Chicago Needs Its Own DOGE

A city nearing financial collapse, Chicago needs to examine the city bureaucracy

Despite the City Council’s demonstration of defiance, the newly approved budget for 2025 represents a continuation of the proverbial kicking of the can down the road, as Chicago will face a budget deficit next year approaching $1 billion. Yes, the lightning rod of every budget debate — an increase in property taxes — was soundly rejected, but what has emerged is a budget that does virtually nothing to restrain spending while allowing for an array of regressive taxes and fees to further reinforce Chicago’s reputation as one of the highest-taxed big cities in the country.

Making matters worse is the fact the school district is about to enter into a new contract that will cost over $3 billion, even if the district’s counteroffer to the union is accepted. That’s twice the cost of the previous record-setting contract that made Chicago teachers and other CTU members the highest-paid among big city school districts and included an additional 9,000 positions. The contract will force the district to raise property taxes to the levy limit every year and the city to increase its annual subsidy, requiring even higher city taxes and fees or cuts to services.

If there’s any good news for Chicagoans, it’s the City Council’s willingness to seriously challenge the mayor’s budget and that some City Council members are finally beginning to question the city’s massive, unprecedented school subsidies, which are impacting the city’s ability to balance its own budget. With Chicago being maxed out on taxes, fees, and fines — and the aldermen one year closer to running for re-election — they would do well to begin working on the next budget now and demand financial accountability for the school district that is already spending $30,000 per student.

What might that look like?

To do that, Chicago needs its own DOGE — an independent financial team of budget and financial management experts with the authority and support needed to evaluate not only the city but also city-controlled agency spending and to develop and help implement a plan that can structurally balance budgets without diminishing needed services while holding the line on new taxes. This would include the public schools, which consume 56 percent of all property tax revenues and receive an additional $1 billion annually in city subsidies.

A Chicago-DOGE effort would include not only a blueprint for balancing budgets but also developing a plan for addressing long-term debt obligations and designing a system of effective financial management and oversight that will hold the line on taxes, ensure accountability for all spending, borrow responsibly, invest in job growth and affordable housing, and ensure spending discipline and accountability. This should begin now in preparation for the city’s next budget.

What would it focus on?

• Begin the process of true zero-based budgeting, requiring that all city activities and programs be closely re-evaluated. This should be the standard practice of every city department and mayor-controlled agency, such as Chicago Public Schools and the CTA.

• Conduct a full inventory and consider reductions of expenditures that were added using the one-time COVID-19 relief funds and the historic tax-increment financing (TIF) sweeps that have occurred simultaneously.

• Scrutinize non-personnel and contractual spending; non-personnel spending has grown by nearly $3.3 billion since 2019, according to an Illinois Policy Institute analysis.

• Revamp and modernize the city’s procurement office, which awards and oversees $500 million in contracts each year.

• Develop a strategy to maximize reimbursements and monetize department services. For example, it’s estimated the Chicago Fire Department forgoes as much as $400 million in reimbursements each year from the federal and state governments, hospitals, and private insurance companies.

• Pursue a class action lawsuit to stop the robbery of city revenues from the parking meter deal. The leaseholder has already recouped its entire lease payment, plus over $700 million more, with 60 years left. The 75-year lease can be legally challenged as being “Manifestly Against Public Policy.”

• Consolidate city pension fund investments and create a single independent “Pension Investment Board,” that would make all investment decisions free of politics and provide ongoing oversight. Such an independent board would significantly improve investment returns.

• Implement TIF reform to bring real transparency and accountability to the use of TIF property tax revenues. A primary objective would be to have the city reduce its school subsidies by an amount equal to its annual tax windfall from the TIF surplus, which has exceeded $1.3 billion since 2019.

• Revamp the process for dealing with lawsuits against the city. Create a “Litigation Office” in the city’s law department to defend the city and also file lawsuits on behalf of the city against those who destroy public and private property and harm first responders and other city workers.

• Conduct a comprehensive review of the city’s public safety assets, examining deployment strategies and the hundreds of millions of dollars spent on police overtime and privatization that could be used to restore police strength and improve public safety.

Critical to balancing next year’s budget and securing the city’s long-term financial health is addressing the abysmal performance of CPS, which — along with pensions — poses the greatest threat to the financial stability of the city. Schools are consuming an ever-larger share of the city’s tax revenues, and along with crime and taxes, the absence of quality school choices is contributing to population loss and lack of new investment, which affects revenues.

A Wirepoints analysis suggests that only half of CPS’s $10 billion budget finds its way into schools. There’s an opportunity to balance the district’s budget while weaning schools off city’s $1 billion in annual subsidies, which could then be redirected to meet the city’s own financial needs. This requires the following actions:

• The first and most important step would be to tie any new contract to available revenues. The last contract raised Chicago Teachers Union member salaries and added thousands of staff members, so a pause is justified to align spending with revenue.

• Break up CPS’s central and regional offices and decentralize the district so money follows students. Currently only 54 percent of school funding as received by the schools. There are 7,500 school staff positions are not assigned to individual schools.

• Return to pre-COVID non-teaching staffing levels and give principals and elected Local School Councils full autonomy over their school budgets. These positions are valued at over $600 million and would still leave the district with a ratio of one staff person for every 8.5 students.

• Consolidate and repurpose near-empty schools, which could save $100 million. Schools could be leased to any of the district’s over 100 public charters — over 90 percent of which are not in public school buildings — generating comparable revenue.

• Expand charters, magnet schools, and school-based magnet programs to attract more students and generate more state and federal aid.

• Empower communities and parents through elected Local School Councils and their principals to control their budgets and staffing models and to select more effective proven school models. This would make the schools more attractive, helping to attract and retain students.

• Make securing funding equity for Chicago teachers its top legislative priority. The city should make this its top state legislative priority. The state covers 98 percent of downstate teachers’ contributions but only 32 percent for Chicago. Pension equity could free up almost $600 million.

The City DOGE could evolve into a permanent, truly independent, and well-resourced budget office with access to all city information, full auditing powers, and a staff capable of being an effective, neutral arbiter in Chicago’s long-running budget shell game. (Currently, the council’s Office of Financial Analysis has two people.) The budget office should be accompanied by a “Truth in Budgeting” ordinance requiring publicly disclosed budget projections, a mandatory legislative budget process, and a set schedule — similar to the federal Congressional Budget Office’s role.

This office could also assume the responsibilities of the old Chicago School Finance Authority (SFA). Created in 1980, SFA kept the district from financial collapse. It would exercise financial control over and furnish financial guidance to the Chicago Board of Education. The goal would be to approve budgets and contracts to secure financial basis for continued operation of the schools. It would have the power to conduct an independent management assessment and audits. Principal responsibility for education policies would remain with the Chicago Board of Education.

Having asserted itself, the City Council needs to provide itself with the tools to address the city’s crisis.