District projects modest operating gap next year but reserves remain within policy in 5‑year forecast

CUSD 200's finance staff on Jan. 22 presented a five‑year forecast that assumes conservative revenue and expenditure trends and projects a modest operating deficit in fiscal year 2026 while keeping reserve levels inside board policy.

Dr. O'Keefe, who led the presentation, said the forecast uses a conservative CPI assumption for levy year 2025 (the December CPI number capped the levy at 2.9 percent) and maintains cautious estimates for new construction and state reimbursements. “Levy 25 will be capped at 2.9%,” he said. The forecast models showed a projected operating shortfall of about $1.5 million in fiscal 2026 under the assumptions presented; that shortfall is currently expected to be covered in part by fund balance and by continuing conservative expense assumptions.

The presentation highlighted several revenue and risk items:

- Interest income: The district has shifted operating balances into money‑market accounts and is benefiting from higher short‑term yields (the presentation cited money‑market earnings near 4.6 percent), producing roughly a $1 million uplift in projected interest revenue compared with prior practice.

- CPPRT and state aid: Corporate Personal Property Replacement Tax (CPPRT) receipts and Evidence‑Based Funding (EBF) remain uncertain; the model uses conservative estimates and notes potential downside if state revenues weaken. Dr. O'Keefe said CPPRT projections have fallen from prior years and that state budget actions (the governor’s upcoming budget speech was cited) could affect tier‑2 and MCAT reimbursements.

- MCATs and reimbursements: Reimbursements for transportation, private tuition and other mandated costs (MCATs) remain prorationed; transportation proration for the current year was discussed and the district plans conservative modeling of those amounts going forward.

- One‑time and timing items: The forecast showed a timing‑related deficit in the debt service fund in fiscal 2026 due to the debt payment schedule and tax collection timing; that is a cash‑timing effect rather than a structural shortfall.

Dr. O'Keefe walked trustees through expenditure assumptions, noting that salaries and benefits account for roughly three‑quarters of district spending. The forecast includes known contractual increases (the WWEA contract has a 6 percent increase in year 3 and a CPI‑linked range thereafter) and a modeled 5 percent placeholder for CEA where negotiations are pending. The presentation also included assumptions for health insurance renewals, turnover savings and modest growth in purchased‑service costs.

Board members and staff discussed facilities timing and potential capital needs: the board’s facilities committee flagged high school athletic turf and associated bleacher/press‑box work as a likely capital need within the five‑year window (field turf installed in 2014 will approach typical 12–14 year replacement life). The forecast did not include potential revenue tied to the scheduled closing of Wheaton TIF No. 3 (expected at the end of 2028), but Dr. O'Keefe noted that if TIF closeout produces incremental EAV the district would be entitled to its share.

The model showed that, under the presentation assumptions, operating fund balances would decline over the projection but remain between the district policy range (25–40 percent). Dr. O'Keefe emphasized that the forecast is a snapshot that will be updated as new data arrive (assessor new‑construction estimates, spring extension figures, and state budget changes).

Possible opportunities cited by staff included returning some pre‑pandemic fees (registration fees were mentioned as a local revenue option that could generate roughly $1 million if reinstated to pre‑pandemic levels) and timing/packaging choices for capital projects. Risks include state budget uncertainty, further erosion of MCAT reimbursements, and higher than expected contract settlements.

The board asked for continued updates; staff said the forecast will be refined during the tentative budget process and as the district closes on the March debt issuance.