
Evanston/Skokie School District 65 is facing unprecedented financial challenges in the coming years. It had deficits of $10 million in both FY’23 and FY’24, and now has a budgeted deficit of about $13 million for FY’25, taking into account all funds except the capital fund (the non-capital funds).
Each of these deficits seemed to take the school board by surprise. On a cumulative basis, these actual and projected deficits will reduce the cash balance in the non-capital funds by $33 million by the end of FY’25, leaving a total cash balance in those funds of $38 million.
This amount would fund the schools for 70 days, considerably less than the minimum fund balance policy target of 90 days.
At the Sept. 16 school board meeting, the district’s financial consultant Robert Grossi gave the board a stark warning: “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. 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.”
At the same Sept. 16 meeting, the district’s Chief Financial Officer Tamara Mitchell presented projections for the next three years for four of the district’s operating funds. Under the projections, the district would have an operating surplus in those funds of $6.6 million in FY’26, $2.2 million in FY’27 and $185,764 in FY’28. A pivotal part of the projections, though, is that they assume the district will cut expenses by $12.5 million in FY’26. The district is scheduled to provide details on those cuts in January.
While the projections show surpluses in the four funds in FY’26 and FY’27, these surpluses are trending down. And the total cash balances in these four funds will be $6 million less at the end of FY’28 than they were at the start of FY’25. This is due to a $6 million payment to cover the increased cost of constructing Foster School, the new school in the Fifth Ward.
Complicating factors
Significantly, though, the projections do not take into account four other non-capital funds maintained by the district. These four funds show a total budgeted deficit of $3 million in FY’25. The RoundTable asked district officials if they prepared projections for these four funds for FY’26, FY’27 and FY’28, and if the district planned to address any projected deficits in these funds in January.1
The district officials did not say if they have projections for these four funds. But Hannah Dillow, communications manager, said in a Sept. 27 email that the district’s “overall deficit reduction plan includes all funds of the district. The aggregate deficit in all funds is the focus of the district’s planning to balance the budget.” She added, “The targeted amount of cuts across operating funds for FY’26 is $15 million.”
Whether $15 million in cuts will be achieved and whether those cuts will enable the district to balance its budgets for the next three years remains to be seen.
There are a few complicating factors.
First, the district appears to have difficulty in cutting back on administrative positions and “other” staff. The FY’25 budget only cuts two administrative positions; but it cuts 51 teaching/DEC member positions. The district also added 119 other full-time equivalent employees (FTEs). This represents an overall increase of 66 FTEs.
Second, in order to make the first of many payments due on the lease certificates issued to pay for Foster School, the district plans to use $3.2 million in state funding which has historically been allocated to the education fund. That means less money will be available to pay teachers and for instructional purposes.
Third, the district has budgeted to increase the property tax levy for its education fund by about $2.5 million by eliminating the 2014 levy for its Illinois Municipal Retirement fund. This option will disappear as the cash balance in the fund runs out.
Fourth, Superintendent Angel Turner said on Sept. 16, “Complete staffing and operational efficiencies cannot be achieved without consolidation of schools,” in other words, closing a school or schools. Proposing, deciding on and implementing a school closing plan before the start of the school year in August 2026 will be an ambitious undertaking. And even if a well thought-out school closing plan was approved, it is difficult to conceive how it could be implemented before the new Foster School is opened and ready to accept students whose schools were closed.
A. The FY’25 budget shows a deficit of $13 million
District 65 has budgeted a deficit of $13 million for FY’25, taking into account all non-capital funds. For FY’25, total revenues are budgeted to be $177.4 million, down 0.4% from the prior year. The total expenses are budgeted to be $190.5 million, up 1.13% from the prior year.
While the changes in revenues and expenses from the prior year are relatively small, the slight decrease in revenues comes on top of significant increases in revenues in the prior three years. The slight increase in expenses is on top of huge increases in expenses in the prior years.
1. Budgeted revenues for FY’25 compared to earlier years
While the district’s revenues are budgeted to slightly decrease in FY’25, the total revenues in FY’25 are still $31.3 million, or 21.5%, higher than in FY’21.
The table below, presented by Grossi to the school board on Sept. 16, shows the trend in actual revenues for all of the district’s non-capital funding sources for FY’21 through FY’24 and the budgeted revenues, by source, for FY’25.

Property taxes. Property taxes comprise about 80% of District 65’s operating revenues. School districts may generally increase property taxes by the lesser of 5% or the amount of the increase in the Consumer Price Index (CPI), with some exceptions, such as new construction or a referendum approving a higher increase.
District 65 is still benefitting from the April 2017 referendum that boosted property tax revenues by $14.5 million in FY’17 and a little more in each subsequent year. The district is also benefiting from significant amounts of new construction, which is not subject to tax caps. In addition, a relatively high CPI in the last several years has permitted the district to increase its tax levy payable in calendar years 2023 and 2024 by 5% in each year.
The table shows that property tax revenues have increased from $117.5 million in FY’21 to $136 million in FY’24, an increase of about $18.5 million, or 15.7%, in that three-year period. Property taxes are budgeted to increase by $5.6 million in FY’25.
Other local revenues are budgeted to decline by about $1.7 million, primarily due to a decline in the corporate personal property replacement tax. But the district is budgeting about $9 million in local revenues in FY’25, which is more than double the amount received in FY’21.
State funding, comprised of evidence-based funding and state grants for special education and transportation, is budgeted to be $16.1 million in FY’25, a little more than in FY’24.
Federal grants are budgeted to decrease by almost $5 million in FY’25, primarily due to the end of COVID-19 relief funds. The amount budgeted for federal grants in FY’25 is about $10.5 million, a little more than the amount received in FY’21.
2. Budgeted expenses for FY’25, compared to earlier years
While the district’s expenses are projected to increase by only 1.13% in FY’25, the total expenses budgeted for FY’25 are about $48 million higher than in FY’21, and almost $20 million higher than in FY’23.
The table below, also presented by Grossi at the Sept. 16 school board meeting, shows the trend in certain categories of expenses incurred in the non-capital funds for FY’21 through FY’24, and the budgeted amount for FY’25.

Between FY’21 and FY’24, student enrollment declined by 958 students. And the number of the district’s total staff increased by 191 FTEs.2
On Sept. 16, Grossi told members of the board that the final budget for FY’25 built in about $6.5 million of the deficit reductions approved by the board in the spring of 2024. That plan called for reducing staff by a total of 40 positions: 10 administrators, nine central office employees and 21 teachers, for a cost savings of $4.7 million. There were other expense reductions called for in the plan.
The actual reductions appear different.
On Sept. 27, Dillow told the RoundTable that the number of administrators budgeted for FY’25 was 64, the number of teachers was 748 and the number of other employees was 680. The table below, prepared by the RoundTable, compares these numbers with those in FY’23 and FY’24.

The table shows that between FY’24 and FY’25, there was a decrease of only two administrators, but the number of teacher positions eliminated jumped to 51. There was an increase of 119 other FTEs, for an overall increase of 66 FTEs.
The jump in the number of FTEs in FY’24 and FY’25 combined is 207.
Salaries and benefits. Salaries and benefits account for about 80% of the district’s non-capital expenses. On an overall basis, the salary expense is budgeted to increase from $110.2 million in FY’24 to $112.1 million in FY’25, an increase of about $1.9 million, or by 1.7%.
Benefits are budgeted to increase from $20.3 million to $21.7 million, an increase of about $1.4 million. Grossi said health insurance premiums rose between 7.3% and 9.8%, and that accounts for about half of the increase.
The budgeted salary numbers are subject to significant uncertainty. The district’s contract with the District 65 Educators Council (DEC, the teachers union) expired at the start of the current school year, and the district has still not negotiated a new contract with DEC. So, the rate of compensation for teachers (and at least one other employee group) is not yet known. The district notes, “Each 1% increase affects the budget by approximately $700,000.”
Purchased Services. The above table shows that purchased services increased from $15.5 million in FY’21 to $31.3 million in FY’24, or by about 100%. Purchased services are budgeted to decrease by about $488,000 in FY’25.
A significant portion of the increase in prior years is due to an increase in transportation costs, which jumped from about $5.9 million in FY’ 22 to $10 million in FY’23. In FY24, transportation expenses came in at $11.6 million, and they are budgeted to increase a slight amount in FY’25 to $11.7 million. The district has not yet gotten transportation expenses under control.
Another significant item in purchased services is “Agency Services Temp Help” which was $1.2 million in FY’23, $3.8 million in FY’24 and $3.3 million in FY’25. Turner said a letter to the community, “The labor crisis has hit special education particularly hard as school districts, including D65, have needed to hire staff through outside agencies to ensure compliance with students’ individualized education services.”
It appears that the district will continue to rely on hiring staff though outside agencies in FY’25.
The line item “Other Purchased Services” increased from $5.9 million in FY’23 to $7.4 million in FY’24, and then decreased to $6.8 million in FY’25. This is still a significant expenditure which is only vaguely described. The RoundTable asked the district what was included in this line item. The district did not respond.
Debt payments. Expenditures in the district’s debt payment category of expenses increased from about $6.4 million in FY’23 to about $8.4 million in FY’24 and are budgeted to increase to about $9.8 million in FY’25. A significant part of the increases appears to be due to payments for the new Foster School. For FY’24, the district budgeted a payment of $1.9 million for interest due on the lease certificates issued to pay for the construction of the new school.
For FY’25, the district is budgeting $3.2 million to pay amounts due on the lease certificates.
Tuition and other objects. The tuition for out-of-district schools (other than Park School) was $2.6 million in FY’23. It jumped to $4.3 million in FY’24 and is budgeted to be $4.3 million in FY’25.
3. Budgeted expenses for Foster School
There are two types of expenses that the district faces in connection with the construction of Foster School.
First, the lease certificates. The district issued about $40 million in lease certificates to generate funds to pay for the new school. The district is required to make payments on the lease certificates in the amount of about $3.2 million on June 30 of each year starting on June 30, 2025 and continuing until 2042.
In presenting the final budget on Sept. 16, Grossi said the district will pay the $3.2 million due under the lease certificates in FY’25 using the state’s evidence-based funding revenues. This state funding has historically been allocated to the education fund.3
Thus, the payments due on the lease certificates will reduce the amount of money available to pay teacher salaries or for other instructional purposes.
Second, the shortfall. The most recent estimate of the cost of the new school is $48.5 million, leaving a shortfall of about $8.5 million between the $40 million obtained through the issuance of the lease certificates and the new estimated cost. Part of that shortfall may be paid by using interest income earned on the $40 million in proceeds from the sale of the lease certificates, but the balance will need to be made up through other sources, including proceeds from the sale of an existing school, said Turner in January.
The district deficit reduction plan for FY’27 (discussed below) shows a payment from the working cash fund in the amount of $6 million. It does not show up as an expense, but in the line: “Other Uses of Funds.” Mitchell said, “The $6 million figure is taking into account the reserves that must be used to complete the Foster School construction. That’s reducing the fund balance reserves as well.”
Because the district did not seek voter approval in a referendum, the district has no statutory authority to levy a separate tax in addition to other district taxes or to levy a special tax unlimited as to rate or amount to pay the principal and interest due on the lease certificates, says the district’s “Official Statement” used in offering the lease certificates.
4. Budgeted deficits by fund in FY’25 — a recap
The table below, prepared by the RoundTable, provides a recap of the revenues and expenses for all of the district’s non-capital funds. ($ in 000s)

At the start of FY’25, these funds had a total cash balance of $51.2 million. At the end of FY’25, these funds are projected to have a total cash balance of $38 million.
The district also has a capital fund that had a cash balance at the end of FY’24 in the amount of about $38.9 million. Most of that fund consists of proceeds from the sale of the lease certificates to build Foster School. The district is budgeting to spend about $23.3 million for the new school out of that fund in FY’25.
B. The deficit reduction plan for FY’26–FY’28
As part of an “overall” deficit reduction plan, the district told the RoundTable it is planning to make cuts totaling $15 million for FY’26. But the district has only provided projections for four of its funds. There are four other non-capital funds.
Whether the district will be able to make cuts totaling $15 million, and whether the cuts will be enough to enable the district to balance the budgets in all of its non-capital funds for the next three years, remains to be seen.
1. Projections for four funds require cuts of $12.5 million for FY’26
District 65 was not required to file a deficit reduction plan this year with the Illinois State Board of Education, said Mitchell, but she added that the district was close to meeting the requirement, and they decided to file the plan to be proactive. The district’s deficit reduction plan presented to the board on Sept. 16 contains four tables, one containing final budget numbers for FY’25, and the other three being estimated budgets for FY’26, FY’27 and FY’28. The tables are prepared in the format required by ISBE.
The table below contains final budget numbers for FY’25, but it provides budget information for only the four funds that ISBE requires to be included in a deficit reduction plan: education, operations & maintenance; transportation; and working cash. As noted in the table below, the total deficit for these four funds in FY’25 is $9,978,720.

The district’s deficit reduction plan contains a similar table for FY’26, FY’27 and FY’28. The table for FY’26 shows a surplus in the amount of $6.6 million — a major turn-around in one year. To achieve that surplus, the district will need to show an increase of about $4 million in total revenues and a decrease of $12.5 million in total expenses for FY’25.
So, the deficit reduction plan calls for cutting expenses by about $12.5 million for FY’26.
In the following two years, FY’27 and FY’28, the district assumes that revenues will increase by 0.7% and 2.8%, respectively, and that expenses will increase by 3.5% and 3.6%, respectively. The district projects it will have a surplus of about $2.2 million in FY’27 and a surplus of about $1.1 million in FY’28.
But the trend is that expenses are increasing at a faster pace than revenues, and by FY’29, there will likely be a deficit again, unless further cuts are made.
The table below, prepared by the RoundTable, shows the total revenues, total expenditures and the deficit or surplus for each year in the deficit reduction plan.

The deficit in FY’25 for the four funds ($10 million) is about the same as the total of the surpluses in FY’26, FY’27 and FY’28 ($9.9 million). But the trend indicates that the structural deficit that has plagued District 65 for many years is continuing.
In addition, the estimated cash balance in these four funds at the end of FY’28 is $35.8 million, which is $6 million less than the cash balance for the four funds at the beginning of FY’25, which was $41.9 million. The decline is due to a $6 million payment to construct Foster School, discussed above.
The district did not provide a written narrative explaining the assumptions it made in preparing its projections or the basis for its assumptions.
2. The deficit reduction plan does not include four funds
The projections contained in the deficit reduction plan prepared for ISBE do not include budget estimates for the IMRF fund, the tort fund, the life safety fund or the bond & interest fund.
These four funds have a total budgeted deficit of a little more than $3 million for FY’25, and the district has not provided projections showing whether these funds will have deficits in FY’26, FY’27 and FY’28, and if so, the amounts.
The RoundTable asked if the district planned to address the deficits in these four funds in the budget reduction presentation it makes to the board in January, and, if so, what the target amount of all cuts in all funds would be for FY’26. Dillow responded on Sept. 24:
“The ISBE deficit reduction plan format only includes the four operating funds: educational, operations and maintenance, transportation, and working cash. The overall deficit reduction plan includes all funds of the District. The aggregate deficit in all funds is the focus of the District’s planning to balance the budget. The targeted amount of cuts across operating funds for FY26 is $15 million. Details regarding the cuts will be presented in January 2025.”
The plan is thus to identify cuts in January totaling $15 million for the FY’26 budget, but the district has not provided projections for all funds showing how it will fare on an overall basis if $15 million in cuts are made.
3. Components of the deficit reduction plan
At the Sept. 16 board meeting, Turner said administrators will present recommendations in January 2025 to cut expenses for the FY’26 budget.
First, she said the district plans to reduce non-classroom staff positions “by assessing operational value and staffing level efficiencies” and to reduce classroom positions “by matching class sizes to current targeted guidelines.” She said the district plans to “modify programs and functions with the goal of ensuring a positive return on investment and to evaluate out-of-school time programming for effectiveness and return on investment.”
She added that staff reductions will be recommended after further analysis and after discussions with affected bargaining units.
Second, Turner said the district will recommend a timeline to consolidate schools, meaning to close a school or schools. She said, “Complete staffing and operational efficiencies cannot be achieved without consolidation of schools.”
Third, the district has a long list of needed building repairs, the cost of which is estimated at $188 million in a 2022 Master Facilities Plan prepared by the district’s architecture and planning firm. Turner said everything cannot be done at once, so the board will be asked to prioritize the projects and develop a timeline to address them. She added, “The district will likely need to use proceeds from the sale of facilities and debt issuances to address capital needs.”
Fourth, Turner said the district will plan to “deliver high quality individualized education services in a more cost-effective manner.” She said the district will conduct an audit of the following areas to determine the best way to support students with an individualized education program (IEP): staffing, scheduling, programing, continuum of services, transportation and optimization of obtaining reimbursement.
Fifth, the district will plan to “deliver transportation services in a more cost-effective manner.”
4. Some things that may impact making the potential cuts
Making $15 million in cuts that will carry through from one year to the next is no easy task. There are at least four factors that may impact the district’s flexibility in making the cuts.
First, the district eliminated 51 teaching positions in FY’25. Cutting more teaching positions will be more painful. On the other hand, the district cut only two administrative positions, and it added 119 “other” FTEs in FY’25. It has added 207 FTEs in FY’24 and FY’25.
Second, in order to make the first of many payments due on the lease certificates issued to pay for Foster School, the district plans to use $3.2 million in state funding, which has historically been allocated to the education fund. That means less money is available to pay teachers and for instructional purposes.
Third, the district has tentatively decided to increase the property tax levy for its educational fund by eliminating the levy for its IMRF fund in November 2014. While this may boost the budgeted amount of property tax receipts for the education fund for FY’25, this tactic may be available for only another year, due to a decline in the balance in the IRMF fund. In 2023, the levy for the IMRF fund was $2.5 million.4
Fourth, Turner told the board on Sept. 16 that “complete staffing and operational efficiencies cannot be achieved without consolidation of schools.” It thus appears that it will be necessary to recommend which school or schools will be closed, tentatively decide which school or schools will be closed, hold the required public hearings on whether a school or schools will be closed and then close the school or schools before the start of the school year in August 2026. This is a short timeline.
And there are many issues that need to be considered in closing a school or schools, including whether each school will have the capacity to meet the needs of students with an IEP, which schools will house the dual language Two-Way Immersion (TWI) program, whether class sizes can be managed (perhaps through permissive transfers or admission to a magnet school) to ensure consistent class sizes between schools and efficient staffing levels, whether there will be an effective method to reduce overcrowding at all of the schools over time, whether the school configuration will have excess capacity in case student enrollment increases in the future, what the district will do if a new school is needed in the future if student enrollment increases, whether racial/ethnic balance will be taken into account, the estimated costs to repair the schools, etc.
In light of the compressed time schedule, Turner said the district will need the assistance of a financial consultant to help objectively review the issues and assist in making recommendations. She recommended that the issue of school consolidations be removed from the purview of a Student Assignment Planning Committee, and that school consolidations be considered alongside the deficit reduction plan because school consolidation was a critical part of the deficit reduction plan. She said the consultant could gather input from the community as part of the process.
Board members who spoke at the Sept. 16 meeting appeared to support the idea of using a consultant to assist in making the recommendations to be presented in January, including the recommendations about school consolidations, but no motion was made, and no vote was taken on the issue. An article about the meeting is available here.
But, inasmuch as Turner said on Sept. 16 that “complete staffing and operational efficiencies cannot be achieved without consolidation of schools,” it would seem that a school closing plan must be proposed, decided on and implemented before the start of the school year in August 2026. But logistically, it is difficult to conceive how a well-thought out school closing plan can be implemented before the new Foster School is opened and ready to accept students whose schools have closed.
Footnotes
1. The RoundTable asked Superintendent Angel Turner; Tamara Mitchell, chief financial officer; Robert Grossi, financial consultant to the district; and Joey Hailpern, chair of the board’s Finance Committee, a series of questions by email on Sept. 24. Hannah Dillow, communications manager, responded on Sept. 27.
2. The table shows the increase in District 65’s staff and the decline of student enrollment for FY’19 through FY’24. The table was prepared by District 65 and provided to the RoundTable in response to a FOIA request.

3. The budget documents prepared by the district show that the total amount of evidence-based funding provided by the state in FY’25 is budgeted to be $7,936,000, and that $4,708,000 is allocated to the education fund, and $3,228,000 is allocated to debt service fund. The payment will be expensed to the debt service fund. **
It appears that the deficit reduction plan makes similar allocations for FY’26, FY’27 and FY’28.
The RoundTable asked if the district was permitted to use the state’s evidence-based funding grant to pay the lease certificates issued to fund a new school that was not approved by voters in a referendum. Dillow responded, “Evidence-based funding is an unrestricted source of revenue for the district. This source of revenue is one of three sources of revenue that is advised by the district’s bond legal counsel to be used to make payments on the lease certificates. The other two sources of revenue are Personal Property Replacement Tax (PPRT) and interest income.”
4. The itemized listing of property tax revenues in the Education Fund for the FY’25 budget, shows a current year levy tax of $59,621,000 (an increase of $5,394,420.03 over the prior year,) and a first prior year levy tax of $53,035,000 (an increase of $6,035,724.77 over the prior year). The total property taxes budgeted for FY’25 are $11,430,146 more than the actual in FY’24, or an increase of 11.3%.
By contrast, the itemized list of property tax revenues in the IMRF Fund for FY’25 shows a current year levy tax of $0 (a decrease of $1,257,235.53 from the prior year) and first prior year levy tax of $1,255,000 (a decrease of $333,528.98 from the prior year) in the IMRF fund. The property taxes budgeted for the IMRF fund are 44% less than the actual amount collected in FY’24.
The RoundTable asked the district to explain the increase in property tax revenues budgeted for the education fund and the decrease of property tax revenues budgeted in the IMRF fund in light of the approved levy or levies for these funds. Dillow responded:
“The FY25 budget includes taxes received from both the 2023 and 2024 tax levies. The 2024 levy will be presented for Board approval in December 2024. The tentative levy presentation will occur in November 2024. ‘Current Year Tax Levy’ relates to the 2024 levy and those budgeted numbers are tentative based on final 2024 levy approval. Additionally, revenues related to the 2024 tax levy will not be received until spring of 2025.
“The district finance team is tentatively choosing not to levy for the IMRF/SS fund on the 2024 levy in order to boost property tax receipt revenue to the educational fund. This financing strategy is permissible. The IMRF/SS fund has a healthy fund balance reserve. The IMRF/SS fund is a restricted fund, meaning revenues may only be used for IMRF pension and Social Security payments. This fact combined with the fact that the fund has a healthy reserve balance led to the finance team’s decision to leverage this financing strategy.
“The IMRF/SS fund is one of the healthiest funds of the district when measuring the expenditure to fund balance ratio. Even with the financing strategy that the finance team has employed, the fund will still maintain over 70% fund balance as compared to projected expenditures. That being said, opting to direct property tax revenues to the fund most in need, the educational fund, is prudent at this time. To be clear, the district will continue to make all required payments in full and ensure a healthy balance remains for this fund.”
Links: Runaway expenses for District 65 lead to 3 straight operating deficits
Analysis: Can District 65 cut expenses by $15 million for FY’26? is from Evanston RoundTable, Evanston's most trusted source for unbiased, in-depth journalism.