City of Chicago

Property Taxes in Chicago

December 11, 2019

City of Chicago Property Taxes: Overview

1

• The City of Chicago and Chicago Public Schools account for 77% of all property taxes in the City

• City and CPS finances have stabilized in recent years

• The City and CPS have had their ratings either affirmed or upgraded by the rating agencies

• CPS has a new funding framework that creates long-term funding stability for major fixed costs

• The City still faces challenges ahead with upcoming labor contract negotiations and the ramp to actuarial

funding for the Municipal Employees and Laborers Pension Funds

• We have a financial plan to surmount these issues, including new revenue from casinos

• The 2020 budget made significant progress

• Climbed the ramp to actuarial funding for Police and Fire pensions

• Structural balance: 60% structural balance in 2020 and a roadmap to full balance by 2022

• Stuck to our values and made additional community investments

• No property tax increase

• The balanced 2020 budget was reform-based with many structural efficiencies expected in outyears

• Workers’ Compensation reform

• Enterprise risk and settlements and judgments

• $537 million in savings and efficiencies

The City and CPS Account for 77% of the Levy in the City

2

Source: Cook County Clerk’s Office.

Chicago Board of Education

52%

City25%

Cook County7%

Metropolitan Water Reclamation District

6%

Chicago Park District5%

City Colleges of Chicago

2%City of Chicago School Building & Improvement

Fund2%

Forest Preserve District of Cook County

1%

Chicago Board of Education City

Cook County Metropolitan Water Reclamation District

Chicago Park District City Colleges of Chicago

City of Chicago School Building & Improvement Fund Forest Preserve District of Cook County

While The Total Levy Has Steadily Increased,

the Tax Rate Is at Its Lowest Since 2012

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Total Levy (in $ millions) Property Tax Rate (per $100 of EAV)

4,173 4,2614,419

4,873

5,2885,578

5,858

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2012 2013 2014 2015 2016 2017 2018

6.396 6.832 6.808 6.8677.145 7.266

6.786

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2012 2013 2014 2015 2016 2017 2018

Source: Cook County Clerk’s Office.

Property Tax Rate (per $100 of EAV) Total Levy (in $ millions)

The City Levies for Debt Service, Pensions, and the Library

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Source: Cook County Clerk’s Office.

0.566 0.522

1.0861.043

0.1180.111

$1,359

$1,447

$1,300

$1,320

$1,340

$1,360

$1,380

$1,400

$1,420

$1,440

$1,460

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2017 2018

Debt Service Pension Library Total City Levy

1.769 1.676

CPS Levies for Operations, Capital, and Pensions

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Source: Cook County Clerk’s Office. The Capital Improvement Levy was levied for the first time in 2015; the Pension Levy was levied for the first time in 2016.

Property Tax Rate (per $100 of EAV) Total Levy (in $ millions)

3.199

2.938

0.551

0.511

0.139

0.104

$2,986

$3,066

$2,940

$2,960

$2,980

$3,000

$3,020

$3,040

$3,060

$3,080

-

0.500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

2018 2019

Operations Pension Capital Total CPS Levy

3.889 3.553

CHICAGO PUBLIC SCHOOLS

FINANCIAL UPDATE

CPS’ Improving Financial Condition – By the Numbers

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Budget gap reduced from

$1.1B in FY16 to $192M in

FY19

$599M increase in Fund

Balance - return to positive

territory

Interest rates declined

dramatically

Cash borrowing nearly

halved in 2 years

($706M reduction)

$365 million

CPS Has Structurally Increased Its Revenues by

$904M Over the Past Two Years

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FY17: CPS secured $454M in new

structural revenues

• $250M new pension levy which will grow

based on EAV

• $102M new Equity Grant from the State

within GSA, held harmless in P.A. 100-

465

• $74M GSA hold harmless which will

continue with P.A. 100-465

• $28M increase in the Early Childhood

Grant

FY18: P.A. 100-465 increases structural

revenues by $450M over FY17 revenues

• $221M State pick-up of normal cost

• $130M property tax levy for pension

which will grow based on EAV

• $76M new formula funding

• $19M early childhood and $4M other

Dedicated Revenues Expected to Cover

CPS Employer Pension Contribution by FY31

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• The Evidenced Based Model funding

formula includes the normal cost as a

factor in providing additional educational

funding

• Funding sources for $855M FY20

Required Employer Contribution

• $492M funded from pension levy

(intercepted by the CTPF)

• $257M funded from State (normal cost

contribution + healthcare)

• $106M funded from CPS operating

funds (12%)

• Dedicated revenues are projected to fully

cover the annual pension contribution by

FY31

• In the meantime, CPS has included the

full statutory ARC in its balanced budget

which, if done annually, allows for a 90%

funded status by FY59

Source: Chicago Teachers Pension Fund (CTPF) Actuarial Report, FY2018.

Portion of pension cost funded from operating funds (12% in FY20)

Pension Levy Revenues projected to exceed CPS Contribution in FY31

$ M

illio

ns

CITY OF CHICAGO

FINANCIAL UPDATE

City's Overall Debt Service Schedule

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-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

1/1/

2021

1/1/

2022

1/1/

2023

1/1/

2024

1/1/

2025

1/1/

2026

1/1/

2027

1/1/

2028

1/1/

2029

1/1/

2030

1/1/

2031

1/1/

2032

1/1/

2033

1/1/

2034

1/1/

2035

1/1/

2036

1/1/

2037

1/1/

2038

1/1/

2039

1/1/

2040

1/1/

2041

1/1/

2042

1/1/

2043

1/1/

2044

1/1/

2045

1/1/

2046

1/1/

2047

1/1/

2048

1/1/

2049

Principal Interest

City's Pension Contributions

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900,214,000 900,214,000

136,774,000

414,115,000 124,132,000

185,874,000

-

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2018 2019

Property Tax Levy Corporate Fund Water-Sewer Tax Water Fund

Sewer Fund Emergency Communications Library Fund Chicago Midway

Chicago O'Hare Library Property Tax

$1,308,544,000 $1,679,785,000

$838M Budget Gap Was Largest in the City’s History

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$838M Budget Gap Addressed with 60% Structural Solutions