Warren Township projects continued surpluses short-term but warns of long-term risks from slowing revenue growth

Rob Grossi, the district’s financial advisor, told the Warren Township High School District 121 Board of Education on April 22 that the district’s referendum and one-time pandemic-era and state payments have produced multi‑million dollar surpluses and strong reserves — but warned that revenue growth will slow and expenses are likely to rise.

Grossi said the district has generated cumulative net operating surpluses of about $33.7 million since early 2021 and, after planned capital work, the projections still show increasing fund balances through the near term. “You will see surpluses to stay healthy,” Grossi said during his presentation, noting the district expects to invest roughly $44.6 million in major capital projects during the projection period, including an $18 million locker room addition and roofing and HVAC work.

The nut of Grossi’s message: the sources that boosted revenues — referendum receipts, unusually large state payments and federal COVID relief money — have waned or will not reoccur at the same scale. The district’s own fund balance policy sets a minimum reserve of 40 percent (about 144 days of expenditures); the Illinois State Board of Education recommends 180 days. Grossi’s baseline projection keeps the district above both markers but shows a less favorable path if state support or inflation‑driven tax growth slackens.

Grossi reviewed the revenue and expenditure drivers in detail. He said roughly 73 percent of the district’s revenue now comes from real‑estate taxes; federal funding is a small share (about 4 percent). The district’s evidence‑based funding increase after the referendum moved it into a different tier of the state formula, producing a permanent but smaller increase than earlier years. He flagged three revenue risks: (1) lower CPI‑based levy growth in coming years (the December 2025 levy will be limited to 2.9 percent), (2) the exhaustion of ESSER/COVID funds, and (3) potential state fiscal pressures that could reduce categorical reimbursements for special education and transportation.

On the expenditure side, Grossi projected average annual salary increases around 3.7 percent (driven by current collective bargaining assumptions and labor market pressures) and benefit cost growth near 6 percent annually, with health insurance increases of 8–10 percent factored in. He also used three scenarios — baseline, realistic worst case and realistic best case — to show fund balance sensitivity. Under the realistic worst case (lower CPI growth, flat evidence funding and higher out‑of‑district tuition growth), he told the board the district would still be projected to remain above 180 days of reserves but with roughly $20 million less in cash than the baseline projection.

Board members asked follow‑up questions and pressed for more extended horizon projections. Board Member Natalia Martinez asked for a longer forecast so taxpayers could see the referendum’s duration “15 years out.” Grossi agreed a longer projection could be produced but cautioned that uncertainty grows with the time horizon; he recommended annual updates and said the district’s current position allows it to consider strategic investments that improve student outcomes while remaining prudent.

Board discussion touched on return on investment standards for any new spending and on the value of early, measured adjustments rather than crisis cuts later. Martinez asked that staff provide an extended forecast that shows the referendum’s effects further into the future; Grossi and district staff agreed to provide a longer‑range projection in the next update.

Grossi concluded by reiterating the primary vulnerability: a significant reduction in state funding if Illinois faces fiscal distress. He recommended continued monitoring and annual updates to the forecast so that the board can act early if the downward trajectory materializes.

The board did not take formal action on the projections; Grossi’s work will be used to inform future budget decisions and the district’s capital planning.