Round Lake District says FY25 underestimates left it using reserves; tentative FY26 budget shows $5.3 million deficit

Round Lake Area Board of Education members on Monday were told an error in the FY25 budget left the district drawing down reserves and created a continuing deficit that administrators say will be addressed over the next school year. Doctor Mendoza, the district superintendent, told the board "money has not been stolen, and we can account for the budget shortfall," and described the root causes as underestimated staff salaries and special education tuition placements. The board voted to place the FY26 tentative budget on display and scheduled the required public hearing for Sept. 29, 2025, at 7 p.m. in the John T. McKee Cafeteria.

The superintendent said the FY25 shortfall resulted from two main miscalculations: staff salaries were under budgeted by "a little over $3,000,000" and special education costs were under budgeted by about $4.5 million for FY25. Those shortfalls required the district to use its savings — the district's cash reserves — to cover operating costs, a practice the superintendent said the district cannot continue. He added, "the primary issue is that we used too much money from our savings account," and emphasized no fraud had occurred.

District finance staff presented the FY26 tentative numbers, showing the operating funds deficit falling from a projected $7.3 million at the end of FY25 to a projected $5.3 million for FY26 after a mix of expenditure reductions and revenue adjustments. The finance presentation noted several specific changes: a $345,000 budget for corporate property taxes based on state estimates; an anticipated $1,200,000 increase in evidence-based funding (EBF) this year rather than the $2,500,000 the district had expected because Chicago Public Schools moved into Tier 1 funding; an estimated $345,000 drop in earnings on investments tied to lower reserves; a $1.3 million reduction in capital outlay; and projected capital-project expenditures of about $5 million already underway.

Administrators described procedural and reporting improvements meant to reduce future risk: multilevel review of budget lines, a new treasurer's report with dashboards and historical trend data, more frequent (quarterly) board budget presentations, an "over-budget block" feature in the Skyward financial system to prevent purchase orders that exceed a line item, mandatory additional training for budget managers, and regular meetings with grant managers. The superintendent and finance staff said those changes will be codified in board policy and made publicly available on the district website.

The board approved a motion to place the tentative budget on public display, adopt the related resolutions and set the public hearing for Sept. 29, 2025, at 7 p.m. The motion was made by Mister Jewett and seconded by Missus Klingler; roll call showed the motion carried. Administration said the final FY26 budget will be adopted by Sept. 30, and that the district must file the adopted budget with the county clerk within 30 days of adoption and then with the Illinois State Board of Education. The presenters reminded the public that the state will not allow filing a deficit budget without an accompanying deficit-reduction plan.

Board members and the public pressed for more detail during the meeting. Finance staff said some savings had been spent because certain funds cannot legally be used to pay salaries (for example, transportation and food-service funds are restricted), and that the district will continue work to match budgeted baselines to actuals before the final adoption. Administrators emphasized timing constraints in Illinois budgeting: staffing decisions are often made months before the state finalizes EBF allocations, which can create mismatches between commitments and actual revenues.

The tentative budget and supporting documents, including footnotes and the new treasurer's report format, were added to the board packet and will be posted on the district website as required. The board directed administration to continue with the outreach and to present the final budget for adoption in September.