Chicago Hiring Freeze Driven by CPS Refusal to Pay $175M Owed For Pensions, $293M for CPD Overtime

Mayor Brandon Johnson’s measures spark debate on impact to public services, with some residents angry that problem seems to have largely resulted from excess money and leeway allowed for two departments with strongest unions

Photo byNational Cancer InstituteonUnsplash

In a decisive move to address the City of Chicago’s financial shortfall, Mayor Brandon Johnson has announced a city-wide hiring freeze effective immediately. This decision, revealed on Monday, is part of a broader strategy to manage the city's current budget deficit, which stands at $22.9 million for the fiscal year.

Annette Guzman, the City Budget Director, made the announcement Monday, stating, "Effective today, we are enacting a series of budgetary restrictions, including a citywide hiring freeze, and stringent limitations on non-essential travel and overtime expenditures outside of public safety operations.

The freeze includes stringent limits on overtime expenses across city departments, which would most notably impact the Chicago Police Department (CPD) and the Chicago Fire Department (CFD). This has led to concerns over safety in the Windy City.

The announcement from the Mayors office didn't explicitly state whether the Police and Fire Departments would be exempt from these measures, and representatives from the current administration didn't give additional details. While the announcment stated overtime would be affected outside of public safety, the memo issued to city department heads and commissioners stated that all government departments and positions would be included in the city-wide freeze.

The city’s financial difficulties have been exacerbated by several factors. One of the primary contributors is the refusal by the Chicago Public School system to meet its $175 million pension contribution for non-teaching staff. This pension commitment made in 2020 was left unmet this year due to CPS’s own $505 million deficit.

The other main contributor is escalating costs, particularly in public safety. In 2023, Chicago spent $524 million on overtime, a 19% increase from the previous year. Of this amount, $293 million was allocated to the Chicago Police Department (CPD) alone, which was nearly three times the budgeted amount for police overtime.

Additionally, a shortfall in tax revenues, in particular the decline in revenue from the state's Personal Property Replacement Tax has further strained the budget. The city’s commitment to funding the "New Arrivals Mission," which provides support to recent migrants and asylum seekers, has also added to the fiscal pressure.

Civic Federation President Joseph Ferguson, said that this situation provides the opportunity for the Government to not just address the crisis in the short term but to implement better budgeting from this point forward.

"The city is absolutely filled to the gils with all sorts of waste and ineffeciencies that can be monetized for the benefit of operations and for the public and we do this to mitigate the needs to go to the revenue side," said Ferguson.

There are a number of questions that remain unanswered regarding the new budget cuts. In addition to general inquiries as to where the city will get the money to make up such a huge sum, questions are being asked about whether CPS will be held responsible for paying for their outstanding pension contributions, a commitment they made in 2020, in light of their own $505 million budget deficit. There are further questions regarding the current budget for CPS and their demand for more funding before agreeing to sign a contract.

According to their own website, CPS's budget for 2024 totals $9.4 billion. Their current deficit was significantly contributed to by more than $450 million in new funding for schools over the past two years.

CPS and CTU continue to push for additional funding which has held up a contract agreement, including a 5 percent raise for teachers, smaller class sizes, hiring more staff and providing housing options for families of students who have inadequate housing. CTU claims that Chicago Public Schools are underfunded and understaffed.

Most of their funding comes from taxes and city government which raises the question of what will be expected of them as cuts are made in all other city departments. The city prepares for new Board of Education elections in November.

Some have also questioned whether there will be cuts to CPD’s academy class as the program had already been placed on the city payroll before the hiring freeze took effect. A spokesman for the Chicago Police Department referred questions regarding funding for future police academy classes to the mayor’s office.

While the hiring freeze aims to curb spending, questions remain about its potential impact on public services. Mayor Johnson has yet to provide a detailed plan for closing the budget gap. Speculation includes possible measures such as increasing property taxes or introducing legalized video gambling, though these ideas remain under discussion.