Departmental budgets for three of Chicago’s oversight agencies are not on their own sufficient to meet mandatory minimums described in law, a BGA Policy analysis of annual appropriations and related documents found. The city’s budget office relies on a combination of non-departmental appropriations and accounting adjustments to make up the difference, resulting in effective operational budgets that fall well short of the total funding floors.

At issue are minimum levels of funding set by city law for three agencies: the Office of Inspector General, the Civilian Office of Police Accountability, and the Community Commission for Public Safety and Accountability. OIG is the independent, nonpartisan watchdog agency tasked with identifying corruption, waste, and mismanagement in city government and operations, as well as evaluating the effectiveness, efficiency, and equity of city policies and practices. COPA is a civilian-staffed agency that investigates allegations of misconduct by Chicago police officers, while CCPSA is an elected body tasked with duties relating to police policy and community-police relations.

Unlike most city departments, the work of oversight agencies inherently involves investigating and at times criticizing other parts of city government, potentially including the administrators and elected officials who set the agencies’ budgets. Mandatory funding minimums help shield inspectors general and similar watchdog bodies from politicized defunding, and are one of the independence protections recommended by the Association of Inspectors General.

The city’s budget office, however, pushed back against the concept of mandatory minimums for oversight departments, with Budget Director Annette Guzman telling BGA Policy in an interview that “budget floors are not a good budget mechanism” and that the minimums “take responsibility out of department heads to innovate, economize; make efficiencies where necessary.” The Office of Budget and Management, which Guzman heads, is responsible for calculating the oversight department budget floors and for determining whether annual budgets meet the required minimums.

Those determinations rely on a combination of additional calculated costs not included in departmental budgets and accounting adjustments that affect the calculation of the funding floors, BGA Policy found, with budgetary impacts that total millions of dollars annually.

Fringe and Indirect Costs

The annual appropriations ordinance does not break out pension and benefit costs to individual departments. Instead, those costs are lump-sum budgeted under the citywide “finance general” appropriations category. 

But for purposes of determining whether statutory budget floors have been met — and only for that purpose — the city’s budget office applies a “fringe” multiplier calculated annually by the Department of Finance to the oversight departments’ personnel costs, then counts the resulting share of citywide pension and benefits costs towards the budget floors. 

Fringe costs are not otherwise included in departmental budgets, nor are they ascribed to individual departments anywhere else in summaries or budget datasets. The fringe tables produced by the finance department are primarily used in grant applications to ensure that grant-funded positions receive funding sufficient to cover pension and benefits in addition to salaries. 

OBM’s position, as laid out to BGA Policy in an interview, is that the relevant ordinances call for the “appropriations available to pay for the expenses” of the various oversight departments to meet or exceed the statutory floor. Since the citywide appropriations for pensions and benefits are partially used to pay for OIG, COPA, and CCPSA expenses, those can, in OBM’s understanding of the ordinance, be counted towards the funding floors, even though there are no standalone appropriations specific to OIG, COPA, or CCPSA pensions and benefits. 

(The citywide lump-sum appropriations are of course vastly larger than the funding floors, and indeed than the combined budgets of all three oversight agencies. In the 2025 budget, the finance general appropriation for the city’s contribution to the Employees’ Annuity and Benefit Fund was roughly $2.6 billion, while the appropriation for healthcare costs and claims was roughly $412 million. A reading of the ordinance in which those are “appropriations available to pay for the expenses” of OIG, COPA, and CCPSA would see the funding floor exceeded automatically every year.)

Complicating the treatment of a calculated fringe cost as an “appropriation available to pay” departmental expenses, OBM uses a citywide average fringe value based on the pension and benefit costs of an average-salaried full-time employee in the Municipal Employees’ Annuity & Benefit Fund across all three budget floor calculations. 

The Department of Finance’s fringe tables are more comprehensive, providing a fringe value for every $1,000 salary bracket across all four of the city’s annuity and benefit funds. OBM’s estimate of fringe for the oversight departments does not calculate fringe at the specific rate for each budgeted position, nor even use a departmental average rather than a citywide average. The total dollar value of “fringe” counted towards oversight department budget floors for purposes of meeting the minimum is an approximation, and typically an overcount, as average salaries at the oversight departments tend to be higher than the citywide MEABF average used by OBM, with correspondingly lower fringe rates on the DoF tables. 

The exact impact of the fringe calculation varies from department to department, as described below, but in all cases is necessary for OBM’s determination that the budget floor has been met. 

Civilian Office of Police Accountability

Per city ordinance, funds available for COPA’s expenses must equal at least “one percent (1.0%) of the annual appropriation of all non-grant funds for the Police Department contained in the annual appropriation ordinance.”

OBM includes its calculation of COPA fringe based on a citywide MEABF average towards that floor. However — and critically — the police department’s pension and benefits costs are not included in the threshold calculation performed by OBM. This results in an apples-to-oranges comparison of COPA’s budget plus fringe to 1% of CPD’s non-grant budget without fringe. 

According to an interview with BGA Policy, OBM interprets “the annual appropriation of all non-grant funds for the Police Department” as referring strictly to appropriations from the Police Department budget, unlike their interpretation of “the appropriations available to pay for the expenses of the Office” as referring both to COPA’s budgeted appropriations and to OBM’s calculation of fringe costs paid out of finance general appropriations. 

The exclusion of CPD fringe becomes even more dramatic when the detailed fringe tables provided by DoF are used, rather than the citywide value based on an average-salaried, full-time MEABF employee used by OBM. CPD’s average salary is consistently higher than the citywide average, and the majority of CPD employees fall under the Policemen’s Annuity & Benefit Fund rather than the MEABF, which uses a separate table with substantially higher fringe rates. 

Since COPA’s first fully budgeted year in 2018, a combination of COPA’s departmental appropriations plus calculated fringe has exceeded 1% of CPD’s non-grant appropriations without fringe — but not 1% of CPD’s non-grant appropriations plus CPD’s non-grant fringe, regardless of whether CPD fringe is calculated using the citywide average MEABF fringe rate or a rate based on an average CPD salary and the PABF fringe table provided by the Department of Finance:

The shortfall becomes more dramatic when comparing COPA appropriations and fringe to CPD appropriations plus fringe based on the PABF table provided by DoF. In either case, COPA’s funding has historically fallen well short every year on any like-to-like comparison, with greater or lesser margins of underfunding depending on whether fringe is applied to neither or to both departments:

Community Commission for Public Safety and Accountability

The Community Commission for Public Safety and Accountability was formed in July 2021 as a result of the Empowering Communities for Public Safety ordinance. Like COPA, CCPSA uses a funding floor based on the Chicago Police Department’s non-grant appropriations, with a base value of 0.22% rather than COPA’s 1%. 

CCPSA’s minimum funding calculation faces the same issue as COPA’s, with the “fringe” value of pensions and benefits included on CCPSA’s side of the ledger but not on CPD’s.

As with COPA, CCPSA’s departmental appropriations plus calculated fringe have mostly sufficed to meet the funding minimum as calculated without CPD fringe, but not if CPD’s fringe is included before calculating the 0.22% threshold, whether applying the citywide average MEABF fringe rate used by OBM or a fringe rate based on an average CPD salary and the PABF fringe table provided by the Department of Finance:

(In its first budgeted year, CCPSA fell short of the non-fringe minimum even when including CCPSA fringe, albeit only by $860; this likely resulted from basing the floor calculation on initial budget recommendations, rather than the final budget passed by the city council.)

With fringe removed from both sides of the equation, CCPSA would have met its budget minimum in 2024, although not in any other years since its formation. Incorporating fringe from both CCPSA and CPD would have resulted in shortfalls every year:

Calculated Impact: A like-to-like comparison of CCPSA appropriations without fringe to 0.22% of CPD appropriations without fringe results in CCPSA appropriations falling short of the calculated budget floor by an average of $314,270 annually since 2022, for a cumulative shortfall of $1.3 million as of 2025. Alternatively, a like-to-like comparison of CCPSA appropriations plus fringe to 0.22% of CPD non-grant appropriations plus fringe results in annual funding floor shortfalls averaging $1.2 million since 2022, a cumulative shortfall of $4.8 million as of 2025. Using a fringe value based on the average CPD salary at PABF rates as calculated by DoF, the shortfall increases to an average of $2.2 million annually since 2022.

Office of Inspector General

The budget floor for the Office of Inspector General is based on a different formula than COPA’s and CCPSA’s, discussed in more detail below. As with COPA and CCPSA, OBM counts towards OIG’s floor a fringe calculation using the citywide MEABF average fringe value. 

In the case of OIG, OBM also adds an additional calculation of “indirect costs” taken from the city’s most recent cost allocation plan. The cost allocation plan is an annual document prepared by third-party consultant Maximus that includes a cost-of-service analysis for services provided by city departments to other city departments.

Indirect costs allocated to OIG in recent cost allocation plans have averaged about $340,000 annually from the Chicago Public Library system, $280,000 from the Department of Public Health, and between $100,000 and $150,000 each from the water fund, Department of Family and Support Services, and O’Hare operations fund. 

When asked what services or expenses those indirect costs reflected, OBM staff stated that they “weren’t as familiar with that level of detail,” and that the reports were prepared by the Department of Finance. The Department of Finance did not respond to multiple requests for comment. 

Since the establishment of OIG’s funding floor, both fringe and indirect costs have typically been necessary to meet the funding threshold as calculated by OBM, although in recent years departmental appropriations plus fringe have met the threshold, with indirect costs further exceeding it:

Calculated Impact: Departmental appropriations alone, without fringe and indirect costs, fell short of OBM’s calculated budget floor for OIG by an average of $5.4 million annually since 2019, the first year in which Budget Overview documents included detailed budget floor calculations.

Basis for OIG Budget Floor

Unlike COPA and CCPSA, whose budget floors are based on a percentage of CPD non-grant appropriations, OIG’s budget floor is set as a percentage of citywide appropriations. 

Per city law, appropriations available to pay for OIG expenses must be no less than 0.14% of “the annual appropriation of all funds contained in the annual appropriation ordinance, as adjusted.” The adjustments described in statute consist of subtracting the costs of any OIG services provided to sister agencies under intergovernmental agreements and pension costs that exceed 2014 levels from the appropriations total before calculating OIG’s 0.14%. 

The actual calculation used by the city’s Office of Budget and Management to establish the threshold and determine whether OIG’s budget exceeds it is more complex than the plain text of the ordinance. In the annual Budget Overview documents published by OBM, an OIG budget value is compared to a funding floor base value, each of which is generated by its own multistep calculation: 

The “Total City Budget” value used in the OIG funding floor base calculation subtracts the value of any transfers between funds and proceeds from debt before applying the statutory adjustments, which results in a substantially smaller basis for calculating OIG’s 0.14%.

In addition to making a pre-calculation adjustment by subtracting the value of transfers and debt proceeds, OBM also bases the OIG budget floor calculation on the recommended appropriations initially proposed by the mayor, rather than the final ordinance passed by the city council.

Final budgets are typically (though not always) larger than the initial proposal. Since 2019, the first year for which budget floor calculations were included in the Budget Overview, final budgets averaged $33.8 million greater than the initial recommendations, with considerable variation.

The choice of which value to use as “the annual appropriation of all funds” before applying the statutory adjustments has a substantial impact, with gaps between OIG’s basis for the 0.14% calculation and the sum of all appropriations in the final, passed ordinance exceeding $1 billion in recent years:

The pre-calculation reductions for fund transfers and debt proceeds are not called for in the OIG’s establishing ordinance, which specifies only adjustments for sister agency intergovernmental agreements and pension costs in excess of 2014 levels. 

According to OBM, those adjustments are standard accounting practice and do not need to be specified in ordinance for the phrase “annual appropriation of all funds” to refer to an adjusted total, rather than the pre-adjustment sum of all appropriations contained in the annual appropriations ordinance. 

Elimination of any duplication or double-counting is standard in accounting, with the transparent identification and elimination of interfund transfers referenced specifically in the Government Finance Officers Association’s best practices. City budget documents do not provide an itemization of transfers, however, only a total value subtracted as “transfers between funds” every year. 

In response to BGA Policy’s request for an itemization of transfers, OBM cited the fund reimbursement appendices from the annual budget books. Those detail only a small subset of transfers, equal in the 2025 budget to less than 5% of the $1.6 billion subtracted as transfers between funds. 

Appropriations in the budget for transfer-related appropriation account descriptions represent an even smaller share, totalling roughly $8.5 million in the 2025 budget, or about 0.5% of the total subtracted for transfers between funds. 

Meanwhile, the total adjustment for transfers and debt proceeds has trended upwards in recent years, resulting in increasing reductions in the basis for OIG’s budget floor calculation. In the budget for 2019, the transfers and debt adjustment equaled 6.4% of total annual appropriations. By the 2025 budget passed last year, that percentage had increased to 11.1%:

A BGA Policy calculation of the 0.14% funding floor formula using the sum of all appropriations in the annual appropriations ordinance, adjusted for intergovernmental agreements and pension costs in excess of 2014 levels as called for in ordinance, generated budget floor thresholds on average $1.9 million higher annually than the levels based on OBM’s “Total City Budget” value that subtracts transfers and debt proceeds before performing the statutory adjustments and 0.14% calculation:

Using a floor based on the sum of appropriations as passed in the final budget without adjustments for transfers and debt proceeds, OIG funds counted towards the floor have only met or exceeded the minimum in the past two budget years, and that only with the inclusion of both fringe and indirect costs. Without fringe and indirect costs, OIG appropriations alone have never met either budget floor:

Calculated Impact: The difference between OBM’s calculated budget floor, subtracting transfers and debt proceeds, and a budget floor based on final appropriations without the transfers/debt adjustments has averaged roughly $1.9 million annually since 2019, the first year in which Budget Overview documents included detailed budget floor calculations. Measured against the higher budget floor, departmental appropriations plus fringe and indirect costs for OIG have fallen short by an average of $1 million annually since 2016, although the floor has been met in the two most recent budget years.  Excluding fringe and indirect costs, OIG departmental appropriations alone have fallen short of the higher budget floor by $6.9 million annually since 2016.

OIG Pension Exemption

OIG’s funding formula is based on a percentage of the total city budget after removing costs for sister agency intergovernmental agreements and any pension costs that exceed 2014 levels. 

The former are relatively modest — the Public Building Commission is the only sister agency that maintains an intergovernmental agreement with OIG, with an annual cost of roughly $200,000 — but pension costs continue to rise each year, exempting more and more of the city budget from OIG’s funding floor calculation.

In 2016, OIG’s first full budget year following the establishment of the funding minimum, pension costs in excess of 2014 levels totalled about $500 million, equal to roughly 5% of that year’s budget. By 2025, the exempted pension costs had risen to $2.4 billion, nearly 13% of the city budget. 

As pension costs continue to climb — and any post-2014 increases continue to be exempted from OIG’s budget floor calculation — the department’s minimum funding level will be set as a percentage of an ever-shrinking portion of the total city budget.

The impact on OIG’s budget floor is increasing rapidly, with 0.14% of the pension-exempted funds equal to roughly $700,000 in 2016, compared to a $3.4 million impact in 2025:

Calculated fringe costs will also rise as pension contributions increase. In 2016, fringe made up 19.8% of the funding that OBM counted towards OIG’s budget minimum. In recent years, fringe has exceeded 30%, most recently 30.2% in the 2025 budget:

By simultaneously shrinking the pool of money used to calculate OIG’s funding minimum and increasing extra fringe costs counted towards that minimum by OBM, growing pension costs will, under current practices, continue to erode OIG’s budget from both sides, resulting in a smaller and smaller portion of funds available for actual departmental appropriations.

Calculated Impact: Exemption of pension costs in excess of 2014 levels has reduced the OIG budget floor threshold by an average of $1.4 million annually since 2016. That average, however, disguises a rapid rate of increase in this impact: applying OIG’s 0.14% to the pension exemption resulted in a $700,000 reduction in 2016, compared to a $3.4 million reduction in 2025. The impact will continue to grow in pace with pension cost increases above 2014 levels.

Funding Impacts of Budget Floor Calculation Practices

A detailed historical analysis of budget floor calculation impacts on actual spending is limited to recent years. City budget actuals that can be broken down and sorted by fund, appropriation category, and other characteristics are only available from FY2022 and onwards, according to the Department of Finance. Prior year actuals are limited to the summaries contained in the Comprehensive Annual Financial Reports.

Examining the available detailed actuals from 2022-2024 provides a modest illustration of the impact of current budget floor calculation practices on all three oversight departments. 

COPA Funding Impacts

Actual spend plus a fringe value based on actual personnel spend and calculated using the DoF tables for an average full-time COPA salary met the OBM-calculated funding floor for COPA that excludes CPD fringe in all three years for which detailed actuals are available. 

Actual spend plus a fringe value based on actual personnel spend and calculated using DoF tables did not meet a funding floor calculated based on CPD non-grant funding plus CPD non-grant fringe, regardless of whether CPD fringe was calculated with the citywide average value used by OBM or with a value from the DoF tables for an average CPD salary at PABF rates.

The shortfall is substantially larger when a rate based on CPD salary averages and the PABF tables is used.

COPA declined to comment on the budget floor or their funding levels, referring budget-related questions to the Office of Budget and Management.

CCPSA Funding Impacts

CCPSA’s first operational year saw only partial spending and is not overall reflective of either the department’s expenses or their relationship to its funding floor. 

Actual spend plus a fringe value based on actual personnel spend and calculated using the DoF tables for an average full-time CCPSA salary met the OBM-calculated funding floor for CCPSA that excludes CPD fringe in 2024, but not in 2023. 

Actual spend plus a fringe value based on actual personnel spend and calculated using DoF tables did not meet a funding floor calculated based on CPD non-grant funding plus CPD non-grant fringe, regardless of whether CPD fringe was calculated with the citywide average value used by OBM or with a value from the DoF tables for an average CPD salary at PABF rates.

The shortfall is substantially larger when a rate based on CPD salary averages and the PABF tables is used.

In response to BGA Policy’s research, CCPSA Vice-President Remel Terry stated: “It’s no secret that Chicago is facing a budget crisis and every department is being asked to make sacrifices. But as a three-year-old agency still building our foundation, every dollar counts. With the resources BGA identified, the CCPSA could strengthen the work our communities have fought so hard for—shaping more evidence-based public safety and accountability strategies and CPD policies, piloting more community-based programs through the District Councils, and deepening our community engagement efforts across Chicago.”

OIG Funding Impacts

Actual spend plus a fringe value based on actual personnel spend plus indirect costs as calculated by Maximus did not meet the budget floor as calculated by OBM in 2022. In 2023, actuals plus fringe plus indirect costs exceeded the budget floor, and in 2024 actuals plus fringe exceeded the budget floor, with indirect costs exceeding further.

At no point was OIG actual spend plus fringe plus indirect costs sufficient to meet a 0.14% threshold of adjusted appropriations based on the sum of final appropriations, rather than the sum of recommended appropriations reduced by transfers between funds and proceeds of debt before the statutory adjustments.

The Office of Inspector General declined to comment on BGA’s findings.

BGA Policy Recommendations

Mandatory budget floors are designed to prevent deliberate or negligent underfunding of departments whose work may at times be critical of city administrators, employees and elected officials. Under-calculating the minimum funding levels or meeting those minimums by including costs outside normal departmental appropriations reduces their operational capacity and undermines public trust. 

In the interest of maintaining transparent, empowered oversight agencies, BGA Policy makes the following recommendations relating to the calculation of minimum funding floors for the Civilian Office of Police Accountability, the Community Commission for Public Safety and Accountability, and the Office of Inspector General: 

• Breaking out “fringe” pension and benefit costs by department is a good transparency practice when done consistently: 
  • City budgets should ideally detail each department’s pension and benefit costs as part of the departmental budgets, rather than lump all fringe costs together in the Finance General section of the budget. This should happen across the board, not solely for purposes of determining whether oversight agencies’ mandatory budget floors have been met.
  • Calculated fringe for each department should reflect that department’s general salary and staffing levels. Ideally, fringe should be calculated on a per-position basis and included in the positions data used for the annual appropriations ordinance; if that is too burdensome, departmental fringe should at minimum be based on the average salary and predominant pension and benefits fund for the relevant department, rather than a citywide average based on MEABF.
• Regardless of how fringe costs are handled elsewhere in the budget, COPA and CCPSA budget threshold determinations should be executed on a like-to-like basis, comparing either appropriations without fringe to CPD non-grant appropriations without fringe, or appropriations with fringe to CPD non-grant appropriations plus non-grant fringe. 
• If indirect costs are considered towards funding floors, the establishing ordinance should be amended to specify that process. Indirect costs are neither defined nor itemized in the appropriations ordinance on which all three funding floor calculations are based.
• If the total of appropriations used as the basis for the OIG budget floor determination is to exclude the value of transfers between departments and proceeds from debt, those adjustments should be spelled out in ordinance, as currently done for the adjustments for sister agency agreements and pension costs that exceed 2024 levels. Transfers should also be itemized such that the total subtracted value for transfers between funds equals the transfers described in the budget data.
• Budget floor determinations should be re-checked against final appropriations as passed by the city council, with true-up amendments introduced as needed when discrepancies between recommendations and the final budget as passed create funding floor shortfalls.
• The city council should eliminate or adjust the exemption of pension costs that exceed 2014 levels from the basis of the OIG 0.14% calculation. As pension costs rise, that exemption will create an ever-widening structural imbalance between OIG’s budget floor and the total city budget. Any statutory adjustment of the appropriations total used to calculate the budget floor should be percentage-based or floating, not tied to a fixed calendar year.