Chicago renews migrant shelter contract with Favorite Staffing for another year despite criticism
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Mayor Brandon Johnson’s administration has renewed a controversial contract with the out-of-state company that staffs the city’s migrant shelters despite its significant overtime billing, a move his team said was its only option as efforts to replace the costly firm with cheaper, local alternatives have hit snags.
Favorite Healthcare Staffing and the city on Monday signed a $40 million extension through October 2024. It’s Johnson’s third extension for the firm and empowers the company to continue hiring caseworkers, security guards, janitors and other employees for the roughly two dozen migrant shelters housing thousands of Chicago’s asylum-seekers.
The continued reliance on Favorite Staffing, based in suburban Kansas City, comes as another migrant housing plan — Johnson’s strategy of establishing winterized base camps for incoming asylum-seekers — is reaching crunchtime. Temperatures are expected to dip below freezing next week but the large heated tents have yet to be erected across the city despite the mayor’s promises to do so by winter.
As Johnson’s team has done repeatedly, deputy chief-of-staff Cristina Pacione-Zayas argued Thursday that the mayor “inherited” the expensive shelter staffing rates from Mayor Lori Lightfoot’s administration along with the unprecedented task of absorbing the thousands of new arrivals, for which Chicago has never had the infrastructure.
The $40 million Favorite Staffing renewal is on top of at least $56 million the firm has been paid since September 2022 as migrants began arriving in Chicago, when the firm’s initial contract on the shelters was inked by Lightfoot. Pacione-Zayas said the Johnson administration has always been “concerned” about the company’s exorbitant bills, but that the city had no choice but to execute “stopgap” contract extensions until better vendors come along.
“If we were to kill the contract, who would staff these spaces?” Pacione-Zayas said during a briefing with reporters. “We would get slammed and critiqued on that. And so we’re being responsible while trying to come up with new ways to be responsive and also sensitive to the fact that the city of Chicago is paying for this.”
A recent Tribune investigation found that the city has paid out extensive volumes of overtime as part of its original deal with Favorite Staffing. A small selection of invoices provided by the city following a Tribune request for all of Favorite Staffing’s invoices shows hundreds of Favorite Staffing workers logged working 84 hours a week — with a majority of that time being paid at an overtime rate at a 50% premium.
At a Woodlawn shelter in early February, for example, 36 of the 50 Favorite Staffing employees logged working at least 12 hours a day, seven days a week. The city’s bill for one week in early February at that shelter was nearly $460,000.
At the Streeterville site one week in March, roughly eight in 10 workers logged working 84 hours. One worker at the Inn of Chicago shelter was logged as pulling five 12-hour shifts, a 14-hour shift and a 16-hour shift during one week in mid-March. For his work alone that week, the city was billed $15,525, invoices showed. Another staffer logged working 12-hour security shifts at least 56 days in a row this winter and spring.
A representative with Favorite Staffing deferred all contract questions to the city. But Keenan Driver, a vice president with the firm, has previously said the company charges “fair and market-based” prices. On Thursday, Driver said in a statement that the company was looking “forward to continuing to work with the City on this important mission.”
Since Johnson took office in May, his team has been critical of Favorite Staffing’s rates, saying the contract was costly to the city and that the city planned to phase it out and bring on local community-based organizations. Those plans have not come to fruition. Instead, his administration has signed multiple renewals of the Favorite Staffing contract; besides this week’s, there were extensions shortly after his inauguration and in July.
Pacione-Zayas said Thursday that doing away with Favorite Staffing is easier said than done, but the administration plans to announce new staffing contracts for some of its 25 shelters in mid-November. Favorite Staffing, though, will continue working at more than half those shelters due to lack of interested bidders and other procurement restraints, she said.
“We had to always have Favorite as a backup,” Pacione-Zayas said. “I think our actions should tell you that this is how we intend on addressing it, and that is by putting Chicagoans to work.”
The new contract reflects recently renegotiated rates touted by Johnson’s team, a move that was necessitated because the city brought on Favorite Staffing to work at its migrant shelters by piggybacking off a state contract for the COVID-19 pandemic.
The state deal had listed specific positions and hourly rates for emergency health care work to be provided by Favorite Staffing. As the city engaged Favorite Staffing to handle migrant shelters, the city contract simply changed the names of jobs and kept the same pay rates.
So previously, a “pandemic healthcare worker” — paid $100 an hour by the state — became “shelter security.” Under the new terms inked in October, a security guard’s regular hourly rate decreased to $68 an hour. If the guard was a local resident and didn’t need a hotel room, the rate would drop to $48 an hour, according to the contract. The renegotiation also requires Favorite Staffing to try to hire any additional workers locally, Johnson’s team has said.
The initial prices for Favorite Staffing employees have led several aldermen to criticize the contract and call for the city to audit the invoices. Pacione-Zayas did not address those demands Thursday, saying the focus was keeping the migrant shelter ecosystem afloat.
She also acknowledged it might not be feasible to cut out Favorite Staffing for good.
“I think that’s what’s sort of being evaluated right now as these proposals are being reviewed,” she said. “It’s a matter of once we kind of see what this application process yields, it’ll let us know what is the potential of being able to fully disengage from Favorite.”
As of Thursday, more than 19,000 migrants have arrived in Chicago since August 2022, with 11,800 currently staying inside the city-run shelters and another 3,300 staying inside Chicago police stations and at O’Hare International Airport.
Gov. J.B. Pritzker, meanwhile, shrugged off concerns on Favorite Staffing’s extensive use of overtime, characterizing it as an expected part of providing services during a crisis and emphasizing that the city ultimately is responsible for the company’s shelter work.
“It’s very hard to have a contract with someone who can, on the spot, in an emergency, be able to deliver the kinds of things that these companies are able to do, and so that is an expensive thing,” Pritzker said.
“Obviously, everybody should be keeping track of the expenditures that they’re making,” he said. “But I just want to remind the folks who are paying attention to these contracts that having a long-term, emergency-related contract is an expensive endeavor.”
In addition to the city’s deal with Favorite Staffing, the Johnson administration also has contracted with GardaWorld Federal Services under a nearly $30 million deal to put up migrant “yurt” base camps across the city. Johnson’s team has weathered flak for that agreement, given the private security firm’s work in immigration detention, to which the administration has said it will apply robust guardrails to hold the vendor accountable.
But with temperatures expected to drop to the high 20s next week, alarm is growing over the fact that the tent encampments are still not ready. Pacione-Zayas said the city is working with faith organizations to try to keep migrants sleeping outside safe from the cold but “we don’t have a lot of turnkey solutions here.”
“We, of course, have some upcoming shelters that are opening. We’re trying to move as quickly as possible,” Pacione-Zayas said.
Johnson’s team recently disclosed that it plans to build one of the base camps on a vacant parking lot at 38th Street and California Avenue — a decision that has attracted outrage from some Brighton Park neighbors and disappointment from Ald. Julia Ramirez, 12th, who has said she was not consulted beforehand.
City workers are currently assessing the viability of the site, which Johnson’s team has said remains viable despite its lack of use since 2020 and objections from environmental groups due to the area’s past industrial activity.
Pacione-Zayas said she could not provide a date on when the base camp, which would house 2,000 migrants, could open, though pamphlets distributed at a community meeting this week suggested that after the site is approved, outfitting the “prefabricated” tents with proper equipment would take days.
“The assessment is still underway and we do not have results at this time,” Pacione-Zayas said.
Pritzker, who previously expressed his preference for bricks-and-mortar shelters over the tent encampments, again said it’s the city’s responsibility to open shelters, with the state playing a supporting role.
“Am I disappointed?” Pritzker said. “I’d like everybody to have housing, there’s no doubt. It’s challenging, especially when, as we know, we don’t know when those buses are leaving. We don’t know how many are going to arrive on a given day.”
