Annual Financial Analysis
Enterprise Funds Expenditures

Enterprise Funds Expenditures

The City’s enterprise funds support the operation, maintenance, and capital programs of the City’s water and sewer systems and O’Hare and Midway Airports. These funds are self-supporting, in that each fund derives its revenues from charges and associated user fees. The costs of capital improvements for the City’s enterprise funds are included in the overall budgets of these self-supporting funds. Click here for the discussion on the enterprise fund’s revenue history.

O’Hare and Midway Airport Funds

Expenditures of Aviation funds include expenses associated with operating and maintaining the airports, including the airfield, terminal, and landside facilities. Both the O’Hare fund and the Midway fund expenses grew steadily over the past decade. As capital improvement projects move forward at both airports, interest payments on bonds issued to fund those projects increase, and depreciation expenses associated with those improvements increase as an overall share of airport fund expenses. Interest payments from the O’Hare fund grew at an average annual rate of 4.5 percent between 2007 and 2016, from $206.5 million to $300.25 million. The Midway fund interest payments grew at an average annual rate of 3.4 percent between 2007 and 2016, from $57.4 million to $75.6 million.

Salaries, wages, and employee benefits (excluding pension benefits) are the largest non-debt related expense of the Aviation funds and have increased due to many of the same factors driving the overall growth in the City’s personnel costs, including salary and wage increases under collective bargaining agreements and the increasing cost of healthcare. Prior to 2015, pension costs were included in total personnel costs across both funds. Beginning in 2015 and going forward, these pension expenses are broken out separately to provide better insight into the Aviation funds’ proportionate share of pension contributions to all four pension funds. The 2016 total pension contributions from both O’Hare and Midway was $34.2 million or a 7.2 percent increase over 2015 contributions.

Energy expenses for the airports have followed similar patterns as seen in Citywide utility and fuel costs, reflecting market prices and efficiency initiatives.

Water and Sewer Funds

The City’s Water and Sewer funds are supported primarily through water and sewer user fees, and these revenues are used to repair, maintain and improve the City’s water and sewer system and deliver safe and clean drinking water. Overall, water and sewer fund expenditures are driven by capital improvement programs, maintenance and repairs, and system operations.

The following charts provide expenditures from the water and sewer funds by division (i.e. power and pumping or purification). The personnel costs and non-personnel costs are included in these divisions where applicable. Similar to the Corporate fund and Aviation funds, salaries, wages and employee benefits make up a significant portion of operating expenses in both Water and Sewer funds, and have increased in recent years due to the same factors affecting overall City personnel costs. In the chart below, pension costs were included in other personnel costs across both funds prior to 2015. In 2015, these pension expenses are broken out separately to provide better insight into the water and sewer funds’ proportionate share of pension contributions to the Municipal and Laborers’ pension funds. The 2016 total pension contribution from both water and sewer was $16.7 million or 9.5 percent of the total employer pension contribution to the Municipal and Laborers’ funds in that year.

Additionally, much of the recent overall growth in expenditures in these funds is related to the Department of Water Management’s capital improvement work to renew and replace the City’s aging water and sewer system. Interest payments on bonds and loans issued to fund the water and sewer upgrades along with depreciation expenses associated with those improvements have increased as an overall share of these funds’ expenses as the City moves forward with these critical capital improvements.