Recommendations to Strengthen the Council Office of Financial Analysis

June 23, 2023

Last week, the Civic Federation released its report, Financial Challenges Facing the Chicago Mayor and the City Council, which provided an overview of the City’s top financial challenges, options for additional revenue sources, financial management options to promote efficiencies and several recommendations. Among these recommendations was a call to expand the budget and authority of the City Council’s Office of Financial Analysis (COFA) as an independent source of information and analysis for City Council.

COFA was established in 2014 to provide financial information to the City Council independent of the Mayor’s Office of Budget and Management. Among COFA’s several powers and duties, the Office is authorized to produce an annual budget options report of potential cost-saving reforms and efficiencies, a financial analysis of the Mayor’s proposed budget, a review of the Annual Financial Analysis (now called the budget forecast) and a summary and analysis of the City’s annual financial audit. COFA is also responsible for producing an annual report on the Office’s activities.

COFA’s duties and powers were expanded in 2018 to include fiscal impact statements for all ordinances that would increase or decrease annual appropriations and ordinances involving the sale or lease of assets with revenue greater than $15 million. They were expanded again in 2019 to allow any member of the City Council to request analyses from COFA without the approval of the Chair of the Committee on Budget and Government Operations. The ordinance also required all of COFA’s reports to be posted on the Office’s website and open to public inspection.

While there have been some improvements in scope and transparency since the office was created, the Council Office of Financial Analysis needs to be strengthened significantly to make it a more meaningful resource to City Council members.

COFA has a budget of $317,680 and only three budgeted staff. By comparison, the New York City Independent Budget Office (IBO), which serves the same purpose as Chicago’s COFA, has a budget of $6.6 million in 2023 and 38 budgeted personnel positions. The Independent Budget Office serves as the best peer model of a well-established and well-utilized independent office for financial analysis. IBO serves a number of crucial roles in providing information to New York City officials and the public, including:

  • The publication of three annual fiscal reports, which include a fiscal outlook providing revenue and expenditure forecasts for the coming year, an analysis of the Preliminary Budget reviewing the Mayor’s budget proposals and a follow-up analysis that examines changes from the preliminary to enacted budgets (these are required through the New York City Charter);
  • Regular releases of fiscal briefs and background papers that examine critical issues of interest in the city;
  • Regular testimony and presentations to the City Council members and caucuses, elected officials, media, and other civic and community groups;
  • An annual report outlining budget options for potential cost-saving or revenue-generating mechanisms; and
  • Acting as a resource to respond to and educate the community regarding the budget and the local economy.

IBO also maintains a website, which includes links to all publications, a comprehensive fiscal history of New York City, educational material on understanding city budgets, information on revenue options and other information.

For COFA to adequately fulfill its intended purpose, Chicago’s City Council will need to enable COFA to function more like New York City’s IBO. The City Council should increase the COFA budget to allow for the staffing levels necessary to make COFA a meaningful asset, expand its authority and clarify COFA’s function as an independent research arm of City Council. These changes would enable COFA to conduct more proactive analysis.

Specifically, the Civic Federation offers the following recommendations to enable COFA to serve as a truly independent analysis arm of City Council. These recommendations were developed with input from the City Council Office of Financial Analysis.

  1. Increase the COFA budget. COFA estimates that it needs at least 12 staff members, which would allow the office to hire both senior and junior level analysts, economics experts and communications staff.
  2. Establish a budget floor for COFA based on a percentage of the annual Chicago budget. COFA suggests an annual budget floor set at 10% of the Mayor’s Office of Management and Budget, Chief Financial Officer and City Comptroller. This suggestion is modeled off the idea of appropriations floors set for both the Office of the Inspector General’s budget and the Civilian Office of Police Accountability (COPA) budget: The Inspector General’s annual appropriation is set at no less than 0.14% of the annual appropriation of all funds contained in the annual appropriation ordinance, as adjusted to deduct intergovernmental agreements with sister agencies and pension payments. The COPA’s annual appropriation is set at no less than 1% of the all non-grant funds appropriations of the Chicago Police Department.
  3. Establish the true independence of COFA and more clearly define COFA’s relationship to City Council. COFA’s establishing ordinance should be amended as necessary to clarify its role as an independent office that supports all committees, members and activities of City Council, not just the Committee on Budget and Government Operations.
  4. Ensure that COFA has access to all of the information necessary to conduct its job. The Mayor’s Office of Management and Budget should provide the access needed to all internal and external budget documents. Additionally, the City Council should include COFA in City Council briefings from Office of Management and Budget staff to ensure that COFA staff receive the same information as members of City Council.
  5. Expand the level of detail provided in ordinances in order to allow COFA to conduct more in-depth financial impact analysis of proposed ordinances. The ordinances introduced in City Council often only provide a high-level overview of the financial components, so more specific details are needed in order for COFA to analyze their financial impact.