District 65's Surprise/Not Surprise Budget Problems
And a 🔥 comment I left about the lease certificate
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.
Sorry, Larry Gavin!
That’s a first for me.
I have thought this savings estimate was BS since they first shared this “data”. A large number of bussed students in middle school are all the kids in Walker neighborhood area who are bussed to Chute. It’s 3 busses, I believe — it’s all the kids in Skokie. That won’t change one bit.
You’re def not alone. Up to 10 comments in EvNow...here’s one:
Dereliction of duty. Pure negligence.
Malfeasance. Incompetence. Ineptitude. These words (and then some) describe this BOE, this Administration, and the attorneys that represent the District. The entire cabal. Millions of dollars don’t just disappear; go unaccounted for. But only here can this puppet BOE and the Administration get away with a response that goes something like this: “We’ll do better next time. Promise. Pinky swear!” The bottom line is this: there needs to be a full accounting of every dollar spent — what was approved by the BOE, and what wasn’t? What was approved by the CFO and never went to the BOE, but was supposed to? What went to Horton’s associates and friends of associates? What was spent and where — down to the penny.? If we lived in Normalsville USA, an honest BOE, a BOE with integrity and a sense of accountability to the public, would have called for an independent audit immediately. Not here, not in “special” and “unique” Evanston, IL. Instead, it’s “Golly gee, something doesn’t add up” and “No more surprises, pretty please!” And the residents? Our response? We barely wake from our apathetic slumber. This place is beyond bizarre. Are we being punk’d?
(Oh, and PS — hey DEC (d65 teachers union): you endorsed all of these people….have fun fighting for your members in the next contract negotiation. This is ALL on you. I can only hope the teachers see this clearly. Actions have consquences. And this time, it’s going to be ugly.)