The Lake Forest Board of Education voted 5-0 Thursday to adopt the district's final fiscal year 2025 budget and financial position report.

Kurt Kelleman, the district's business manager, told the board that the district received "over $1,600,000 additional state discretionary funds" in the mid-year period and that those revenues, together with higher local interest receipts and additional Perkins grants, pushed the district into a projected surplus. "Essentially we're looking at with those additional revenues primarily a surplus still of about $923,000," Kelleman said during his presentation.

The board's vote finalizes a budget that reflects rapid recent growth in Division 1 units (the state's unit-count metric for staffing funds). Kelleman said the district earned roughly 13 additional Division 1 units over two years and reached about 292 Division 1 units in the most recent count, a driver of both higher state formula revenues and increased local salary obligations.

Why it matters: The adopted budget increases projected reserves while also acknowledging near-term financial risks. Kelleman said the district projects an estimated year-end reserve of roughly $7.7 million if current assumptions hold, and he noted that long-term pressures include potential reductions in Title I funding, changes to the state equalization formula and the state-local share of any statutory starting-teacher-salary increase.

Most important facts: The board's mid-year financial review showed:
- State discretionary receipts increased by about $1.6 million since last month, per Kelleman.
- The Gobble Wobble-related grants and other local receipts raised other-local revenue and local interest income was higher than in prior months.
- The district projects an unencumbered local cash balance of about $12.4 million as of Dec. 31, 2024, a March 31 projection near $11.0 million and a June 30 projected reserve near $7.7 million.
- Kelleman emphasized that the district's unit-count gains have driven both revenue and expense growth: "over the past 2 years we've had a $2,500,000 increase in our expenses," he said, and revenue growth has so far outpaced expenses.

Board members asked for context about risk. Kelleman said the state's equalization formula is under review and could be restructured in coming years; if fully adjusted without caps it could substantially change Lake Forest's equalization receipts. He also flagged the governor's phased plan for a $60,000 starting teacher salary and the local share that would be required to meet the state/local split.

During discussion, board members thanked staff for the clearer comparative presentation (preliminary vs. final vs. prior year) and pressed staff about assumptions on tuition payments for special placements, transportation matching, and how much of recently recognized state revenue is recurring. Kelleman said some mid-year items (for example, academic-excellence cash-ins) may affect division-2 and division-3 receipts late in the year, and that final actuals historically underspend budgeted amounts by roughly 2%–5%.

The formal motion to "approve resolution 22.2 financial position report and final budget as presented" passed unanimously, with the five members present voting yes.

Looking ahead: Kelleman said he expects unit growth to moderate from the recent rapid run-up but cautioned the board to plan for possible future changes to state funding formulas. The board will carry the adopted final budget into its year-end projections and will revisit actuals after Q3 reporting.

Vote: The board approved the final budget 5-0. Board members recorded as voting in favor were President Earl Dempsey, Vice President Starkey, Dr. White, Miss McCoskie and Mr. Rau.

Ending note: Kelleman closed by reminding the board that the district's strong reserve position stems largely from recent unit-count increases and that several state-level issues (equalization, Title I funding shifts and the starting-salary policy) remain material uncertainties for planning.