RECOMMENDATIONS FOR A FINANCIALLY SUSTAINABLE CITY OF CHICAGO June 30, 2011 The Civic Federation would like to express its gratitude to the following committee members for providing their expertise and insight as we composed this report: CHAIR: ALICIA BERG MEMBERS: STEVEN ABBEY ALBERT HANNA ALLAN AMBROSE BENNETT JOHNSON III RUSS CARLSON RICH KINCZYK LEW COLLENS DANA LEVENSON OMAR DAGHESTANI GLENN MAZADE MARK DAVIS TOM MORSCH DONALD FRANKLIN DONOVAN PEPPER PETER GLICK JOSEPH STARSHAK GRAHAM GRADY KENT SWANSON PATRICK HAGAN JOHN WILHELM DON HAIDER JERROLD WOLF M. HILL HAMMOCK DOUGLAS YERKES The Civic Federation would also like to express its gratitude to the following foundations, whose generous grants made the research and writing of this report possible: The Chicago Community Trust The John D. and Catherine T. MacArthur Foundation The Joyce Foundation McCormick Foundation Copyright © 2011 The Civic Federation Chicago, Illinois TABLE OF CONTENTS EXECUTIVE SUMMARY ......................................................................................................................................... 4 PURPOSE .................................................................................................................................................................... 8 STATEMENT OF THE PROBLEM ......................................................................................................................... 9 Persistent Structural Deficit ................................................................................................................................. 9 Inadequate Corporate Fund Reserves ................................................................................................................ 10 Growing Long-Term Liabilities ......................................................................................................................... 10 READER’S GUIDE TO THIS REPORT ................................................................................................................ 12 PERSONNEL ............................................................................................................................................................. 13 CORPORATE FUND ................................................................................................................................................... 15 PUBLIC SAFETY ....................................................................................................................................................... 16 CIVIC FEDERATION CONCERNS ................................................................................................................................ 17 CIVIC FEDERATION RECOMMENDATION .................................................................................................................. 18 1. Develop a Plan to Reduce Personnel Count and Expenses ...................................................................... 18 PENSION FUNDS ..................................................................................................................................................... 19 CIVIC FEDERATION CONCERNS ................................................................................................................................ 21 CIVIC FEDERATION RECOMMENDATIONS ................................................................................................................ 22 2. Reduce Benefits Not Yet Earned By Current Employees .......................................................................... 22 3. Increase Employer and Employee Contributions to Meet the Actuarially-Based Needs of the Funds ..... 22 4. Pursue Pension Fund Consolidation ........................................................................................................ 23 5. Reform Pension Board Governance ......................................................................................................... 24 6. End the City Subsidy of Chicago Public Schools’ Employer Contribution to the Municipal Fund .......... 24 RETIREE HEALTH CARE ..................................................................................................................................... 24 CIVIC FEDERATION CONCERNS ................................................................................................................................ 25 CIVIC FEDERATION RECOMMENDATION .................................................................................................................. 26 7. Create an Independent Retiree Health Care Trust Fund .......................................................................... 26 POLICE DEPARTMENT......................................................................................................................................... 27 CIVIC FEDERATION CONCERNS ................................................................................................................................ 30 CIVIC FEDERATION RECOMMENDATION .................................................................................................................. 33 8. Conduct an Evaluation of the Police Department for Potential Cost Savings ......................................... 33 FIRE DEPARTMENT .............................................................................................................................................. 34 CIVIC FEDERATION CONCERNS ................................................................................................................................ 35 CIVIC FEDERATION RECOMMENDATION .................................................................................................................. 38 9. Conduct an Evaluation of the Fire Department Staffing Structure and Deployment ............................... 38 PROCUREMENT ..................................................................................................................................................... 38 CIVIC FEDERATION CONCERNS ................................................................................................................................ 40 CIVIC FEDERATION RECOMMENDATIONS ................................................................................................................ 41 10. Pursue Strategic Sourcing ........................................................................................................................ 41 11. Improve Procurement Performance Metrics ............................................................................................ 43 12. Standardize Contracts .............................................................................................................................. 43 13. Improve Bill Payment Procedures and Incorporate Electronic-Procurement Technology ...................... 43 14. Pursue the Previously Proposed Waste Franchising Initiative ................................................................ 44 INFRASTRUCTURE ................................................................................................................................................ 45 CIVIC FEDERATION CONCERNS ................................................................................................................................ 47 CIVIC FEDERATION RECOMMENDATIONS ................................................................................................................ 49 15. Reorganize the City’s Infrastructure Departments to Increase Efficiency and Reduce Costs .................. 49 1 16. Implement a Comprehensive Right-of-Way Management Program ......................................................... 50 17. Centralize Inspection Services .................................................................................................................. 51 WATER AND SEWER ENTERPRISE FUNDS .................................................................................................... 51 CIVIC FEDERATION CONCERNS ................................................................................................................................ 52 CIVIC FEDERATION RECOMMENDATION .................................................................................................................. 53 18. Develop a Water Management Plan ......................................................................................................... 53 ALTERNATIVE SERVICE DELIVERY ............................................................................................................... 54 CIVIC FEDERATION SUPPORT FOR ALTERNATIVE SERVICE DELIVERY ..................................................................... 55 CIVIC FEDERATION CONCERNS ................................................................................................................................ 56 CIVIC FEDERATION RECOMMENDATIONS ................................................................................................................ 57 19. Create an Alternative Service Delivery Policy ......................................................................................... 57 20. Restart Bidding Process to Implement a Public Private Partnership for Midway Airport ...................... 57 21. Pursue Revenue Collection and Enforcement Opportunities with Cook County ...................................... 58 TAX INCREMENT FINANCING (TIF) ................................................................................................................