Oct. 23 (Bloomberg) -- The Obama administration may funnel more federal aid directly to cities and bypass states, Valerie Jarrett, a senior adviser to the president, said during a Chicago appearance with her former boss, Mayor Richard M. Daley.

“We want to make sure that the dollars and the programs that we have are tailored to your needs and that you have one place that you can go in the White House,” Jarrett said during an appearance at the Art Institute of Chicago.

President Barack Obama in February created the White House Office of Urban Affairs, noting that about 80 percent of Americans live in urban areas. Jarrett works with that office as the Assistant to the President for Public Engagement and Intergovernmental Affairs.

The administration is looking for ways to reward successful programs, Jarrett said, and is considering sending more federal funding directly to U.S. mayors.

“We’re going to make that kind of decision on a program by program basis,” she said.

The federal government was her “single biggest frustration” when she worked in city government, Jarrett said.

Daley praised Jarrett and the administration because he said they “get it” when it comes to urban America.

“I better get it,” Jarrett replied. “I learned it from him.”

The event’s sponsors included The Burnham Plan Centennial and Chicago Metropolis 2020, a regional planning organization. The city is celebrating the centennial of the 1909 Plan of Chicago, which helped create many of the lakefront parks and other design features that still dominate the city’s appearance.

Needed Boost

Jarrett’s visit comes at a time when the mayor of the nation’s third-largest city could use a boost.

Chicago lost its bid for the 2016 Summer Olympics on Oct. 2, is facing a $520 million budget deficit in 2010 and is poised to raise bus and train fares because of a transit agency shortfall.

Unemployment rates in big cities remain high. September unemployment in the Chicago metropolitan area was 10.5 percent.

Youth violence also continues to plague Chicago. A Sept. 24 beating death of a high school honor student prompted Obama to send his attorney general and education secretary to the city to try to look for ways to reduce the killings.

Daley said the “most shocking thing” about the beating was that someone had time to film it and not call police.

Jarrett knows Chicago’s problems well. She first met the Obamas in 1991 when she was Daley’s deputy chief of staff and interviewed Michelle Obama for a City Hall job.

Former Boss

A lawyer, Jarrett started in city government as a deputy corporation counsel for finance and development. She also served as a commissioner in the city’s planning and development department and as chairman of the Chicago Transit Board.

Her current boss, a former community organizer on Chicago’s South Side, also has urban credentials.

Obama is the nation’s first big-city president in nearly a century. He grew up in Honolulu, went to college in Los Angeles and Manhattan and has spent most of his adult life in Chicago.

Other modern presidents like John F. Kennedy and Richard Nixon have lived in big cities, although none have been as closely associated with urban America as Obama.

Robert Weissbourd, president of Chicago-based economic development firm RW Ventures, said the administration is working to change the terms of the urban policy debate.

“They are trying to move the discussion along and reframing it,” he said. “The bad news is it’s very difficult for the federal government to quickly realign programs.”

Weissbourd said the White House is wise to recognize the economic importance of cities.

Milwaukee Defender

“Cities produce the incomes that are the basis of the federal tax collections,” he said. “Cities really control the income and cost side of the federal government.”

Milwaukee Mayor Tom Barrett, an early Obama supporter in the presidential campaign, said he is pleased with the communication and urban policy from the administration.

“It’s an attitudinal shift,” he said. “They view us as a partner.”

Barrett said the White House has a staff member assigned to deal specifically with mayors, whether they have concerns about housing, swine flu or other matters.

“It’s nice to know that you are being listened to,” he said.

To contact the reporter on this story: John McCormick in Chicago at jmccormick16@bloomberg.net.

Last Updated: October 23, 2009 19:05 EDT