District receives clean audit but several funds show declines, auditor warns of deficit-reduction plan
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Summary
External auditors gave East St. Louis School District 189 an unmodified (clean) audit opinion for FY2025 while noting significant decreases in several operating funds and that the district's AFR triggered a state deficit reduction plan; auditors recommended monitoring and possible FY26 allocations.
Nick Cavalieri, a principal at audit firm Baker Tilly, told the East St. Louis School District 189 Board of Education on Dec. 16 that his firm issued an unmodified opinion on the district's FY2025 financial statements and found no material misstatements.
"There did not appear to be any material misstatements," Cavalieri said, adding that auditors performed tests under governmental auditing standards and communicate any proposed adjustments to management.
Cavalieri also flagged declines across several funds. He reported a $15,500,000 decrease in the general (education) fund; decreases of $1.5 million each in the operations and maintenance and transportation funds; a roughly $72,000 decrease in the municipal retirement/social security fund; about a $400,000 decrease in the debt service fund; and a $114,000 deficit in the capital projects fund. The fire prevention and life safety fund ended the year with a nominal increase of about $100,000, leaving a balance of approximately $1,300,000.
The auditor said the district's Annual Financial Report (AFR) for 2025 triggered a deficit reduction plan under state review. "The 2025 AFR triggered a deficit reduction plan," Cavalieri said, and he advised the board to monitor fund balances and consider allocations in fiscal year 2026 to cover facility costs and cash-flow timing.
Cavalieri noted that part of the district's reported revenue and expense relates to required state on-behalf payments for teachers' retirement and teachers' health insurance (about $22,100,000), which are shown as both revenue and expense on the statements. Excluding that on-behalf amount, the auditor calculated the district's unrestricted education (Ed) fund ending fund balance ratio at about 28 percent, near the state board's lower guidance of roughly 25 percent.
The presentation included two audit adjustments the district agreed to—one related to accounts payable timing and another to reclassifying state transportation grant revenue to the transportation fund where required.
What's next: the auditor recommended continued monitoring of reserves and possible targeted allocations in FY26. The meeting record shows no additional formal actions taken at the meeting specifically to address the deficit plan; the board approved the consent agenda that included the November financial report during the same session.