The Evanston/Skokie District 65 school board on Monday night adopted a budget for the 2025 fiscal year with $177.3 million in revenue and $190.5 million in non-capital expenditures. If everything sticks to budget, the district is on track to close the year with a deficit of $13.2 million, excluding capital projects.
Including the capital budget, expenses are $213.8 million, good for a capital-inclusive deficit of $35.11 million. That’s on the heels of the district running a shortfall of about $10 million for both the 2023 and 2024 fiscal years. This coming year, the district also has to make its first full payment of $3.2 million on the lease certificates it issued to fund the Fifth Ward school.
“As the district’s financial adviser, I cannot stress enough the magnitude of the financial challenges facing this district. Status quo will lead the district into either financial or academic bankruptcy,” said financial consultant Robert Grossi.
“I’ve been appointed twice by the Illinois State Board of Education in my career to oversee school districts that have been taken over by the state due to fiscal insolvency. Unless decisions are made that are bold and immediate, it is my assessment that the district is heading in that direction.”
Grossi was referring to the imminent risk, if the status quo continues, of the state taking over the district, which happens periodically with Illinois school districts that repeatedly fail to pay their bills.
The district’s spending over the last several years, which has gone up by an average of 9.75% per year since the 2021 fiscal year, was the elephant in the room. Cash on hand for District 65 was at $90 million to start this year, but Grossi and Chief Financial Officer Tamara Mitchell are projecting that number to fall to $54.96 million by the end of the year. That means the district is expecting to have 72 days’ worth of reserve funds when the 2024-25 year wraps up.
Reserve policy
School board policy calls for the district to keep at least 90 days’ worth of funds in the bank at all times. Grossi called that the “minimum” policy of any district he’s worked with, meaning that District 65 could be in a precarious position in the event that property taxes are paid out late next year, for example.
Last year, property taxes came in December instead of August, when it usually does, which meant the district lost $35 million in funds for about four months, according to Grossi. If that were to happen again, the district would need to borrow money just to pay teachers and staff their salaries and benefits, he said.
District 65 Superintendent Angel Turner reiterated the key components of a deficit reduction plan that Grossi and Mitchell are expected to present to the board in January. She highlighted five strategies for long-term financial stabilization, including staff cuts, school closures, building maintenance and finding a way to provide both special education and transportation services at a cheaper cost.
Consultant eyed for school consolidation
Breaking with the district’s previous plan, Turner and several board members said evaluating options for “school consolidation,” that is, school closures, will be too much added work for the administration to handle along with running the everyday operations of the district.
As a result, Turner told the board on Monday night that her team’s recommendation is to hire an independent consultant to get feedback from the community and ultimately make a recommendation on a school consolidation plan. That means school closures will no longer be under the purview of stage three of the Student Assignment Planning (SAP) process, which is just now getting underway.
A committee of district administrators and staff will make up a SAP III committee that will eventually recommend what District 65 programs to keep in place and where they should be housed. Part of the district’s budget reduction plan will involve identifying programs that provide a “positive return on investment” and removing programs that do not, according to Turner.
“The reality is we have the capacity to do our jobs, but for this short timeline [for finalizing a budget reduction plan by January], it’s going to take a level of skill and expertise that we need to lift up,” she said. “There’s no way we can do this and do this well, and still run the day-to-day operations of this district.”
The board showed support Monday for hiring a third-party firm to look into school closures and help with the district’s overall budget cuts. Board member Biz Lindsay-Ryan said an outside company with “laser-focused expertise” on school consolidation would allow Turner and her administration to spend their time on student-centered work instead.
Mya Wilkins, the board’s vice president, also called it “unreasonable” to expect district staff to handle school closures and staff cuts without outside help.
“Consolidation is going to be very emotional, and we don’t want community members to be going after our staff, accusing them of being biased or anything else. So I do like the idea of someone outside. If it’s affordable, maybe we can partner with Northwestern,” said board member Omar Salem. “We have to make sure they [the public] not only feel heard, but even for the folks that don’t come out and speak, that they know what’s happening.”
Long-term outlook
Assuming $15 million in permanent budget cuts as part of the reduction plan that will be presented in January, an annual 3% increase in revenue and 3.5% increase in expenses, the district can go from this year’s deficit to surpluses of $6.6 million next year, $2.17 million in fiscal year 2027 and $185,000 in 2028, according to Mitchell.
Wilkins and board members Joey Hailpern and Soo La Kim both expressed appreciation for Grossi, Mitchell and Turner coming up with a long-term plan for righting the district’s proverbial ship. Lindsay-Ryan also encouraged the rest of the board to consider the cost, both human and financial, of the potential cuts coming down the road.
“What you all are saying is great. It makes sense,” Salem said. “I’m happy that there’s a plan, but as the parent of a second-grader and a kid who’s not here yet, this does scare me. Obviously, mistakes have been made in the past, maybe some mismanagement, whatever it is. But it really sucks that the current and future students might have to miss out on things.
“I do think we’re going to be able to get out of it, it sounds like. But how are we, as a district, going to make sure we’re still offering the top-level education while also getting out of this mess?”
District 65 heading to insolvency without ‘bold’ cuts, consultant says is from Evanston RoundTable, Evanston's most trusted source for unbiased, in-depth journalism.