Evanston/Skokie District 65 released a tentative budget for the 2025 fiscal year on Friday, and the projections don’t look good.
After racking up $20 million in surprise budget overruns over the last two years combined, the district is predicting the problem will get even worse in the coming year.
“While projected expenditures are currently forecasted to increase less than 2% overall, the District still faces a tentative, projected deficit of approximately $7,945,000 in the District’s operating funds (i.e., educational, operations and maintenance, transportation and working cash funds), and a total deficit of $19,974,000 for all funds, which includes the Capital Projects Fund for the upcoming fiscal year,” budget officials wrote in a letter posted on the district website.
In all, the tentative budget (below) shows revenues of $176 million and expenditures of $196 million. The projected deficit includes the nearly $8 million shortfall in operating funds and a more than $10 million deficit in bonds and capital projects, which includes payments due on the lease certificates the district issued to pay for the new Foster School in the Fifth Ward. Construction on the school is expected to start later this month after delays in the city permitting process.
In a blunt message about the district’s financial position, financial consultant Robert Grossi – who the district hired in September 2023 to help stabilize the budget – addressed the two years of fiscal overruns and wrote that “underperforming a budget in this manner for two consecutive years is unique based on all of my experience.”
Grossi said he’s worked with school districts on their finances for more than 30 years. The Illinois State Board of Education has twice appointed him to oversee state takeovers of districts with money problems.
Over the last year of reviewing past and present expenses and budgets, he said what he found “most troubling” is that the school board “seemed to have been regularly provided with information that understated the financial impact of the major financial decisions they were asked to support.
“This is evidenced by two poorly developed budgets, inaccurate information of the financial implication in the construction of the new school, monthly financial reports that reflected data that were more than two months old, and financial reporting that positively skewed the District’s financial condition through techniques that included delaying the payment of bills and accelerating the receipt of grant revenues into the District before the associated expenses actually occurred,” Grossi wrote.
All of those past actions “are irregular and not consistent with best practices,” he concluded.
The budget for the new school is what ultimately revealed the scope of the district’s financial issues.
Fifth Ward school pivot
Superintendent Angel Turner, who has worked at District 65 since August 2021, became the school system’s top administrator in July 2023 after Devon Horton resigned to take a post in the Atlanta area.
In October, Turner announced at a board meeting that the previously promised K-8, three-story Fifth Ward school, with room for housing the Dr. Bessie Rhodes School of Global Studies, would actually cost $65 million, far more than the project’s $40 million budget.
At that meeting, Turner also acknowledged that savings from no longer having to bus students from the Fifth Ward to schools in other neighborhoods – previously estimated at $3.2 million a year by the administration under Horton – would really be more like $700,000 a year.
That reality forced the school board to pivot to a smaller two-story, K-5 new school that will cost $48.4 million and be unable to house Bessie Rhodes inside the new building. The board voted in June to close Bessie Rhodes once the new school opens, but without a plan to keep the Rhodes community together.
In a candid admission, Grossi wrote that “had the Board received accurate information on the cost and savings generated from the Fifth Ward School, I believe their decision making related to the new building would have been different.”
He also identified several “headwinds” that will likely make the budget crisis even more difficult to solve, including ongoing negotiations between the administration and the teachers’ union on a new contract. School starts Thursday, Aug. 22, and the two sides still have not agreed to a deal. Considering the sky high inflation rates in 2021 and 2022, the union will likely be asking for a big raise in base pay for teachers across the board to start the new contract.
Revenues heading down
To make matters even worse, revenues are going down this year because federal grants related to the pandemic are now gone, and District 65 won’t see any more evidence-based state funding because of its declining enrollment.
The school board already approved $6.5 million in cuts in the spring as part of the first phase of a long-term budget-reduction plan put together by Grossi and his team. They are scheduled to present the second phase to the board in September, when the final budget for fiscal year 2025 is presented.
“It’s very important to note that this budget should be considered as ‘tentative’ and our team continues to actively work on its revision and development,” the district said in the letter posted Friday. “We are still awaiting additional information from the Illinois State Board of Education and other sources that will impact the final budget in mid September. It is unlikely that this will be the final budget.”
District 65 forecasts nearly $20 million deficit for 2025 is from Evanston RoundTable, Evanston's most trusted source for unbiased, in-depth journalism.