Title: NOTE 1 – REPORTING ENTITY
Accounting Policies: NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are generally reported on the accrual or modified accrual basis of accounting depending on the type of fund. Some expenditures are reported when the reimbursement is received due to uncertainty of the source of funding at the time the expenditure is incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, as applicable, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available.
Certain financial awards were received by the City in the form of noncash direct assistance. These noncash awards are included on the Schedule under ALN 93.268. The schedule of expenditures of federal awards includes a column titled Non-Federal Expenditures. Amounts reported in this column include the City’s required match for federal programs.
The City has a cost allocation plan for allocation of common and indirect costs related to grant programs. The amounts allocated to 2024 grant programs are based primarily on 2023 budgeted amounts. Variances between actual costs and budgeted amounts are adjusted on a prospective basis. A copy of the cost allocation plan is kept on file at the City. The City’s cost allocation plan for 2024 has been prepared on a Direct Cost Base that does conform to the direct cost bases in the Uniform Guidance. The City’s 2024 Cost Allocation Plan (Local Organization Cost Allocation Plan – LOCAP) was provided for review and negotiation to the City’s indirect cost cognizant agency and is pending negotiation and approval, expected in 2025.
The City has not elected to use the applicable de minimis indirect cost rate allowed by the Uniform Guidance. Individual City departments’ indirect cost rate proposals (ICRP’s) for 2024 have been prepared on a Salaries and Wages plus all Fringe Benefits (S&W+FB) Direct Cost Base that does conform to the Uniform Guidance.
The 2024 Indirect Cost Rate Agreements related to the ICRP’s for the Chicago Departments of Planning and Development, Housing, Public Health, and Family and Support Services are pending negotiation with the City’s indirect cost cognizant agencies. The provisional rates in the 2023 Indirect Cost Rate Agreement for these departments extending from 01/01/2023 through 12/31/2025 were used for 2024 indirect cost recovery.
Federal/State Commingled Funds – The City of Chicago receives various federal awards that are passed through the State of Illinois. Many of these contracts contain a blend of state and federal awards. To the extent practical, the federal funding has been segregated from the state funding based on information provided by the state agencies. In some instances, individual state contracts contain multiple federal ALNs and the City has segregated the federal dollars associated with each contract award based on information received from the pass-through state agency. Due to the timing differences between the pass-through agency fiscal year end and the City’s reporting period, allocation differences may result.
The state contract for the Child Care program (federal cluster 93.575/93.596), passed through the Illinois Department of Human Services (“IDHS”), has been considered a Type A cluster for audit testing purposes each year. The final allocation of federal expenditures varies depending on the most recent available information provided by IDHS and may be reported under both ALNs or one ALN. For FY2024 the Child Care program included federal funds confirmed by IDHS for ALN 93.596.
COVID-19
While continuing to recover from the impacts of the COVID-19 pandemic, the City received federal and state grants, including $7.5 million of ARP Act funds used to replace lost revenues due to the impacts of the COVID-19 pandemic totaling $1,855.0 million. These revenues were primarily used to respond to the ongoing effects of the COVID-19 pandemic, such as housing and rental assistance, and public safety, as well as provide essential government services.
In addition, the City is eligible for the Federal Emergency Management Agency (FEMA) Public Assistance Program and in FY2024 received reimbursements for eligible expenditures incurred in FY2020, FY2021, FY2022, and FY2023 under this grant in the amount of $1,711,589, $3,297,208, $1,812,623, and $1,760,588 respectively, as reflected under ALN 97.036 and 97.141 in the Schedule.
WIFIA Loan (ALN 66.958):
The City of Chicago (Department of Water Management) executed a Water Infrastructure Finance and Innovation (“WIFIA”) loan agreement with the U.S. Environmental Protection Agency in October 2023 and re-executed the agreement in December 2024 to secure a lower interest rate prior to the first disbursement. The initial draw of $56.4 million was received in 2024 and includes EPA-certified eligible project costs incurred between June 2022 and September 2024. For SEFA purposes, expenditures under the WIFIA program are recognized only when certified by the EPA as eligible and disbursed to the City. Accordingly, the full $56.4 million disbursement is reported on the FY2024 SEFA and represents the outstanding loan balance as of December 31, 2024. Future reporting will follow this same approach for consistency.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
The City of Chicago (the “City”) is a governmental entity established by laws of the State of Illinois and has the powers of a body corporate, as defined in the statutes. All significant operations of the City are included in the scope of the Office of Management and Budget (“OMB”) requirements contained in 2 CFR Part 200, Subpart F (“Single Audit”). The U.S. Department of Health and Human Services (“HHS”) has been designated as the City’s cognizant agency for the Single Audit. The reporting entity for the City is based upon criteria established by the Governmental Accounting Standards Board.
Programs Subject to Single Audit – A Schedule of Expenditures of Federal Awards (the “SEFA”) is presented for each federal program and a summary of expenditures by federal agency is as follows:
U.S. Department of Agriculture $ 4,399,904
U.S. Department of Commerce 11,930
U.S. Department of Housing and Urban Development 156,432,018
U.S. Department of Justice 72,008,366
U.S. Department of Transportation 111,518,056
U.S. Department of Treasury 175,821,680
U.S. National Endowment for the Arts 203,308
U.S. Environmental Protection Agency 80,059,739
U.S. Department of Energy (291,908)
U.S. Department of Health and Human Services 340,833,485
U.S. Corporation for National and Community Service 739,339
U.S. Department of Homeland Security 75,110,807
Total Expenditures of Federal Awards $ 1,016,847,534
Passenger Facility Charges collected and expended, as prescribed by Sections 9110 and 9111 of the Aviation Safety and Capacity Expansion Act of 1990 issued by the Federal Aviation Administration of the United States Department of Transportation, are not included in this Single Audit report and are audited separately.
Title: NOTE 2 – BASIS OF PRESENTATION
Accounting Policies: NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are generally reported on the accrual or modified accrual basis of accounting depending on the type of fund. Some expenditures are reported when the reimbursement is received due to uncertainty of the source of funding at the time the expenditure is incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, as applicable, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available.
Certain financial awards were received by the City in the form of noncash direct assistance. These noncash awards are included on the Schedule under ALN 93.268. The schedule of expenditures of federal awards includes a column titled Non-Federal Expenditures. Amounts reported in this column include the City’s required match for federal programs.
The City has a cost allocation plan for allocation of common and indirect costs related to grant programs. The amounts allocated to 2024 grant programs are based primarily on 2023 budgeted amounts. Variances between actual costs and budgeted amounts are adjusted on a prospective basis. A copy of the cost allocation plan is kept on file at the City. The City’s cost allocation plan for 2024 has been prepared on a Direct Cost Base that does conform to the direct cost bases in the Uniform Guidance. The City’s 2024 Cost Allocation Plan (Local Organization Cost Allocation Plan – LOCAP) was provided for review and negotiation to the City’s indirect cost cognizant agency and is pending negotiation and approval, expected in 2025.
The City has not elected to use the applicable de minimis indirect cost rate allowed by the Uniform Guidance. Individual City departments’ indirect cost rate proposals (ICRP’s) for 2024 have been prepared on a Salaries and Wages plus all Fringe Benefits (S&W+FB) Direct Cost Base that does conform to the Uniform Guidance.
The 2024 Indirect Cost Rate Agreements related to the ICRP’s for the Chicago Departments of Planning and Development, Housing, Public Health, and Family and Support Services are pending negotiation with the City’s indirect cost cognizant agencies. The provisional rates in the 2023 Indirect Cost Rate Agreement for these departments extending from 01/01/2023 through 12/31/2025 were used for 2024 indirect cost recovery.
Federal/State Commingled Funds – The City of Chicago receives various federal awards that are passed through the State of Illinois. Many of these contracts contain a blend of state and federal awards. To the extent practical, the federal funding has been segregated from the state funding based on information provided by the state agencies. In some instances, individual state contracts contain multiple federal ALNs and the City has segregated the federal dollars associated with each contract award based on information received from the pass-through state agency. Due to the timing differences between the pass-through agency fiscal year end and the City’s reporting period, allocation differences may result.
The state contract for the Child Care program (federal cluster 93.575/93.596), passed through the Illinois Department of Human Services (“IDHS”), has been considered a Type A cluster for audit testing purposes each year. The final allocation of federal expenditures varies depending on the most recent available information provided by IDHS and may be reported under both ALNs or one ALN. For FY2024 the Child Care program included federal funds confirmed by IDHS for ALN 93.596.
COVID-19
While continuing to recover from the impacts of the COVID-19 pandemic, the City received federal and state grants, including $7.5 million of ARP Act funds used to replace lost revenues due to the impacts of the COVID-19 pandemic totaling $1,855.0 million. These revenues were primarily used to respond to the ongoing effects of the COVID-19 pandemic, such as housing and rental assistance, and public safety, as well as provide essential government services.
In addition, the City is eligible for the Federal Emergency Management Agency (FEMA) Public Assistance Program and in FY2024 received reimbursements for eligible expenditures incurred in FY2020, FY2021, FY2022, and FY2023 under this grant in the amount of $1,711,589, $3,297,208, $1,812,623, and $1,760,588 respectively, as reflected under ALN 97.036 and 97.141 in the Schedule.
WIFIA Loan (ALN 66.958):
The City of Chicago (Department of Water Management) executed a Water Infrastructure Finance and Innovation (“WIFIA”) loan agreement with the U.S. Environmental Protection Agency in October 2023 and re-executed the agreement in December 2024 to secure a lower interest rate prior to the first disbursement. The initial draw of $56.4 million was received in 2024 and includes EPA-certified eligible project costs incurred between June 2022 and September 2024. For SEFA purposes, expenditures under the WIFIA program are recognized only when certified by the EPA as eligible and disbursed to the City. Accordingly, the full $56.4 million disbursement is reported on the FY2024 SEFA and represents the outstanding loan balance as of December 31, 2024. Future reporting will follow this same approach for consistency.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of the City of Chicago under programs of the federal government for the year ended December 31, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The Schedule presents only a selected portion of the operations of the City of Chicago and accordingly, it is not intended to and does not present the financial position, changes in net position or cash flows of the City of Chicago.