Evanston-Skokie elementary school officials are reviewing options in the wake of a financial forecast showing District 65 with a potential deficit of $12.5 million within five years.
Officials have no immediate plans to ask voters for more money to cover the deficit, but harsh cuts could be in the offing.
Administration officials recently released a forecast showing the district’s annual deficit growing from $1.6 million next year to more than $5 million five years from now, resulting in a cumulative $12.5 million deficit.
If left unchecked, the deficit would plunge the district into bankruptcy and financial oversight by the state, said Lutaf Dhanidina, the district’s chief financial officer.
“The further down you drop, the harder it is to come out,” Dhanidina told the school board at its Dec. 15 meeting. “And there is also a loss of prestige for a community like Evanston.”
No one on the school board is calling for a referendum, but board President Mary Rita Luecke and other members believe the district may have to ask voters for funds in the future or make painful budget cuts.
The district, which has 6,700 pupils in 15 elementary and junior high schools, is already on the state’s financial early-warning list, the second worst of four levels the state uses to characterize school finances.
Despite the gloomy forecast, board members believe they have several options available before they have to worry about the state stepping in.
“I think we have to be realistic that what we’re talking about is either program reductions or staff reductions,” Luecke said. “And if we do have to make substantial reductions, maybe the community will say they’d rather increase revenues.”
The forecast comes as the district prepares for negotiations with the five unions representing its roughly 1,000 employees, including 650 teachers.
Bob Carroll, president of the District Educators’ Council, the local teachers union, does not think the grim financial picture is a coincidence.
“Part of [the projection] is their normal conservative fiscal planning,” said Carroll, a teacher for 31 years in the district. “But part of it is posturing.”
The possibility of a large deficit “is too far down the road to be predicting the sky is falling,” he said.
But district officials say their fears are real.
They say they are facing many of the same financial problems plaguing districts all over Illinois: tax caps stifling revenue increases, rising health-care and salary costs, and tax increment financing districts that shift school tax dollars to development projects.
The district thought it would get some help from one of those TIF districts at the end of its five-year projected run. But the Evanston City Council recently approved a measure that extends the life of the downtown TIF district one year. That could cost the district $3.2 million.
“TIF revenues have promoted business development,” said board member Bob Eder. “But it has not been good for the schools, and that’s why we’re sitting here with the deficit we have now.”
To raise new revenue, District 65 imposed its first school fees last year to offset costs for classroom material and other expenses.
Dhanidina told the board that about half of the district’s parents have failed to pay the $87-per-pupil fee. The district has taken in about $200,000 instead of the $400,000 it expected, officials said. The district is preparing to send out a second notice to parents.
“I am hoping that once we get past the holidays, parents will have enough money left over” to pay the fees, Dhanidina said.
Cuts are the school board’s first option. But the district had to cut $3 million from its budget two years ago to prevent deficit spending, and the debate over those program cuts, many of them arts-related, left unpleasant memories.
“It was tough,” board member Mary Erickson said.
Voters approved a capital improvement tax-rate increase to pay for a new administrative building and computer infrastructure three years ago. But the district has not asked them for an operating fund tax increase in 15 years, and board members are not eager to do so.
“I don’t think we’re there yet,” Luecke said. “I think the community wants us to put our emphasis on what and how we spend our money.”
