District 65's Surprise/Not Surprise Budget Problems

Let’s read some local news:

• June 7, 2023: District 65 to finish year with $3.4 million deficit, taking board by surprise (Evanston Roundtable )

• June 8, 2023 $4M Budget Shortfall Passed To Interim District 65 Superintendent (Evanston Patch)

• August 7, 2023 D65 chief financial officer to step down (Evanston Roundtable)

• August 23, 2023 District 65 projects operating deficits growing to $17.2 million by 2029 (Evanston Roundtable)

It is surprising that this year shows a budget deficit (see projections below) but it is less news that there were future budget deficits, they’ve been showing this problem for some time. If you go back to the 2022-23 Budget at a Glance, you can see the projected deficits for this year thru 2028. Now that number for 2029 is out and it’s not pretty ($-17m).

Dr. Horton on his resume for the job in DeKalb listed the accolades the District has received from the Illinois State Board of Education (ISBE) for financial management:

Awarded recognition from ISBE as having the most high quality equitable budget for a school district in Illinois. We were sent to present to other districts in Denver about our process.

It is hard to look at all the red and say “give these guys an award for financial excellence!” In the next five years alone, if you add up those red numbers below, its -$49.2 million dollars. The deficits are mostly made up by savings the District built up from the 2017 Referendum that passed 80-20.

They’ve already had to tap into reserves this year, contrary to the plan.

So by 2027-28, the referendum savings account is empty.

The Lease Certificate

Speaking of referendums, I will continue argue that the District should’ve put the Fifth Ward School up for a referendum, instead of using an anti-democratic financial product, the lease certificate. To quote last year’s budget document (bold is mine);

As part of our newly approved Student Assignment Plan, District 65 has secured funding to build a new K-8 school in the Fifth Ward without creating an additional burden to taxpayers. The estimated cost of $40 million will be fully covered through the issuance of Lease Certificates which are long-term financial commitments exclusively used for funding new school construction

I believe this false and in order to be true, requires that the District realize a $3.25m savings in transportation from no longer bussing the fifth ward kids. I simply do not understand how they got that number - you can read how I slice and dice the numbers. At most, I believe the savings are about $2.1 - $2.3m and $3.25m was a convenient number to get a $40m mortgage.

Yesterday’s Roundtable article reported on the subject;

She said administrators are assuming transportation costs will be reduced by about $3 million per year, and this reduction is reflected in the “Purchased Services” category of expenses, which decline from $24,616,679 in FY’25 to $22,001,164 in FY’26. Again, this expenditure category contains expenses for many other items in addition to transportation expenses.

I initially posted a 🔥 comment on the story alleging fraud, requiring the article to be updated (with my comment deleted)1. The article was updated to clarify that the decline in transportation services includes the $3.25m savings and is not representative of just the savings (ie $24.6 - $22.0 = $2.6m).

I misunderstood - I’m thankful they deleted my comment2. However, I remain a skeptic that this is an honest assumption.

The District has yet to show any calculations in public on how they arrived at that $3.25m number, all that is out there is a lonely slide from Raymond James in a presentation in March 2022. I asked via email for previous stories and received no reply.

Pending some bombshell, this is the last post I will make on the lease certificate story; I think the story (and my argument) is plenty out there now and I’m in favor of the new school but perhaps with a different, more financially responsible footprint, given what looks like a looming budgetary crisis.