What is the true cost of the Chicago Police Department?

As Chicago Mayor Laurie Lightfoot’s administration makes its final pleas to aldermen to approve its 2023 budget recommendations, a new analysis shows they’re not getting a full picture of the biggest budget item — police — and other city departments.

A new analysis by a former employee of the City Council’s Office of Financial Analysis shows that the Police Department’s stated budget significantly understated the department’s true annual costs.

The mayor’s spending plan is $16.4 billion provides for a total CPD budget of $1.94 billion next year. But if you include the other costs associated with CPD included in the lesser known budget buckets, the true value is more than $3 billion. Previous police budgets under Mayor Rahm Emanuel’s administration also looked billions below their actual cost.

That’s according to Jonathan Silverstein, a former COFA analyst, who says the city needs to be more transparent about its budgeting practices and show how basic costs — such as pensions, overtime and legal settlements, benefits and fleet and facilities management — add up. for the taxpayers of Chicago.

The issue is particularly important as the city struggles with crime and the debate continues over overall police funding. Several lawmakers in recent years have called on the city to shift funding from police to alternative responses, including violence prevention, housing and other human services. Some of their comments echoed statements made around the “Defund the Police” movement that gained momentum during the George Floyd-inspired protests of 2020.

Transparency around one of the largest positions is also important to begin addressing the city’s mounting debt and pension obligations, Silverstein told the Tribune. “Before you can figure out your budget, you better know what you’re spending your money on.”

A representative of the city’s Office of Budget and Management declined to comment.

Silverstein and others acknowledged the issue affects several other city departments whose pension costs and benefits are in other budget buckets. But CPD deserves special attention, Silverstein argued, because of its size and the extent to which it increases the overall budget through overtime and legal fees that exceed budgeted amounts. CPD responsibilities are also a significant cost driver in the newly created Office of Public Safety, which provides shared services for Chicago’s public safety departments.

A recent analysis from the Better Government Association suggested that the office cost more than it saved the city pushed back from.

Silverstein, who now works for another municipality in the region and wrote the study independently, compiled his analysis using the city’s own budget documents and data. In some cases, when the city reports things like benefits and pensions for civilian employees as a lump sum, it has created estimates based on the number of managers in the Police Department or the number of employees in certain units.

Lawrence Msal, head of the Civic Federation, a fiscal watchdog group, said the analysis “points to the biggest political debate going on in cities across the country: how much should we spend on police.” The topic is particularly relevant to Chicago, he said, which is under a federal consent decree and where the department came under scrutiny for transparency around the posting of officers. Msal called before more transparency around consent decree and staff costs.

Msal said that while the Civic Federation does not evaluate research by other organizations, Silverstein’s analysis seems reasonable based on the federation’s past reviews of city budgets. The civic federation also sounded the alarm about the amount of city spending on the budget, known as “general finances,” which includes debt, insurance premiums, pension contributions and other benefits for city government employees. Combining those costs makes it difficult for the public and policymakers to track changes over time and gives “tremendous discretion” to the mayor’s budget team “without measuring actual costs,” Msall said.

This has become more problematic, Msall told the Tribune, because “the city’s use of the ‘General Finance’ category has been growing rapidly, especially in the last five years.” In the mayor’s 2023 budget, it’s $7.8 billion, which Msall noted is a huge chunk of total spending “in this category, which has increased over the last five years by more than 56%.”

The city also allocated $183 million to the Fraternal Order of Police contract in 2020 and 2021 as part of the general finance department.

The largest expense of the police, which is included in the “general finances”, and not in the budget of the department, is the payment of pensions. The city pays into two funds for CPD officers: one for sworn officers; other civil servants. Payments to the Chicago Police Annuity and Benefit Fund (for sworn officers) totaled $5.3 billion between 2012 and 2022, according to city budget documents. Silverstein also calculated how much the city pays for civil servant pensions, estimating that the city paid more than $330 million into the Annuity Fund and municipal employee benefits for CPD employees during the same period.

Benefits are also a significant cost factor in “general finance”. Silverstein similarly did the reverse technique an estimate of how much the city pays for CPD benefits — including premiums, insurance claims, deferred compensation, disability and line-of-duty death — based on the department chief’s tally. It found that between 2012 and 2022, the city made more than $2 billion in such payments.

And the city does not include the cost of the CPD fleet, either building maintenance and utilities costs in its police budget—it is instead managed by the Department of Assets and Information Services. Silverstein obtained cost estimates for various police stations and CPD headquarters, utilities and vehicle repair costs between 2017 and 2019 and adjusted them for previous years for inflation. Together, he estimated, they cost the city more than $30 million a year.

Other major cities Silverstein looked at, such as Los Angeles, Houston and Phoenix, include pension and employee benefits costs in their police budgets, the analysis noted. Although New York City does not include pension and retirement costs in its police budget, costs for building services, natural gas and electricity, and fuel and vehicle maintenance are reflected in the New York City Police Department budget. Houston includes fleet services; Los Angeles budgets for water and electricity, building services and bond interest and repayment. The Phoenix budget notes services provided to the police department by nearly two dozen other departments.

Msall and Silverstein credit the Lightfoot administration with some budget improvements, including moving costs of court settlements and judgments into CPD’s budget, as well as better budgeting for settlements and overtime.

However, even with these improvements in recent years, both are still over budget.

The city paid out $639 million in police-related judgments and settlements between 2012 and the end of 2021, but only $329 million was budgeted for that period. It has gone over budget every year except for 2020, when courts were largely closed due to the pandemic.

The city also budgeted about $720 million for overtime between 2012 and 2021, but spent about $1.2 billion. If current trends continue, the department is poised to “overspend the 2022 overtime budget by $65 million,” Silverstein’s analysis said.

Ald. Maria Hadden, 49, whose job before joining the City Council included leading participatory budgeting projects, said the report is “definitely food for thought,” especially given the controversy surrounding the current police budget.

“My concern is that if we have costs broken down that way, if we already have concerns about (police) staffing, overtime or payroll, when we look at those numbers broken down that way, maybe we would take different decisions,” Hadden told the Tribune.

The city would benefit from doing a similar exercise for each department, she said, because current budgeting practices “do not paint the full picture.”

Kara Hendrickson, executive director of the BPI’s Good Government Group, said, “This report, the city budget as a whole, should really make Chicagoans question whether their money is being spent effectively on public safety.”

Hendrickson said the report raised questions about spending controls and budget transparency in general. She noted that “a number of technology contracts that the city uses, like ShotSpotter, are costs that are included in the Office of Public Safety, not in the CPD budget,” which cuts the Police Department’s budget and makes it “harder for communities that can be concerned about monitoring or using technology like ShotSpotter to analyze how those tax dollars are being spent by the department.”

Alternatives are expected to hold a final vote on Monday.

aquig@chicagotribune.com