An immediate round of cuts made before the 2025 fiscal year and new policies requiring more timely expense reports and bill payments appear to have gotten District 65 back on the right financial track at least for the time being, adviser Robert Grossi reported to the school board on Monday afternoon.
Grossi presented the chart below, which compares revenues and expenses through February of fiscal year 2025 to the same data from fiscal year 2024 (the fiscal year begins July 1, so these numbers represent two-thirds of each fiscal year). So far, expenses are down $9 million and revenues are up $3.9 million from last year. To this point, the district has operated at a $3.6 million surplus, compared to the $9.3 million deficit it registered through February 2024.
Much of that progress began a year ago, when the board approved $6.5 million in cuts for the 2025 fiscal year. Tamara Mitchell then took over as chief financial officer on July 1, and she led an effort to re-establish best practices for spending, like notifying the board of all expenses before they’re paid and adding safeguards to ensure that all purchase card charges are reviewed and approved by multiple people.
Grossi described this latest data as “cause for optimism,” and he praised the board and administration for “quickly addressing the issue.” As of now, transportation and special education expenses “are trending below budget,” he added, “which leads me to conclude that the district is going to outperform its budget.” The district also won’t see the impact of the additional $13.3 million in cuts that the board approved in January until fiscal year 2026.
The budget approved by the board last summer projected a deficit of more than $10 million, which isn’t even counting capital projects. But despite the good news that the deficit might be smaller than expected, District 65 still has a long way to go to reach longterm sustainability.
“The first major fire that had to be put out was to get rid of the structural deficit,” Grossi said. “The district had to stop the bleeding as much as possible. And the district has come very close to stopping the bleeding for this point in time. The challenges that you still face are that your fund balances are now low.
“I would argue that the district really does not have the fund balance reserves to address major capital anymore. If you have to address major capital, it’s going to have to come through some sort of debt issuance or source of revenue beyond your regular operating budget.”
On top of that, he said that several factors are complicating the financial picture for all school districts — inflation is lower, meaning the district’s revenue growth will slow over the next two years, while corporate personal property taxes have fallen and the Trump administration has thrown federal funding into question.
The Illinois State Board of Education also puts every school district in the state into one of four financial categories: recognition, review, early warning or watch. The latest available report from September 2024, which evaluated fiscal year 2023 data, designated District 65 as “review.” But Grossi said fiscal year 2024, which also ended in a deficit, will “more than likely” put the district under “watch” or “early warning” at a minimum. Getting out of those categories will take time and eventually being able to boost reserves back up, he said.
Superintendent Angel Turner mentioned that the district only fixed its board financial reports to be more accurate and timely last year. Before that, paying bills due in one fiscal year in the next fiscal year to manipulate the system was a common practice, Turner said.
Even though paying bills on time sounds like the bare minimum, said board member Biz Lindsay-Ryan, “in my six years on the board, we haven’t done it.”
“This is something that has been happening historically with previous administrations — not just one administration, said school board President Sergio Hernandez. “So having this administration actually really digging in and saying, ‘This is not right, and we really need to figure out some processes to make this right,’ of course has been long overdue.”
“How could we have known? What we’re seeing here [in financial reports] is just an amalgamation of different expenses and revenues. But in regards to knowing when the bills get paid, that’s something we weren’t privy to as a board, or wasn’t shared with us. It just frustrates me. But I’m also excited that we are now taking hold of this issue that’s been going on for a while.”
Audit results
Earlier in Monday’s meeting, Nick Cavaliere of accounting firm Baker Tilly presented the results of his 2024 audit of the district’s finances.
Cavaliere and his team ultimately rendered an “unmodified audit opinion,” which means that the financial reports he analyzed came back clean in terms of the numbers they featured. The auditors found no instances of noncompliance that they would be required to report.
But they did find two “material weaknesses.”
“A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis,” Baker Tilly’s presentation said.
Those two problems included:
- The district’s June 30, 2024 financial report overstated its total fund balance by $575,845 when compared with the actual bank statement from the same time.
- The district didn’t pay $718,570 that it owed to the Teachers Retirement System (TRS) in fiscal year 2024, and it eventually had to make up that difference in fiscal year 2025.
Responding to those two issues, Mitchell — who was not yet working in the district when both situations happened — said that the district’s software provider has done additional training with the employee responsible for the financial statement error, which at least partially resulted from confusion with investment statements as opposed to cash position.
As for the TRS mistake, she said that errors occurred in the reporting of retirement contributions, and that a staff member just forced the payroll through without correcting it.
“It definitely has been addressed with the team. We’re making steps to correct that so it doesn’t happen in the future,” Mitchell said.
Later, in addressing questions from the board about the accuracy of financial reports going forward, she added that “we are keeping our finger on the pulse to make sure that what we’re seeing in the reports is actually what’s happening.”
Winter budget update offers District 65 ’cause for optimism’ is from Evanston RoundTable, Evanston's most trusted source for unbiased, in-depth journalism.