Last year Chicago’s City Council approved Mayor Lightfoot’s “Chicago Recovery Plan”, which is described as a spending plan to “amplify once-in-a-generation federal funding to create an equity-based investment strategy to catalyze a sustainable economic recovery from the COVID-19 pandemic.” In a nutshell it’s a blueprint for how Chicago plans to spend flexible federal funds it was allocated from the 2021 American Rescue Plan Act (ARPA). More specifically, under ARPA’s State and Local Fiscal Recovery Fund (SLFRF) program the City of Chicago was allocated nearly $1.9 billion in flexible federal aid. This is money that the Mayor and City Council have a fair amount of discretion over. Chicago has until 2024 to obligate that $1.9 billion and it all must be spent by December 31, 2026.
Chicago does not have complete control over the money; however, and spending has to fall into one of the allowable expense categories (there’s a list of 83 categories in Appendix 3 of this document). Eligible SLFRF spending ranges widely from lead remediation projects to COVID vaccine campaigns to replacing government revenue lost due to the pandemic. This last item–replacing lost revenue–is notably different because it allows governments to use SLFRF funds as general purpose revenue, which creates even more flexibility as money is fungible. Importantly, with the other spending categories governments have to report spending at a granular, project level of detail and the spending needs to be tied to COVID’s health and economic impacts. This level of detail is not required for revenue replacement.
During the 2022 budget process the Mayor and City Council approved the “Chicago Recovery Plan”, meaning they settled on how the City would use its $1.9 billion. In addition to the federal money, Chicago is also financing an additional $660 million with bond proceeds (aka long-term debt). So in total, the Chicago Recovery Plan is a framework for spending $2.547 billion over the next several years. Here’s how the City depicts this flow of money:
*Note: the City uses the acronym LFRF while I use SLFRF.
Of the $1.9 billion SLFRF aid, Chicago plans to use $1.32 billion for “revenue replacement” (which is what the City labeled as “Essential City Services” in the above graphic). Governments are allowed to use the SLFRF aid to replace revenue lost because of the pandemic and its negative economic impacts. That SLFRF aid then becomes a general revenue source for the city, who can use it to pay for general government functions and services that existed before COVID. In essence, using the SLFRF aid as revenue replacement allows governments to avoid spending cuts and/or to restore spending to pre-COVID levels. As I previously wrote about, Chicago is using the SLFRF aid for revenue replacement as a way to indirectly pay off short-term debt it took out at the start of the pandemic (for more on this see this blog).
The remaining $1.227 billion Recovery Plan spending is for specific initiatives, like the pilot cash assistance program and building a sobering center. The $567 million in spending that is paid for with SLFRF aid has to be reported to the U.S. Treasury Department at a granular level (known as the “project level” in the reporting requirements). Chicago does not have to report the Recovery Plan spending that is being financed with bond debt to the Treasury Department.
It’s been a year since the Recovery Plan was approved, so what’s been spent?
That’s tricky to figure out for several reasons. First, the Recovery Plan is for multi-year spending, and the document itself doesn’t detail how much will be spent on specific initiatives on an annual basis. Second, in the Recovery Plan the City has grouped individual initiatives into program areas and only provides how much money has been allocated to the program area. Take the cash assistance pilot: below is how it’s reported in the Recovery Plan document. The cash assistance pilot is part of the “Targeted financial and legal assistance for underserved residents” program area and is one of three initiatives mentioned in the description of that program. $71 million is allocated to that entire program area. But how much is specifically for the cash assistance pilot? It’s not clear from the Recovery Plan.
Since the City has to report SLFRF spending to the Treasury Department we can use the data the federal government releases to get some insights. There are a few limitations though. Again, what the Treasury releases only includes SLFRF aid spending, so Chicago’s spending that’s funded with bond debt is excluded. SLFRF aid spending is reported to the Treasury on a quarterly basis, and the currently available data covers the spending between March 2021 through March 31, 2022. A final limitation is that how the information is reported to the Treasury Department is not the same as what is in the Recovery Plan so while we can look at total SLFRF spending we cannot easily say which programs that spending corresponds to. This issue of not being able to reconcile information between different reports is a problem because it means we can’t evaluate the City’s Recovery Plan progress and whether it is actually carrying through with all of its planned initiatives (initiatives paid for with SLFRF aid can be tracked using the Treasury Department released data).
Using the Treasury Department released data and looking at just the SLFRF supported spending, of Chicago’s $1.887 billion, it reported it had spent $782.3 million (or 41.5% of the total aid) by March 31, 2022. However, of that spending nearly all of it ($782.2 million) was for revenue replacement, which means that the City hadn’t reported much spending for any of the $567 million in Recovery Plan initiatives (here’s a link to Chicago’s SLFRF data that is from the Treasury Department; the full dataset is available on the Treasury site here). Last, the City hasn’t issued the debt yet, so we can assume the $660 million in bond funded spending hasn’t taken place yet.
Putting it all together, this means that Chicago has spent about 31% of the total $2.547 billion Recovery Plan spending. Below is a table summarizing my understanding of Chicago’s Recovery Plan spending progress as March 31, 2022.
|Total Planned Amount of Spending ($ Millions)||Amount Spent as of March 31, 2022 ($ Millions)|
|SLFRF Aid for Revenue Replacement||$1,320||$782.2|
|SLFRF Aid for Recovery Plan Initiatives||$567||$0.1|
|Bond Debt for Recovery Plan Initiatives||$660||$0|
Adding some confusion though, WTTW’s Heather Cherone recently reported that the City has spent $130.5 million on Recovery Plan initiatives, which would be higher than what’s in the Treasury Department data but still a small fraction of the total $1.227 billion planned spending that is not revenue replacement.
So, does that mean no work is happening? Not necessarily, but this becomes highly technical. The Treasury Department requires governments to report “obligations” and “expenditures” to it and has its own definitions for those terms. That reporting does not necessarily align with typical government budgeting or accounting practices, or how money actually flows. But from my vantage point–and using the publicly available reports–it’s unclear what’s happening, and this lack of transparency about how the City’s Recovery Plan is going is a problem. Again, the publicly available data indicates that the only substantive spending that has taken place is for revenue replacement (which, again, was largely used to pay off debt indirectly).