Facing a projected $12 million budget deficit for 2027, Evanston leaders Monday considered, and then rejected, a plan that would have encouraged some city employees to retire early or leave their jobs voluntarily.
The proposal for voluntary employee separation was one of a number of ideas provided to the City Manager’s Office to address the fiscal shortfall.
Evanston’s budget expenditures totaled more than $404 million in 2026. About 31% of that, or roughly $126 million, went to pay city employee salaries and benefits, according to city data.
“This program (voluntary separation for employees) alone will not address the structural deficit, but it’s one of many tools that we can use to control personnel costs,” Clayton Black, Evanston’s deputy chief financial officer, told Finance & Budget Committee members at their Sept. 2 meeting.
While the committee voted unanimously to not take action on the matter at that time, a final decision on the two voluntary staff reduction programs came before City Council members Sept. 14, where officials reiterated their decision to explore alternative options.
“Early retirement and voluntary separation packages are not where we want to go first,” said Ald. Jonathan Nieuwsma, 4th, at Monday’s Council meeting. Nieuwsma also sits on the Finance & Budget Committee and is one of four alderpersons who initially voted down the initiatives.
“It might be something we consider at some point after we take a more strategic approach on headcount reduction,” Nieuwsma added.
Staff reduction options presented for Council members to consider included the Illinois Municipal Retirement Fund’s (IMRF) early retirement incentive (ERI), which allows cities to offer eligible employees the chance to purchase up to five years of service credit at retirement. For each month or year of service credit they purchase, a member’s retirement age is increased accordingly.
This would mean a 55-year-old employee with 20 years of service could purchase five years of service through the early retirement program and retire now as if they were 60 years old with 25 years of service.
The second option on the table was a voluntary separation program to incentivize eligible staff members to willingly separate from the city. The program would only apply to employees over the age of 50 who are eligible for retirement under their respective pension plans, according to city documents.
Black previously told committee members the total cost savings from instituting one or both of these options was undetermined, but that in order to see substantial savings, the city would need to replace employees who leave through the program with workers whose salaries cost no more than 70% of the departing employees’ payroll costs.
When the motion failed to pass at Council Monday for lack of a second alderperson to bring it forward for a vote, Ald. Matt Rodgers, 8th, told the public that officials looked at multiple options on the table and directed the city manager to look at reducing the workforce “through vacant positions, through positions that are duplicative of others or where [staff] might be able to rearrange departments in order to make things line up better.”
“So, again, not saying no to this ever, but not saying yes to it tonight,” Rodgers added.
Ald. Clare Kelly, 1st, told Finance & Budget Committee members earlier this month that she wouldn’t support early retirement options in the future because city staff “really need to do the hard work of looking at our staffing and determining which positions we could remove.”
“I think that’s the first step,” Kelly reiterated.
But the push to streamline cost-saving options signals increased desperation among city leaders looking for other solutions to make up the deficit. Other, less favorable solutions may be increasing property taxes, introducing new food and beverage taxes, or hiking city-wide program fees, officials have suggested during prior budget meetings.
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According to Deputy Finance Officer Black, Evanston’s General Fund balance rested at $16.5 million at the end of 2025, a $41.2 million reduction from where it sat at the end of 2022.
Once an $11 million advance to the Capital Improvement Fund is returned to the General Fund, the balance is expected to reach $27.7 million, a $1.4 million excess in reserves to the $26.3 million required to remain in the city’s fund balance at any given time. But that excess is still short of the amount needed to cover the projected 2027 structural deficit, Black said.
“We’ve seen the excess reserves get spent down for a variety of reasons,” Black noted at a July 8 budget review meeting. But he didn’t specify which of the city’s 41 fund reserve accounts were the most to blame.
With new union contracts for city employees currently in the works, among other financial considerations, Evanston is poised to face a difficult year ahead, he said.
City manager Stowe is expected to release the city’s 2027 draft budget Tuesday, Oct. 6, after which it will be available for public viewing on the City of Evanston website.