidding pools.

• Post better solicitation descriptions: Descriptions of open solicitations on the city’s eProcurement portal are often comically vague. For example, a description for an open solicitation that closed this month: “Request for Qualification (RFQ) for Target Market Planning Next Consulting Services Various Scope Categories.”2 Part of the reason would-be vendors are dissuaded from bidding on contracts is because it’s incredibly difficult to surmise what a contract actually is from just its brief, character-limited description. Realistically, vendors often don’t bother to submit bids unless they have reason to believe they might win the contract – because of department outreach or because they’ve held previous city contracts.

• Expedite vendor payments: After winning a bid and providing services, a vendor’s submitted invoices make the rounds through many approval layers before – hopefully – the Comptroller’s Office ultimately pays the bill. Just as with solicitation responses, invoices might be disqualified for technicalities, and even flawless invoices often work their way through the payment approval chain very slowly. Most local governments in Illinois are bound by state statute to pay vendors within 30 days, but Chicago exempted itself by city ordinance in 1987.
  

  A substantial chunk of contract dollars flow through to subcontractors, and these subcontractors often aren’t paid until the city pays the prime contractor, which means that some subcontractors wait months until they are reimbursed for work already rendered. Small firms are the least likely to be able to float the money and are often discouraged from working with the city entirely. Every business that opts out of bidding for fear of late payment means a less competitive bid pool and likely a higher cost for the city.

  
  In 2021, the Lightfoot administration convened the Prompt Payment Working Group, which analyzed the late payment problem. Although the group highlighted issues with payment processes and Mayor Lightfoot later mandated departments to develop procedures to accelerate payments, it’s not clear that the city implemented any of the specific recommendations in the group’s report. At the time, the Aviation Department required invoices to pass through 14 steps and CDOT required between 6 and 17 steps before approval.
  
  A report released by the Office of the Inspector General last month revealed that DOF doesn’t have sufficient data to determine its own payment timelines. According to vendors, the invoice system remains convoluted and slow; in 2025 one professional organization cited “delayed city payments that often extend six months or more.” Years after documenting the problem, DOF hasn’t standardized invoice approval processes across departments and hasn’t used the tools at its disposal to accurately track timelines. The first step to expediting payments is to consistently enter data into its existing system; it’s hard to fix a problem you can’t measure, and the city already has the tools to measure it.

• Consider unbundling large contracts: In part because the procurement process is long, confusing, and full of pitfalls, many firms that actually perform work – especially in construction – only ever work as subcontractors. These subcontractors are significantly more likely to be MBEs or WBEs. At the most extreme, this pass-through dynamic can look like a large firm with extensive public contracting experience winning a bid but subcontracting out nearly 100% of the substantive work. This arrangement may reduce administrative work for the city, but the city ultimately pays higher prices to prime contractors.
  
  One way to increase vendor competition is to induce subcontractors to respond to solicitations directly. The best way to encourage this is to break large contracts into smaller, more manageable chunks of work: this is called “unbundling.” When paired with active contract management (see below), it has been shown to generate savings in a variety of procurement contexts, including construction and IT. In addition to cost savings, unbundling gives the city more exit opportunities. Instead of getting stuck in a huge contract with an underperforming vendor, unbundled contracts allow the city greater flexibility at a more granular level.
  
  To be clear, the benefits of unbundling disappear if solicitations stall at every stage; unbundling only pays dividends when the process of reviewing and approving more contracts isn’t horribly onerous. At the end of her term, Mayor Lightfoot issued Executive Order 2023-14, which included a provision requiring departments to consider unbundling contract scopes. Despite that mandate, and because it didn’t accompany a faster contracting timeline, departments have largely avoided unbundling. The median contract size has actually increased substantially since 2023. The city should focus on streamlining its solicitation process first, and then it can focus on unbundling where appropriate.

Once a contract is awarded, manage costs better

Contracts usually include a specific “not-to-exceed” amount, but often vendors end up pursuing contract modifications to increase their cost ceilings and/or extend their contract timelines. According to the city’s public contract data, about half of contracts issued from 2016 to 2024 received a contract revision of some type. About one in ten contracts ultimately exceeds their initial amount, and the median overrun among those contracts is roughly 50%. For large contracts, these overruns can be enormously consequential. This is another area where DPS’s slowness costs the city substantial money. Under a system where it can take two years to secure a new contract, the only option to provide service continuity may be to extend an existing contract – even on unfavorable terms.

Two procurement categories with frequent cost overruns are construction and IT. Both industries benefit from information asymmetry and high switching costs: most city employees don’t know how to build websites or bridges, and it’s hard to find another vendor when you already have a half-built airport terminal or software product. As a recent example of an external IT contract gone sideways, take the disastrous Tyler Technology contract with Cook County for an online property tax and record system. The contract was originally $75 million and promised a 3 to 5 year project timeline. As evidenced by the newest property tax bill delay, the contract is now more than six years behind and at least $175 million (230%) over budget. And all that for a product that still doesn’t totally work!

Unfortunately, botched technology implementations like Cook County’s property record and tax system happen all the time. Construction contracts rarely fail so spectacularly, but they regularly spill beyond their initial budgets and timelines. At a fundamental level, the incentives for contractors and the government are misaligned. If a contractor fails to deliver on time or on budget, they are often rewarded with non-competitive contract extensions or change orders (contract modifications). And, even more perversely, these additional payments often have substantially higher profit margins than the original, precisely because they aren’t usually bid competitively. Many firms, especially in construction, accept razor thin margins on original contracts, with the expectation that they will take home more from change orders.

One approach to reduce cost overruns and ensure product quality is active contract management. As the EY report notes, implementation of the city’s new ERP (Enterprise Resource Planning) system may enable the city to build out better systems for contract management, and the city’s efficiency initiatives status update suggests that IT is “reviewing a contract performance management tool.” Even if the city’s ERP implementation happens perfectly and quickly, no software solution can singlehandedly solve contract management. Effective data management is necessary but not sufficient for keeping projects on track and on budget to deliver a quality product.

Ultimately, effective contract management requires city employees with subject matter expertise. An academic study on state construction procurement found that states with higher employee capacity have lower costs. It also found that states that use external consultants for project management tend to have higher costs. Another paper finds a causal relationship between higher “bureaucratic competence” and a reduction in delays, cost overruns, and renegotiations. In short, it’s harder to take the city for a ride when someone who knows their stuff is checking on contractors’ work. More generously, contractors are more efficient when they have clear direction from a dedicated point person. At the same time, knowledgeable project managers can scope solicitations better at the outset, reducing the need for costly contract amendments later.

Chicago should focus on finding and retaining expert project managers knowledgeable about construction and technology. To its credit, Chicago has already been quietly building up its data and technology capacity within the city’s new (as of 2023) Department of Technology and Innovation (DTI) and in a citywide civic technology group. The city should continue to invest resources in building DTI’s data and technical problem-solving capacity, as well as the equivalent for construction management.

Recapping our policy recommendations

• Continue implementing EY’s recommendations around category management.

• Invest in a more easily navigable solicitation portal.

• Recommit to reducing vendor payment timelines.

• Commit to unbundling contracts where appropriate and possible.

• Build specific subject matter expertise internally to conduct initial scoping and to actively manage external contracts.

Some major changes are taking place to transit across northern Illinois this fall. Thanks to major reforms passed by the State Legislature last year, the newly created Northern Illinois Transit Authority (NITA) will have more power to force the CTA, Metra, and Pace to deliver reliable, high-quality, and integrated service.1

But new reporting lines and rules won’t have much of an impact unless the new system is overseen by leaders who are both willing to push the respective service boards hard for better performance and experienced enough to make informed decisions about the challenges the system faces.

Assessing that first criteria is challenging, though I would start by being suspicious of individuals who were long-time board members under the previous regime, rarely use the system, or who fought to defend the status quo prior to the NITA reforms. But we do have some pretty high-quality criteria to assess the question of experience. As I’ve previously written, the actual world-class transit systems in Europe and Asia have real subject matter experts on the boards – with far more board members with engineering degrees, experience running transit systems, and other complementary skills.

Historically, U.S. transit agencies (including the CTA, Metra, and Pace), have not done this. Instead, transit boards have been heavy on community advocates (which can play a useful role), and local politicians (which do not).2 In short, transit appointments are often treated as a political sinecure rather than a serious responsibility. The results are predictable.

As of this month, we finally know who is being appointed to the new NITA board, as well as the CTA, Metra and Pace boards. One feature of the system is that many of these are dual appointments: 17 of the NITA board appointees will also serve on at least one of the service boards, in an effort to improve coordination and alignment across the system. Governor JB Pritzker, Cook County Board President Toni Preckwinkle, Mayor Brandon Johnson, and the county board presidents of the five collar counties have all announced their picks for both the NITA board and additional appointments to the service boards.

Appointments and overlap of NITA Board Members. (Source: RTA)

So let’s see how they did. If you’re keeping track at home, a full list of the appointees made by each elected official is available at the end of this article.

Governor JB Pritzker: B. Pritzker’s appointees have many of the complementary skills NITA and the service boards will need. Two of them (Bashir Qaasim and Neema Jha) have strong technology backgrounds, which will be helpful for fare integration and stronger public safety tools, and another (Nirali Shah) is a procurement expert. I’d also put in a special plug for Nedra Sims Fears, whose combination of community development, finance, and past experience on the Metropolitan Planning Council board makes her a uniquely strong pick. The downside of the Governor’s picks, however, is that there’s relatively little transit experience here – none of the members of the group have experience in transit agency operations or major capital projects.

Cook County Board President Toni Preckwinkle: A-. These picks are (almost) uniformly great. Not only did Preckwinkle pick several former engineers with strong transit backgrounds, one of them (former Federal Railroad Administrator Joe Szabo) has real expertise from outside the Chicagoland region. Tom Kotarac was a driving force behind the NITA reforms, and Luis Montgomery is an engineer with 20 years of experience working on major public projects.3 There are also some creative picks to provide complementary experience in areas like workforce development (Diane Williams), and construction (Ann Kayalil). The only weak spots here are the selection of two suburban mayors (Forest Park Mayor Rory Hoskins for NITA and Pace, and Phoenix Mayor Perry Wells just for Pace), but at least Hoskins was an active part of the NITA negotiations and represents a constituency served by CTA, Metra and Pace.

Chicago Mayor Brandon Johnson: D+. Mayor Johnson is fond of school analogies, so let’s put it this way: if Preckwinkle is the student who turned in her homework early and crushed the extra credit questions, Brandon Johnson is the student who turned in the same homework he submitted last year when he flunked the class.

Six of the Mayor’s eight appointments previously served on one of the transit boards, which means this is mostly a copy-paste job from the poorly managed prior regime. That includes Lester Barclay, the CTA board chair for the last five years who rarely uses the system and opposed key parts of the NITA reforms.4

These picks are also light on relevant experience. There are a few folks with relevant legal, mental health, and social services experience, but none of the Mayor’s appointees have any experience in rail operations or construction. There isn’t a single engineer among the group.

Collar Counties: D. The collar county board members either didn’t understand the assignment, or don’t yet see the value of a truly regional approach to transit. Three of the five appointees are local mayors, who will face strong incentives to serve as advocates for their respective jurisdictions, rather than as stewards of a regional system. Two of them, Romeoville Mayor John Noak and Roselle Mayor David Pileski, publicly opposed the NITA reforms. There are a couple of bright spots: Gary Gordon’s financial expertise as CFO of the Shedd Aquarium will be valuable, and it’s possible Brian Dahl could provide a helpful perspective as the head of the Fox Valley Building Trades.

Where does that leave us?

If you’re keeping score, we’re just scraping by with a passing GPA here. That’s not exactly inspiring. But it’s worth noting that these appointees do represent a significant improvement over the set of folks who previously served on these boards. The share of seats held by members with actual transit operations experience has more than doubled (from 8% to 18%), with particularly encouraging gains for Metra and Pace. Notably, CTA (where the Mayor mostly repeated his prior picks) is the service board that made the least progress. There will also be fewer local politicians with control over a regional system.

But even if these appointments reflect measured progress, we’re going to need to keep up the pressure. In particular, Mayor Johnson’s picks are a clear signal that he thinks the way the CTA has been run over the last few years is fine, and doesn’t regard making major improvements to transit as a priority. The candidates running against him should call this out, and be clear about what their standards for transit board members would be.

It’s also going to be critically important that the new NITA be led by an Executive Director with deep transit expertise. That means picking a transit expert who has not spent the last decade defending the status quo, and ideally has a real understanding of transit systems around the world. The best transit managers run the best transit agencies, which unfortunately are almost uniformly not in America. We should be leaning on - or at least learning from - transit professionals from other countries with high-quality transit systems to help build the executive team for the new Authority.

This is our last, best chance to build a high-quality transit system in the region for the next generation of Chicagoans. Ridership was already falling before the pandemic. If we end up facing another fiscal cliff scenario in the future, the agencies will have less farebox revenue and fewer political supporters. They’ll also have to face a public that is already revolting against tax increases. We cannot afford to get this wrong.

Appendix: The full set of NITA and service board appointees

Note that in addition to the NITA and cross listed board members noted above, the Governor, Cook County President and Mayor all have additional appointments to make to the service boards. The full set of overlapping positions is listed below, along with their bios.

Source: Star:Line Chicago

State of Illinois

• Bashir Qaasim (NITA, Metra): Vice President of the Whole Group, which advises organizations on complex technology transformations. Previously worked at Aforza and Accenture.

• Nedra Sims Fears (NITA, CTA): Executive Director of the Greater Chatham Initiative. Prior roles included community development and finance at Fannie Mae and the City of Chicago, and previously served on the board of the Metropolitan Planning Council.

• Nirali Shah (NITA): Senior Director of Procurement at the Obama Presidential Center. Previously served as Director of Procurement at McDermott Will & Schulte and prior procurement roles at the CTA.

• Rosa Ortiz (NITA, Pace): Urban planner and the principal and founder of 3e. Studio. She previously served as Managing Deputy Commissioner for the City of Chicago Department of Housing, with prior roles at CMAP and other housing non-profits.

• Vanessa Uribe (NITA): is Associate Vice President for People and Operations at The Chicago Community Trust. Prior roles in the Secretary of State’s Office, and Department of Commerce and Economic Opportunity (DCEO).

• Neema Jha (CTA): Director at Charles River Associates (CRA) focused on technology implementation, with prior roles at Amason Web Services and the Tribune Media Company.

Cook County

• Tom Kotarac (NITA, CTA): Executive VP for Transportation at the Civic Committee of the Commercial Club of Chicago, prior roles at the Chicago Metropolitan Agency for Planning and working for Senator Dick Durbin.

• Diane Williams (NITA, Metra): Former CEO of the Safer Foundation, which provides job training to people with criminal records, and prior leader of the Southland Development Authority.

• Romayne Brown (NITA, Metra): Metra board chair from 2020-2024, and previously served as CTA’s Vice President of Rail Operations.

• Luis Montgomery (NITA, Pace): Transport & Municipal Market Sector Lead for MacKay (an infrastructure consultancy).

• Rory Hoskins (NITA, Pace): Forest Park Mayor.

• Ann Kalayil (CTA): Associate vice president of facilities and construction at Columbia College and former bureau chief of asset management for the county.

• Joe Szabo (Metra): Former administrator of the Federal Railroad Administration.

• Perry Wells (Pace): Phoenix Mayor.

City of Chicago

• Oswaldo Alvarez (NITA, CTA): Executive Director of the Illinois Legislative Latino Caucus Foundation, served as Illinois’ Statewide Census Director for the 2020 Census.

• Natasha Jenkins (NITA, Pace): Senior Attorney at Clark Hill PLC, with prior legal roles at Littler Mendelson, United Airlines, Teamsters Local 700, CTA, and the Illinois Attorney General’s Office.

• Dennis Mondero (NITA, Metra): General Counsel for AKIRA, a Chicago-based retailer, previously Executive Director of the Chinese Mutual Aid Association and as Chief Administrative Officer and Senior Vice President at CTA.

• Dee Atkins (NITA): Chief of Community Engagement and Equity at Thresholds, a major mental health and substance use treatment provider.

• Lester Barclay (NITA and CTA): Family law attorney.

• Dr. Michael Eaddy (CTA): Senior pastor of People’s Church of the Harvest Church of God in Christ, president of the People’s Community Development Association of Chicago.

• Christian Mariano Díaz López (Metra): Affordable housing developer with the Latin United Community Housing Association (LUCHA) and Co-Chair of the System Change Working Group for Elevated Chicago.

• Karen Tamley (Pace): President and CEO of Access Living, previously served as Commissioner of the Mayor’s Office for People with Disabilities.

The Collar Counties

• John Noak (NITA, Pace): Romeoville Mayor and CMAP Board Member. Will County appointee.

• Gary Gordon, (NITA, Metra): CFO of the Shedd Aquarium. Lake County Appointee.

• Brian Sager (NITA, Metra): Former Woodstock Village Mayor. McHenry County Appointee.

• Brian Dahl (NITA, Pace), former Kane County Board Member, and president of the Fox Valley Building and Construction Trades Council. Kane County Appointee.

• David Pileski (NITA, Pace), mayor of Roselle, and senior supply chain manager at Grainger. DuPage County appointee.

Several years ago, in May 2023, Sterling Bay’s Lincoln Yards project wasn’t doing very well, and was looking for new investors to recapitalize the project. Among those they pitched was the Chicago Teachers’ Pension Fund, which eventually declined to bail them out.

Thank goodness they did. The project never came to fruition, with Sterling Bay surrendering or selling off various portions of the land at a loss. In retrospect, the deal would have been a terrible investment that would have generated a significant loss for the pension fund. It’s also really easy to imagine some terrible political incentives that could have surfaced if they did buy in.

It’s hard for me not to think about that dodged bullet when reading about Alderman Jason Ervin’s proposal to use pension and city funds to repurchase the city’s parking meter rights, which Chicago Parking Meters LLC (CPM) has been looking to sell to Stonepeak Partners. Doing so would be another bad idea. City Council should resist calls to do so.

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The original sin

While it often gets bandied about, I think it’s worth unpacking a bit what exactly made the parking meter sale such a bad deal in the first place. Contrary to what many would argue, I don’t think it’s the fact that we sold off a public asset. Around the same time, the City of Chicago engaged in several other asset sales that by and large worked out great - like leasing out four underground parking garages in the Loop as well as leasing the Chicago Skyway tollroad (both for 99 years).

It’s also worth pointing out that operationally, privatization gave us some consumer benefits, like the fact that new meters (and the ParkChicago app!) are way easier to use than the old parking meters were. You might think that’s trivial, but I think making services consumer-friendly is something governments should spend more time prioritizing.

Instead, two simple things made the parking meter deal so bad. First, we didn’t use the money well. Funds from the parking garage transaction went towards a number of longer-term initiatives such as retiring debt, funding MIllenium Park, and financing other Park District capital projects. Similarly, the Skyway privatization funded long-term budget reserves, created new neighborhood investment funds, and paid off old bond debt. Those are the kind of transactions that trade a long-term asset for a new set of capital investments. In contrast, the parking meter revenue was largely a one-and-done financing which plugged an operational budget hole in 2008 and left us in worse shape a year later when we still had budget problems but didn’t have another parking meter system to sell off.

Secondly: we got a terrible price. As many have noted, CPM has reported over $2 billion in revenue from the city’s meter system since 2009, nearly twice what they paid for control of the system ($1.15 billion). That sale price was supposedly justified by analysis from William Blair, which valued the system at between $650 million and $1.2 billion in their report for the city. Yet actual revenues beat Blair’s most optimistic scenario1 nearly immediately, with $503 million in revenue from 2009 to 2013 (versus $495 million in the bull case).

This was primarily from operational changes that Blair’s analysis didn’t adequately account for - like improving collections with those better meters, and expanding paid hours on weekends and overnight downtown. They also just hiked the rates; while parking rates had been pretty low for a long time pre-deal, the transaction itself built in a specific schedule of increasing rates over time that obviously led to higher revenue off the bat.

Two wrongs don’t make a right

But just because selling it was bad doesn’t mean buying it back is good. Start here: buying it back to be a useful asset for our pension system only makes sense if we intend to maximize the parking meter system’s revenue no matter what. That means hiking meter fares whenever it’s appropriate to do so, and putting them in as many places as possible.

I am skeptical that this is politically feasible; many of the same forces that prevented City Council from hiking rates in the early 2000s (pre-transaction) still apply. We’ve seen in the past couple budget cycles how unpalatable it is to raise property taxes on Chicagoans. In the last budget cycle we saw that City Council wasn’t able to find enough votes to increase garbage fees, even when we know that our garbage collection system is running at a significant loss. Do you really think that same Council is going to have the political will to hike meter fees at the expense of the public? And if not, why do we want to buy back a system that requires us to do so?

More fundamentally, it also just strikes me as a terrible idea for our pension funds to double down on investment strategies - like a Chicago-specific infrastructure fund - whose risks and returns are highly correlated with the success of the city itself. If those investments don’t pan out, it’s probably because Chicago is struggling in some way. In that scenario, our investment returns would be worse, forcing the funds to rely on larger contributions from our budget - at the same time that the city hits the skids. Our city’s fiscal health and pension solvency would become even more correlated than they are today. I’m sure you could come up with a worse plan, but I’d have to think a little bit on how2.

We’d also be doubling down over a very long time horizon. I have my other issues with their analysis, but here I can just quote directly from that Blair analysis (just replace “75 years” with “57 years” in your head)3:

The concession agreement requires the concessionaire to operate the System for 75 years, regardless of changes in population, economic activity, technology, patterns of behavior, and the myriad other factors that might affect the economic value of the System. There was no such thing as a parking meter 75 years ago—the first ones were installed in 1935. And if you go fifty years farther back than 1935, there were no vehicles powered by internal combustion engines. A lot can and will change in 75 years. Chicago has experienced meaningful fluctuations in population during the last 75 years. There is substantial uncertainty associated with the future availability and cost of motor fuel, vehicle-sourced pollution and emissions, improvements in public transportation, and so on. Just as the application of improved meter technology may enhance the value of the System, it is also true that technological innovations may adversely impact the value of the System. For example, it may be that individual motor vehicles are replaced by other forms of personal transportation that do not require as much or even any street parking.

Instead - and feel free to stop me if you’ve heard this one before - if we want to improve our pension funds, we’d be far better off doing the exact opposite of this, and unwinding our other special active investments in favor of a passive strategy where the funds stick to broad-based index funds with higher returns and significantly lower management fees than our current portfolio has. Doing so gives us an opportunity to save $30-40 million in annual investment expenses while simultaneously improving our returns and reducing our Chicago-specific exposure. It’s not groundbreaking, sexy, or exciting, but it’s exactly the kind of vanilla, boring approach we need to actually get our pension funds back on more solid footing.

Find a smaller win

None of this is to say, however, that we should just be content to sit back and do nothing. I’m not a lawyer, so it’s really not clear to me exactly what role City Council could play in blocking a transaction if they really want to - but it does strike me as something that would probably be bad for the city with respect to investor relations in the long run. That said, I think it’s entirely reasonable for us to take Stonepeak Partners up on their offer to work with the city to eliminate the deal’s ‘true-up’ payments that require us to compensate investors for temporarily out-of-service meters.

I imagine there are other opportunities to extract value for the city, too - but these would require working with Stonepeak, not trying to freeze them out of the transaction (which could arguably have the opposite effect). We should do so, and take the responsible win over the Pyrrhic one.

A “bus bunch” on the 66 eastbound to Navy Pier. If these two buses are on top of each other, you can bet someone is waiting for a delayed bus elsewhere on the line. Photo credit: Steven Vance, via Flickr

An event to plug: September 2nd | A Conversation with Matt Brewer: Matt Brewer is an attorney and former CEO of the Chicago Housing Authority. He’s also running for Mayor. Join us for a conversation with him about his career, the CHA, and how he’d run the city. We’ll be at Jefferson Tap and Grille from 5:30-7pm. Register here.

Today’s piece is written by an anonymous CTA bus operator. The opinions reflected in this article are solely theirs and do not reflect the opinions of their employer

Few things are more frustrating to a rider than waiting 30 minutes for a delayed bus, only to finally see three show up at the same time. This is called a ‘bus bunch’ and it’s all too common across CTA’s network. It’s also a much harder problem to fix than you might think.

I’ve previously noted that CTA needs a dedicated team to manage bus spacing and ensure consistent service when things go wrong. Today, we’ll go deeper into the causes of the bus bunching problem, and explain how a dedicated bus spacing control team could help.

CTA’s bunching explainer offers a fairly standard picture of the cause. Something delays a bus en route, which causes it to fall behind, getting closer to the bus behind it. In the meantime, more passengers build up waiting to get on the route, which means the delayed bus now has more (and longer) stops to make. That causes it to slow down even more, pushing it further back. Meanwhile, the bus behind it has relatively fewer passengers, and catches up. Without mitigation, the bunched buses have to share stops, which slows both of them down, potentially causing more buses to catch up and become part of the bunch.1

This is especially common on high frequency routes, as even a minute or two delay on a 5-minute headway essentially guarantees bunching. If you look at the CTA Bus Tracker for westbound 66 buses around rush hour, this kind of thing will show up: buses that left the Navy Pier terminal more or less on time, but are all bunched together by the middle of the route.

This is certainly a way that buses bunch, but as highlighted in a recent article from a University of Chicago Researcher, many bunches originate at the terminal. That’s when multiple buses depart from the first stop simultaneously.

To understand how this happens, we’re going to need to dig deep into how CTA bus operations actually work on the ground. To do so, let’s look at an hour of time in an operationally simple(r) route, see where things can go wrong, and explore how having a control center branch focused on bus headway management could help.

Westbound Route 66 - Chicago - 5:00PM -> 6:00PM

Map from the Transit App

CTA route 66 buses start at Navy Pier, and either head to Austin (~8.5 miles away) or are “shortlined” at Pulaski (~6 miles). They take a fairly straight shot, heading down Grand till they get out of out of Navy Pier, turn on Fairbanks, then follow Chicago till their destination.2

You can see a diagram of the buses that depart Navy Pier below. Solid lines represent in service routes, and dotted lines represent periods where buses run without providing service (“deadheads”). Note the time frame difference for the first column vs the second and third columns.

Source: Author, based on data from CTA run paddle

The first bus in our window is run number 5666 (with the “5” indicating it is a bus from the Chicago Garage, and the first 6 indicating its primary route is Chicago). It arrives at Navy Pier at 4:43, sits for 15 minutes before departing for Pulaski at 5:01PM, then turns into the garage, which is conveniently located at Chicago & Pulaski.

From here, 12 more buses will leave Navy Pier before 6PM, for an average departure interval of under 5 minutes. 9 of them are also buses arriving in service from Austin, all sitting for about 15 minutes before turning around. Two of them (5667 and 5628) deadhead (or run “Not in Service”) from Austin direct to Navy Pier via the Eisenhower, Lower Wacker, and DuSable Lake Shore Drive. They sit for 15 minutes at Navy Pier before entering service.

Fifteen minutes may seem like a lot of time to pay for a bus to sit around, but keep in mind that a “15-minute break” is fairly standard for most jobs, and bus drivers need a bit of mid-shift “personal time” too. Just as important, these breaks serve as buffer time, to ensure that even if a bus experiences delays arriving at Navy Pier, it can still start its route on time.

This brings us to our third way a bus gets to Navy Pier - run #5683. 5683 deadheads from the Chicago Garage, but does so on essentially the same route as in service buses, running in mixed traffic on Chicago Avenue. It is scheduled to sit at Navy Pier for about 5 minutes before turning around.

Implications for Bunching

As mentioned earlier, some level of bunching is basically guaranteed to happen en route. But perhaps the most frustrating, most impactful kind of bunching is that which begins before the buses leave the terminal - or “terminal-originating bunching.” One bus (or more than one) arrives late enough to the terminal that it and its follower were scheduled to have already left, and no supervisor or controller has provided a fix. When this happens, they will often leave late as a group. In this case, the buses slow each other down from the jump, and riders at the middle or end of the line experience a very long wait.

Let’s look at where this is likely to occur, and look at possible fixes.

Least likely (although it still happens) are the buses coming in service from Austin. The 15-minute buffers these buses have when they arrive at the end of the line in Austin, and again when they arrive at Navy Pier, can absorb a lot of sins. However, if these buses encounter a lot of traffic, or if the bus ahead of them was taken out of service, or perhaps a transfer train line or bus line they cross has experienced bunching, these conditions can create an overfull train or bus that dumps a lot of riders onto a 66 bus, slowing it down. They can then be at risk of overrunning their 15-minute scheduled layover.3

If these buses dispatch in a bunch, one solution is to “short-turn”, or have the bus turn around early on its trip to Navy Pier, discharging passengers onto the following bus. This maneuver can help put a bus back on schedule for its trip from Navy Pier. 4

A second solution is to have a delayed bus “run light” – deadheading without passengers for a few blocks while leaving Navy Pier. This saves time by preventing it from having to stop to pick up passengers, and helps prevent overcrowding when it does enter service. This may not work if there’s heavy demand at the beginning of the run, or if the traffic is so heavy that deadheading provides little time savings. This trick works better off peak, or when there’s shortcuts available on a route (e.g. for routes that run somewhat parallel to the highways).

The buses deadheading from Austin – 5667 and 5628 – are at greater risk of potential terminal-originating delays. These buses are exposed to a completely different traffic risk since they take the expressways. One frustrating element of operating buses is when you get screwed by traffic that is not part of your route. It’s hard to explain to riders “yeah, so the reason this 66 bus is late is because of a crash on Interstate 290 that’s backing it up. I know that doesn’t make sense.” There’s also less buffer for these buses, because they don’t have a 15-minute buffer at Austin before they turn around and deadhead back to Navy Pier.

But by far the worst carry-over bunching is going to be #5683 - the bus that deadheads down Chicago from the garage. It only holds for 5 minutes at Navy Pier, with only a 4 minute gap until its follower leaves, meaning just a 7-minute delay will put it essentially on top of its follower from jump.

The good news for deadheading buses is that since they have no passengers, they can be turned around and enter service mid run,5 somewhat consequence-free. Assuming the rest of the line is stable, riders at Navy Pier do not experience any extra wait: their bus was already late enough that it would’ve arrived with its follower. Riders down the line benefit moderately, as their bus arrives sooner, and the whole line benefits from reducing bunching (which delays all the buses in the bunch).

Unfortunately, this is effectively never done in practice, because control does not have the tools or manpower to execute granular maneuvers like this. Operators cannot decide this (despite an old, defunct pilot of this idea), both because we do not have the authority to reroute ourselves and because we cannot see the performance on the line: maybe a bus hasn’t left Navy Pier in 15 minutes due to an incident, and the next two buses – no matter how late – have to go there to provide enough capacity for built-up demand.

Notably, it’s much more difficult for control to reduce bunching en route, although things like bus lanes, all-door boarding, transit signal priority, and bus stop consolidation that speed buses will also enhance reliability and reduce – but not eliminate – bunching.6 Instead, a more proactive control could do is reduce extreme bunching by maintaining smoother dispatching and preventing a build up of minor delays that turn into big delays. Service gaps of 30 or 40 minutes start as 10-minute gaps, remain unaddressed, and then build into bigger problems over the course of the day. Catching the gaps early can ensure small annoyances for riders don’t snowball into bigger problems.

It’s easy to see a 25-minute gap in service on a frequent route and think “how hard could it be to just send out a bus?” or “they must be pretty short staffed if this bus isn’t coming”, but the truth is bus operations are a much more complex and fragile beast than most folks think. By adding more proactive oversight to the network, CTA could mitigate some of this fragility and provide more reliable service without just throwing more buses and operators at the problem: a more expensive solution that often doesn’t work.

A “run paddle” is the basic document describing how a particular CTA bus operator goes about their day. These schedules (and issues keeping to them) define CTA rider experience, and I’ll be referencing them extensively in future articles. So, let’s learn to read them.

Here’s a sample run paddle, one of the ones I mention in my [link here] article on the Chicago Avenue route.

Let’s start from the top.

The red box contains the run number (5636) and the day of the run - Weekday (ie, Monday-Friday). There may be run 5636 dispatched on Saturday, or Sunday, but those will be different, operating at different times, or doing different things. The first character (“5” here) indicates the garage - Chicago. You can see all the garage identifiers on chicagobus.org. The second character is a digit identifying the primary route that the run is on - in this case, “6” for bus route 66. This is unique to the garage - 56XX indicates a Chicago bus running primarily as a 66, while K6XX indicates a bus from the Kedzie Garage running primarily on the 60.

The orange box describes the total hours the route is expected to pay, the breakdown of work, and the time operators have to report (ie, clock in) for the route. “DUTY TYPE” is blank, which indicates this is a regular run. Other options include “BLOCK” (typically 10 hours or more) and PTO (Part Time Operator). “WORKING” indicates the total time an operator is paid to be on the clock, ALLOW is time the operator is paid on the clock but not driving (e.g., they are inspecting a bus before pulling it out, or commuting to meet a bus en route at the relief point to take it from the operator currently driving it). SPREAD is time paid to an operator that is not worked: our union contract says if an operator has a “swing” (split) shift in excess of a certain time period (10.5 hours), they make half time for every hour in excess of that period. (“Free” pay is nice, but dear God swing shifts suck).

The yellow box is a breakdown of each half (ie, before and after “fallback”/lunch) of a run. “Plat” refers to “platform time” (the time a driver is physically on the “driver platform” of a bus), so “Plat time” is the same as “drive time”. “Plat start” is “driving start,” “plat end” is “driving end.” “Half start” and “half end” refer to the times the operator starts having assigned duties. Notice here that, for the first half, “plat start” and “half start” are different - this is because the operator starts the shift at the garage, and has to commute to meet and take over an in service bus.

“Plat time” is significant to split out from the rest of time an operator is working because the CTA operator contract says plat time in excess of 5 hours and 30 minutes is unsafe, and operators should be paid 30 minutes overtime if they work over 5 hours and 30 minutes driving. This effectively prevents excessively-long scheduled drive times, as CTA dislikes paying us to do nothing.

Moving on to the juicy stuff, the main body of the run.

Here the red boxes here are the beginning or end of a half. This run begins with a “relief” (RW). The operator commutes to Chicago and Pulaski (by riding a Pulaski bus, catching one of their fellow operators pulling out, or, because Chicago & Pulaski is very close to the Chicago garage, simply walking there) and takes over a bus, headed west (RW), from run 5681. They finish the west-bound run, then do a full lap of the 66. The first half ends with a pull-in to the garage (the directions for doing so are contained in the note “a” in the blue boxes). The operator takes ~50 minute lunch, then meets westbound (RW) bus 5621 and takes it over. They again pull this bus in to end their shift.

The orange box gives operators information about what they’re doing: in this case, a 66 bus. The bus scheduled ahead of this run (“L”- Leader) is 666, and it is “6+” (6.5) minutes ahead (“headway”). The bus scheduled to be behind this run (“F” - Follower) is 668, and it is 6.5 minutes behind. “FB Code” (farebox code) is vestigial from before we had computers on the buses; today it’s all GPS-coded and automatic.

The yellow box contains a single in service trip of the bus. Each line is a “time point,” telling the operator their scheduled departure from that intersection (being late is fine, departing early is “””not allowed””” although that doesn’t stop most operators). The bolded time points are terminals. The time points marked with an “E” (green box) allow the driver to depart early from those time points. These time points are typically at the end of a trip (although not every trip of every bus has “E”s). These time points exist purely as a rough schedule, they don’t mean we have to wait at them if we’re early, but they allow operators to more easily estimate “how long till we get to [street]” questions from riders. After a single trip, the bus will either turn around or deadhead somewhere. For this route, it just turns around every trip. The run paddle has empty space before the next run, and the time between one Chicago Austin at the end of a trip and the Chicago Austin at the beginning of the next trip is the time the operator has to use the bathroom, stretch their legs, or simply absorb delays from the last trip.

So, in brief: This run pays 8 hours 41 minutes, clocks in at 14:56 (2:56PM), and involves 23 minutes of commute to meet in service buses. The first half is 3 hours 22 minutes of driving, and the second is 4 hours 56 minutes of driving. The run starts with a relief, does essentially one lap of the 66, then pulls into the garage and takes a lunch (“fallback” in CTA lingo). The run then meets another in service bus, and does a few laps of the 66 before pulling in again at ~22 minutes past midnight.

Easy, right? Let’s do a harder one. The top is all reasonably familiar. This run is notably a swing (where does it say that? Two answers: It has “SPREAD” pay, and also the part where “fallback”/lunch is has two horizontal lines instead of one.)

Where this run is different is that it has a lot of…extra stuff.

The run begins with a pullout, easy enough. It deadheads to North Beach via “a” squints* Kedzie -> Harrison -> California -> 290E -> Ida B Wells -> Lower Wacker -> Lower Lake Shore -> Lake Shore -> Lasalle -> “side of on-ramp leading to Northbound DuSable Drive.” Operators are expected to know which direction to turn at each listed intersection.1 After sitting a bit, the bus pulls out to the origin of route 134 (Stockton/La Salle Express) at Briar & Sheridan. It then does the 134 Southbound, then deadheads to the north end of 134 to go again via “c” squints harder Lake Shore, exit at Belmont, continue to Sheridan. It does the 134 south again, and then pulls into the garage via “d” - Adams to Desplaines to Van Buren to 290W to California to Van Buren.
(For my bus bunching article readers, notice literally any of the streets in these deadheads can have a crash on them, or construction, or just some particularly double parked drivers and this will gut the whole thing, despite riders of the bus never noticing any direct obstructions to the route.)

After a ~4.5 hour fallback, the operator walks out of the garage (the relief point is literally at Kedzie garage) relieves K535, headed north (RN) on a 52 (the “South Kedzie” route), and does a few laps of that, before handing the bus off to K542, then walks back into the garage to hand in their paperwork.

Note the run is K534 - the 134 is not considered one of the main Kedzie runs, so the second digit - “5” - references the 52.

The final, secret bit of each run is contained at the bottom: supervision can change your route at any time. This is done when a bus is particularly late (for instance, a bus is scheduled to be in service but a supervisor orders them to deadhead instead to get “back in place” on schedule), or when the train system goes down and they need to pull buses off the street for the shuttle, or when an event is letting out or…

Scheduling - How do operators get assigned runs?

Every few months, CTA bus operators get to “pick” their runs on a seniority basis, with longer-tenured bus operators picking their runs before newer operators pick theirs. Each run is listed individually for each weekday (these are typically all the same). Saturday and Sunday both have their own unique schedules. Operators may choose to pick any combination of 5 regular runs (although only so many operators can choose to have any given day off), or pick a “block” of four 10ish hour days that come as a package deal with Saturday and Sunday always off, plus one other day. You can see all of the spring 2026 runs and the summer 2025 runs here. Part-time operators can indicate their preference among part-time-only run blocks totaling around 30 hours for a week (unlike full time operators, part time operators can have their schedules changed on them by management. Full time operators cannot be forced to change their runs.)

Operators may also select to work “the [extra] board,” where they call in five days a week to learn what they have been assigned the next day. Operators on the board may also get assigned a “show,” where they come in for 2 hours and take whatever run that people do not show up for without giving 24 hours notice. The board, shows, and last minute requests for operators to take overtime are how CTA fills sick days, vacation days, last-minute call-offs, etc. Working the board typically results in operators getting more hours than a picked run would2 (and therefore better pay), as well as allowing them to typically get off earlier each day than they otherwise would.

Since picks are made in seniority order, new operators generally work nights and weekends and progressively get earlier off times and more favorable days off as they build seniority. Once all available runs are picked, remaining operators automatically get shoved onto the board. This, combined with bus operators tending to love picking up extra shifts, is how CTA maintains (despite what CTA riders might expect) an exceptionally high level of service delivery for buses: approximately 99.5% of all buses scheduled actually go out.

Congrats, you have now passed an entire half day in CTA operator training!

• August 19th | Let’s Talk Housing with Ald. Bennett Lawson: Join A City That Works, Strong Towns Chicago, Chicago Growth Project, Abundant Housing Illinois, Lakeview Urbanists, and whatever other pro-housing groups that get started between now and Wednesday to talk housing with Ald. Bennett Lawson. We’ll be at Big Gay Sal’s Pizza in Lakeview from 5:30-7:30pm. Register here.

• September 2nd | A Conversation with Matt Brewer: Matt Brewer is an attorney and former CEO of the Chicago Housing Authority. He’s also running for Mayor. Join us for a conversation with him about his career, the CHA, and how he’d run the city. We’ll be at Jefferson Tap and Grille from 5:30-7pm. Register here.

A few months ago, we wrote about Chicago’s poor record of solving murders: in 2025, only 33% of homicides in Chicago actually ended in an arrest. That’s a disaster for a number of reasons. Not only are far too many murders going unpunished, but by ‘clearing’ a large number of homicides without ever making an arrest, the Mayor and Police Department are hiding the ball on just how bad we’re really performing.

But homicides aren’t the only crime we should care about. So I submitted a Freedom Of Information Act request to figure out how many non-fatal shootings a year Chicago Police clear – and what share of those clearances actually involve arrests.

The numbers aren’t pretty. Between 2001 and 2025, the arrest rate for non-fatal shootings in Chicago has averaged just 9% per year. During the pandemic, arrest rates dropped to as low as 5% before rebounding to 11% last year. CPD is also writing off almost as many cases via ‘exceptional means’ (such as when a perpetrator is deemed to be dead already, or the State’s Attorney’s Office declines to prosecute a case). Historically, 7% of cases have been cleared through that path.

This still understates the problem. First, it only counts shootings where an individual was hit – if a gunman fired and missed altogether, it wouldn’t be included in this data. And unlike homicides, which are generally reported very accurately, surveys indicate that just 40% of violent crimes are reported to police. That means that there are likely far more shooting victims in Chicago that never came forward in the first place. After all, if the police aren’t going to make an arrest anyway, what’s the point?

This is bad for a few reasons. Not only do victims of violence deserve closure, but actually solving crimes is an important part of how a police department rebuilds trust with residents.

Solving more shootings would also likely help drive down violence in the city over the medium term. Researchers have struggled to tease out the deterrent effect of higher clearance rates, but in Chicago we know that a very small number of individuals commit a large share of the shootings. Getting just a few of them off the streets could make a major difference in public safety. Shootings also often set off cycles of retaliatory violence, which could be interrupted if perpetrators are caught quickly.

It’s also worth remembering that almost every shooting is an attempted murder – the perpetrator just missed, or the victim got timely medical care. Catching these offenders before they learn to aim presents one of our better opportunities to reduce homicides going forward.1

Chicago appears to be uniquely bad at this

Few police departments are good at solving these cases, but Chicago appears to be uniquely bad. In 2024, Chicago’s 9% arrest-rate clearance rate for non-fatal shootings was less than a third of the national average of 34%.

We’re also worse than most of our big city peers. According to a review by the Marshall Project, in 2022 Denver, Colorado led the way amongst big cities with a 53% clearance rate of non-fatal shootings. New York was second at 41%. Meanwhile, Chicago was at the bottom of the cities reviewed, with a clearance rate of just 9%.

Source: Marshall Project

Again, this understates the problem. Because Chicago tends to rely much more heavily on ‘exceptional clearances’ than other cities, our 9% significantly inflates the actual share of non-fatal shootings cleared by arrests. When you strip out the 77 ‘exceptional clearances,’ Chicago’s arrest rate for non-fatal shootings in 2022 was just 7.2%.2

Other cities do not do this at the same rates. Data for 2022 isn’t available publicly, but in 2025, New York reported just 6 ‘exceptional clearances’ across all crime categories. That means its 42.6% reported clearance rate in 2025 is an actual reflection of its arrest rate, rather than an exercise in aggressive stat padding.

We’re dealing with a capacity problem

There’s nothing special about shootings that makes them particularly hard to solve. In fact, because these cases all come with a live witness (the victim), these cases should generally be easier to solve than homicides.3

The problem is that police departments don’t prioritize them. In Boston, researchers found that clearance rates for homicides and non-fatal shootings are similar in the first 48 hours after an incident, but then fall off much faster for non-fatal shootings as detectives are routed elsewhere.

We see this pattern in Chicago as well. As noted in an excellent Sun-Times article last year, non-fatal shootings are quickly deprioritized by CPD. The Matrix Consulting study published earlier this year put some numbers behind that reporting: detectives spend an average of 270 hours per case on each homicide, but just 50 hours per case for non-fatal shootings.

The results are predictable. CPD consistently makes arrests in 100-200 non-fatal shootings per year, regardless of the overall number of shootings committed. When shootings go up (as they did in 2016 and 2020), an even larger share go unprosecuted – contributing to a broader breakdown in public safety.

Three solutions to boost arrest rates

This fact pattern leads to some pretty straightforward solutions. First, Chicago needs to dedicate more detective time to solving non-fatal shootings. Based on the Matrix analysis, detectives should be spending 4-5x the time and effort on non-fatal shootings as they are today. Any efforts to civilianize more roles and/or hire more officers needs to make this role a priority.4

If we do so, we can expect some pretty quick results. When Denver attacked non-fatal shootings with the same resources as fatal ones, clearance rates jumped up from one in six to over 50%. The Boston Police Department has accomplished something similar. Notably, in February of last year CPD told the Sun-Times that it was trying to do something similar, but absent a meaningful increase in detective headcount, it’s hard to see where those resources would come from.

Second, we need to continue to lean into technology investments to improve the productivity of detectives. Research on CPD’s Area Technology Centers indicated they delivered meaningful improvements in homicide clearance rates even as violence spiked during the pandemic. Continued investments in cameras and license plate readers would likely make a big difference.

Better software to process those inputs would also help. Per the Matrix analysis, the average homicide case requires CPD to review 60 hours of video, and the average non-fatal shooting requires 6.5 Artificial Intelligence is not a magic wand for solving our city’s problems, but there are plenty of off-the-shelf tools that are quite good at processing large volumes of video and tagging moments for better review. That could free up significant time and might encourage detectives to source more video footage in the first place.

Finally, we should extend some progress CPD has made to homicide investigations to non-fatal shootings. This has been a below the radar story in recent years, but the Department has been working to implement a series of recommendations made by the Police Executive Research Forum and Department of Justice back in 2018.

One of those changes, codified in the last CPD contract, ensures the same detective consistently works a homicide from the get-go. We’ll spend more time on those changes, but they appear to be a success so far. Treating non-fatal shootings with a similar level of care and consistency would likely deliver improvements to clearance rates as well.

This is a solvable problem

There is rarely ‘one weird trick’ to address the problems Chicago faces. But in this case, there is also no one single villain or entrenched political actor blocking a series of systemwide changes, either. CPD wants better numbers, detectives want to solve crimes, and other actors in the system - including the police union - have been open to prior reforms.

Solving more shootings won’t come easy, but we can fix this problem with focused effort and a limited amount of additional resourcing. In the process, Chicago could give more victims closure, rebuild trust in our police force, and deliver safer communities in the long run. That’s exactly the sort of reform a future Mayor and Police Superintendent should prioritize.

• New to announce: On September 2nd, we’ll be chatting with Matt Brewer, former CEO of the Chicago Housing Authority and candidate for Mayor of Chicago. Come hang out with us at Jefferson Tap from 5:30-7:00pm, and register here to let us know you’re coming.

Others to remember: Big Tent Urbanist Party on August 13, Keep Families in the City on August 16, and A Conversation With Ald. Bennett Lawson on August 19.

In recent years, the City of Chicago’s budget has gotten increasingly difficult to get across the finish line. Our annual budget gap - the projected budget deficit that the City has to close each budget season - has grown from around $128 million in FY2023 to over $1.1 billion last year. And despite some reforms last year, gaps are projected to remain quite large. The city’s Financial Future Task Force projected a gap of nearly $700 million this year and gaps between $680 and $780 million in future years.

Meanwhile, City Council has become an increasingly outspoken voice during budget season. After providing significant pushback during the fall 2024 budget season, last year they took things fully into their own hands by passing a budget of their own. Leading this process is an unenviable position to be in.

Yet that is the position that whoever wins next year’s mayoral election will find themselves in. This is the second post in our series on the issues that ought to shape the 2027 mayoral race (pensions was first). Chicago’s fiscal position is fraught, and the budget cycle seems more challenging than ever - but figuring out how to deal with our fiscal reality must be at the forefront of any mayor’s agenda.

Some budget basics

First, a brief overview of how the city budget works: last year, the City of Chicago had a total budget of around $16.6 billion, with $12.7 billion in our operating budget (excluding grant funds). Much of that, however, consists of spending that is fairly set in stone. Pension payments and debt service, for example, now combine to make up about 40% of the city’s operating budget. Our city enterprise funds (water, sewers, and the two airports) also make up a significant portion of the overall budget but are standalone self-funded entities.

The remaining piece is our Corporate Fund, which was around $6 billion last year. This is the City’s general operating fund, and is where we spend money on the stuff you probably think about most often in terms of “what the city does.” This is also the portion that’s really up for debate each year and gets negotiated during budget season. When there’s a shortfall in revenue, it’s the fund where the cuts (or new taxes and fees) need to come from, and when there’s a surplus it’s where the City can allocate funds for new investments or projects.

And as I referenced earlier, those shortfalls have become increasingly common in recent years. This year’s gap is expected to be somewhere around $680 million before changes to the budget take place. You could get fairly granular at mapping out the causes of these recurring deficits, but ultimately they boil down to the fact that increases in our spending1 typically outpace our revenues2.

Even in the Corporate Fund, room to maneuver is not always huge. I think it’s worth noting that in last year’s budget, when Council passed their own proposal over the mayor’s objections, the final alternate budget that passed changed only 1.6% of total spending - a few hundred million dollars - compared to the mayor’s original proposal. Over 98% of the budget wasn’t in dispute even when fighting was at its fiercest in recent memory.

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The case for a long-term strategy

Perhaps the most frustrating part of our budget challenges is in the seeming lack of long-term planning at solving the problem. Each year, we seem to reach for a new hodgepodge of additional taxes, fines and fees to bring in a bit more revenue. We find a new smattering of operational efficiencies we can come up with to reduce our spending. Then when we’re still not there, we use one-time solutions like pulling in increasingly larger TIF surpluses or taking on more debt to fund operational expenses.

What we’re not doing often enough is enacting solutions which can compound year over year, like indexing those taxes and fees (and yes, even our property tax levy) to inflation, so they’ll increase slowly over time and keep better pace with our expenses, instead of ratcheting upwards every few years.

And in recent cycles, this challenge has become particularly difficult as tensions between City Council and the mayor’s office escalated into Council passing an alternate budget of their own. It’s difficult to enact meaningful reforms when those reforms aren’t led by the administration responsible for enacting them, or when those voting to pass them have to worry about the threat of a veto preventing reforms the mayor doesn’t like. But I am skeptical that City Council will be willing to revert to a more passive voice in future administrations, even if future mayors have less contentious relationships with Council. Candidates for mayor need to think about how they intend to work *with* City Council to craft a budget that fixes our fiscal challenges, rather than just butting heads and seeing who can get to 26 votes first.

What that long-term strategy should include

It’s worth thinking through what that long-term strategy ought to include, too. An easy one for starters: more of our revenue sources need to be indexed to inflation going forward. Under Mayor Lightfoot, for example, the city increased its property tax levy each year to keep up with inflation. Those small-but-predictable increases ought to be a lot easier for taxpayers to deal with than seeing a dramatic tax hike every few years when we’re forced to raise the levy more significantly. And away from property taxes, my back-of-the-envelope math estimated that indexing other fees and fines referenced by the Financial Task Force - like recycling fines, food inspection fees, or the bottled water tax - would bring in around $17 to $18 million per year for the city. That won’t close the gap on its own, but it helps stop the gap from compounding each cycle for no reason other than nobody wanting to have yet another fight about which fees to hike this year.

Some larger revenue ideas are worth exploring as well. The online sports wagering tax the city passed last year, for example, has performed exceptionally well, and it would probably behoove us to think about expanding to whatever level would maximize revenue for the city. Secondly, while I’m not a fan of pulling money out of TIF surpluses every year, I do think we need to take a harder look at fully sunsetting those TIF districts which are no longer necessary to stimulate economic development. Doing so would increase our property tax levy without raising rates on homeowners.

I’ve also been an advocate before of hiking our garbage fee, which currently brings in around $60 million in revenue for the city but covers less than one-fifth of what it actually costs for the city to collect our trash. Garbage collection is one of the most straightforward fee-for-service type things that the city does, and having a fee that more adequately reflects the cost of collection seems like a straightforward good idea (and one that can be done in a way to protect low-income residents, as we do with water and sewer bills).

We also need to do a better job adopting sustainable reforms that groups like the Financial Future Task Force and EY come up with, rather than shelving or slow-walking their ideas. Last year, for example, the Task Force’s interim report and EY jointly identified somewhere in the neighborhood of $90 to $120 million in efficiencies that the city could act on immediately - including domains like fleet management, debt collection modernization, and tax auditor staffing - plus another $100 to $200 million in longer-term savings from things like technology modernization and City-County functional consolidation. Implementation hasn’t kept pace with the ambition. Take fleet management, for instance - identified savings were in the ballpark of $13 to $28 million, but last year’s budget only contemplated $3 million of it. That’s not nothing, but it’s not what we need.

To be fair, we are making some progress - the estimated fiscal gap for this year of around $680 million is meaningfully smaller than last year’s $1.1 billion, and that’s presumably through some of these reforms. But “better than it was” isn’t the same as “as good as it can be,” and there’s no real mechanism ensuring that reforms adopted survive contact with the next budget cycle.

What the next mayor needs to be thinking about

With all that in mind, here are the main things I think candidates for mayor need to be considering:

• Have a plan for dealing with labor. Labor is our most significant expense in the budget, with personnel costs making up roughly 70% of the city’s operating budget. Both EY and the budget working group have also noted that many of their most significant cost-saving reforms would require buy-in from our public sector unions. Nearly all of the city’s major Collective Bargaining Agreements - including the Fire Fighters, FOP, SEIU, AFSCME, and IBEW all expire on June 30, 2027. That’s just six weeks after the next mayoral inauguration date on May 17th. Candidates need a plan *right now* for what they want out of those negotiations and how they intend to deal with the city’s labor partners to put us on firmer footing going forward.

• Regard Springfield as a tool, not a cure-all. In recent years, we’ve often heard calls for more progressive revenue sources - which Springfield would need to work to authorize - to fix our budget challenges, followed by very little action to actually bring about those changes. There are other legitimate asks Chicago can make of the state government to help our budget issues, too - like extending the sales tax to cover services, or fighting for a higher LGDF share rate (both ideas the Financial Task Force included in their recommendations). But getting any of those ideas implemented requires having a real state legislative agenda, and consistently lobbying for that agenda. That’s also a long-term project, not something you can count on for the next budget cycle. And it’s a task often made easier when those doing the lobbying can point to the hard choices we’re already making at the city level before we’re asking for more state help. It’s not enough to turn to Springfield as a panacea. Candidates need a clear idea of what they’re looking for from Springfield, a long-term plan for bringing it about, and a short-term plan for how they’re going to make progress until they can get that plan passed.

• Fix our economic growth. At a certain point, we cannot keep raising rates on a base that isn’t growing fast enough. Every fight over the next new tax or fee is really a fight over how to divide a pie that isn’t getting bigger - and the only way out of that dynamic is a tax base that expands on its own. A serious mayor needs an actual growth agenda, not just wishful thinking and platitudes about why economic growth is important. We’ll go into more detail on this in a future post, but proposals like further cutting the tape to reduce permitting timelines, or reforming our zoning and construction codes to increase the supply of housing, seem like obvious places to start.

The overall requirement here is difficult, though straightforward. To solve our fiscal challenges, future administrations need a sustained commitment towards long-term fiscal reforms, dealing with partners in labor to reduce our largest spending costs, and creating the economic growth that will make our budget math easier. Candidates for mayor need to show they have a plan to do that.

Daniel Koslovsky is a recurring contributor for A City That Works. He’s also written for the University of Chicago’s Becker Friedman Institute, Streetsblog Chicago, and Crain’s Chicago Business.

Regular readers of A City That Works are well aware of the growing housing crisis facing Chicago. The good news, as previously laid out by this blog, is that the city and state are at least starting to address the zoning rules that make it harder to build housing across the city.1

However, if we don’t also reduce the cost of new construction, zoning code reforms alone won’t generate enough new development to overcome the city’s shortage of 128,000 affordable homes. Recent research found that construction costs are the biggest driver of increasing break-even rents2 in the city and that they are accelerating faster than the national average.

To address this issue we need to reform Chicago’s building code as well. The poster child for these efforts has been single-stair reform, which would make it easier and cheaper to build affordable, multi-family units. But that’s just the starting point – there are a number of other elements of Chicago’s building code that raise construction costs, while providing minimal safety benefits.

Richard first wrote about this problem back in 2024. Today, we’re kicking off a recurring series to dig into the code changes that could make it cheaper to build in Chicago, and help deliver lower rents and safer buildings in the process. In particular, we will be examining the following:

• Plumbing code restrictions that limit the use of polyvinyl chloride (PVC) and cross-linked polyethylene (PEX) plastic piping and tubing

• Restrictions on the use of mass timber for buildings 6+ stories

• Elevator cabin size, accessibility, and other requirements

• Other areas where Chicago’s code is out of step with the rest of the country such as requirements for electrical conduit (metal piping), excessive accessibility requirements, and an opaque building code update process

Today, we’ll take a brief look at the cost premiums and safety considerations of each of these items. Then we’ll examine the second order implications, and the political constraints that have kept these rules in place.

Known Costs and Uncertain Benefits

Plumbing: Currently, Chicago code prohibits developers from using PVC and PEX plastic piping and tubing in residential buildings with a height exceeding 60 feet. This forces mid and high-rise multifamily buildings to be built with more expensive cast iron or copper piping. David Lapidus, a Chicago area multifamily housing real estate developer, estimated that allowing plastic piping and tubing could save 5-10% on total construction costs.

PVC piping. Source: The Vinyl Institute.

The code is ostensibly in place to improve fire safety in mid and high rise buildings, but neither of the two dominant plumbing codes adopted by most jurisdictions in the US (the International Plumbing Code and the Uniform Plumbing Code) impose any height limits for plastic pipe use. Chicago’s 60-foot restriction is out of step with most of the country, which does not see plastic piping as a fire hazard worth restricting.

Mass timber: Chicago’s allowable-height rules push many mid-rise buildings greater than five stories into more expensive “noncombustible” construction types. Crucially, this prevents developers from using mass timber as the primary building material. David estimates that on one 50,000 square foot project he is currently working on, his company could have saved 10% on overall construction costs if mass timber were an option.

Prior code updates in Chicago illustrate the potential impact of relaxing restrictions on timber construction. Annual permits issued in the city for five story residential and mixed-use buildings essentially doubled after the city’s code was updated to allow wood framing for interior walls starting in 2021.

Construction of a mid-rise building using mass timber. Source: Woodworks.

Similar to plastic piping, the justification given for limiting mass timber to five stories is fire safety, but this restriction is not aligned with current guidelines. The modern International Building Code, which most jurisdictions in the US adopt, now permits mass timber to be used for buildings up to at least nine stories generally, and all the way up to 18 stories in some cases.

Elevators: Chicago’s building code requires that buildings six stories or higher have at least one elevator with a cabin large enough to accommodate a fully horizontal ambulance stretcher.3 This cabin size requirement is the norm throughout the US and Canada. In comparison, the rest of the developed world typically only requires elevator cabins to be large enough to fit a wheelchair plus one person.

The larger cabin size is one of the primary reasons it costs three times as much to construct an elevator in the US and Canada as it does in Western Europe. The larger cabins are not only more expensive to build, they also reduce the feasibility of new developments by decreasing the amount of rentable space by an estimated 5%.

Comparison of the minimum elevator cabin sizes in most of Europe and most of North America. The measurements are in centimeters. Source: The Center for Building in North America.

The larger cabin size is mandated to accommodate emergency responders in the event they need to transport someone in a medical crisis in a fully reclined stretcher. While that is a noble motivation, such events are exceedingly rare and emergency responders are experienced at working around the absence of large elevator cabins.4 The extra cost also perversely incentivizes developers to exclude elevators from their projects altogether when possible, depriving tenants of the safety benefits a smaller elevator would provide.

Individually, the extra costs from these codes are enough to sink housing developments that would otherwise be just profitable enough to get built. Collectively, they present a serious financial hurdle for medium to large housing developments, ballparked to be 20%-25% of construction costs for a project constrained by all three codes, in a city in desperate need of more homes.5

In addition to resulting in less housing overall, high construction costs contribute to disinvestment in lower income neighborhoods. When construction costs are high, developers have to be able to command high rents or sales prices in order to get projects to pencil. That means investment is restricted to a small set of already affluent neighborhoods, while housing stock in lower income communities continues to age.

Hidden health costs

Paradoxically, by stalling the construction of new homes in the name of safety, the highlighted codes are making Chicagoans less safe in meaningful ways. A 1999 paper by Harvard researchers tried to quantify these secondary effects. They broke them down into two categories — stock effects and income effects.

Stock effects are the negative impacts of having an older, less safe housing stock. Older housing is more likely to contain hazards, provide less fire protection, and be in substandard condition generally. That describes a lot of Chicago housing today - the median home in Chicago is more than 70 years old.

Income effects are the negative health impacts of people having to spend more on housing if they want to attain the same quality of home. A portion of the money families must spend on more expensive housing would have gone towards healthcare and lifestyle improvements. Foregoing that spending has real health consequences.

The study’s authors find that every 0.1% increase in construction costs leads to between two and sixty premature deaths per year nationally. Translating the low end of this premature deaths estimate to a 20%-25% increase in construction costs these codes are estimated to incur, means a conservative rough estimate of the premature deaths in the Chicago area resulting from the cost premium of these codes is about 13 to 16 people annually.6

There are further negative consequences not accounted for by this paper.

First, by making the city’s housing less dense people will be forced to more sprawling communities and live a more car-oriented lifestyle. Driving is a much more dangerous activity than living in a multifamily unit with slightly relaxed building codes. A recent Pew study found that multifamily housing built after 2010 had a fire death rate of 0.5 per million people. Meanwhile, 15,000 miles of driving, the yearly distance driven by the average American, results in roughly 180 fatalities per million people.7

Additionally, for some households, the extra cost of housing is the difference between having a home and living on the street. There is a well established relationship between the cost of housing in a metropolitan area and its rate of homelessness. People experiencing homelessness are at a much higher risk of experiencing health and safety issues than the general population, even after controlling for things like income, education, and race.

Absence of cost-benefit analysis

Building codes are valuable. They set minimum safety standards that give us all peace of mind. Their benefits are felt at both the individual and community level. I can rest easy knowing that I’m not living in a tinderbox, and that my neighbor’s building isn’t at risk of producing a fire that spreads fast enough to take down the whole neighborhood (something Chicago is all too familiar with). Codes also reduce transaction costs by harmonizing standards across the construction industry.

But to enact optimal policy, lawmakers need to soberly weigh the costs of these codes against the benefits they provide. By not fully accounting for a code’s costs, they may end up harming the people they are trying to protect. In the case of the codes highlighted in this series, not only do they cost Chicagoans more in monthly rent and mortgage payments, the secondary effects of those extra costs erode any of the limited safety benefits they may provide.

The politics of reform

On paper, relaxing these codes seems like a clear net positive. Unfortunately, they remain in place because the political economy for them has long been asymmetric. We will dive into specifics more in later articles, but to characterize the landscape broadly — concentrated, powerful interest groups fight to maintain the current codes without much organized push back.

Fire departments support the stricter codes because they are incentivized to promote the safety of their firefighters and the fire safety of the city above all else. Understandably, they are not particularly concerned with the cost these codes add to building homes. Thus, any code that might provide extra fire protection, even ones like restrictions on plastic piping and tubing where the safety benefits are up for debate, are likely to be supported by CFD.

Unions in the building trades often support the stricter codes because they lead to more work for their members. In many cases, more stringent specifications require more labor (or more skilled labor) than simpler alternatives. A common saying in the construction industry is that it takes ten men to carry one length of a cast iron pipe, but it only takes one man to carry ten lengths of PVC plastic pipe. Of course, organized labor is also invested in seeing more projects pencil - and nobody wins when nothing gets built at all.

There’s also asymmetry in the risk facing policymakers because of public psychology. If a death can be traced back to a relaxed code, there’s the potential for the politicians who enacted the reform to face public outrage and scandal. In contrast, no such public outrage exists for those who have maintained the status quo of a supply constrained housing market, even though its secondary effects have likely led to a number of premature deaths.

Those are three strong political forces and, until the recent rise of the YIMBY movement, there was no countervailing force pushing for reform. Historically, even developers haven’t been major advocates of code reform, because they’re used to the rules as written and they apply to everyone in the industry. But as the city’s housing crisis continues to worsen, the political calculus has started to change.

A path forward

Chicago does not have to choose between safety and affordability when it comes to housing. With the modern safety features of multifamily buildings these two goals are in fact aligned. To do that, we need to pursue targeted code reforms that will enable far more buildings to pencil.

Other cities and states have already charted a path that Chicago and Illinois can follow. We will highlight those jurisdictions as this series rolls on. Many of them navigated the same political challenges laid out above.

It is genuinely exciting to see the growing momentum around zoning reforms at the state and local levels. Those concerned with the current housing crisis should be heartened by the recent progress in the city and state to address the serious lack of homes. Now, we need to direct the same level of energy and attention to our building code.

Adam Drakulic is the President of the Chicago Growth Project.

On October 2nd, 2025, my wife and I welcomed our first child into the world. We live in a two-bedroom condo in Wrigleyville that we adore. The Brown and Red lines take me to work and our daughter to every cultural institution this city has to offer. We have gone without a car for most of that time, and saved a lot of money in the process.

As every parent eventually discovers, a baby’s worth of stuff expands to fill whatever space you have. So we’ve found ourselves looking for more elbow room. I made the mistake of checking Zillow to see what the market looks like around us, and trust me, it’s not pretty. There are plenty of one bedrooms comparable in price to the rest of the city, expensive $800,000 plus duplex downs, and almost nothing in between. In particular, there are almost no apartments available with three or more bedrooms.

Lakeview Builds Family Housing Exactly One Way

I pulled the Census microdata for Lakeview and Lincoln Park to see what has been built since 2010. In buildings of twenty units or more, 69 percent of units built are a studio or a one-bedroom, and 10 percent of units have three bedrooms or more. In contrast, 87% of units built in one or two unit buildings were three bedrooms or more. Lakeview does build family-sized housing, it just builds it as detached houses and duplexes, which is the most expensive possible way to produce a bedroom on land this valuable.

Here is an example of what’s getting built: 3511 N Wilton Avenue, Unit 1 is a three-bedroom, three-bath, 2,100 square foot duplex down on a quiet one-way street, a few minutes from Wrigley Field, the Southport Corridor, and both the Brown and Red lines. It is, more or less, exactly the home I would buy if I could. It was listed on May 1st of this year at $799,000, went contingent in five days, and closed on June 5th at $826,000. That works out to $393 per square foot.

You can see the missing rung in the price data. Citywide, the typical three-bedroom home in Chicago is worth about $358,712, according to Zillow. A one-bedroom in Lakeview is worth $5,000 less than the citywide average. That discount might come as a bit of a surprise, but the plethora of older 1- and 2-bedroom apartments in Lakeview are likely driving that trend.

But as you scale up in bedrooms, a clear disparity emerges. A two-bedroom in Lakeview costs 1.5 times as much as the city wide average, a three-bedroom runs 2.3 times, while a four-bedroom is 2.9 times. By the time we reach five bedrooms, Lakeview costs 4.4 times what the rest of the city does.1

Family-sized units are priced at a premium. One well-known variable here is schools. On the 2025 state assessment, Burley, Blaine, and Hamilton Elementary are among the highest-scoring open-enrollment neighborhood elementary schools in CPS. Lakeview, and other North Side neighborhoods have other amenities in abundance as well, including transit, parks and retail - which researchers find strongly complement school quality.

Today, there are only two public schools in the entire city that report a smaller share of low-income students than Burley, Blaine and Hamilton.

Chicago should be making these opportunities as widely as available as possible. In this case, that means encouraging as many family-friendly units as possible. Unfortunately, we’ve spent decades doing the opposite.

Historically, 2-4 Flats Supplied Most of Our Family-Friendly Units

In Chicago, family-sized housing most commonly comes in the form of a two-flat, three-flat, four-flat, and courtyard buildings. Chicago built them by the thousands a century ago, and you walk past them on almost every residential block on the North and Northwest Sides.

DePaul’s Institute for Housing Studies found that nearly 40 percent of rental units in two- to four-unit buildings have three or more bedrooms. In buildings with five to 49 units, it is 14.8 percent. In buildings with 50 or more units, it is 5.9 percent.

Now, those buildings are disappearing. Between 2012 and 2023, the number of rental units in Chicago two-to-four-unit buildings fell by almost 12 percent. And the units that are getting built in places like Lakeview are going for eyewatering sums, as we saw earlier.2

It’s beyond the scope of this article to address the 2-4 flat problem.3 But here, we’ll address a related question: if there’s so much demand for family-friend housing in high-income neighborhoods, why aren’t we building family-friendly apartments?

The Zoning Code Is The First Problem

41 percent of Chicago’s land is zoned for single-family homes only, which means the two-flat and the three-flat are illegal to build on a huge share of the city’s residential land. On a standard Chicago lot of 25 by 125 feet, the RS-3 rules on lot area and floor area work out to exactly one home for exactly one family.

In the districts that do allow apartments, the code charges extra for bedrooms. Chicago regulates density through minimum lot area per unit. Every dwelling unit has to be matched by a set number of square feet of lot. In the RM6 and RM6.5 districts, Section 17-2-0303-A requires 135 square feet for a studio apartment, and 300 square feet for any other type of unit.

A standard Chicago lot is 3,125 square feet. At 300 square feet per dwelling unit, that lot holds ten family-sized apartments. At 135, it holds 23 studios. Land is a fixed cost, and it gets divided by whatever door count the code allows. Say that lot costs $400,000. That is $40,000 of land buried in every family-sized apartment and $17,400 in every studio.

Two Staircases, No Third Bedroom

Then there is the building code. Chicago requires two stairways in apartment buildings above three stories. Two stairways means a corridor has to run the length of every floor to connect them, which pushes the units to the outside and slices them thin so they all touch a window.

A corner unit can have windows on two sides, which is what a three-bedroom needs. A unit in the middle of the corridor gets one exterior wall. On Chicago’s 25-foot lots, that geometry rules out the family-sized unit before anyone picks a finish. Steven Vance at Chicago Cityscape put numbers on the waste: single-stair buildings dedicate up to 95 percent of their floor space to housing, against as little as 70 percent in a double-loaded corridor building.

A City That Works made the full case for single-stair reform back in April, and it’s worth your time.

The Math Never Gets to a Three-Bedroom Apartment

Add this all up and apartments with three or more bedrooms quickly fail to pencil. The construction consulting firm Rider Levett Bucknall puts Chicago new multifamily hard construction costs at $220 to $490 per square foot as of the first quarter of 2026. That Wilton Avenue unit fetched $393 per square foot in one of the highest-demand neighborhoods in the city. That doesn’t include the cost of land, architects, engineers, permits, lawyers, or the interest you pay during construction. It also doesn’t include a dollar of profit for putting that capital at risk.

With construction costs that high, the tradeoff between building a studio or a one bedroom versus a three bedroom is a bad trade. A three bedroom unit takes 3.8 times the floor area of a studio and earns 2.6 times the rent. Per square foot, the studio brings in $3.71 a month and the three-bedroom $2.61. To match what a studio earns on the same square footage, a Lakeview three-bedroom would have to rent for about $5,800 a month. At $5,800 you are not solving a family housing problem, as the only families who could realistically afford those would earn $240,000 per year or more. The only family-sized home the math supports is a duplex down that sells for $826,000.

The One Rule That Actually Rewards Family Units Is Optional

Chicago’s zoning code is not completely off the mark in incentivizing more family-sized homes. A developer can satisfy the Chicago’s affordable set-aside requirement with fewer, larger units. A three-bedroom counts as two studios. A four bedroom counts as two and a half. This only applies to the affordable units, and it’s at the discretion of the housing commissioner.

Alicia Pederson, writing over at Courtyard Urbanist, suggests an alternative. For buildings of 25 homes or fewer, Chicago should let developers satisfy their affordability requirement by building family-sized units that carry no income restriction at all. Small buildings are where Chicago families already live, and also happen to be the buildings under greatest pressure from affordability requirements. Even without an income restriction, they’d make an important contribution to affordability and stability.

A Simple Set of Changes

This is a solvable problem. In 1998 Houston cut its minimum lot size in the urban core from 5,000 square feet to 3,500, and in 2013 extended the change to nearly the whole city. According to a Pew Charitable Trusts brief on research out of UT Austin, at least 34,000 townhouses went up between 2007 and 2020. The townhouses built on former single-family lots carried a median assessed value of $340,000, against $545,000 for other new single-family homes in the city.

Here in Chicago, a few changes - at no fiscal cost - could make an enormous difference in our ability to keep families in the city:

• Legalize multi-unit housing on all of Chicago’s residential land.

• Set minimum lot area by floor area instead of by unit count, so the code stops taxing bedrooms.

• Pass Alderman Matt Martin’s single stair ordinance, which is currently sitting in committee.

• Count bedrooms instead of doors in the Affordable Requirements Ordinance, and let buildings of 25 homes or fewer meet the obligation with family-sized units.

High costs and a dearth of family-friendly housing options are not an inevitable result of development patterns or demographics. They’re a policy choice that we’ve made, bit by bit, over decades. We can choose to do better.

• August 13th | Big Tent Urbanist Party: Join a wide range of advocates and volunteers at Pizza Lobo in West Loop to celebrate Chicago’s urbanist organizations and our accomplishments. Event is from 6-9pm. Register here.

• August 19th | A Conversation with Ald. Bennett Lawson: Join Strong Towns Chicago, Chicago Growth Project and A City That Works to talk housing with Ald. Bennett Lawson. We’ll be at Big Gay Sal’s Pizza in Lakeview from 5:30-7:30pm. Our events are always free, but it’s helpful if you register here to let us know you’re coming.

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Last Thursday, the Chicago Board of Education passed a $10 billion budget for the 2026-27 school year by an 11-7 vote. The budget as passed involved several amendments to the district’s original budget proposal, which had included around 1500 layoffs and five furlough days in an effort to close a $732 million deficit. The amended budget instead relied on a higher assumed TIF surplus (up from $200 million to $285 million), as well as an assumption of $150 million in extra revenue from the State of Illinois through higher EBF funding ($100 million) and other grant programs ($50 million).

I’m not sure how I feel about that TIF figure, but the $150 million in new state funding does not strike me as a realistic assumption to make, and it is deeply irresponsible for the Board of Education to pass a budget relying on it. The district, its employees, and the public it serves will be worse off for it.

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Some background

As we’ve covered before, CPS has often faced large budget gaps in recent years, including a $734 million deficit in 2025-26 and a $505 million deficit in 2024-25. This year’s budget followed a similar shape, with a $732.5 million gap to close. The district initially sought to do this through a series of cuts, including laying off 760 teachers, 801 teacher aides, and 162 central office staff, plus a midyear spending freeze and five furlough days for employees on non-student attendance days.

While such proposed cuts were quite unpopular, CPS CEO Macquline King also highlighted the fact that district staff has grown significantly since 2019 - up around 10,000 (or 26%) - while enrollment has fallen by over 45,000 students (or 12%).

In the short term, CPS’s financial situation this year is particularly precarious given delays in Cook County property tax revenue collections causing a cash shortfall for the district. Because of this - and because the district does not have a rainy-day fund - CPS has to rely on short-term borrowing to make payroll until property tax revenue is disbursed. This increased pressure to pass a budget, as CPS leadership had indicated doing so was a precursor to securing those short-term loans.

A solution that doesn’t work

But while simply wishing more state revenue into existence might have been convenient for the school board, it’s simply not realistic. For starters, as many have pointed out, any supplemental appropriation passed in a fall veto session would need a three-fifths majority to take immediate effect. It’s difficult to imagine such a majority - relying heavily on non-Chicago legislators - is feasible.

And if legislation is not tailored as a Chicago-specific expenditure, it ends up quite expensive for the state (at a point rather late in the game from a budget perspective). As the Civic Federation president Joe Ferguson pointed out, given that CPS only receives about 20 cents of every dollar in EBF funding, $100 million in new EBF dollars to CPS requires around $500 million in new state spending. Governor Pritzker has also expressed a fair amount of skepticism already, stating that “there’s no revenue currently for what they’ve described” and pointedly noting that he was waiting for House Speaker Emanuel Welch’s purported plan. Capitol Fax’s Rich Miller has pointed out the inherent difficulties in any such plan.

All of this helps explain why CPS CEO Macquline King and the CPS finances team have expressed severe skepticism and concern around this course of action. CPS Chief Budget Officer Emila Zoko argued that the budget as passed could result in a credit downgrade, making borrowing more expensive for the district, and that “it will be a disaster” if CPS relies on this revenue and it does not come through. Acting CFO Wally Stock also expressed concern about whether the budget as passed would still allow the district to get the short-term loan it needs to make payroll in September, given their cash crunch, which King referred to as ‘catastrophic.’

To put it plainly, I simply do not believe it is realistic to view an extra $150 million in state revenue as a reasonable assumption in any way, shape, or form.

Stunts are not solutions

I am certainly sympathetic to the idea that the state needs to do more to support local education spending. As I’ve written before, the most obvious place is on the pension side, where the state is already picking up the tab for every district in the state except Chicago Public Schools. I also think it’s good to come up with creative solutions to fix our financial issues; given the district’s myriad of issues it behooves us to look at every opportunity we can.

But there’s a huge difference between fighting for more state funding and pretending you’ve already gotten it, or between finding creative solutions and imaginary ones. This is the latter on both counts, and when the imaginary revenue doesn’t show up, the district will be forced to make more painful cuts than it otherwise would have.

Given all that, it is difficult to look at this as anything more than a political stunt aimed at shifting the blame for unpopular cuts away from board members and to Governor Pritzker and the State Legislature. This tracks with reporting from Capitol Fax, which noted that board member Michilla Blaise commented as much on Facebook, remarking that if the state fails to allocate extra funds to the district, the board would “put all the layoffs and dead programs at the governor’s feet.” I don’t really know what else to say about that.

What comes next?

The CTU and others have applauded the budget amendment, claiming that doing so “hold[s] the adults in the room accountable” and that CPS and those board members opposed to the vote “fail to understand their role as advocates.” But there is a difference between advocacy and activism, and I think these kinds of budget shenanigans will make it less likely the district gets what it wants, not more.

Beyond Springfield, in recent cycles CPS budgets have relied on significant TIF surpluses to help balance the books, which come at the discretion of the mayor. We’ve also of course seen a game of hot potato over who pays pension contributions for the non-teacher employees of the district. Already at least one mayoral candidate - Susana Mendoza - has come out strongly against employing TIF surplus as a budget balancing tool, and I don’t imagine she’s alone.

What happens when a future mayor of Chicago is less beholden to the CTU? A dysfunctional Board of Education who’d rather pass the buck than accept the reality of its fiscal situation does not make for a good partner, and if future mayors don’t view CPS as a good partner then the long-term budget math gets much harder for the district. As bad a short-term move as this is, it might be a worse long-term one.

November is coming soon

Despite whatever the CTU and the eleven members voting for this budget may claim, this is not a bold stand to hold the state accountable. It’s a reckless move which ignores the reality of the district’s finances this year, threatens our financial credibility, and kicks the can six months down the road until after the school board election.

Nine1 of the eleven members voting for this budget, by the way - including Ms. Blaise - will be on the ballot for school board in November. Voters should remember their irresponsibility at the polls.

Today’s guest post is written by Jens Ludwig, Charlie Beck, and Chico Tillmon.

We here at the University of Chicago Crime Lab recently published an op-ed in the Chicago Tribune outlining a set of four concrete, evidence-based strategies that whoever leads the city for the next four years could implement, at low cost, to improve public safety – perhaps substantially – over the next four years.

In what follows here, we “show our work” and try to explain why we’re focused on these four things specifically, and why we think that adoption of these strategies would be such an important (and low-cost) way to make our city safer – much safer.

What would a public safety plan for Chicago look like?

If the city had unlimited money, the answer to that question would be easy. But we have the opposite of unlimited money. Like other cities, our budget got a big boost for the past several years from federal pandemic relief funding. That funding is now done. At the same time Chicago’s downtown, as in most cities, is still struggling to adapt to the work-from-home era. News stories regularly document struggling downtown office buildings around the country selling for 10% of their previous values. That is not ideal for any city’s tax base.

We outline here a set of four concrete ideas that, with respect to public safety, can help the city do more with less. The key to getting more from less on the public safety front is to take greater advantage of an accumulating body of data and evidence about how to best prevent gun violence as discussed in more detail in our recent book Unexpected Places: The Unexpected Origins of American Gun Violence (University of Chicago Press, 2025) that summarizes the key lessons we’ve learned at the Crime Lab over the past nearly two decades of work.

What are those key lessons? While the media coverage over-represents shootings that stem from organized, hierarchical gangs fighting over drug turf, that’s not what most shootings are. They’re arguments, or retaliation for a past argument, that end in tragedy because someone’s got a gun. The data suggests the key is to inject a moment of reflection into these events, either by having a third party step in to interrupt things or else helping slow down people’s decision making. Not enough of that is being done here in Chicago, or else is not being done well enough – a problem that also creates an opportunity.

The four policy opportunities we focus on are:

• Getting more public safety per dollar spent on community violence intervention (CVI) programs

• Better harnessing the most important crime-prevention tool society has – public schools

• Low-cost changes to neighborhood infrastructure

• Getting more public safety per dollar spent on the Chicago Police Department (CPD)

We take these each in turn.

1. Community Violence Intervention

First let’s start with the big bet that Chicago has made on community violence intervention. CVI has become an umbrella term for a variety of things that enjoy different degrees of support from the existing research about their effectiveness:

In some sense our recommendation for whoever runs Chicago from 2027-2031 is “help our local CVI sector do more of the things the data tell us work.” Below we discuss education, the built environment and different enforcement strategies; here we focus on “meta-cognition” programs, which are a CVI program component that, as noted above, has very good evidence behind it.

Almost every CVI program has an opportunity to incorporate more meta-cognitive programming into many of the things they are already doing, which could have the effect of increasing – perhaps substantially – the public safety effectiveness of existing CVI dollars. For example, connecting adults to jobs programs doesn’t do much to reduce violence, surprisingly. But adding in programming on meta-cognition can lead to large changes in violence, as data from the READI program in Chicago suggests. Specifically, a randomized controlled trial (RCT) of READI by our University of Chicago Crime Lab team showed that program participants experienced a 65% reduction in arrests for shootings and homicides.

As a side note on the READI results: Some observers have dismissed those impacts because of the degree of statistical precision (or imprecision) of the estimates; the odds that this sized impact estimate is due to change is 13%, higher than the usual 5% cutoff that scientists use for hypothesis testing. But while it is appropriate for science to adopt such a stringent, risk-averse bar for rejecting the scientific status quo – science should be conservative and update its understanding of the world only slowly, when the evidence is quite strong – this same convention for policy evaluation winds up strongly and inappropriately privileging the status quo. For purposes of making policy decisions, the right question is: “We have a policy that reduces gun violence arrests by 65% but with a 1 in 8 chance this effect is a fluke result; if the impact is real, the benefits to Chicago would be between 4 and 18 times program costs. Is that worth it?” We suspect that few Chicago citizens, when posed with this question, would say no.

What would be useful for the next administration, whoever that is, to commit to?

• Supporting local CVI programs in the effort to incorporate meta-cognition programming into what they are already doing by supporting staff and leadership training.

• Holding local CVI programs that receive city funding responsible for achieving that goal

The exact impact of this shift for the city on gun violence is somewhat hard to predict. While incorporation of meta-cognition or CBI programming can be quite large, as noted above, it is hard to know to what share of high-risk people in Chicago are currently being served by existing CVI programs, and what share of existing CVI programs are already incorporating such programming (and with what degree of intensity and fidelity). But just to illustrate:

• Suppose existing CVI programs were working with the 3,000 people who may account for around 10% of shootings in Chicago

• The best-case scenario would be that adding CBI / meta-cognitive programming to existing CVI efforts could have the same impact as going from the effects of a standard jobs program to the effects of READI – a 65% reduction – which would imply a reduction in citywide gun violence of around 6.5%.

That alone obviously doesn’t solve the problem of gun violence, but a 6.5% reduction at low cost (essentially just the cost of training and supporting CVI programs to all be able to do this with fidelity) in a city with thousands of shootings every year and hundreds of homicides would represent hundreds fewer families devastated every year by the serious injury or death of a loved one. This would be, in other words, an important contribution to public safety in our city.

2. Leveraging the Chicago Public Schools as our most important prevention program

We believe there are opportunities to get more gun violence prevention from the city’s biggest and most important social program: K-12 schools. Research on Youth Guidance’s Becoming a Man (BAM) program and Brightpoint and YAP’s Choose 2 Change shows that it’s possible to substantially reduce violence involvement for teens through meta-cognition programs delivered in schools. The biggest challenge with these programs is scaling them up, partly for reasons related to cost – Youth Guidance, Brightpoint and YAP are best-in-class vendors, and so deliver high-quality programming, but that requires additional resources that in turn make it hard for schools to scale to every student who would benefit- which is to say every student, given that the leading causes of death to teens in America are homicides, suicides, car crashes and drug overdoses, all essentially “deaths of decision-making.”

One way to scale these programs at low or no cost is to incorporate them directly into the school curriculum and have existing teachers deliver them as part of the regular school day. This is, for example, the goal of local non-profit Youth Guidance’s EVOLVE program for students who schools decide next extra help.

But there are also ways to scale such programs to all students, to fully maximize the benefit to the city. For example, middle and high school students already have to take health class, yet there is substantial room for improvement in what’s taught. The CDC already encourages school systems to incorporate decision-making education into health education curricula. Since successful meta-cognition programs can be taught in just 3 or 4 weeks, this change would require carving out just a month of the existing school health curriculum to this content.

How large of an impact might we expect from this? One reason we are cautiously optimistic about both the impact of this strategy and its feasibility for implementation is that a generally similar strategy was tried several years ago by the Cook County Juvenile Temporary Detention Center: Have existing detention staff get trained to deliver this sort of program to residents in the afternoon, during time periods when they would otherwise have just been watching TV. The JTDC is at least as complex a delivery setting as K-12 schools; after all, these changes inside the facility were an indirect result of a lawsuit against the facility by the ACLU of Illinois that led a judge to essentially take over the facility. Our randomized evaluation suggests this sort of program – delivered at little cost (just a week of staff training) – reduced recidivism by 20%.

What are the potential impacts of this on gun violence in Chicago? Over time, a larger and larger share of the Chicago population that is at highest risk for gun violence involvement – call it people between the ages of, say, 15 and 35 – will have gone through local schools and experienced this sort of programming. Given that Census data suggest that roughly half of Chicago residents were born in Chicago, if we assume most of that group attended school in the area (public, charters or Catholic and other private schools) and the impacts are like those inside the JTDC then the net reduction in Chicago as a whole could be on the order of 10%.

3. Changing the Built Environment

Third, the city could do more to capitalize on the predictability over when and where the arguments and retaliation that drives shootings will happen. For example, data from the University of Chicago Crime Lab shows that we can predict which 5% of blocks in Chicago will experience over one-quarter of next year’s gun violence. Data from other cities shows that neighborhood improvements like fixing up vacant lots and abandoned houses, better street lighting or cleaning up streets and sidewalks can get local residents out into public spaces, increasing the odds a neighbor is around to step in and interrupt an argument before it escalates. Each of these individual changes have shown to reduce violent crime or shootings by 20-30%.

Chicago already has the capacity to do all those things – our departments for parks, streets and sanitation, and transportation. Those activities get distributed across the city’s 234 square miles in some opaque way that surely under-attends to the tremendous public safety value of prioritizing blight remediation on the most impacted areas. What would happen to public safety if we asked relevant city departments to prioritize fixing up 10 high-violence blocks a week, every week, for the next four years?

• In four years we’d have improved the nearly 2,000 blocks that consistently account for a quarter of the city’s shootings.

• If we conservatively assume that changing every aspect of the built environment in a neighborhood has at least as much impact on gun violence as studies suggest each individual change has – call it 30% - then by the end of four years gun violence in Chicago would be nearly 10% lower.

This low-to-no cost reprioritization of existing city services would give us a valuable public safety “double dividend” from city functions most people never associate with public safety.

4. Improved policing

Finally, the same predictability of when and where shootings will happen suggest that police also have a tremendously important role to play in interrupting and preventing shootings. Police also have the uniquely important role of solving crimes; the failure to do that can lead people to conclude the only justice they’ll ever get is vigilante justice. The data show that even among cities with similar poverty levels and police budgets, there are big differences in how much public safety different police departments create. One thing the best police departments in America have in common is that they’ve fully transitioned into becoming modern organizations: hiring and promoting on merit, not favoritism; invest deeply in the quality of people running the organization; and empowering leaders to lead but then also holding them accountable.

This all suggests there should be ways to get more public safety per dollar spent on the Chicago Police Department:

• Move to an objective, performance-based promotion strategy;

• Provide potential future CPD leaders with the sort of leadership training the UK College of Policing provides (and requires) before anyone can be eligible for promotion, to make sure the best people are best positioned to lead successfully;

• Empower leaders to lead by pushing resources and decision-making authority down to the district level so there can also be more accountability for how those resources are being used.

How much could these changes matter? The answer is potentially a lot. Our University of Chicago Crime Lab team carried out a study of violent crime outcomes in different cities as leadership changes in each local police department, controlling for police spending in each city as well as the sort of socio-demographic city characteristics that influence local crime rates. The difference between the very best functioning departments and the very worst are on the order of 80% swings in violent crime rates. Suppose that Chicago PD were at the median among police departments right now; the data suggest that getting CPD to be like the best departments in the country could lead to up to a 40% reduction in violence in the city.

Such a change seems large, but consider the divergence we’ve seen in homicide rates across the three largest American cities since the peak of the crack cocaine epidemic in the early 1990s. Specifically in 1991, Chicago, Los Angeles and New York all had nearly identical homicide rates, just above 30 per 100,000. In the nearly 30 years that followed – right up to the COVID pandemic – the murder rate fell by nearly 80% in Los Angeles and 90% in New York City, drops that are often attributed in important part to (not entirely, but in important part) to management and leadership changes in both LAPD and NYPD.

For those still skeptical of the potential for such large productivity changes from “merely” changing organizational management practices: Studies of the importance of management quality in the private sector finds that consulting interventions to improve firm management can create lasting improvements in productivity of 35%.

Conclusion

No one would claim that these are the only things we should be doing over the next four years to make Chicago better and safer. For example:

• We take for granted continued efforts on things that are already underway like the CPD consent decree and workforce allocation plan.

• CPD is also down around 1,700 sworn officers compared to 2019; the data suggest that a mayor who could figure out how to get the department back to pre-pandemic staffing levels would reduce murders in Chicago by 10% through that step alone. (Conversely, further cuts to the CPD would be expected to cause homicide rates to go up).

But a clear commitment to doing at least these four core evidence-based strategies over the next four years would represent an important step towards what Chicago could desperately use – becoming safer.

Charlie Beck was chief of the Los Angeles Police Department and interim superintendent of the Chicago Police Department. Jens Ludwig is Edwin A. and Betty L. Bergman distinguished service professor at the University of Chicago and Pritzker faculty director of the University of Chicago Crime Lab. Chico Tillmon is executive director of the University of Chicago’s Community Violence Intervention Leadership Academy.

Timeline released by the Illinois Department of Transportation to consider the possibility of modernizing the existing Clybourn Metra Station. Source: IDOT.

We’ve written previously here about state capacity – the inability of government to deliver on the promises it makes to citizens. “State capacity” is a pretty terrible term for the problem. But it can best be thought of as a creeping set of constraints on government processes that result in ever greater dysfunction in service delivery. Put another way, when you subject governments to six-month hiring timelines and 17,899 page environmental impact statements, you end up with $440M train stations, 1,000 missing affordable housing units, and hundreds of unsolved murders.

But many of these broken processes are submerged deep within the bowels of government, and it’s often hard to tie any one of them neatly to a specific outcome.

Take the new timeline floated by the Illinois Department of Transportation to rebuild Metra’s Clybourn Station. IDOT suggests that it will take more than two years of community input and alternatives analyses to begin to consider the possibility of replacing the existing station.

You read that right – two years to admire the problem, before even beginning to proceed with “feasible concepts.” Once IDOT and Metra land on what those feasible concepts are, things are likely to take much longer. Metra’s recently completed Peterson and Ridge station ended up taking 15 years and almost $28 million to build.

These delays are likely driven by some mix of required community and governmental input processes, environmental and historic preservation signoffs, less-than-cooperative partners in city government, and a dependence on outsourced engineering partners instead of in-house expertise.

But which of these problems is the biggest? Which are politically feasible to fix? And if someone at the newly created Northern Illinois Transit Authority actually fights to fix one of them, will that actually speed up the project – or will it just run into some other blocker that holds up progress for another years?

To fix this – and crucially, to keep the same problems from emerging in new form as soon as you turn to something else – government needs better systems to surface implementation barriers, and feed them back to executives and policymakers. That includes identifying well-intentioned policy mandates that are actually extremely difficult to implement, as well as an interlinked morass of personnel, procurement, and inter-governmental constraints that slow things down.

At the federal level, Jennifer Pahlka and the good people at the Niskanen Institute are working to build better feedback loops into the federal policymaking process. They recently published a very cool report aggregating qualitative input from federal workers on the biggest constraints in their roles.

Unfortunately, there doesn’t appear to be anything similar yet emerging at the state or local level. And for a couple reasons, the problems are often greater the further down the chain you go.

Constraints snowball

Much of the work of the federal government is actually carried out through grants that cascade down through state and local governments (and their non-profit partners). Each level of government can add its own constraints – but none have the ability to simplify or streamline rules.

The result is a one-way ratchet that applies all the rules of the federal government, plus a double-helping of restrictions and constraints at the state and local levels. A developer using Low-Income Tax Credits to finance an affordable housing project is subject to all of the Federal rules, plus any additional rules added by Chicago’s Department of Housing – plus any other rules added if they take money from the State of Illinois, Chicago Housing Authority, or other funding sources.

New Jersey Labor Commissioner Robert Asaro-Angelo testifies to state legislators next to a box containing the 7,119 pages of active Federal regulations governing the state’s Unemployment Insurance program. Source: NJ Spotlight News via Eating Policy.

It doesn’t help that public sector entities are naturally risk averse, and will often pass along the most restrictive interpretation of rules handed down from above. When I was in the Mayor’s Office, funding programs with Federal American Rescue Plan dollars, the city was paying a contractor to pre-emptively audit our desired spending categories, even while the Treasury Department had put the phrase “broad flexibility” into almost every section of its guidance. Then we in turn applied the full rulebook of city rules onto our grantees.1

Naming problems requires picking jurisdictional fights

Theoretically at least, every employee of every federal agency ultimately reports to the same boss. But much of local government depends on the cooperation of leaders at different levels. In transit, for example, the Chicago Transit Authority relies on the Chicago Police Department to provide security for the system. In addition to the CPD transit detail, CTA also pays a hefty chunk of money to CPD officers for overtime to cover the system.

But my understanding is that CPD has not taken that responsibility particularly seriously – which is why you’ve likely seen plenty of officers standing around stations holding their vests, but very few actually walking rail cars and enforcing the rules. This is especially true for overtime details that don’t have high-quality oversight and management, with clear objectives and supervision from leadership.

This obviously puts CTA in a tough position; the transit agency is getting blamed for safety issues (and losing riders in the process). But Interim CTA President Nora Leehrsen can’t exactly go out and publicly call out CPD without risking even less support, even if CTA knows what specific management changes are required at CPD to get better support.2

This problem gets even harder when agencies report to different political masters. CPD detectives, for example, have to do the legwork to collect evidence to bring charges in criminal cases. But the State’s Attorney’s Office makes the final decision about whether to press charges. If the State’s Attorney Office starts declining to prosecute, that can quickly demoralize cops doing the legwork – or provide a justification for them to stop doing their jobs. And even a well-meaning State’s Attorney’s Office that’s graded on its win-loss rate in court may find reasons to decline to prosecute tough cases that are harder to win.

These problems are likely to get worse

Unfortunately, in the short term, there are reasons to expect that these problems are going to get worse. It’s harder for the City and State to work with a federal government that is becoming more erratic, abusive, and vindictive. The erosion of support for local journalism makes it harder to do the deep investigative work necessary to uncover these problems. And faster turnover in Mayoral administrations makes it more difficult to build the relationships and institutional knowledge to bridge interagency divides.

Finally, in Chicago power is becoming ever more diffuse. The next Mayor will no longer have control over the CTA Board or Chicago Public Schools, and the Chicago Police Department is now subject to a wide range of oversight organizations that disperse authority and accountability for any individual decision. There are good reasons for some of those changes, but they will make it even harder to assign blame when dysfunction emerges in city government.

The path forward

So we’re fighting an uphill battle here. This also isn’t a situation any one actor can fix. But that means that a wide range of partners can help.

First, and foremost, public sector agencies need to do a better job listening to frontline employees. To be clear: this does not mean another round of input sessions where everyone gets to be heard, sticky notes get put on maps, and real action grinds to a halt. Instead, agencies need better processes to source constraints from their frontline workforce, aggregate and filter them over time, and then start to act on the constraints that are impinging on the actual performance of the workforce.3

Any version of that process will likely generate a bunch of noise. To be successful, such a process likely needs to include an option for anonymity, make it clear that the point is to identify workplace constraints rather than employee grievances, and aggressively highlight the changes that are made as a result of the feedback.

Second, elected and appointed leaders need to be more willing to go public with the constraints holding their teams back. I get that this is hard – admitting you have challenges (including challenges with other units of government) is an easy way to open the door to more criticism or look like you’re simply shifting blame.

But for deep, structural problems in city government, it’s no longer plausible to argue that the emperor is simply experiencing a momentary wardrobe malfunction. We saw this argument from former CTA President Dorval Carter in the runup to last year’s fiscal cliff, and it went over like a lead balloon.

It is possible for capable leaders to point to progress, express thanks to partners, and highlight specific challenges or needs for their agencies. Ideally, this is also a path to taking measured, but clearly defined risks – with electeds or agency leadership acknowledging an effort to try something new, and acknowledging the possibility that it may need to be rolled back.

Finally, oversight and advocacy institutions need to be more willing to surface these obstacles as part of their work. Inspectors General have powerful tools to identify performance failures in and across government.4 It is of course necessary for them to look at more bog-standard versions of fraud and misconduct in government. But at the margin, it’d be helpful to see more in-depth reports on bad city processes, and fewer quick hits highlighting minor misallocated payments on city emergency programs.5

I get that this is challenging. Traditionally, Inspectors General have been packed with lawyers looking for misconduct - and Chicago has given them plenty to work with. But in the long term, an oversight model that simply looks for missteps and then demands additional processes and checks in the future is likely a counterproductive waste of government resources. Oversight agencies need to aim higher, and do harder systems-level work.

A similar principle applies to issue advocates, and the philanthropic organizations that fund them. Issue-based organizations are naturally going to prioritize accomplishing a specific task. But while you can find dozens of reports over the last few years advocating for Chicago to accelerate its efforts to replace lead service lines, and even a few calling out very high costs, those reports rarely advocate for specific changes to city codes or processes.

Again, in the short term this is understandable! Advocates (and donors) are generally motivated around specific causes. And it’s often easier to try to grind out one more win than ask uncomfortable questions about broader systems and coalition partners. But without deep reforms to enable functional state action, progress on issues like housing, transit and public safety are likely to be temporary at best.

Hold elected officials accountable for results

But while government needs to do a better job listening to its workforce and asking for help, and auditors and advocates need to do a better job identifying systemic problems, the public expects elected officials to deliver results. Residents don’t really care which board members are appointed by whom, or whether their highways are patrolled by the Chicago Police Department of the Illinois State Police.

And that’s ok! If we’re able to effectively identify problems inside and between governments, elected officials should be able to resolve those problems within the political process.

When things get bad enough, that still happens today. It’s not an accident that after years of public safety complaints, the Cook County Sheriff is now actively patrolling parts of the Red and Green lines, walking through cars, enforcing quality of life issues, and cracking down on fare evasion. Crime on the system is down dramatically.

The goal, however, is to pull off systematic changes like this even when government doesn’t have a looming fiscal cliff. It will take more work to make this a standard part of public sector processes.

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To help visualize that journey, we built what I think is a pretty cool dashboard covering all four of the city’s pension funds.1 It pulls together data that’s currently scattered across actuarial valuations, city budget documents, and academic datasets, and puts it in one place with plain-language explanations, real charts, and a scenario tool that lets you model the future yourself. You can look at the funds individually or as a combined whole, and every number is sourced and shown on the page it appears. You can check it out here, at pensions.acitythatworks.org:

How we got here

The easiest place to start is the history tab, which shows the last 30 years of assets, liabilities, contributions and funding rates for all four funds. It’s really worth remembering that in 2000, we were still 83% funded overall - but then our liabilities just began a steady climb upwards while our assets treaded water. Particularly striking to me is the fact that as of 2025, our pension systems had around $14.2 billion in assets - which is still lower than what they had in 2007.

I also try to translate these numbers to a per-person basis on the impact tab. Nearly 80% of City of Chicago property taxes go towards pensions - that works out to roughly $1,210 per household in the city. The unfunded pension liability works out to around $31,000 per household or $13,000 per resident. As always, it’s useful to remember that because these liabilities are fixed, growing our population faster will help bring down those figures. The difference between 0% and 2% population growth per year is around a 50% reduction in per-resident liabilities by 2058.

Where do we go from here?

Probably my favorite part of the dashboard is our scenario modeling tool. The pension funds’ actuarial reports project out contributions every year from here to the 2050s. This takes that as our baseline, and then allows you to adjust assumptions about how well our returns do, whether we want to change our 90% target or the target deadline year, or whether we should keep making supplemental payments to the system and see how that impacts things.

A couple things stood out to me from building this. One is that we’ve done the hardest work already - between 2011 and 2025, annual pension payments jumped from $440 million to $2,85 billion dollars per year. On average, that meant that every year the city had to find another $170 million in annual funding. On a go-forward basis, we’re not forecasting any huge jumps in annual contributions; it’s just a steady 2 to 2.5% (or roughly $60-70 million) climb each year. It’s a long climb, but it’sabsent any further legislative changes or major recessions, the steepest bit is behind us.

That 2 to 2.5% growth is also a useful reminder of why growth should matter. Throughout the 2010s, the population of Sun Belt cities like Austin and Fort Worth grew by around 2% per year; if we can achieve the same, our contributions per-capita would be basically flat: in short, the average Chicago taxpayer wouldn’t have to dig any deeper to bail out our pensions. Unfortunately, we haven’t managed this in recent years - during the 2010s, Chicago’s population grew at a rate of just 0.2% per year.

Finally, because that target is set in law, what’s really at stake isn’t whether or not we hit the 90% target - it’s how much we’re going to have to pay each year to get there. In a baseline scenario we’ll have about $116 billion in contributions into the four systems between now and 2058. If we’re willing to make an extra $300 million supplemental payment each year going forward, the compound interest of money getting into the funds earlier means that our total contributions drop to under $109 billion - and we start seeing lower annual payments by 2040. For context, that’s about the same impact on cumulative contributions as us earning an extra 40 bps per year (e.g. earning 7.1% instead of 6.7%).

Some obligatory caveats

I think it’s also useful to point out the many things this doesn’t do. Start with the scenarios modeling; this is all a fund-level tool. I built this to take the funds’ actuarial projections and scale them up/down based on what the actuaries report at a portfolio level. It’s also not a probabilistic model - while you can simulate a one-time shock, there’s no year-to-year volatility to the returns baked in, which oversimplifies the math on our contributions. If you asked me, for example, how to bake in what happens if you change benefits based on an even larger Tier 2 sweetener, or how to simulate the impact a pension buyout plan could have on our math, I’d have a pretty hard time.

I also don’t have anything included to cover exactly where our liabilities came from, or how to calculate an individual retiree’s annual benefits. I think that’s worth doing and I’ll try to expand on that in a future iteration of the dashboard.

Finally, while I’m not aware of any errors in the dashboard (and I have cross-checked this with a few knowledgeable experts), there’s still plenty of room for error. If you find any mistakes, please let me know! I’d love to correct them wherever possible. And if you have any other feedback, suggestions, or ideas for ways to improve the dashboard, please feel free to reach out as well. This was fun to build, but I really do hope it’s useful to help people understand our challenges - and I’m happy to keep improving it to make it more useful however possible.

On June 30th, the City of Chicago published its 2025 Annual Comprehensive Financial Report. There’s a lot worth unpacking from the full report, but for today’s purposes I’ll focus on our pensions, since the ACFR provides a nice summary we can use (as we did last year) for an annual check-in on how the system’s going.

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An overview of 2025

As a recap of our starting point: as of the end of 2024 (e.g. last year’s numbers), the combined four pension systems (Police, Fire, Labor, and Municipal Workers) stood at 25.4% funded, with $12.42 billion in assets against $48.95 billion in liabilities (a net unfunded liability of $36.53 billion). Here’s what’s happened since, from the city’s 2025 Annual Comprehensive Financial Report:

Relatively speaking, things went quite well last year. Fair value of the assets rose by 14.4%, from $12.42 billion to $14.20 billion, with a net investment gain of around 11% ($1.375 billion). For three of our four funds (all except Laborers’), contributions outpaced benefits paid, so we are making net progress in growing the asset base from contributions alone.

On the liability side, most things look pretty normal. It’s worth noting that because prevailing interest rates have changed a bit, we now have a higher assumed discount rate for the Municipal and Laborers’ funds1, which translates to a lower total liability (by about $310 million) and a lower assumed discount rate for the police fund’s liabilities, which translates to a higher total liability (by about $21 million). The other big change was a legislative one - the passing of PA 104-0065 (or HB 3657, the Tier 2 sweetener for police and fire pensions), which added $300.4 million in liabilities to the system per the ACFR. We’ll talk about this more in a bit.

Combining those two: we started the year at $12.42 billion in assets against $48.95 billion in liabilities for a 25.4% funded rate and a $36.53 billion net liability. We ended the year at $14.20 billion in assets against $50.63 billion in liabilities for a 28.1% funded rate and a $36.43 billion net liability. That’s pretty solid progress.

The Impact of PA 104-0065

One of the most surprising pieces to me was how small the immediate impact of the Tier 2 sweetener (PA 104-0065) for our police and fire pensions was on this year’s financials. Per the ACFR, it only added around $300 million in liabilities as of 12/31/2025, despite reporting last fall indicating an impact of $11 billion to the pension funds. I’ve asked the Department of Finance for some clarification about how they’re thinking about those numbers, but haven’t yet heard back as of now. I’ll update as soon as I do.

As Ald. Bill Conway points out on Twitter, however, the most logical explanation simply has to do with GASB accounting standards. Our pension liability as reported in the ACFR accounts for all pension liabilities earned to date, while most of the expected impact of the legislative change is on benefits earned in future service years. You can actually see this more clearly in the contribution schedules reported by the PABF and FABF (in their annual actuarial reports) - The 2024 fund reports estimated they’d need $56 billion in total contributions from 2026 to 2055; the 2025 reports show an additional $8.3 billion in contributions over the same timeframe:

A short-term win for active management

Next, I feel obligated to refresh my annual exercise of how we’d do under passive management. In past years, I’d found that a passive management approach (just ‘buying the index’) could save us something like $30-40 million per year in management fees without impacting returns. That remained true last year as well.

This year, active management looks a bit better. The 2025 money-weighted rates of return for the Municipal, Police, Fire, and Labor funds were 12.5%, 13.85%, 13.77%, and 12.6%, respectively, per the funds’ individual ACFRs. If you instead deployed a passive strategy, putting 50% of funds into Vanguard’s total stock market and total bond market funds, you would have instead generated a 12.14% return for the year. That makes this the first year since 2022 that active management beat the passive strategy (though I’d still point out that over a longer time horizon, passive management remains ahead, and as such I remain convinced that a transition is a good idea).

Digging in further

All in all, there’s actually some good progress showing up here, though the journey out of our mess is still quite a long one. It’s also worth noting that we’ve now had three straight years of really solid returns - averaging over 11% annually - and in that time our funded rate has just increased from 22% to 28%. What happens next time the market has a bad year? It’s easy to imagine a lot of that progress going away, which is why it’s so important to keep chipping away at our liabilities wherever possible.

Our pension debt remain our greatest fiscal challenge as a city, and it’s important that we continue to deal with that reality responsibly. If you’re interested in exploring more, we’ve put together a new dashboard to dive into exactly how our system got so underfunded, the impact that has on our finances today, and what it’ll take for us to climb out of the hole - please check it out at pensions.acitythatworks.org and let us know what you think.

And as a reminder, the mailbag is open. Drop a question in the comments here, and we’ll answer it in an upcoming post.

In January 2024, Judith Crown over at Crain’s wrote a story observing that affordable housing in Chicago had gotten shockingly expensive to build. She interviewed a number of affordable housing developers, who pointed to a mix of challenges with Chicago’s Low Income Housing Tax Credit (LIHTC) program.

That got us thinking. Early the next year, we wrote our first piece on Chicago’s eyewatering LIHTC costs. As part of it, we pulled five years of City data, showing that costs had spiked 85% since the pandemic to almost $750,000 per unit in 2023. We also found that those costs had not spiked everywhere - in Houston, for example, per unit costs had only risen 30%.

A few months later, on the advice of some partners in the affordable housing space, we compared the City’s costs to those of the Illinois Housing Development Authority, which also allocates LIHTC dollars in Chicago.1 In 2023, DOH LIHTC projects cost almost twice as much as state-funded LIHTC projects in Chicago. We noted that some of the unique factors with the city’s process were likely driving those costs. Those included a second building code for affordable projects, no standardized scoring system to reward lower costs, and an adversarial relationship between the city and developers on change orders and project management.

That piece caught a fair bit of attention, and ended up getting picked up in Slow Boring and the New York Times. It was also read down at City Hall. A few weeks later Alderman Matt Martin, along with co-sponsors Bennet Lawson and Leni Manaa-Hoppenworth, introduced a bill that would have eliminated the second building code (the Architectural Technical Standards Manual). We were excited about the legislation - but it faced strong opposition from the Department of Housing and ended up getting bottled up in committee.

That’s where things stayed for over a year. We continued to push the issue in the newsletter and via Crain’s, as well as in a series of behind the scenes conversations. A few months ago, we noted that Chicago’s high costs had meant that we’d missed out on building more than 1,000 affordable homes in the last three years. A lot of other folks kept pushing as well, including the Illinois Housing Council and Abundant Housing Illinois.

A few weeks ago a revised ordinance emerged. It backed off the proposal to eliminate the ATSM, but requires DOH to start reporting on project costs and City approval timelines. It also eliminates a requirement that both DOH and the Buildings Department certify buildings for occupancy - and raises the threshold for developers to have to go back to DOH to get change orders approved. While it’s not as ambitious as the original bill, it addresses some clear pain points in the process today, and makes it easier to push for greater reforms in the future.

The revised ordinance cleared the Housing Committee last week, and on Wednesday it was approved unanimously by Chicago’s City Council.

To be clear, this is a down payment on the changes we need to see. There’s a lot of work still to do - we still need to dramatically scale back the ATSM, put together an actual scorecard to reward cost control, and repair the relationship DOH has with the affordable housing community. It’s also worth noting that credit goes to a wide range of people: including the affordable developers who spoke up, Judith Crown for picking up on an important story, and Alderman Martin for leading on an important issue.

We are pretty excited to have played a part in this story. It’s also a bit of a milestone for A City That Works. This is the first time we can draw a direct line from the work we’ve done to substantive policy change in Chicago. We do not intend for it to be the last.

And as a reminder, the mailbag is open. Drop a question in the comments here, and we’ll answer it in an upcoming post.

Last week, the Johnson Administration introduced an ordinance to City Council that would make substantial changes to the way leases are signed in Chicago. It’s a substantial piece of legislation that has the potential to dramatically reshape the city’s rental housing market.

Unfortunately, very few of those changes would be positive. By adding a slew of costs and penalties to rental agreements, the bill would make it a lot riskier to own rental units in Chicago – especially if you rent to vulnerable tenants. As a result, tenants will face fewer options, and tougher screening to get an apartment in the first place. And over time, Chicago will end up with less housing and higher rents.

But there’s a lot in this act, and it’s not all bad. So let’s break down the key components of the bill piece by piece.

What the PRO Act Does

The bill does five things:

1. Bans move-in fees and other junk fees, and reforms the city’s rules on security deposits to make them easier to collect and administer

2. Requires greater disclosure of who owns rental buildings, and sets up a rental registry to track units across the city

3. Permanently expands the city’s eviction counseling program, which provides lawyers to tenants facing eviction or non-renewal

4. Sets up a Bureau of Rental Housing Services to inform tenants and landlords of their rights, and mediate disputes

5. Requires landlords to offer a cause when they don’t renew a lease. If the tenant is not at fault (including for renovations, or if the landlord chooses to move back into the home), they must offer relocation payments to tenants worth 5-10 months rent (or $5,000-$10,000, whichever is greater).

Transparency is good and junk fees are bad

The most straightforwardly good thing the bill does is cap application fees at $20 and ban other ‘junk fees’ that don’t map directly to landlord costs. It pairs this with a reform to security deposits that makes it much easier for landlords to hold and collect. In tandem, this will eliminate high application or move-in fees, and likely bring back security deposits.

That means that when would-be tenants look at listings, they can more easily compare one cost number – the rent. And while security deposits are far from perfect, they reward tenants who care for units. That’s far better than a system of high-cost application or move-in fees that socialize the cost of bad tenant behavior across all renters.

It also reflects well on the Johnson Administration that the bill reforms security deposits. Part of the reason Chicago has a lot of move-in fees in the first place is that current rules require landlords to segregate deposits in separate interest-bearing accounts (and face stiff penalties if they get the paperwork wrong). Not only is the city cracking down on a bad practice (the junk fees), but it’s creating a better way to manage rental units (security deposits).

But the bill hasn’t approached most of the other challenges it attempts to address in this fashion. A rental registry, for example, is a good idea that would make it easier to understand changes in the city’s housing market and track problematic landlords. But the city plans to fund this registry with fees of between $20-$60 on each rental unit. In a tight rental market, you can expect that cost to be passed on to renters in the form of higher rents.

Stronger tenant protections are valuable, but also drive up costs

In a similar vein, there’s a lot to be said for efforts to reduce evictions via a right to counsel. There is an inherent power imbalance between landlords who have legal representation and tenants who often can’t afford it. Evictions are also damaging events that can trigger a spiral of other costs and often homelessness. In Chicago, the Law Center for Better Housing found that the presence of an attorney reduces evictions 25%.

But they also make renting to tenants riskier – especially lower income ones who are more likely to struggle to pay rent. Slower, costlier evictions raise the likely operating cost of a unit – and mean that at the margin, landlords will need to raise rents, cut maintenance spend, or take units off the market. It also means that the marginal, lower-cost new construction might no longer be financially viable.

In a 2026 working paper, a group of researchers found that New York’s staggered right-to-counsel program drove up rents by 1.2-1.6%, overwhelming the benefits to the few tenants who benefited from legal representation. And in a broader study of tenant protections, a paper published in the Journal of Urban Economics finds that a one standard deviation increase in an index of tenant protections resulted in a 14% increase in median rents and a .03% increase in homelessness.

In an ideal world, better representation and clearer rules encourage faster decisions and resolve disputes more quickly. That seems to be what the Department of Housing is hoping the new Bureau of Rental Housing services will do. But it’s hard to believe that the current iteration of DOH can function as an honest broker in these conversations. In the affordable housing construction domain, DOH has developed a toxic relationship with the affordable developers who it is supposed to work with and regulate to provide housing. This bill was directly introduced to the Housing Committee, and landlords are loudly protesting that they weren’t consulted as it was drafted.

Sky-high relocation payments will do lasting damage

But the truly wild piece of this legislation is the final section. Any time a landlord decides not to renew a lease, they are required to offer the tenant a justification. And any non-renewal that’s not based on poor tenant behavior (i.e., non-payment of rent or damage to the unit) requires relocation payments:

• If a landlord chooses not to renew a tenant’s lease because they want to move a relative in, convert the unit to a condo, make significant repairs, or demolish the unit, they have to pay the tenant the greater of $5,000 or 5 months’ rent.

• If the landlord chooses not to renew the lease for any other reason, or the landlord “increases rent with the intention of encouraging the tenant to refuse to renew the rental agreement,” they are on the hook to pay the tenant the greater of $10,000 or 10 months’ rent.

I think it’s worth noting that this is not something that has been studied extensively, for the simple fact that only a handful of other cities include provisions like this. Most of the cities that do, like San Francisco and Los Angeles, also have sky high (read: broken) rental markets. And none of them impose provisions as costly or sweeping as what’s being considered here - particularly when you consider that Chicago’s rental rates are generally much lower than the other cities on the table.

We are already in a tight rental market. A substantial increase in rental costs will rapidly translate into higher rents. Part of this will be immediate – landlords will factor in the risk that they have to make relocation payments, and crank rents accordingly. But there are likely a number of other, second-order effects that will occur as well:

• Fewer small landlords: Smaller landlords are the ones most likely to need to move in a family member, or move a tenant out for a renovation. They’re also least likely to be able to handle additional paperwork and costs – and most likely to be threatened by non-payment or rising operating costs. I don’t think small landlords are necessarily good (in my experience, the best ones are better than corporate landlords, and the worst ones are far, far worse), but it’s reasonable to expect more consolidation after this bill passes.

• Fewer two- and three flats: As Charlie Cohen notes, Chicago’s traditional stock of naturally occurring affordable units are getting squeezed from two sides – in high-income neighborhoods, 2-3 flats are getting de-converted into single family homes, and in low income ones rents often can’t cover upkeep costs. Substantially increasing the risk (and cost) of managing a small rental building is likely to put both trends into overdrive – accelerating both deconversions and demolitions.

• More ‘for-cause’ evictions: Today, there are a lot of edge cases where a tenant is a pain (slow on their rent, noisy enough to annoy their neighbors but not get the cops called on a regular basis), that landlords handle with non-renewals today. But if that path now requires forking over at least $10,000, it’s going to become a lot less appealing to wait those tenants out. Landlords may simply begin the eviction process as soon as they can establish cause.

A recipe for less housing

As the risks and costs of renting to tenants spike, it will become even harder to get new housing units to pencil. That will leave more tenants facing prohibitive rent hikes, and living in older, substandard housing stock.

Of course, in the long term, the only path to affordability is more housing: giving tenants more options and bargaining power, and reducing the ability of landlords to raise rents or skimp on maintenance. Decades of academic research confirm that adding more housing reduces rents, evictions, and homelessness.

But today, Chicago ranks dead last among our big city peers when it comes to new housing construction. Relative to their populations, Houston and Phoenix are building 3-4 times as much housing every year as we are. Even New York and LA are building twice as much. It should come as no surprise that we’re seeing some of the fastest rent hikes in the nation.

You know what won’t help fix this problem? Requiring landlords to fork over 10 month’s rent if they want to get rid of a bad tenant.

The way forward: tenant protections and aggressive upzoning

If we were actually trying here, there’s space for a powerful housing bill that protects renters in the short-run and for the long-term. In addition to the good parts of this bill like the junk fee reforms and rental registry, you could put together a right to counsel program with clear timelines on cases, and pair it with a stronger emergency rental assistance program, that helps tenants avoid evictions when things go wrong.

If you combined that with an aggressive, citywide rewrite of the zoning code to legalize more housing in dense, high-demand parts of the city, you could expect far more construction in Chicago even as you strengthened rental protections. Renters would benefit from short term protections and while gaining long-term market power, and we’d all benefit from living in a City that was affordable and growing.

But that would require some hard political choices. Neighbors would complain about new developments, Alders would have to cede some power, and we’d have to come up with the cash to reliably fund emergency rental assistance. None of those would be easy. I’m hopeful we’ll see some version of that deal in a future administration.

But in the meantime, Mayor Johnson has presented an election year short-cut that ignores hard tradeoffs and abandons any effort to address Chicago’s affordability crisis. This bill would make life harder and more expensive for Chicago renters. City Council should reject this ordinance.

First, some programming notes:

July 27th | Logan Square / Avondale Happy Hour: Come on out to talk housing, schools and anything else. We’ll be at Ludlow Liquors starting at 5:30, and will be joined by Carlos Rivas (CPS School Board 3B member), Pete Gonzales (running for school board in 3A), and Daniel Tobon (running for Alder in the 35th Ward). Our events are always free, but it’s helpful if you register here to let us know you’re coming.

And as a reminder, the mailbag is open. Drop a question in the comments here, and we’ll answer it in an upcoming post.

Public Safety

Murder in the US Fell Dramatically in the First Half of 2026 Jeff Asher / Asher Analytics. It’s worth noting that so far this year, murders are down 20% across big cities… and up 5% in Chicago. It’s still too early to make final judgements on that - we have a lot of summer to go. But it’s not an ideal moment to have your Superintendent step down.

In Back of the Yards, a wave of shootings highlights long-term questions in a city trying to build on historic progress Caroline Kubansky / Chicago Tribune. “CPD data shows that across Chicago, shootings and homicides are still much lower, year-to-date, than they were in 2022 as the city emerged from the pandemic. And homicides in most of the city are virtually flat or decreasing sharply compared to the same period last year. A swath of the city’s South Side, and the Deering District in particular, is the exception. The district, which stretches from Chinatown, Bridgeport and Canaryville across the Back of the Yards and McKinley Park to Gage Park, has so far tallied a 183% increase in homicides compared to the same period in 2025.”

Despite Mayor Brandon Johnson’s campaign promise, 911 mental health response team flounders Alice Yin / Chicago Tribune. “Throughout his 2023 mayoral campaign, Brandon Johnson championed a progressive vision of sending teams of mental health clinicians instead of police officers to help people suffering from psychiatric emergencies. But since he took office and started phasing cops out of the city’s Crisis Assistance Response and Engagement program, those teams of mental health workers have struggled to respond to 911 calls. CARE’s dispatch volume plummeted almost 70% during his second year, according to data obtained via a public records request, and plunged again last year after the Chicago Police Department took back its devices that provide real-time updates on radio and dispatch communications.”

Cities Aren’t Putting Police Officers Where They’re Needed Most Richard Day / Vital City. That whole workforce allocation problem Chicago has? Turns out it’s common across other big cities like New York and Washington DC. Richard wrote it up over at Vital City. Notably, the patterns of understaffing we see in Chicago (fewer officers per homicide in lower income and black neighborhoods) show up elsewhere as well.

Housing

Judge dismisses Edgewater residents, businesses’ lawsuit over Broadway zoning changes Abby Miller / Chicago Sun-Times. “[Edgewater Residents for Responsible Development] had asked the court to revert the zoning to its previous classifications, invalidating the ordinances. The group has said it isn’t against new development in Edgewater, but rather the lack of public input and collaboration on crafting the plan. Separately, the group issued a call in early June for the Chicago Park District to purchase an Edgewater synagogue’s lakefront property in order to block their development proposal and preserve the land as open park and beach space.”

Opinion: Building more affordable housing requires better government Ald. Matt Martin / Crain’s Chicago Business. We’re always happy to see elected officials get into the posting game - especially when it’s in defense of some long-overdue reforms to the city’s Low Income Housing Tax Credit allocation process. As Martin notes, we’re spending far more per unit to build affordable housing. That means we’re building far fewer units than peer cities.

Steep growth in same-sex couples on the Far Southeast Side: ‘I can make home here’ Lauren FitzPatrick and Alden Loury / WBEZ/Sun-Times. It is good that Chicago is a welcoming city, with neighborhoods that meet the needs of a wide range of communities. It’s even better when those communities can feel safe branching out (or returning) to neighborhoods across the city. A nice story about Chicago - and a good reminder that broad-based affordability can support community and belonging in unexpected ways.

Chicago Affordable Housing Developer Game Daniel Kay Hertz. If you code your own game to simulate how difficult it is to build affordable housing in Chicago, we promise to put it in our recommendations. And it’s pretty fun!

The High Cost of New York’s Rent Freeze and After the Mamdani Rent Freeze Arpit Gupta / City Journal and Vital City. Last month, Gupta (who also writes on Substack over at Arpitrage) was the lone member of New York City’s Rent Guidelines Board to vote against freezing rents on the city’s stabilized apartments. In these two pieces, he makes the case for why a rent freeze was a bad idea, and what the city should do next to deal with stabilized housing in the city. Both worth your time.

Transit

How to fix transit construction in America Matt Yglesias and Institute for Progress / Slow Boring. These guys ran a campaign to solicit ideas on improving the cost of transit in the United States, the result of which is the Transit Abundance Playbook. You’re gonna need to carve out a full afternoon for this one, but the laundry list of ideas they’ve come up with has a lot of good stuff.

State capacity

Why is it so expensive to replace lead pipes in Chicago? Juanpablo Ramirez-Franco, Keerti Gopal, and Clayton Aldern / Chicago Sun-Times. We’ve covered this before (and honestly, think the authors could’ve learned a little bit about pipe-pulling vs. trenching from Harjas’s article), but this is another helpful look at one of Chicago’s greatest infrastructure challenges. The Department of Water Management does not cover itself in glory.

Sometimes you have to hurt people Jeremiah Johnson / The Argument. “If there’s any possible way that an action could harm someone — no matter how unlikely the scenario is, how small the harm might be, or how easily it might be mitigated — there will exist people who demand that nobody take that action… In order for society to progress, we’re going to have to accept a little risk. You can’t develop vaccines without human trials. You can’t build a bridge or a road or a train station without displacing something. The correct response is to admit that some people might lose out, and that’s just fine.”

City Leaders Tout Tree-Planting Bonanza, But Neighborhood Disparities Persist Alex Nitkin, Binghui Huang and Andrew Adams / Illinois Answers Project. Negative headline here feels a little unfair - Chicago’s progress on this is basically an unqualified good thing. It turns out that instead of accommodating squeaky wheels, a standardized approach to tree-planting is both more efficient and a more equitable way to ensure all neighborhoods benefit from a tree canopy that improves air quality, lowers temperatures, and helps keep water out of basements.

Something great

This is just the best. Happy Friday.

Over the next several months, candidates for mayor are going to tell you a lot about their plans for policy areas like public safety, housing, schools, and transit. Those are all important. But before we decide how to prioritize spending in those areas, nearly a quarter of our city budget is already spent: it goes to paying down the city’s pension liabilities.

This is the first in a series of overviews we’re putting together on the issues that ought to shape the 2027 mayoral race. We’re starting with pensions not because it’s the most exciting issue (it’s not), but because it’s the one that determines how much room the next mayor has to do everything else. After a decade of real fiscal pain, we are finally starting to see some fragile progress in our pension system. Whoever wins in 2027 will need to protect that progress in the budget, at the bargaining table, and, increasingly, in Springfield. It’s a prerequisite to everything else our mayor will want to do.

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The problem (and how we got here)

If you’re new to this topic, here’s our current situation distilled down to a few numbers (courtesy of the city’s 2025 ACFR, which was released last week):

• $36.4 billion: the gap between what Chicago’s four pension funds have promised to pay public employees (about $50.6 billion) and the assets they hold to pay for it (about $14.2 billion).

• 28.2%: the share of those promises that are currently funded. Believe it or not, that’s actually a fair bit higher than it has been - at our low, in 2022, we were down to around 22%. But it’s still very, very bad: a healthy pension fund sits at 90% or above. Chicago’s four funds are all among the worst-funded of any major American city.

• $2.9 billion: what the city contributed to the funds last year. Ignoring grant funds, that’s roughly a quarter of our budget.

Climbing out of this $36 billion hole is difficult. But creating the hole in the first place was fairly straightforward. In a nutshell, for many decades Chicago funded its pension systems according to a statutory formula that had nothing to do with what the funds actually needed. City contributions were set based on a fixed multiple of employee contributions, not tied to anything around how much our liabilities actually increased each year. Because of that, growth in liabilities slowly - and then quickly - outpaced growth in assets. In 1999, our system’s funded ratio was around 86%; by 2008 it had fallen to roughly 40%.

Under Mayor Emanuel, the city attempted to reform benefits to close the gap, but the Illinois Supreme Court ruled that the state constitution’s pension clause made promised benefits untouchable. That left us only one path: paying down the debt. The city spent the following decade climbing a brutal ‘pension ramp’ which gradually increased our annual contributions up to actuarially determined levels (which, over a long time horizon, put the funds back on a path to solvency). That ramp is now complete, with actuarial funding written into state law. Based on those legally required payments, the system is expected to reach a 90% funded ratio in the mid 2050s. In recent years, beginning under Mayor Lightfoot, we’ve also made ‘supplemental payments’ which help us amortize down those liabilities faster than the scheduled ramp. This costs us a bit more in the short term in exchange for lower lifetime payments in the long run.

The important point of that history is what it rules out. Barring an amendment to the Illinois constitution, these benefits have to be paid. The only questions left are how quickly we pay down what we already owe, whether anyone adds to the pile, and whether the economy underneath the payments grows or shrinks.

Why this matters now

With the pension ramp now fully climbed, we’re finally starting to move past the treading water phase and actually make progress at digging our way out. But it’s imperative that we protect this progress in several ways. First, by ensuring we stop making the problem worse. Because of that constitutional protection, benefits can never be reduced, only expanded. I’m still not sure we’ve fully reckoned with what that means.

Last year, for instance, Springfield passed HB 3657, a sweeping enhancement of Tier 2 benefits for Chicago police officers and firefighters which projected to add $11 billion to the city’s pension liabilities over the next several decades. Despite that impact, it passed (nearly unanimously) with barely any fiscal scrutiny, the city was caught flat-footed in opposing it, and the governor signed it anyway. We wrote about the fallout in detail here. It’s hard to envision how the city can make progress digging out of our $36.4 billion hole at the same time the state insists on making the hole deeper. A stronger presence in Springfield - and one that emphasizes playing defense on issues like this - needs to be a core competency going forward.

Second, it’s worth making harder choices today to ensure more progress going forward. Our policy of making supplemental pension payments to help amortize our liabilities more quickly, for instance, trade a bit of short-term pain today for more progress in the long-term - an extra $250 million this year saves us nearly twice that over the next few decades - but getting rid of them is going to look more and more tempting as our budget fights get worse. That’s a temptation future administrations will need to avoid.

What a serious plan should look like

So what should candidates actually be saying? Here’s my list. None of this is particularly complex, but that doesn’t mean it’s particularly easy.

Keep pre-paying on our funding schedule. Our actuarial contributions must remain a floor, not a ceiling. The city’s practice of making supplemental pension payments beyond the statutory requirement over the last few years is one of the best fiscal decisions in recent memory and will lead to significant savings in the long term. Candidates serious about our pension liabilities ought to commit to continuing the practice going forward - and be able to explain to voters where they’d cut or tax in order to preserve the advance payments.

Pay for sweeteners at the bargaining table. Both our police and fire collective bargaining agreements expire in June 2027, and negotiating their contract renewals will be one of the first challenges of the next mayoral term. The Tier 2 sweetener Springfield passed last year effectively increased those union members’ pensions by a full third. For the city to remain solvent, those need to be backed out of any wage increases negotiated in 2027.

Treat Springfield as fiscal policy. The next mayor needs a real intergovernmental affairs operation - one that knows about bills like HB 3657 months in advance, has an affirmative city position on the remaining Safe Harbor questions, and is willing to spend political capital opposing benefit expansions even when the unions backing them are the mayor’s allies. Voters should ask every candidate directly: what would you have done differently on HB 3657? And what is your plan to avoid a similar sweetener for other public employee pensions? Without preventing future benefit expansions, it’s hard to envision how we make progress against our long-term liabilities (short of amending the constitution).

An all-of-the-above approach to improving our pension funds. Beyond the big stuff, future administrations simply need to be able to pick up any wins they can to help chip away at our liabilities. We’ve made the case before that funds would likely do better by adopting more passive investment strategies. A city pension buyout program could also engineer some small level of liability reductions as well. These are second-order items relative to those above - and a candidate who only answers pension questions with minor reforms is telling you something about their political courage. But it’s nonetheless true that identifying and executing on any opportunities for improved returns or reduced liabilities needs to be part of our pension strategy.

Grow the denominator. Finally: underpinning all of this, of course, is growth. Nearly eighty percent of the city’s property tax levy goes towards funding pensions, and we’ve seen in recent years how politically difficult it is to raise that levy. You know what’s far easier? Having the levy increase naturally when new construction increases our property tax base. Outside of a candidate’s plans for pension liabilities, they need to have a real plan on how to grow the city of Chicago, with respect to both GDP and population. Pro-growth policies that increase our city’s population and tax base make our fixed liability get a lot smaller on a per-capita basis. Every pension answer that doesn’t come attached to a growth agenda is just a plan for managed decline.

None of this will be the flashiest part of any candidate’s platform. That’s fine. But it is the prerequisite. The candidates worth taking seriously in 2027 are those who can explain how they’ll protect the progress we’ve made on our pension liabilities and how they’ll continue that progress going forward. Everything else on their agenda will depend on it.